At the 2019 annual meeting of the World Economic Forum in Davos, Bain Worldwide Managing Partner Manny Maceda discusses how the company is setting new standards of excellence through diversification, sharpening strategies and building capabilities.
Read the transcript below.
BILL HOLIBER: Welcome. I'm Bill Holiber, CEO of U.S. News & World Report, at the World Economic Forum in Davos. I'm joined by Manny Maceda, CEO of Bain. Welcome, Manny.
MANNY MACEDA: Thank you, Bill. Happy to be here.
HOLIBER: So it's really interesting here in the mountains, beautiful snow and things like that. And we're talking business and geopolitics and capital, and so on. But when you think about 21st-century leadership, which is why we're here today, and the things that you need to look at to first understand all the disruption that's going on—whether it be around the world, whether it be around communities, whether it be social issues that companies have to deal with today, leaders have to deal with today, workforces, even citizens—
HOLIBER: And in your role as CEO, what are the sorts of things that you identified in the broadest sense?
MACEDA: Thanks, Bill. You said it's in the 21st century.
MACEDA: We actually think we're at a meaningful pivot in what the nature of firms are that happens every 40 or 50 years. If you go back where we've been for the last 30 or 40, we call that the shareholder value era, where often the primacy of getting your stock price, creating value in the company economically, was what defined the objective of a firm.
Preceding that was the days of the modern corporation getting built, the architecture, professional management—General Electric, General Motors, originally. Today's firms are different. There are a few factors that leaders will have to deal with. Number one, you have to be more mission centric. The objective is not just, what will I do to drive my share price? It's often, what is the purpose? How will I have a bigger impact in the world?
Number two, in the old days, you used to have a strategy choice, where you might be [thinking], I'll be lower cost, or I'll be more differentiated. Well, with the advent of all the technologies you have, you can be both. You can have scale—virtual scale—fast, and yet really know your customers individually, intimately.
Number three, we now live in a world of ecosystems. Where it used to be, you decide what's inside my company, who's my customer, who's my competitor. In today's world, to succeed you have to build a network, a system, of partners in your supply chain, in your technology—cooperators, in some cases.
Number four, you also now have to, in parallel, keep your first engine, your core engine, going—we call it Engine 1—as long as you can. But it used to be that you kept all your focus on that. Well, the great companies now, you have to simultaneously incubate and develop your Engine 2 and your Engine 3. Even in some cases, it means disrupting yourself.
So I call some of those things out, and there are a few more. And so what that means is the leader today has to wrestle with a different set of issues. And it's a much more complicated world, compared to "I just need to meet the needs of my shareholder."
HOLIBER: Right. Now that's a big part of the discussion that's been going on. You know, it's nice to talk about all the theory, right, and the thought leader conversations. But then it comes down to, how do you execute that?
The big thing now, which a lot of companies have been doing for years, but they're talking about it a lot more, is corporate social responsibility. And it would be interesting to know what some of the things are that Bain does to give back to the community.
MACEDA: Number one, we choose to donate 2% of our capacity pro bono to NGOs, to foundations, companies like Endeavor, Acumen. And we find that the best gift the company can give ... you know, we could write a check, but if we really believe in our product, Bain consulting is a valuable asset applied to an organization to sharpen their strategy, to build their capability.
So to be able to give 2% of our capacity, which last year was many tens of millions of dollars, we find that that's the right thing to do. It inspires our people. It inspires me. And we try to make a difference in the world.
Now, within our core—for-profit, you know, we are a commercial organization—to have a very large and growing practice helping companies actually take corporate social responsibility issues into the core of strategy, which is now valuable and real, whether it's for private equity firms, or creating social impact funds and finding that those actually often don't need an economic trade-off, or for companies that ... we're doing work with some companies to reduce waste, to make your supply chains more sustainable, to do more organic farming.
All of those are ways we can help. And frankly, if we're doing that, it's good business, because we are a going concern. But our people are more inspired, and they'll work harder, they'll stay longer, they'll be more fulfilled.
HOLIBER: Bringing it more personal, who are the people, companies and things that have influenced you, in terms of your view in leadership, that made you the person you are?
MACEDA: Well, I start with my parents. They were both accomplished in their respective fields. I mean, part of the reason I ended up where I was, you know, my father was a political refugee, and he wanted to help his country. He had to leave for a while.
The US granted him asylum. I followed. That's how I became an American. I stayed; he went back to the Philippines. And he was very hardworking, purpose driven. But as he was a politician, he was also pragmatic—you know, that would probably be a good term to use for politicians—and my mother is very values driven.
And I felt, if you have the combination of being pragmatic about how to get things done—if you can navigate the political arena but never lose sight of doing the right thing and never quit—I found that very good.
I've had a chance to learn from many clients—it's hard to name—but founder-led companies that I've had a chance to work for have a clarity of vision I feel that is consistent, whether it's in the 21st century. And one of the things I'm trying to do in my firm, even though I'm not a founder—I'm the seventh managing partner in Bain's history—is to actually try to maintain that founder's mentality.
HOLIBER: Well, thank you very much, Manny.
MACEDA: Bill, thank you. It's my pleasure.
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