Dominic Barton, McKinsey’s managing director, argues that capitalism is endangered unless business leaders take steps now to “modernize” the system. This “precious machine” and “the best economic system” requires both popular and political support.
Barton spent 18 months talking to 400 business and government leaders around the world to develop his Harvard Business Review article, “Capitalism for the Long Term.”
McKinsey has posted videos of Barton discussing his ideas as well as articles to encourage others to engage in the discussion. “There’s a lot of things that business leaders can fix,” Barton says in one short video. “We don’t need the government to tell us what to do but we need to get out there and move on it.”
Moving on it requires adjustments, shifting from a quarterly to a long-term focus, serving stakeholders while building value for shareholders, and strengthening governance.
Pointing to the increased complexity of business, Barton observes that the current governance model was developed for another time 30 years ago. The most shift is that directors need to spend more time on board work to understand the business well enough to provide strategic advice. He points out that boards of private equity firms spend about 74 days a year; corporate boards spend 15-20 days, too little to provide the strategic help that companies need in a competitive, global and 21st century environment.