An inside look at how the McKinsey Global Institute creates a better understanding of the world

The McKinsey Global Institute (MGI) was named the world’s number one private-sector think tank by the University of Pennsylvania’s Lauder Institute in its 2018 Global Go To Think Tank Index report, which was published early this year. MGI has now topped the list four years running.

For nearly 30 years, MGI’s reports have influenced key decision makers in business, the nonprofit sector, and government, but what is it that sets MGI apart? How has it earned its reputation? And who, exactly, is its audience?

To answer these questions and more, we recently talked to James Manyika, MGI chairman and one of its three directors.

What sets MGI apart from other think tanks?

We do research that’s relevant for business and for the economy, so we think about MGI’s audience as being leaders in the private sector, policy, and government. We see our function as doing fact-based research that informs their decision making.

Fireside chat with James Manyika at the Tallinn Digital Summit, 2017. Photo: Arno Mikkor under CC by 2.0.

Does that include policy research?

MGI is not a policy shop, and we don’t give any policy prescriptions. And quite often, people are disappointed when they read our reports: they expect there’s going be that final chapter where we prescribe policy. Well, that chapter doesn’t exist, and it’s quite deliberate. We see our role as developing a fact base that can inform our leaders as they make policy and other decisions. Based on our research findings, we do try to highlight the biggest problem for leaders to solve.

What do you find particularly distinctive about MGI?

We’re relatively unique in the sense that we have complete independence in what we look at. We occupy this interesting space between business research and academic research, and we take the best of both worlds. Every time we do any research project, we have academic advisors who critique, challenge, advise, and collaborate with us, helping us to hold our research to the highest standards.

We occupy this interesting space between business research and academic research, and we take the best of both worlds.

James Manyika, MGI chairman and director

We’ve also been very lucky to have several leading economists, including several Nobel laureates, be advisors of our work. In our history they have included Nobel laureates like Robert Solow, Ken Arrow, Paul Romer, and others like Olivier Blanchard and Dani Rodrik.

Today, they include Laura Tyson, a professor at the Haas School of Business at the University of California, Berkeley; Michael Spence, a Nobel laureate in economics and professor of economics at New York University’s Leonard N. Stern School of Business; Richard Cooper, a professor of international economics at Harvard University; Erik Brynjolfsson, director of the Initiative on the Digital Economy and professor of management at MIT Sloan;  Matt Slaughter, dean and professor of international business at the Tuck School of Business at Dartmouth; Sir Christopher Pissarides, a Nobel laureate and professor of economics and political science at the London School of Economics; Diana Coyle, professor of public policy, University of Cambridge;  Martin Baily, a senior fellow in economic studies at Brookings Institution; and Rakesh Mohan, a professor at Yale School of Management and senior fellow at the Yale Jackson Institute for Global Affairs.

I think all of that is what makes MGI unique.

What makes MGI research noteworthy?

We see our value in what we call “micro to macro,” meaning that we try and work on research where you can observe the microeconomics on the ground, inside companies, inside sectors, and in particular places. That micro understanding of how business and the economy works then allows us to have a point of view on the macro. This is one of the benefits of being part of McKinsey—the ability to access this micro perspective—which then allows us to have a point of view on the macro.

How do you put that micro-to-macro perspective to work?

We can apply this approach in a few programmatic areas—for example, technology and its impact on business and the economy. We tend to look at labor markets, at globalization, and at global trade. And we also look at questions, from time to time, that have to do with environmental impacts and natural resources and how they intersect with business and the economy.

What’s your favorite story about MGI research addressing real-world problems?

Over the years, we’ve had an impact in so many different ways. For example, we’ve been doing work on labor markets in the US economy for many, many years: how employment is changing, how the labor force is changing, and what the skills of the future are likely to be.

Over the years, we’ve had an impact in so many different ways.

James Manyika, MGI chairman and director

Then four years ago, we collaborated with the Markle Foundation, a nonprofit foundation that does big initiatives every few years to think about how we can take all this research and do something with it in the real world. Markle went on to create Skillful, an initiative that’s doing skills and career matching based on our research. It’s now working in 26 states in very creative public–private partnerships, whereby the governors in those states and a few technology companies have started to apply our research about labor markets across America.

Is there a story you’d add that extends beyond the world of work?

Our research on gender parity—we did probably what’s considered now one of the largest research efforts to look at gender parity across the world. We looked at 93 countries vis-à-vis a wide range of different indicators for women’s economic participation. The comprehensive nature of that work resulted in the United Nations focusing its women’s initiative on the gender gaps that had been highlighted in our research.

Finally, how about innovation? Give us an example of MGI’s ability to pioneer new ideas.

We’ve often innovated in different ways to measure things. Several years ago, a big question for everyone was, “How do you even measure the digital economy?” We started sizing the digital economy, starting in the United States, going sector by sector, drawing on the firm’s proprietary data and insights and also using private data, especially on global data flows. Well, it turns out that our approach was ultimately sufficiently interesting to the US Department of Commerce as it was starting to measure the size and scale of the digital economy, as well as data flows.

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