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Decoding Davos

From left: Dominic Barton, McKinsey’s global managing director, Dennis Nally, chairman, PricewaterhouseCoopers International Ltd., Jean-Pascal Tricoire, CEO Schneider Electric, and Emma Watson during a panel discussion promoting gender parity.

by Dominic Barton—Why go to Davos? Because the annual meeting of the World Economic Forum (WEF) in the mountains of Switzerland remains a unique opportunity to connect efficiently and effectively with an extraordinary number of clients and key decision-makers. After four intense days of formal sessions, one-on-one meetings, and snatched conversations I always come away with a sharper sense of the issues to which we—and our clients—should be paying attention. This year was no exception.

As a firm we send five official delegates—this year myself plus Cornelius Baur, Gary Pinkus, Vivian Riefberg, and Kevin Sneader. What do we actually do? Well, among other things: We hosted four dinners with a broad range of CEOs to explore the topics of  digitization and analytics; we held a breakfast discussion on the topic of “Organizing for the Future,” featuring Carlos Ghosn of the Nissan Alliance and Randall Stephenson of ATT; Kevin spoke alongside British Prime Minister David Cameron and Queen Rania of Jordan on the challenge of finding sustainable jobs for refugees; Vivian spoke at both The Girls’ Lounge (the first female-focused, male-inclusive destination for women at Davos), and a Seneca Women event; along with Larry Fink of BlackRock, Mark Wiseman of CPPIB, Andrew Liveris of Dow and Cyrus Mistry of Tata Group, I co-hosted a two hour working session with CEOs and institutional investors who are members of our Focusing Capital on the Long Term initiative.

Dominic Barton, McKinsey’s global managing director

On Friday, I also took part in an event hosted by UN Women as part of their HeForShe initiative, promoting gender parity. We are one of the ten ‘corporate impact champions.’ Actress Emma Watson chaired an interesting discussion involving other impact champions including the CEOs of Twitter, Unilever, and Schneider. As part of HeForShe, we have made public for the first time data about our own progress towards gender parity within McKinsey. The figures are a reminder of the challenge we, along with other organizations, face—particularly in retaining women as they progress towards senior leadership positions. We have put in place a number of measures to address this but have a long way to go.

We also found time for meetings with close to 300 clients and contacts. Yes, good calendar management remains a core competence.

As for the ‘big themes’ that dominated discussion, here are six that struck me as particularly interesting:

The technology revolution rolls on. Discussion centered on the speed, scale and force at which technologies such as artificial intelligence, machine learning, robotics, nanotechnology, and biotech are transforming industries and markets. Without doubt, this is changing our lives and the lives of future generations. We heard genuine excitement about the opportunities created by these technologies—along with concern about the societal challenges, especially with respect to job creation.

Global growth isn’t over. Financial and commodity markets convulsed during the week, with oil plunging and share prices sinking. But the overall picture on growth was more positive than this suggests. Our own sense, echoed by a number of others, is that while the macro-economic outlook remains tough in the first half—and we may not yet be done on the downside—things will probably pick up in the second half.

China isn’t over.  Is a hard landing ahead? Or is China’s economic deceleration just part of an essential transition? We tend to share the mindset of those who would prefer to see a sustainable 5-6% growth this year led by services than an unsustainable 9-10% growth led by investment. India too continues to generate optimism and a sense that real change may be underway.

Geopolitical worries. Regional conflicts, terrorism and the threat of ISIS loomed large in political discussions, as did the ongoing humanitarian tragedy of the refugee crisis in Europe—which many now see as a “make or break” challenge for the EU. Nationalism is clearly rising, and we still lack a clear framework for how the international order should evolve.

Organizational change. Business leaders feel under intense pressure to keep evolving business models and operating models, both to fend off new competitors and to take advantage of emerging technologies such as automation and machine learning. This requires a willingness to retool processes, retrain people, and invest capital at scale, all amid deep uncertainty. Many CEOs see this as being the defining issue of their tenure.

Focusing executives on the long-term. It is no secret that this is one of my personal passions. The corollary to being able to adapt to rapid change is the imperative to resist short term pressures and manage companies for the long term. Based on conversations at Davos, we aim to deepen conversations with boards and executives and also explore regulatory changes and new metrics that can help move the needle in the right direction.

Every country and company faces unique challenges. But as this WEF reminded us, our common task is to adapt successfully to some of the deepest long-term technological changes we have faced in our careers—all while coping with a geopolitical and macro-economic context that grows more volatile. We returned from Davos determined to keep innovating to help our clients do just that.