05 Jul McKinsey’s windy platitudes bode ill for next half-century
Will McKinsey exist in 50 years’ time? This question has lodged itself in my mind after reading a piece in the firm’s magazine that tells us what business people will be thinking about for the next half-a-century.
The McKinsey Quarterly is 50 years old, and it has chosen to celebrate its birthday with a momentous article based on many years’ research by the firm’s sharpest minds. As the piece isn’t terribly snappy, here is a potted summary. The future, the consultants say, is going to be very big. Unfortunately, the past isn’t going to be a good guide to it. Or as they put it: ‘With more discontinuity and volatility and with long-term charts no longer looking like smooth upward curves, long-held assumptions giving way, and seemingly powerful business models becoming upended.’
More specifically, three trends will shape this volatile, discontinuous, upended future. The first is technology. Its growth will be exponential and there will be ‘turbo-charging advances in connectivity’. Second, growth in emerging markets will continue and a lot more big cities will spring up in places we’ve hardly heard of. Finally, everyone is going to go on getting older.
The banality of this is arresting. These aren’t trends of the future but of the present; if there is one thing that is true of the distant future it is that it tends not to be ruled by the same things that rule us now.
But wait, there is more. These trends will have ‘extraordinary implications for global leaders‘, it warns, before getting down to specifics: ‘It’s likely that different regions, countries, and individuals will have different fates, depending on the strength and flexibility of their institutions and policies.’ I’d put it stronger than that. It is certain that some countries and people will do better than others, as it was always thus, and always will be.
As for technology, McKinsey says it will shake up business ‘in unimaginable ways‘. This has the advantage of being right. But it has the disadvantage of being a shameful cop-out as if you are forecasting it, it is your job to imagine those ways — and to tell us what they are.
The conclusion? ‘Change is hard‘ — a declaration so crashingly obvious, it is odd that the authors feel the need to back it up with reference to ‘social scientists and behavioural economists‘ who have noticed a bias towards the status quo.
There are various things that can be said about this sorry exercise in windy platitudes. First, 50 years is a ludicrously long time to try to forecast. Accountants, who are on the whole a more sensible lot than management consultants, typically don’t look out for more than a year when establishing if a business is a going concern. I sit on a board where we sometimes plan for the next five years — which is quite an enjoyable exercise, and it is useful to play with various things that might happen — but everyone always takes it with a handful of salt.
Second, as my colleague Tim Harford recently pointed out, one of the reasons forecasts are so useless is that they aren’t forecasts at all. They are marketing exercises. Seen this way, the McKinsey piece starts to look a lot less boneheaded. ‘Tomorrow’s strategist must comprehend a world where offerings may vary … necessitating increasingly diverse approaches. All this will place a premium on agility: both to ‘zoom out’ in the development of a coherent global approach and to ‘zoom in’ on extremely granular product or market segments.’ In other words, CEs should appoint McKinsey at once.
My own forecast is rather different: McKinsey won’t exist 50 years hence. This is based on three trends similar to those the firm spotted. If economic activity moves to far-flung cities, these are the parts of the world where western strategy consultants tend not to flourish.
The next trend is that as executives get smarter in dealing with this complex world, they will be more able to solve their own problems. One of the reasons management consultants flourish is that CEs look at their mediocre underlings and outsource work instead. If the homegrown talent gets better, they will stop doing this.
Most important is the effect of technology. All the grunt stuff consultants do analysing markets can be done by anyone with an internet connection. The two things that people will always be better at than machines are motivating others and coming up with original ideas. Yet on neither score does the consultant look good. Strategy firms don’t do much in the way of motivation. And as for originality, if the best McKinsey can do after years of study is say that technology, globalisation and ageing will feature in the next 50 years — a robot could have come up with that in a jiffy. ©2014 The Financial Times Limited.