ET GBS: Innovation is vital to survive disruption, says McKinsey & Co's MD Dominic Barton

NEW DELHI: “Innovation is absolutely critical given the disruption sweeping across companies,” Dominic Barton, managing director of McKinsey & Company, said at the Airtel-Economic Times Global Business Summit on Friday.

“If you are not thinking about what parts of your business are going to change in two years from now, you may not be around,” Barton said in his opening address, at which Prime Minister Narendra Modi was chief guest.

He said up to 40% of what McKinsey will do in three years will be entirely different from what it does today.

Barton said companies will soon need to appoint a chief digital officer (CDO), much like the chief financial officer, which came into existence in 1962. “If we don’t have a CDO to manage all the data, which is different from CIO, it is going to be difficult,” he said. Barton’s speech was titled “Winning Strategies for Corporations in Today’s Volatile Business Environment.”

Barton, a Canadian who helped the consultancy weather the worst crisis in its 90-year history, said typically, 90% of profits are earned by the top 20% companies.

“The most exceptional organisations over time are those that reallocated resources 10-15% a year.

That is very difficult to do. In my 30 years at McKinsey, I have never seen a business unit and client come forward and say we’d like less capital for next year. Everyone is growth-oriented. Those organisations are able to reallocate in a better way.”

Barton, who was elected by the firm’s partners to a third and final three-year term as managing director in 2015, said a lot of innovation is taking place in India and China. However, India remains better positioned to tackle the wave of changes sweeping across the business world, according to him.

The final point Barton made was that it is very difficult to make forecasts: “McKinsey is the firm that also predicted in 1991 that the total demand for cell phones will not be more than 75,000.”