These are no ordinary times. The venerable independent investment banks Lehman Brothers and Bear Stearns no longer exist. Central bankers and finance ministers are working in concert but struggling to keep up with events. China’s government is pumping hundreds of billions of dollars into the country’s economy. Chief executives in the US financial-services and automotive sectors have gone to Washington hats in hand.
Along the way, many core assumptions about the merits of globalization, markets, risk, and debt, long taken for granted in business, government, and academia, have come into question. One big shift already under way involves a far larger role for government in the economy, whether through outright ownership of former private-sector assets or tighter regulation. Also inevitable: massive changes in industry structures. Consolidation, effected either by bankruptcies or mergers, is already transforming financial services and seems bound to take place elsewhere as the impact of the credit crisis ripples through the real economy.
In this collection of articles by McKinsey consultants and outside contributors, we explore the managerial implications of the economic transition that has just begun. A critical theme running through much of the content is how to cope with the extraordinary uncertainty permeating today’s business environment. We have also distilled practical advice on issues—managing costs, obtaining financing, working with regulators, adjusting sales and marketing—that are more pressing and require fresher thinking than they did in past downturns.
Inspired leadership is urgently needed to renew the global financial system and avert a protectionist backlash or excessive regulation that could derail economic progress—especially in countries and regions emerging from poverty—or dampen the entrepreneurial spirit. Strong leadership is equally critical within organizations. Anxious employees, customers, suppliers, and shareholders are looking for a steady hand and clear, candid messages from corporate leaders, not for unrealistic pronouncements that may be overtaken by next week’s events. The world is watching.
Ian Davis
Managing director, McKinsey & Company