日志
McKinsey’s managing director Dominic Barton and His Ideas
||
McKinsey’s managing director Dominic Barton and His Ideas
McKinsey partners re-elect Dominic Barton as managing director
McKinsey’s Dominic Barton on Leadership — and His Three Tries to Make Partner
McKinsey partners re-elect
Dominic Barton as managing director
January 28, 2015
McKinsey managing director, Dominic Barton
McKinsey & Company is a professional services firm, owned and governed by partners spread across Europe, the Americas, Asia Pacific, the Middle East, and Africa. It’s not a conventional organization. Every three years, the firm’s senior partners elect a managing director from among their ranks to serve as ‘first among equals.’ The results of the latest election: Dominic Barton will serve a third term.
As you might expect, the office of managing director is
significantly different from the role of CEO at a large corporation. “Our firm
is full of leaders,” says Dominic. “As managing director I set themes, make
connections, and drive forward initiatives that will advance our ability to
serve our clients, strengthen our firm, and develop our people.”
McKinsey also has a Shareholders’ Council—a board of
directors—whose members are also elected by the world-wide partnership. As of
today, the council’s 30 members represent more than a dozen nationalities.
Dominic’s priorities for the next three years? Continuing
McKinsey’s pace of innovation and modernizing the firm. He says: “The metabolic
rate of the world continues to increase, and so are the challenges facing our
clients. We’ve built some terrific new capabilities over the last few years and
we will be increasing our pace of change and renewal.”
Dominic plans to continue his practice of meeting with
two CEOs or government leaders a day, giving him a unique perspective on what
matters to companies, governments, and non-profits the world over. He will also
lead McKinsey’s work on some of the big topics facing leaders across all
sectors, including the future of capitalism, leadership, and Generation, a McKinsey Social Initiative that pioneers new
ways to build skills and job readiness for one million unemployed young people.
And finally, as the leader of the single largest private
partnership in the world, he will ensure that McKinsey’s strengths and values
in particular are reinforced. He will drive the firm’s constant renewal in the
context of a faster-moving external environment and a changing profession.
- See more at: http://www.mckinsey.com/about_us/new_at_mckinsey/mckinsey_partners_reelect_dominic_barton_as_managing_director#sthash.LPDnLVVQ.dpuf
Making boards work
Most directors don’t understand the company’s strategy
and prioritize short-term gain at the expense of creating long-term value. We
recommend four essential changes.
December 2014 | byDominic Barton and Mark Wiseman
http://www.mckinsey.com/insights/organization/making_boards_work
Boards aren’t working.
It’s been more than a decade since the first wave of post-Enron regulatory
reforms and, despite a host of guidelines from independent watchdogs such as
the International Corporate Governance Network, most boards aren’t delivering
on their core mission: providing strong oversight and strategic support for
management’s efforts to create long-term value.
This isn’t just our opinion. Directors also know they’re
falling short. A mere 34 percent of the 772 directors surveyed by McKinsey in
the spring of 2013 agreed that the boards on which they served fully
comprehended their companies’ strategies. In March 2014, McKinsey and the
Canada Pension Plan Investment Board asked 604 C-suite executives and directors
around the world which source of pressure was most responsible for their
organizations’ overemphasis on short-term financial results and underemphasis
on long-term value creation. The most frequent response, cited by 47 percent of
those surveyed, was the company’s board. And the result among those who
identified themselves as sitting directors on public-company boards?
Seventy-four percent.
These are shocking results. How can companies strengthen
their boards’ knowledge and help directors build, maintain, and refine a
long-term mind-set? A good first step might be to help everyone firmly grasp
what a director’s “fiduciary duty” really is. Most legal codes stress two core
elements: loyalty (placing the company’s interests ahead of one’s own) and
prudence (applying proper care, skill, and diligence to business decisions).
Nothing suggests that the role of a loyal and prudent director is to pressure
management to maximize short-term shareholder value to the exclusion of any
other interest. To the contrary, the logical implication is that he or she
should help the company thrive for years into the future.
If directors can keep their fiduciary duty firmly in
mind, it should encourage big changes in the boardroom. They will spend less
time talking about meeting next quarter’s earnings expectations, complying with
regulations (although that, of course, must be done), and avoiding lawsuits,
and more time discussing potential new goods, services, markets, and business
models, as well as what it takes to capture value-creation opportunities with
big upsides over the long term. Let’s look at four familiar areas where change
is essential for this to happen:
•Selecting the right people. What’s behind
the dramatic increase in interventions by activist shareholders? According to
Stephen Murray, president and CEO of CCMP Capital Advisors, a major
private-equity firm, “The whole activist industry exists because public boards
are often seen as inadequately equipped to meet shareholder interests.” In
short, companies keep appointing directors who aren’t independent thinkers and
whose experience is too general.
•Spending quality time on strategy. Most
governance experts would agree that public-company directors need to put in
more days on the job and devote more time to understanding and shaping
strategy. While we recommend that board members dedicate at least 35 days a
year to the job, the precise number of days a board meets or the mix of field
trips isn’t the main issue. What matters most is the quality and depth of the
strategic conversations that take place.
•Engaging with long-term investors. While
boards may be guilty of pushing executives to maximize short-term results, we
have no doubt where that pressure really originates: financial markets. That’s
why it’s essential to persuade institutional investors, whose ownership
position makes them the cornerstone of our capitalist system, to be a
counterforce. Boards can and should be far more active in facilitating a
dialogue with major long-term shareholders—and many investors would welcome
such engagement.
•Paying directors more. Good capitalists
believe in incentives. There is a growing consensus that directors should sit
on fewer boards and get paid more. We fully agree, but the even more important
issue is to structure that pay toward longer-term rewards. To get directors
really thinking and behaving like owners, companies should ask them to put a
greater portion of their net worth on the table. This could be achieved by
giving them a combination of incentive shares, a portion of which vests only
some years after directors step aside, and requiring incoming directors to
purchase equity with their own money.
While the thrust of each of these broad changes is
relatively simple to articulate, none is easy to make. All of them must fit the
specific company and industry context. Introducing them—and making them
stick—will require deft handling by board chairs or lead directors, working
alongside CEOs. But we need a deep shift in the culture, behavior, and
structure of public-company boards. Over time, nothing else will do more to
ensure that these core institutions of our capitalist system deliver the kind
of sustained value creation that long-term shareholders expect and that our
society deserves.
Read the full article, “Where boards fall short,” on the Harvard Business Review website. For more
on this topic, visit the Focusing Capital on the Long
Term website.
About
the authors
Dominic Barton is
McKinsey’s global managing director, based in McKinsey’s London office; and Mark
Wiseman is the president and chief executive officer of the
Canada Pension Plan Investment Board.
McKinsey’s
Dominic Barton on Leadership — and His Three Tries to Make Partner
http://knowledge.wharton.upenn.edu/article/mckinseys-dominic-barton-on-leadership-and-his-three-tries-to-make-partner/
Dominic Barton, global managing director of
consulting firm McKinsey & Company, has an impressive bio. He was
previously the firm’s Asia chairman and leader of its Korea office, is a recipient
of South Korea’s Order of Civil Merit and Singapore’s Public Service Star, and
is also the author of more than 80 articles about business.
But Barton’s rise to the top was neither
swift nor always smooth. During a Wharton Leadership Lecture, Barton talked
candidly about some of the lowlights of his 29-year career at McKinsey. For
example, his early days at the firm were not quite what he expected. Knowing
that McKinsey was an advisor to CEOs, he “had a kind of idea” that he would be
put to work in that capacity. Instead, his first assignment was to determine
how many pieces of KFC should go in a lunch box. “So there’s McKinsey working
on the biggest problems on earth, and I’m trying to figure this out,” he said,
adding that “four” was the answer to the chicken question.
Barton noted that when he joined the
company in 1986 in Toronto, he never intended to embark upon a business career.
He was working on an MPhil in economics at Oxford, with a focus on industrial
economics, and simply wanted some firsthand experience of corporate realities.
“I figured I’d come to McKinsey for two years and get as much experience as I
could, then go back to the academic world,” Barton said. “The more I worked in
the firm, the more curious I grew…. At McKinsey you’re always learning. Just as
soon as you get comfortable with something, you go to the next level, and I
love that.”
Third Time Lucky
One level that Barton did have trouble
moving to, though, was the key step of being elected a partner. In his talk, he
was very open about the fact that it took him three tries, and said it was a
painful process. “Many people who are joining McKinsey have obviously done well
[through life] or they wouldn’t be here…. So being told at times that you’re
not actually doing that well can be a bit of a trauma to the system.”
“Many people who are joining McKinsey have obviously done
well [through life] or they wouldn’t be here…. So being told at times that
you’re not actually doing that well can be a bit of a trauma to the system.”
Barton noted that after his first try, he
was told that while he appeared to have the intrinsic capabilities to be a
partner, he needed to demonstrate those qualities more often: to “be tough and
go at it.” He characterized the second attempt as “more embarrassing, in a
sense, because it was quite public.” People knew that he had “been around” for
a substantial amount of time as a senior engagement manager. This time, the
feedback was: “’We are not actually sure you do have the intrinsic
capabilities’ and ‘you’re not a good problem-solver.'” Referring to the fact
that problem-solving is the essence of being a consultant, Barton quipped,
“This is like telling someone in the church that they’re an evil bastard.” He
said that relatives and friends began to gently suggest that he might not be
cut out for business after all.
Barton talked about how stressful the
experience was since, typically, when he had worked hard at something, it had
turned out well. Then he had a breakthrough. “I had splinters in my back from
going over the bar so often … and I finally realized, you know what, I’m going
to set my own bar. And I’m going to make it higher than theirs.” He would stop
focusing as much on “jumping through hoops for other people” — and if things
did not work out, he would go elsewhere.
SPONSORED CONTENT:
Tough Times
Barton’s strategy apparently worked: He
stayed with the firm and rose to the position of global managing director in
the summer of 2009. However, within a few months he faced one of the biggest
challenges of his new post. Against the backdrop of an economy still reeling
from the financial crisis, the news emerged that two senior McKinsey executives
had been arrested for insider trading.
“It was the biggest shock. You just can’t
imagine,” said Barton, adding that the two individuals in question, Rajat
Gupta and Anil Kumar, had been 25-plus-year veterans of the firm.
“McKinsey & Company is about trust. At the end of the day, if people don’t
trust us, we can’t work. So this was a very big deal.” Around the time the
story broke, Barton was living in London, and about to go to his first meeting
with then-British Prime Minister Gordon Brown at 10 Downing Street. He recalled
being painfully aware that day that headlines about McKinsey & Company’s
insider trading were splashed all over the newspapers. “I remember standing
there [at the gate] in the rain thinking, ‘Should I go in? Because this is
probably not the best time. Should I just go back home and have a hot
chocolate?'” Barton says he did go in, however, and that “people were very
warm,” listening and sharing stories about difficulties they had been through.
According to Barton, the experience of the
scandal taught him some important leadership lessons. One was to be “completely
open” in such a situation. “I had [heard] advice that ‘you had better not say
very much; wait until you find out more.’ But my view is that I’m just going to
say how I feel…. If you’re honest and authentic, people pick it up and know
that you’re serious about it.” He said he actually communicated much more about
the event than he tried to hide it in situations such as recruiting, for
example.
“I had splinters in my back from going over the bar so
often … and I finally realized, you know what, I’m going to set my own bar. And
I’m going to make it higher than theirs.”
The second lesson, said Barton, was to
spend time understanding what really happened. “[McKinsey] has human beings; we
have people that do bad things. And we have to help each other try not to do
that.” He added that monitoring systems have been put in place: “If someone’s
more than two standard deviations off with a peer group, they get audited. It’s
automatic.”
A ‘Student of Leadership’
“I’m
a student of leadership. It’s an amazing opportunity in this role,” said
Barton, stating that for the past six years, he has met with at least two CEOs
or government leaders every day. He identified some common themes that emerge
when CEOs reflect on their careers, which in Barton’s experience cuts across
regions, industries and functions. One is that they would have “moved faster on
people … taken people out faster, moved them up faster and spent more time on
people…. I’ve not heard a single leader not say
this [among] those that are toward the end of their career,” Barton said. He
also noted that many CEOs express regret about not having been more ambitious
for their organizations. From his own experience, he said, it takes a couple of
years to get used to being in the role, but “if you don’t get moving, your time
is up.”
Another theme Barton identified from
talking with CEOs is the importance of mentally compartmentalizing. “You get so
many issues coming at you, and some of them can paralyze you.” He related a
story from a Liberty Mutual CEO who told him, “‘In my first three weeks of my
job, I would have kicked you out of my office.'” The CEO explained that at that
time, he had been told by his general counsel that the company was being sued
for $6 billion, and that everywhere he looked, all he could see was $6 billion.
“Now, he said, ‘I’m talking to you, and I have six of those [issues going on
right now], but I’m focused on you.'”
“McKinsey & Company is about trust. At the end of the
day, if people don’t trust us, we can’t work. So this was a very big deal.”
Taking Your Own Medicine
“I think we’re very good at telling our
clients what they should do, what medicine to take. But we don’t like taking it
ourselves,” Barton said, on the subject of innovation and modernization at
McKinsey. But these areas are big priorities for him. He noted, for example,
that the firm is becoming more involved with technology, in ways such as
providing software to clients and investing in, or building, technology
companies. “We are partnering with people we never would have partnered with
before. It’s only 12% of our activity now; I’d like it to be 40%. I think we’re
on track to do that in the next three years.”
Barton also spoke about his concerns that
McKinsey stay “relevant” in the global economy. The economic power is shifting
to Asia and Africa, he said, and it is “happening fast.” He noted that his
colleague Vikram Malhotra, McKinsey’s chairman of the Americas, has been a
major driver of the firm’s awareness about this even though he runs the North
American practice. “Vik is the guy saying, ‘What are you doing in Africa, what
are we doing in China, India, hiring people, building it.'” Barton added, “I
worry that we need to move faster. That’s why we need to innovate…. If we don’t
challenge ourselves, we’ll get challenged in a big way.”
Image: “Dominic Barton” by World Economic Forum from
Cologny, Switzerland – Plenary Session – Growth & Drivers – World Economic
Forum on East Asia 2009. Licensed under CC BY-SA 2.0 via Commons –https://commons.wikimedia.org/wiki/File:Dominic_Barton.jpg#/media/File:Dominic_Barton.jpg
