Catching the Digital Wave

15. January 2016

Photo of Dominic Barton

Dominic Barton

Dominic Barton is the global managing director of McKinsey & Company.

JAN 15, 2016, Project Syndicate

NEW YORK – Technological change has always posed a challenge for companies. But, as we saw once again in 2015, it has never occurred as rapidly, or on as large a scale, as today. As innovation sweeps across virtually every sector, from heavy industry to services, it is transforming the competitive landscape, with the most advanced companies – rather than the largest or most established players – coming out on top.

For incumbents, the threat of displacement is very real. The average tenure of a company on the S&P 500 has fallen from 90 years in 1935 to less than 18 years today. Disruptive new players like Uber, which has upended the taxi industry, are tough competitors, often staking out market share by shifting more surplus to consumers. This is part of a broader trend of intensifying competition that, according to recent research from the McKinsey Global Institute, could reduce the global after-tax profit pool from almost 10% of global GDP today to its 1980 level of about 7.9% within a decade. Read the rest of this entry »

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