Inside the Strategy Room
33. How new CEOs can manage for the future
Jan 13, 2020
McKinsey senior partners Carolyn Dewar and Michael Birshan discuss the dilemma faced by new CEOs: focus on short-term results or invest in long-term future. They highlight the benefits of a long-term perspective and share research on company performance. They emphasize the strategic reallocation of capital and resources, including human capital. The impact of digital on traditional retail and the importance of building platforms and networks are explored. The challenges and necessary skills to succeed as a CEO are also discussed.
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Quick takeaways
- Companies prioritizing a long-term perspective experience higher revenue growth, economic profit, and job creation.
- Successful CEOs pivot from short-term gains to long-term growth by implementing strategic moves and realigning organizational structure.
Deep dives
Long-Term Orientation Leads to Greater Success for Companies
Companies that adopt a long-term orientation tend to outperform their peers on various metrics. They experience 47% more revenue growth, 81% higher economic profit, and create more jobs. Long-term firms also show greater market cap and earnings growth. The pressure for short-term performance has been increasing due to factors like activist investors. Research confirms that companies prioritizing the long-term perspective reap significant benefits in terms of performance and value creation.
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