Posts Tagged ‘McKinsey’

The Market State

November 17, 2010

Last year, corporate executives spent a lot of time talking about the problem of headwinds in a difficult economy.  They never talk about tailwinds in a good economy but that’s another story.  What they have talked about this year is “uncertainty” by which they apparently mean excessive government regulation brought on by the global fiscal crisis. A McKinsey white paper published earlier this year suggests that companies would be better off preparing for much more activist national governments and the challenges they will present than whining about uncertainty.  The authors of the study suggest that the challenge for sovereign states in dealing with slower economic growth while still providing affordable safety nets will entangle the private and public sectors in the future in ways that are unthinkable in today’s developed economies.

While there are clearly financial and operational implications of this shift, there are also reputational dangers and opportunities.  If McKinsey’s predictions are correct, the term corporate social responsibility may take on entirely new meanings.  U.S. companies have long bemoaned the emergence in the 1950s of employer-supported health benefits.  If the market state is truly the wave of the future, they may have seen nothing yet.

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Captain Ahab and the Modern Enterprise

June 22, 2010

Perhaps we need to re-examine our practice of building corporate reputation through CEO visibility  and thought leadership.  This reflection is prompted by Stefan Stern’s comments in The Financial Times today on the concept of centred leadership developed by McKinsey’s Joanna Barsh.  Barsh’s model grew out of her team’s work on women leaders in business and focuses on five principal strategies — developing meaning, managing energy, positive framing, connecting and engaging.  What caught our attention was Stern’s coupling of this concept with a commentary on the retirement announcement of Tesco’s legendary leader, Sir Terry Leahy.  Stern warns us against fitting Leahy’s success into the mythology of the lonely heroic leader.  Tesco’s success was a team effort, as Sir Terry himself points out, lasting for decades.

We’re not sure exactly how the centered leadership model fits, but Stern is clearly stating that the global enterprise of today is too complex to be led by the lone, heroic leader as radical soloist.  If this is true, we need to find a better way to nourish corporate reputation than by creating leaders in the image of Captain Ahab — driven, charismatic, inscrutible, Olympian.  Sustained strategic credibility in the new model will come from showcasing the cohesion, creativity and connectedness of a group of leaders.  In some companies, this already happens organically.  For the rest of us, centred leadership may be a useful wake up call to change the default mode from Moby Dick to The Seven Samurai.

Chinese at Play

March 10, 2010

As usual, the statistics relating to China are mind-numblingly large.  According to a McKinsey Quarterly article first published in the Harvard Business Review, 384 million Chinese consumers spend 70 percent of their leisure time on the Internet.  Much of this web surfing is taking place on mobile devices because China’s cellular providers recently started offering widespread 3G service, according to the article.

These numbers are a timely reminder that it is far from premature to start monitoring Chinese blog traffic and to get to know influential Chinese bloggers even if you don’t market a big global consumer brand like Nestle or Nokia.  One US company, for example, facing a product contamination issue that was not big news in the US, was taken aback that the Chinese Internet was ablaze with commentary, due, of course, to China’s experience with this issue.  Corporate brands, not just consumer brands need to be ramping up to meet this challenge.  Death by 384 million cuts sounds quite painful.

Issues Mapping

November 16, 2009

A great piece in the new McKinsey Quarterly by Charles Roxburgh about the value of scenario planning prompts me to share our own version of scenario planning we call “issues mapping.”  Whereas Charles uses certain criteria he calls pre-determined outcomes to frame scenarios, we frame our process using four forces: economics, demographics, technology change and culture change.  We map these four forces against the entire value chain of an organization to identify reputation risks and opportunities that arise as these four forces interact over time.  What this process does is it throws into sharp relief how an organization that fails to adapt can go from being a reputation leader to a reputation laggard or be exposed to a crisis that could have been predicted.  Charles offers an example of a pre-determined outcome as used by Shell Oil, a pioneer in scenario planning: “Rainfall in the mountains means flooding in the plains.”  A simple example of our issues mapping process is what happens when a smaller than average 18-34 year old age cohort interacts with a strong economy: front line customer service quality declines because more qualified workers can find better jobs in a strong economy.  The answer — investment in training and supervision.  These are certainly times for companies and organization to take the time to think through the unthinkable.  Issues mapping isn’t a bad way to do it, when reputation is at risk.

Power Curves

June 10, 2009

The McKinsey Quarterly is trying to start a conversation about the application of power laws to man-made catastrophes such as the recent global financial meltdown.  What can we learn, they ask, about predicting man-made disasters from earthquakes, tsunamis and forest fires, all of which follow established power law curves — a “head” of many low impact events and a tail of infrequent but high impact ones?  They point out that as early as 2006 some specialized mortgage companies were already in deep trouble, presaging the later fall-out in the broader market.

This discussion got us thinking about whether we could apply the same thinking to predicting reputation catastrophes.  What if we could identify sudden clusters and unexpected spikes in certain types of reputation crisis pointing to a larger break-out into a broader market of high profile companies.  We already know that some types of crises have copycat characteristics: whistleblower lawsuits, food tampering, sexual harrassment charges, for example.  In 2007-8, there was also a sudden spike in investigations related to the Foreign Corrupt Practices Act, prompting us to recommend that all multinationals take a closer look at their foreign operations to try to detect compliance failures.

We’ll revisit this topic when we have devised a tracking model to cover this interesting application of complexity theory.