| A curated business roundup |
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December 7, 2018 |
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| Weekly need-to-know content |
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| Welcome to the Shortlist: new ideas on timely topics, plus a few insights into our people. Subscribe to get it in your inbox on Fridays. Scroll down for highlights from McKinsey.com and to see what Joanna Barsh, an expert on leadership, is reading. |
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| Think of all the ink spilled over the early days of a CEO’s tenure—the first year, the first 100 days, the first week (just kidding). Or the end of a chief executive’s run, focused on legacy and the search for a successor. But what about the middle years of a CEO life span? (The average CEO tenure, by the way, is about six years.) |
| McKinsey asked accomplished CEOs of large-cap companies what drove their performance in early years versus later ones and what they wished they’d done differently in between. Participants were intrigued; most hadn’t thought about their middle years as a distinct act in their drama. |
| But when they did, they had a lot to say. One recurring theme was not to let ambitions slide after the first year. In fact, cranking up the intensity level can help keep organizations from falling back into the “old normal.” That may mean casting a skeptical eye, even on cash cows. Gordon Moore and Andy Grove, who led Intel in the 1980s and 1990s, famously imagined getting fired and asking themselves what a new CEO would do. Their astonishing (but correct) answer: get out of memory chips—the technology that had defined the business. |
| A new CEO’s strategy can energize an organization. But when the veneer starts wearing thin, a shift to operational thinking is in order—fixing broken processes and breaking down silos. This also applies elsewhere in the C-suite. Chief financial officers, for example, have substantial room to grow as change leaders—not only within the finance function but also company-wide. |
| The way CEOs think about talent is also a little surprising. It turns out that the stereotype of the new CEO—choosing a top team in the first six months or year, then sticking with those folks—doesn’t reflect reality. High-performing CEOs recognized when they needed a different talent mix and acted accordingly. |
| Leaders also start thinking more broadly about talent in their middle years, expanding their focus beyond the top team. Research repeatedly shows that people deliver their best when they feel part of something larger than the pursuit of a paycheck. CEOs who provide a road map for aligning employees’ personal aspirations with organizational goals create a winning combination. |
| Relatedly, top CEOs create mechanisms for communicating dissent and disruptive ideas. While leaders say people around them may initially be open about what needs fixing or where opportunities lie, objective viewpoints get harder to find over time. |
| Frank Blake at Home Depot is a good example. He determined early that some store formats weren’t working and found many of his subordinates happy to offer proposals. He rejected most, settling on a handful. But by the middle of his tenure, he wasn’t seeing many new ideas and inferred that people had decided what he would and wouldn’t like. To restart the flow, he eschewed some high-level meetings in favor of visiting store associates on the front lines. |
| Finally, CEOs tend to make bolder long-term moves in their middle and later years. By then, they’ve built not only leadership capital but also a deep knowledge of the business. Having learned the hard, early lessons, some CEOs wake up one day with an epiphany about how to change the trajectory of their business—a fitting plot development in any Act II. |
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| OFF THE CHARTS |
| Fashion’s year of awakening |
| Fashion companies must come to terms with the fact that the old rules no longer apply. Our new report, The State of Fashion 2019, suggests fashion players need to be nimble, digital-first, and faster to market. Now.
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| The consequences of falling behind are dire, as the recent consolidation of industry profit shows: the top 20 fashion companies now account for 97 percent of the value created in the industry, compared with 70 percent in 2010.
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| Interview |
| ‘This is not just a Google problem’ |
| In an increasingly digital economy, even basic job qualifications now include more technological skills. Jacquelline Fuller, president of Google.org, shares how her organization is preparing people for the future of work. |
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| MORE ON MCKINSEY.COM |
| Mind the gap in earning power for African Americans | Efforts to ease workers into an automated future could wind up worsening existing racial disparities in income, opportunity, and wealth in the United States. But retraining in just five occupation categories could mitigate nearly 60 percent of the risk. Plus, check out this interview with the article’s authors.
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| The new frontier in renewables | The renewable-energy market is transitioning into its next, and riskier, phase. Governments will begin abandoning subsidies, leaving developers fully exposed to wholesale prices. Here’s how to navigate this new frontier. |
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| WHAT WE’RE READING | Joanna Barsh |
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| Joanna Barsh is now director emerita of McKinsey after 20 years as a senior partner. The best-selling author of How Remarkable Women Lead, she served on Secretary of State Hillary Rodham Clinton’s International Council on Women’s Business Leadership. |
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| I’m loving Calypso by the scathingly funny David Sedaris. I needed a pick-me-up from reading the news! David’s family is both dysfunctional and loving—just a bit more extreme than mine (well, maybe much more). I get to chuckle and scratch my head at each turn of his pen. |
| Speaking of short-story writers with dark humor, I’m hooked on Etgar Keret. His writing is even more disconnected from reality, a welcome relief from the dystopia of our world at times. I just know I will shrink as I age to fit in my daughter’s pocket and go everywhere with her. And if you don’t get the reference, read The Bus Driver Who Wanted to Be God and Other Stories (or was that in The Nimrod Flipout?). |
| I just finished Rick Nason’s It’s Not Complicated, about how traditional ways of thinking are no longer effective in our evermore complex business world. I enjoyed the book so much I called Rick to talk about my research on diversity. Simply put, there are challenges that are hard to define, where there is no right answer or stopping point, and where things change constantly. If that sounds familiar, read this book. |
| In the same vein, I’m making my way through Scott E. Page’s The Diversity Bonus, about how diversity of thought trumps homogeneous intelligence when it comes to really hard problems. If you've got a tough challenge (take mine, please!), assign a diverse team. I liked Katherine Phillips’ chapter on how racial diversity makes for a better jury no matter what. |
| When I’m really in need of escape, I turn to E.F. Benson’s Queen Lucia series from the 1920s and ’30s. Superbly written and pure fun. The worst thing that ever happens to Lucia is being found out for not really knowing Italian. Lucia is a powerhouse of a woman who alone can strong-arm her village into the 20th century. Indeed, Lucia was born in the wrong times: today she would be a CEO! |
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| BACKTALK |
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