The “social side” of strategy at Davos

Blockchain technology, AI, and cybersecurity all featured prominently at the World Economic Forum in Davos this year. But for all the talk of robots, it’s the central role human dynamics continue to play in business that enlivened my discussions last week.

As many may know, I am on the verge of publishing Strategy Beyond the Hockey Stick with my co-authors Chris Bradley and Martin Hirt. (The book’s official publication date is February 13.) Our book’s title refers to the confident “hockey stick” business plans we’ve all seen before—they paint a future where results sail confidently upwards, after an initial dip that coincides with next year’s budget.

How biases politics and egos derail business decisions
How biases politics and egos derail business decisions

In the book, we reveal how our four-year analysis of hard data on the economic performance of thousands of companies can help CEOs distinguish the true breakthrough plans from the fakes. There’s practical advice on how to deal with the “social side” of strategy - the real-life human dynamics in management teams that so often get in the way of strong execution – with cartoons to illustrate our insights. You may even recognize some of your own experiences in them.

How biases politics and egos derail business decisions
How biases politics and egos derail business decisions

In the weeks leading up to the launch I’ve been sharing early copies with clients, and it’s interesting to see how people react to the book and its ideas. While in Davos last week with my McKinsey colleagues, I showed the book to a few clients. Some of the reactions:

  • The “social side” of strategy resonated with nearly everyone. As we illustrate in the book, business leaders, despite their best intentions, often are influenced by human biases and social dynamics that get in the way of clear strategy and strong execution. Nearly everyone I showed the book to recognized themselves in the cartoons. And their immediate question to me: “Did you find the solution?”
  • Many clients focused on the Power Curve we developed, which illustrates the three distinct groups of companies: the bottom quintile with massive economic losses; the long, flat, middle 60% with practically no economic profit; and the top 20% to whom most of the value accrues. Those in the middle were surprised at the odds (just 8%) of moving from their current position to the top. Those at the top wondered what they should do to stay there.
  • Of the eight shifts we recommend companies make, two stood out for my clients: shifting from short-term yearly discussions to longer term strategies; and the need to make big, bold moves, not incremental ones.

Interestingly, several days before Davos, Chris Bradley and I hosted a webcast to discuss the book and its main points. When we polled the nearly 400 attendees, almost all said that their strategy discussions are also dominated by the social dynamics we describe in the book. In addition, 80% said they did not practice any of what we suggest in the book, leading me to conclude that there’s a lot in the book that can help managers. I am looking forward to learning more from readers of the book and the discussions it is prompting.

I am a senior partner in McKinsey and Company’s Amsterdam office and leader of our Western European region.

I am also the author, along with Martin Hirt and Chris Bradley, of the forthcoming book, Strategy Beyond the Hockey Stick: People, Probabilities and Big Moves to Beat the Odds, available February 13, 2018.

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