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London Leadership Series

Posted by Debasri on 18 November 2007

On 13 November, Ian Davis, Managing Director of McKinsey & Company, came to London Business School, as part of the London Leadership Series and shared with students and staff, some key thoughts that he said was a gift to London Business School, for the many gifted individuals that the school has given the firm.

Some of the key themes that he shared with us were as follows:

Growth: Companies are obsessed with growth and the capital markets reward it. He believes that the threat, in the short run, to growth is the slowdown in the US housing market and its effect on decreasing consumption demand, especially in the light of trade contagion between the US and other countries. However, he is personally very optimistic about the future, especially about the role of Asia and other emerging economies in fuelling this growth. The primary take-aways from his message were that countries with good education infrastructure and companies with skills to manage culturally diverse workforce will be the leaders of tomorrow’s growth. Some of the sectors that he believes will fuel global growth in future are infrastructure and retail/ consumer (especially in emerging markets), healthcare and knowledge based services.

Managing Risk: Organizations will have to rethink the way they perceive, price and manage risk. The definition of risk needs to extend beyond business and financial risk, and will need to incorporate reputational, organizational and geo-political risk. While the current crisis in the financial services industry will lead to a redefinition and repricing of financial risk, Mr. Davis fears that the next crisis will be from the unwinding of certain nations and thus in the form of political risk. And as had happened in the liquidity crisis, the global economy, will yet again, be perhaps caught unaware.

Focus on Talent: Talent is the set of capabilities, attitudes, attributes and characteristics that make organizations function effectively and efficiently. Mr. Davis pointed out that nations and organizations, especially those in emerging markets with increasingly face the challenges of not having a history of capital markets and of not having a culture of corporate management. In this scenario, how effectively companies manage globally and culturally diverse workforce and customer bases will become the key success factor. Not only that, he believes that the competitiveness of emerging markets will increasing shift from a pure cost advantage to one in which they will start leveraging their talent pool.

Technology & Internet: Mr. Davis believes that technology today has become a foundation of capability and that the internet has become much more pervasive than before. This is a significant development and the use of technology will perhaps shape the way business is conducted in the future.

Fads: Debt has always been cheaper than equity and Mr. Davis believes that fuelled by private equity activity, capital markets are today the ‘in’ thing. Whilst he recognizes the importance of capital markets in the development and smooth functioning of the global economy, he does make a point of mentioning that obsession with capital markets today is indeed a fad.

Some other points that came out, in the Q&A section, were issues related to rejuvenation of success, of why companies succeed for only the short term, the importance of company boards in transparent, responsible decision making and the challenges he faces everyday to create a common culture at McKinsey & Company, in which leadership of thought and leadership co-exist.

It was indeed an intellectually rewarding experience to hear, in person, the man who leads an organization that can safely be said to be today’s thought leader.

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