“Why is it that companies and governments always call on McKinsey when they could call on McLaren?”

Rory Sutherland:

One obstacle might be the boredom threshold. If you are used to a high-octane life on the Grand Prix circuit, a three-hour meeting with healthcare regulators might leave you wanting to bite your arm off. Once, by accident, I ended up as part of a project-management workgroup seeking regulatory approval for a drug: after the 18th Gantt chart, I experienced one of those moments where boredom becomes physically painful.

But the other issue at stake is the difference between deterministic and probabilistic improvement. If you engage engineers, you don’t know what you are going to get. You may be unlucky and get nothing. Or their solution may be so outlandish that it is hard to compare with other competing solutions. On average, though, what you get will be more valuable than the gains produced by some tedious restructuring enshrined in a fat PowerPoint deck.

But in business, let alone in government, it is only in crises that people find a budget for probabilistic interventions of this kind (in peacetime, nobody would have given Barnes Wallis the time of day). The reason is that both bureaucrats and businesspeople are heavily attracted to the illusion of certainty. Standard cost-cutting ‘efficiencies’ can usually be ‘proven’ to work in advance; more interesting lines of enquiry come with career-threatening unknowability.

One problem with this pretence of certainty is that cost-savings are more easily quantified than potential gains — so business and government are increasingly geared towards providing people with more, poorer things at an ever-lower price. Yet much evidence suggests that people like fewer, better things at a slightly higher price.

Indeed one reason why the world is in a mess is because, for a long time, the ratio between ‘explore’ and ‘exploit’ has been badly out of whack. Entities like procurement have been allowed to claim full credit for money–grabbing cost-savings without commensurate responsibility for delayed or hidden costs. The shadow of this is everywhere, from Grenfell Tower to PPE shortages.