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Re-inventing capitalism: McKinsey CEO key speech

Re-inventing capitalism: McKinsey CEO key speech John DrummondCorporate Culture “There is a crisis in capitalism”, Dominic Barton, the CEO of McKinsey & Company said in a keynote speech in the City of London last night. A simple summary of his argument has three steps: One, there are three compelling reasons for change:

  1. there is a huge growth in the number of middle-class consumers – 3bn more; the industrial revolution involved 1/1,000 of the number of people

  2. technology is moving three to five times faster than the ability of managers to keep up

  3. these new middle classes will create constraints on resources eg the current projections are that by 20% there will be a 40% gap between the demand and supply of water Two, there are three big reasons why capitalists should be worried:

  4. there has been a reduction of trust by 21% in western businesses

  5. there has been a significant rise in inequality; there has been an increase in the share of income of the top 1% from 7% to 14% of all wealth between 1970 and 2009

  6. unemployment particularly youth unemployment should be of serious concern (Spain has 56% youth unemployment) Three, there are three actions that he recommends:

  7. focus on stakeholders not just shareholders

  8. explore owner-based governance: in particular, boards are spending way too much time on fiduciary duties and way too little on long-term strategy

  9. there needs to be a move from a focus on quarterly capitalism to long-term capitalism In practice, Dominic believes Asian companies think longer term and invest more as a result. Emerging market invest at twice the rate of established markets. In summary he said: “we are being boiled like a frog in a pot…changing to a long-term view is vital for company survival and economic revival.” And in case you think this is a one-off, Dominic was clear that his view emerges from his meetings with CEO’s – two a day for the last four years. John Drummond, Chairman of Corporate Culture. Over the last eight years he has worked on social marketing, CSR strategy, branding and organisational change with many clients including Bank of America, BT, Sky, WRAP, Marks & Spencer, T-Mobile, O2, Buying Solutions and EDF Energy.

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In the news this week October 29th 2018

Dear Readers, Here are a few articles published in the last few days (W/C October 29th 2018) that address issues - tech, AI, sustainability, investment, leadership, corporate governance and modern sl


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