Good morning,
As economic uncertainty continues, “the best CFOs are actually seeing this current environment as an opportunity,” Ishaan Seth, a senior partner at McKinsey & Company’s New York office, told me.
As Seth works with financial services and private equity clients, including investment banks, retail banks and brokerages, I asked him what he hears in conversations with finance chiefs. “If there was one thing to point to that I'm hearing every one of my CFO clients talk about, it’s that the degree of volatility and uncertainty in today's market is really quite unprecedented,” he says.
“A new McKinsey report highlights the biggest challenges and opportunities CFOs are facing right now,” details my conversation with Seth about the firm's research. Creating a road map to thrive during these times requires CFOs to have a mindset shift from traditional tactics, he says.
“Having a mindset of being incredibly aggressive and bold on the upside while absolutely continuing to manage the downside is something we see the best CFOs doing,” Seth says.
How are they being bold? By building an edge on insights, commitment, and execution, Seth says.
“In boldness around this idea of insights, we are seeing the best CFOs pushing hard to get better information from a more diverse, non-standard set of sources than ever before,” he explains. “Relying on conventional data, conventional analysis, and the common ways of doing things is not going to hack it in this environment. I’ll give you an example. A bank brought together probably 75 or so chief country officers from all of their global markets.”
He continues, “They put them in a room for two days and said: ‘We've got people here who understand China, Brazil, India, Germany, and that are talking to clients, regulators, and suppliers and have different sources of signals on everything from inflation to wage rates to payment flows. But we're not tapping into this. How can we take all this wonderful information and harness it in a way that we as a company can get this kind of wisdom much more quickly?’”
Another example? “Looking beyond your own industry,” Seth says. “I was talking to a CEO we've been working with quite extensively through the pandemic, and they've been trying to figure out the best way to set up a hybrid work model. How do we return to the office in a way that really gives us a differentiated advantage in terms of days working at home and onsite? And their source of learning was outside the industry.”
He continues, “They actually convened seven or eight senior executives from across industries, such as technology, retail, and pharmaceuticals, to meet on a monthly basis and hear how they're dealing with these issues. What are the real estate decisions they're making? What are their policies on vaccination? How are they thinking of new uses of technology with clients in this domain?”