McKinsey’s Dominic Barton talks about the new geopolitics, cannibalization, and the global shift in economic power.
As global managing director of McKinsey, Dominic Barton talks regularly with the CEOs of the world’s largest companies and leaders of nations worldwide—they’re clients of the elite management consulting firm, which serves some 90% of the Fortune 100 as well as nonprofits and governments. Barton thus gets an unparalleled inside view of what global leaders are doing—and how the world’s business climate is changing. McKinsey itself is a leadership factory, whose alumni have become CEOs of American Express, AT&T, Boeing, IBM, and dozens of others. Barton, 52, talked recently with Fortune about the trends of most concern to leaders now, how infotech is forever changing their jobs, and much else. Edited excerpts: What are your clients’ worries right now? They’re pretty consistent around the world. The big one now is geopolitics. Whether you’re in Russia, China, anywhere, the assumed stability that was there for the past 20 or so years—it’s not there. The second is technology, which is moving two to three times faster than management. Most CEOs I talk to are excited and paranoid at the same time. Related to that is cybersecurity: The amount of time and effort to protect systems and look at vulnerabilities is big.
A fourth trend is the shift in economic power, with 2.2 billion new middle-class consumers in the next 15 years, and it’s moving to Asia and Africa. Do you have the right type of people in your top 100? Are you in those markets? Those are the four big ones we see everywhere.
Which companies have done a good job dealing with those challenges? Look at Samsung. No one knew the brand in 1999. They were seen actually as a Japanese company [it is South Korean]. They certainly were not a high-end consumer electronics brand. In three years they said, “We’re going to change.” While achieving record profits, the chairman is pounding it out there to say, “We’re not moving fast enough.” And this was a chairman who at one point said to his organization, “Next year I want you to be willing to change everything except your spouse and your children.” It’s a mindset.
Lenovo—look at its organization model. It’s a global leadership team that makes decisions at a far faster rate than many of its Western peers. It’s part of the culture.
And everybody’s seeing their business model disrupted. If you were in the S&P 500 in 1935, your average lifetime as a big company would be 90 years. And I worry about that because McKinsey’s coming up to our 90th anniversary. In 2011 the average lifetime if you were in the S&P 500 was 18 years. So the churn rate of companies is going up. A lot of the changes are attacking your existing model, so you have to cannibalize yourself. You have to make business-model disruption part of your performance metric.
Computers are doing a lot of things that managers used to do, sometimes better than managers can do them. That trend will only accelerate. What happens to the role of the business leader? You need leaders to help the machines figure out what questions you’re focusing on. If you don’t understand the business issues or questions to ask, you can crunch all sorts of interesting things and it won’t deliver. There are also judgment calls that need to be made. Machines are getting smarter at analyzing masses of information, but in a world that’s more volatile, judgment is going to be at a premium.
This story is from the October 27, 2014 issue of Fortune.