Technology, talent, decarbonization—we explored these and many other topics this year on The McKinsey Podcast. A range of McKinsey partners joined us on the mic and offered their perspectives on the pivots that global business leaders have made to compete more effectively. On this episode, we revisit a few of those discussions and offer quick takes from McKinsey partners on what has mattered most to CEOs and other C-suite leaders over the past 12 months.
Also, McKinsey senior partners Kweilin Ellingrud, Sven Smit, and Yuval Atsmon talk about their choices for McKinsey’s 2024 book recommendations.
This transcript has been edited for clarity and length.
The McKinsey Podcast is cohosted by Roberta Fusaro and Lucia Rahilly.
Roberta Fusaro: Hello, Lucia.
Lucia Rahilly: Roberta, hello.
Roberta Fusaro: I was just reading about agentic AI. The idea of an AI system that has agency, the ability to make decisions without human intervention, is kind of blowing my mind.
Lucia Rahilly: I bet you were reading our recently published article “AI for IT modernization.”
Roberta Fusaro: I was. It turns out many Fortune 500 companies have antiquated software systems, like 20 or more years old. And without modernizing, they can’t use cutting-edge technologies like agentic AI and others, and there’s a big risk they’ll be left behind.
Lucia Rahilly: It’s a brand new world! Actually, truly. Especially when it comes to geopolitical upheaval. It’s on the minds of so many global leaders these days. McKinsey just published an article called “A proactive approach to navigating geopolitics is essential to thrive.”
Roberta Fusaro: It’s a great piece that talks about how business must seek and seize opportunity in the face of geopolitical disruption. Both of the articles we mentioned are, of course, online and in our show notes.
Quick takes from 2024
Lucia Rahilly: It’s been a year, hasn’t it? It’s like before gen AI and after gen AI.
Roberta Fusaro: Yes! It seemed as if in an instant the world of business was transformed.
Lucia Rahilly: On The McKinsey Podcast this year, senior partner Lareina Yee had some really interesting things to say about how to build and use AI responsibly.
Lareina Yee: How we think about responsible AI isn’t a moment. It’s actually embedded in the way we develop our business plans, in the way in which we build, configure, and test the solutions, in the way in which we implement it and continue to get feedback, and in the way we have strong compliance on the back end if there was a mistake made.
Roberta Fusaro: And digital leader Eric Lamarre, coauthor of Rewired, said business should be ready to scale AI systems thoughtfully.
Eric Lamarre: We are now entering the phase of how to build organizations that can scale digital and AI innovation across all their processes. So the next ten years are the years of the platform-operating model that allows many agile teams to innovate in a way that is coherent.
Lucia Rahilly: And who will lead the way through this type of innovation? The CEO, of course. Senior partner Liz Hilton Segel says leaders have to get on that front foot to stay competitive.
Liz Hilton Segel: Most businesses are being disruptive and disrupted in some form today. And as an organization, if you’re not clear on how you’re building new muscles to compete differently, odds are you’re going to be left behind.
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Roberta Fusaro: Competing differently could include CEOs leaning on their CMOs to help craft strategy. McKinsey partner Robert Tas says in 2024 that wasn’t happening often enough.
Robert Tas: One of the troubling things we saw was that CMOs were being moved to executors of the strategy rather than being the ones to help create the strategy. In order to make it work really well, CMOs need to be at the table doing both. They need to have a voice in shaping strategy.
Lucia Rahilly: Shaping strategy is just one of the many responsibilities CEOs have. Senior partner Andrew Goodman says that to avoid feeling overwhelmed, many CEOs turn to their chief of staff, to help organize their priorities.
Andrew Goodman: This idea of two or three being your “tuxedo agenda,” the outward-facing priorities that you have, and two or three being your “pajama agenda,” things that were inward facing and about how the company or organization works—I really liked that idea as a way of thinking about priorities.
Thoughts on talent
Roberta Fusaro: In 2024, we talked a lot about talent. Senior partner Kate Smaje said that your people are the key to innovating with technology.
Kate Smaje: The organizations that are able to get some form of human breakthrough, not just the technology breakthrough, tend to be those that are moving ahead faster. Really thinking strategically about the future of work and what roles and so on we need the human to do when that organization is fully tech enabled.
The organizations that are able to get some form of human breakthrough, not just the technology breakthrough, tend to be those that are moving ahead faster.
Lucia Rahilly: As we look ahead to a much more tech-enabled future of work, what matters most to talent, especially gen AI talent? Senior partner Aaron De Smet says it’s the soft stuff.
Aaron De Smet: Some of the factors that make the biggest difference are having caring leaders, meaningful work, flexible work, feeling a sense of inclusivity and community … and feeling valued by leaders and by the organization.
Roberta Fusaro: Feeling valued sounds good to me. A big part of that for many is feeling included at work. Senior partner Alexis Krivkovich says diversity should be on every CEO’s to-do list.
Alexis Krivkovich: Let me give you one example every single leader can do. Get out a piece of paper, write down a list of the people you think you’re sponsoring and mentoring, and then grade yourself on how diverse that list is. Many leaders will find that the list is not balanced. It’s more reflective of their own journey and the people they think they can most naturally coach and support.
Lucia Rahilly: And let’s be real. Most leaders are men. There’s still work to do. And senior partner Lareina Yee says the research shows that women are at-the-ready.
Lareina Yee: Women may pause a beat to let someone else express their view. They may pause a beat in politeness to let someone else raise their hand. That doesn’t mean their hand isn’t raised because, actually, you weren’t looking. Their hand was up the whole time.
Roberta Fusaro: Speaking of hands. We needs lots of them. When it comes to global productivity, senior partner Olivia White says we need as many people as possible working as efficiently as possible because the global population is aging.
Olivia White: And that means most parts of the world are going to have a higher dependency ratio going forward. To support such a society, everybody working needs to generate more output per unit of labor because they need to be able to cover everybody.
What about consumers?
Lucia Rahilly: I suppose it makes sense that with an aging population, wellness is on many consumers’ minds. In fact, the demand for wellness products is growing. McKinsey research says wellness is a $1.8 trillion industry worldwide. McKinsey partner Anna Pione noted that compared with 2020, consumer priorities have changed.
Anna Pione: What we were really surprised by when we first did the research back in 2020 is that “clean and natural” was actually beating out clinically backed products in many subcategories. . . . And in the more recent research we saw, it’s moving much more toward clinical effectiveness and science-backed being the most important priorities that consumers have.
In the more recent research we saw, it’s moving much more toward clinical effectiveness and science-backed being the most important priorities that consumers have.
Roberta Fusaro: Senior partner Sajal Kohli said companies must study all the incredible data they have to understand exactly what the consumer wants.
Sajal Kohli: I think retailers and consumer products companies should not forget they’ve had this longstanding relationship with their consumers, and the consumers have told these companies a lot about themselves. The question is, can you harness that to actually tailor your offerings and engage with these consumers in a different way?
Lucia Rahilly: In addition to understanding the changing tastes of consumers, at McKinsey, 2024 saw a real focus on decarbonization. Here’s senior partner Mark Patel talking about an approach to removing carbon called enhanced rock weathering.
Mark Patel: The principle of enhanced rock weathering [ERW] is when you spread rocks on soil; the rocks—generally in the form of dust or very small rocks—weather naturally and, in so doing, have the effect of storing carbon, which then naturally gets washed out through the soil.
The application of spreading rocks or rock dust onto soil for fertilizing purposes is centuries old, but most folks didn’t naturally attribute it to large-volume removal of CO2. A number of companies are now embracing ERW and pursuing it.
Roberta Fusaro: Carbon was certainly top of mind at this year’s UN Climate Change Conference, or COP, where attendees reached an agreement on carbon markets. McKinsey partner Alexis Trittipo says climate change needs to be a focus heading into 2025.
Alexis Trittipo: There’s a real recognition that we need to do both adaptation and mitigation at the same time at this COP, and that’s a really important message for us to take forward. We’ve seen flooding in Brazil, in Spain, in Germany. We’ve seen two hurricanes off the coast of Florida, for example, that would have had major impacts. We’ve got to have real talk about it. How do we build a better infrastructure? How do we change behavior? How do we monitor and better understand what’s going to come?
A reading list for the new year
Lucia Rahilly: Predicting the future is something inventor and author Ray Kurzweil is known for. His new book, The Singularity Is Nearer, had a big impact on senior partner Yuval Atsmon, who chose it for McKinsey’s 2024 book recommendations.
Yuval Atsmon: I was a big fan of Ray’s previous work. Twenty years ago he wrote The Singularity Is Near.
And as you can imagine, the new book talks a lot about what has changed over the last 20 years. Ray continues to be tremendously optimistic and excited about all the things technology can and will enable us to do. He continues to remind us of the incredible power of the exponential evolution of technology. Things we think are still quite far away, doubling every year or two in capabilities, can actually be a thousand times better within a decade or two and a million times better within two or three decades.
Kurzweil is one of those people who can imagine things that we can’t. The subtitles of the book actually talk about us merging with AI or with technology. The ideas feel very science fiction: like our ability to upload ourselves to different forms and operate in one space with everything that we think is us and with all the cyber capabilities that are available on a cloud or otherwise. He suggests it could happen within, in some cases, our lifetime, or at least the lifetime of our children. I don’t know that everything in the book persuaded me. I think on the path to the most exciting vision, there’s still a lot of challenges that we need to surpass collectively as a society.
But I find it incredibly powerful to go through some of these books that have that power of imagination, based on real scientific capabilities. And Ray has a tremendous track record of having made good predictions over the last 50 years.
Roberta Fusaro: Senior partner Kweilin Ellingrud recommends the book Tribal Leadership, Leveraging Natural Groups to Build a Thriving Organization, by David Logan, John King, and Halee Fischer-Wright.
Kweilin Ellingrud: What I really enjoyed about the book is it was a great combination of deep research and database insights, as well as stories about specific companies and leaders and cultures. Some of the key insights that struck me most about the book are that a tribe or a team is a group of 20 to 150 people who know each other well.
Small companies are made up of a single tribe, usually, and large companies have different groups of tribes, or tribes of tribes. What makes some tribes or teams more effective than others is all about culture. And the language and behavior used within that culture matter a great deal. That’s what actually helps tribes or teams operate more effectively.
The book defines five stages of effective operations. Level one is less effective than level two, et cetera. Level one is described or defined as despair. It would be where people are either thinking or saying, life sucks. Level two is more victim oriented, and people may be thinking, my life sucks.
Level three is more lone warrior, with people thinking, I’m great, but you’re not. And level four feels like a great team. Things are working well. And people may be thinking, we are great, and they are not. There is a bit of an “other” there. Level five is defined as wonderment, where people are thinking life is great.
Most organizations never achieve level five or, frankly, even level four. I would highly recommend the book Tribal Leadership.
Lucia Rahilly: Senior partner Sven Smit has not one, but two recommended books this year.
Sven Smit: The first one is God’s Debris by Scott Adams, the author of the Dilbert comic strip. The book, however, is not comical at all. It discusses many angles of the meaning of life, ranging from people who think that we live in a simulation, or we live in the aftermath of God, or we live under God in various ways. It’s a conversation that I followed in many different ways, whether it’s Gödel, Escher, Bach, and other forms of philosophy and science combinations. And I love many angles to this and appreciated this particular angle.
The second book is called Lifespan: Why We Age–and Why We Don’t Have To, by David Sinclair. It discusses the idea that we might live much longer because we’re starting to find the keys to aging and also how to turn those keys to our advantage.
It does give me the feeling of optimism that maybe my young daughter will make it to 150 with a reasonable probability, while that’s probably not in the cards for me. But if you look at my two suggestions, they’re a nice spectrum from the meaning of life to the duration of life.
Happy reading to you all!
Roberta Fusaro: Yes! Happy reading to you all. Our show notes include a link to our 2024 book recommendations. There’s a range of suggestions for all sorts of tastes.
Lucia Rahilly: And a very happy holidays to you from all of us at The McKinsey Podcast. See you in the New Year.
