In order to reinvent others, McKinsey reinvents itself

  • Wants companies to focus on implementing digital and analytics solutions
  • Need for change goes beyond improving bottom-lines, up into nation-building


In order to reinvent others, McKinsey reinvents itself


"I CALL it McKinsey 2.0". Nimal Manuel (pic), managing partner, Malaysia, McKinsey & Company wants us to get to know the new, updated version of the Big Three consultancy firm he works for.

It's so important that McKinsey launched their inaugural Digital and Analytics Forum in Kuala Lumpur to press home their vision of the opportunities available to companies today.

"Fifteen percent of McKinsey's work today is work we didn't have three to four years ago. It's much more around the implementation of digital and analytics."

This is apparent from McKinsey's recent acquisition of VLT Labs, a Kuala Lumpur-based product development studio now operating under McKinsey Digital.

"By next December, (McKinsey's digital and analytics people) will make up about one-third of McKinsey's Malaysia Service."

Digitisation and analytics not an option, but a must

The push for McKinsey's transformation has been led by the market. "Innovation in McKinsey is driven by what we believe our clients need," explained Michael Gryseels, senior partner and leader of McKinsey Digital Labs, APAC.

"It's a reflection of a broader realisation in the business communities that digitisation and analytics is not an option, it's a must."

Nimal explained in detailed that there were four areas where McKinsey needed to reconfigure: Building their capability to do design work; improving development skills within the company ("we now believe all our consultants need to learn coding"); upgrading their analytics capabilities; and improving their ability to implement real solutions on the ground.

"If you take all of that together, that is now representing more than one third of our firm," pointed out Gryseels.

The writing on the wall

The sectors in the region that show the most growth are fintech, telecommunications, oil and gas and the retail sector, and the realisation that you are being disrupted can be an unpleasant surprise.

"Huawei rolled out the red carpet for us. TenCent asked, 'Who are you'?" recounted Mohd Khairil Abdullah, the CEO of Axiata Digital Services, during a CEO roundtable at the forum.

Axiata had visited the US$400 billion investment holding company in Shenzen to find out their plans.

What he learned was that they intended to strengthen their reach and grip through apps like WeChat, sharing their plans for their improved versions of phone calls and text messaging, and doing so that by understanding their customer - an advantage traditional telcos claim to have over their digital opposition.

Khairil believes his industry has now been well and truly disrupted and warns that 44% of jobs currently in the telco-as-a-utility industry will be lost in the next few years.

"Sectors who are first disrupted are the guys with the biggest burning platform and need to do something," said Nimal, pointing to oil and gas as a key example.

"What we found is that in those sectors where technology is disrupting them, they are the companies that move the fastest."

New environments with new ways of working

And now they can move faster than ever. "The cost of computing is 2% of what it used to be."

Apart from faster processors, there is now more data collected than ever, with 90% of the world's data having been created in the last two years. The demand and supply created by these two advancements have spurred the development of Artificial Intelligence and Machine Learning.

The benefits are beginning to be seen. Nicolaus Henke, the global leader of McKinsey Analytics and senior partner, explained that the telcos were now seeing costs savings of 15%-30% from digitisation, while for the banking sector, it's 10%-15%

But these benefits are only apparent when companies are set up to take advantage of the latest innovations. "Technology is not the bottleneck," said Nimal. "Organisations are the bottleneck."

"Within McKinsey we're building a capability of agile coaching and agile transformation," said Gryseels.

"(This) is to help our traditional more enterprise clients to adopt the ways of working of startups."

Apart from methodologies, they are also exploring new ways to problem-solve. "For example, we've been solving a wide variety of business problems through Design Thinking, hackathon style kind of workshops."

Ever the much-maligned powerpoint presentations may be falling out of favour, replaced by interactive prototype proof-of-concept demos.

"In five years from now, we won't just be an old and new McKinsey - we'll be a very new McKinsey across the board, that's my vision."

National opportunities and threats

However, Nimal cautions to not be distracted by the hardware. "Technology's the easy part," observed Nimal. "The harder part is the organisation and how I think about adopting this."

There are also broader issues at stake. "Once I overcome the first order challenge, then the second order challenge becomes critical: What do I do with my workforce?".

These staff risk losing their jobs if they are not reskilled, raising a country's unemployment levels and creating a digital gap if they are left behind.

This is one example of issues faced by the country as a whole if it wants to maintain its recent growth rate of 4%-5% per year.

"If you look at the next 20 years, we've got less babies being born. We've got less people entering the workforce. If we're wanting to expect the same level of growth, about 4+%, we have got to get more productive."

"So, if we want to sustain (this), we need things like digital, things like analytics""

Nimal concludes, "Malaysia as a country has got no choice but to adopt digital and analytics. If we don't, we'll be left behind."


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