BackIndia needs to rethink how it skills its workers: Dominic Barton
McKinsey's global managing director speaks on India's role in the global practice, the challenges for the firm and what he hopes to see from the govt
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Dominic Barton, global managing director of McKinsey and Co., in town with the firm’s newly elected senior partners, spoke on India’s role in the global practice, the challenges for the consultancy firm and what he hopes to see from the government. Edited excerpts from an interview:
What is the role of McKinsey India in the global practice?
It’s a very important practice. We have five locations here and about 3,000 people. That’s the second largest after the US, and it’s growing. It’s not just the client base here that’s doing exciting things, it’s the people. It’s always been a source of talent for the firm, not just for India but globally, and that’s just increasing with this new digital world where we need mathematicians, engineers. India is just loaded with amazing talent—you see Indian colleagues all over the world leading our practices. So it’s both the client and the talent.
What sort of innovation do you expect to see out of India?
Capability building and skilling—it’s a part of India’s challenge. There’s got to be a rethink on skilling workers, especially in this technology age, because if we don’t get good reskilling we’re going to be in difficulty. And in India, given the urbanization and so forth, the problem is compounded fivefold. I’m convinced this country will figure it out. So this is the place for us to figure it out. Education reform, I’d expect us to drive that from here. Innovation in that area means really high quality, very low cost and mass, to get people there. Other areas where we can see work from India include consumer goods, media, retail, consumer—it should be done here. Anything that has lots of consumers, this is the place I’d look to.
There’s increasing competition today. How do you maintain your premium with others also snapping up the kind of talent you go after?
We have to take our own medicine like we tell our clients. It’s happening for sure to us. That’s why our pace of change has to go up because that commoditization of consulting—many, many more MBAs, many more people hiring our own people—it’s happening. So coming in like we used to 30 years ago with some new piece of strategic thinking, everyone’s going to laugh at you, they won’t even buy you lunch for that.
What we have done is a couple of things—capability building; (and) the other thing that’s different is much more of our fees is now completely results-based and I love it. We have a culture that’s distinctive about impact about how we get people to focus very quickly on delivering results. It’s not just about putting documents together. We will be paid if we deliver a result. If we say to a client “we found $100 million in ebitda (earnings before interest, taxes, depreciation and amortization, or operating profit) performance. It’ll cost you $9 million to be able to get that $100 million but we get zero if you don’t get it, we get nothing." That takes a lot of guts to do, but we are so keen on doing that. What we do in that, while we have our fees at risk, there’s an upside as well. That’s where you can see in our balance sheet if we’re having an impact or not. That’s a big shift from when I joined.
There’s a new government in India. Your views? What are you hearing from your clients? Do they want to come do business here?
I’m very positive. Before they were elected I was telling people “don’t bother, just don’t waste your time, it’s just too convoluted, you’re just going to get a headache" and I love India, but I was beyond a point of frustration. With (Prime Minister Narendra) Modi coming in and all that he wants to do, I’m very excited. I’m still excited, but it’s more that we need more real results. People recognize how difficult it is to change. There’s a democracy here, things work in a way.
But I’ll say a couple of things: this whole digital technology, with Modi being in Silicon Valley, the guy is getting the message out there. This is a source of global talent and he embraces it; he’s not a luddite. The commitment to structural reform, I have no doubt is there. The challenge there is how fast you can get it done. That’s where there’s a tiny bit of frustration. I know its not easy, but, boy, I’d love more infrastructure investments to be made in particular.
There’s also a notion that there seems to be a bias towards innovation, we want people to make in India. People feel that’s a very good approach. There are a lot of challenges in India with inequality, so the programme to build toilets is a big deal, development means development for all, and he’s pretty serious about that. I feel very positive. It would just be great if there were more landmark changes, but I don’t underestimate the political environment.
These are globally turbulent times. What is your advice to companies on how to prepare for the world we live in?
There’s so much volatility and disruption, you have to have a microscope in one eye and a telescope in the other because you’ve got to be aware and immediately deal with short-term disruptions because they could shut you down. For instance, you could have a supply chain problem because of a climate issue or a trade issue or pricing issue of a commodity, but you also have to have a long view because if you’re just focused on that you might wake up and find that you’re irrelevant. Where are you trying to get to over the long term, what markets do you want to be in, what type of services do you want to develop for your customers over time. Tail risk: are you spending time thinking about tail risk? I’d also call it tail opportunity. And tail risk is not the black swans. It doesn’t have to be a macro environment. It could be something that happened outside your industry.
For instance, if you’re a cardiac surgeon in the US right now and your doing really well, the driverless car, you may not know it, is going to completely disrupt you, because the majority of the hearts for the heart transplants unfortunately come from car accidents. And your supply chain has just been decimated. You need to be on that tail, thinking about cross sectors because the competitors may not come from that sector that you’re in. They may, more and more, come from somewhere else. The question to keep in mind is how many hits can you handle without going down as a ship?
You may need a little more capital, I wouldn’t be leaning out my balance sheet too much, I’d be thinking about my talent—how deep is my talent, what’s my rate of innovation, do I have a machine coming up with enough ideas to move things along? Because if not, you very quickly can get displaced. At the same time, you’ve still got to keep an eye on where do we want to be, what type of work want to be providing.
Is this a standard way of doing business now? No more hourly billing?
That’s the classic way we do it and a lot of our clients still like that. In a strange way, we’ve educated clients that this is almost like a law firm, it’s leveraged labour. For instance, we have a methodology for very, very quickly turning around the performance of a troubled business. Because we have methodologies, we have intellectual property, yes we have people too, we have software. It’s the results that matter, not how many hours—did people spend five days a week, who cares, that’s old school. But we are the problem because we created that. We have to move away from it. And then we have to see what happens when we become scarce. That’s what I’m keen to see. This is a bet to the commodity play.
What else would you like to see on the ground from the government apart from infrastructure?
Infrastructure is the big one. Let’s get the roads built and that creates jobs and that allows ag-food to work, that’s the big one. I’d be quite singularly focused on pounding that. There’s a lot on the skilling, education reform. We’ve got such a young work force which is a huge asset given how the rest of the world’s ageing, except Africa, so skilling this young population that’s coming in so they get jobs. And I just don’t believe it can be done with the old education where we write our notes. We can teach people code in six weeks. Education reform, we’re running out of time on that. On ag-food, this should be the breadbasket of the world just by the climate and we waste so much food and that’s an area to drive.
Can India become a hub for consulting? The world is very global yet very nuanced and cultural. So, can McKinsey and the consulting world head in that direction?
Sometimes people ask me where’s the headquarters of McKinsey, and I say I don’t know. Because there are at least six and India is one of them just by the definition, given the scale of what we do here—we have centres of excellence here, our research and information arm is providing a lot of the data analytics, the risk management systems for development and stress testing for US banks is done here. It’s the advanced analytics, high-end work that is done here and that’s just going to grow.
What percentage of your revenue is from India?
We don’t talk about it, but it’s important. We’re in 62 countries, so we’re pretty spread out, but India is pretty important, and will continue to grow at a good pace.
What are your plans for India?
India is an innovator for the firm. When I was in the Asia role, I would come here once a month at least. Partly to serve clients, but it was also to find out what people were doing because Noshir (Kaka, India managing director) and Adil (Zainulbhai) before him had a model of “ask for forgiveness, not permission". They experiment. They’re doing a lot of innovation in the firm. we are going to do more data analytics here. It’s become an MGI (McKinsey Global Institute) hub. The NDER report. We didn’t decide that in Washington. It’s the group here. I expect us to be relevant here because if we’re not, we’ll be irrelevant in the world.
Capability building, leadership, advanced analytics, software, restructuring practice—these are all part of the global practice and we’re doing that in India as well.
How do you hang on to talent? Is that a concern?
Our mission is twofold—to have lasting impact with our clients, and to attract, develop and retain outstanding people. What I hope makes it attractive for people is if you come here we will make you a global leader. And we’ll do it very quickly. Take people and turbo charge them. And part of it is apprenticeship. What we’ve got to do in a better way is an integrated life because this work can become all-consuming—so making sure there’s a sense of balance. There are people who will just work all the time and they’ll like it, but they’re actually not very effective leaders at the end of the day, they’re boring. They’re not interesting, they’re not people you want to spend a lot of time with. The numbers I look at the most are twofold—our offer accept rate (87%) and how many people are in leadership roles when they leave (455). That offer accept rate is about a 22-year high.
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