This is the McKinsey Podcast, where we help you make sense out of our world's toughest business challenges.
Welcome to the show.
I'm Lucia Raheli.
And I'm Roberta Fasaro.
Hey, folks, this is a special bonus episode of the McKinsey Podcast.
We're going to cover highlights from last week's meeting of the World Economic Forum at Davos.
McKinsey leaders Becca Coggins and Shelley Stewart III were on the ground and share what was top of mind for CEOs, including geopolitics leading through the AI moment and the arrival of humanoid robots at scale much sooner than many of us expected.
Thanks for being together with us, especially at such a busy time.
Thank you, Lucia.
It's good to be on with you as always.
Thanks, Lucia.
So this year's Davos was the biggest yet, largest gathering in the 55-year history of the event.
Tons of buzz, obviously, on geopolitics, so let's start there.
Rising tensions between world powers were on display obviously, with leaders highlighting risks to global stability, to traditional alliances, to economic cooperation and so forth.
Shelly, let's start with you.
What was the discussion with CEOs actually like on the ground?
Yeah, absolutely.
Geopolitics was certainly the start of every discussion that I was in.
I think you had six of the seven G7 heads of state on the ground.
And I think that's a heavier presence than we've historically seen.
So certainly a lot going on on that front.
But I think the other topic technology broadly agentic AI automation, robotics really good and robust conversations about how we bring those things into the world in a way that actually creates value and what it could mean for how we work, how we live.
I think there was generally a positive sentiment around the macro economy, acknowledging a level of uncertainty.
So there's no question on this geopolitical question, right, that the world is reordering, right?
Global trade is actually expanding if you look at the numbers in the aggregate, but it is certainly reorganizing, which has implications for global institutions.
In terms of the leaders.
Look, I think people recognize that moments of real discontinuity give latitude for bold moves.
So I think people see the opportunity ahead.
And the question is, can you move with speed?
So there are a few things that I think folks agreed to in many of the conversations that I was in.
One is this notion of building a resilient organization and resilient leadership, this balanced optimism.
So trying to be realistic about the challenges and uncertainty, but also being optimistic and really frankly, focusing on the things that are in your control.
We talked a lot about diversification, optionality, structural flexibility in your supply chain.
And there's an acknowledgement that, As you think about resilience and you think about building redundancy into your business model, it could raise costs in the near term, but it ultimately protects the organization from more prolonged disruption as the world continues to reorient and change.
Super interesting.
Okay, thanks, Shelly.
Now let's turn to AI.
The other big theme this year, as Shelly just said, with a lot of tech leaders in attendance.
Becca, what were your key takeaways from the discussion around AI and what's next?
I think it would be hard to overstate the prevalence of AI in the Davos ethos and conversations this year.
If we actually start by rewinding January 2023, you start to see that sort of more speculative or imaginative conversation transition to something that feels much more like real conviction about a technology that will be as transformational and ubiquitous as electricity.
I think was the analog that we heard several leaders using.
And yet I think a lot of the executives that we spent time with really felt like they are left to navigate a bit of a gap between the promise of that technology, what it might deliver.
Our own estimates are 3 trillion by 2030 in sort of incremental impact.
I think feeling like they are left to navigate a bit of the tension between fear of being left behind or getting not out of the gates fast enough and real ROI concerns.
And so I think the shape of the conversations around AI and Davos this year was really about how do we make 2026 the year that we can close narrow at least, but close that gap.
Satya Nadella, I think, was quite impassioned in his urging CEOs to think about 2026 as the year that we pivot from pilots to sort of impact at scale.
You know again, probably a fool's errand to synthesize thousands of conversations, but you know, I think, three themes that really stood out to us in this sort of vein of navigating this AI transition.
I think the first was a conviction that impact really requires redesigning work.
And that the days of call it solo player tool support need to transition to much more end-to-end reconfiguration of how work gets done.
That is a real collaboration between humans and agents and probably sort of multiplayer, even orchestration, if you will.
I think the second theme that really I found quite inspiring and really stood out to a lot of folks is that growth is a big unlock.
And that, yes, AI will still be helpful in terms of productivity.
But if you look at the AI leaders and you listen to what they're saying, they're saying yes productivity, but let's put those gains then into unlocking a real AI-driven growth agenda.
And some of the examples there I think got folks excited because you were also seeing the technology push from call it basic knowledge work into true scientific innovation, RD in pharma or materials.
How do you think about predictive or personalized healthcare?
And maybe the third I would highlight, and probably the most universal, was the idea that this AI transformation is, at its heart, a people transformation and real conviction that the organization as we know it will have to evolve pretty fundamentally.
Sarah Fryer from OpenAI had a great provocation to a group to say every leader should understand their org chart that's inclusive of both humans and agents and have really plans to nurture and develop both.
You heard a lot of conversations around the role of the manager.
How do we actually redefine what that is when the legacy is?
It's defined by span of control over people, complexity of portfolio, et cetera.
And I think in this people transformation theme was also a recognition that you know trust and capability might really be the limiting factors.
Thank you, Becca.
Okay, follow on that.
A big part of the discussion here continues to involve parsing what humans can do versus what agents or LLMs can do.
In that context, what skills do you think are most in demand for humans now?
You know, we're seeing companies look at this maybe in two horizons.
So the big one that we note is a huge rise in the demand for AI fluency or, you know, employees who can manage, interpret and work with AI tools very effectively.
I think we see a corresponding, maybe more interesting shift that one's pretty obvious shift in some of the related capabilities around.
How do I successfully embed AI?
So systems thinkers, systems designers, right?
As you think about this end-to-end workflow redesign, we're seeing some uptake in that demand now.
If we sort of fast forward a little bit, where will those human skills be differentiating over time?
And what are those uniquely human things that we should be, you know, searching for developing, et cetera.
And so I think you know, audacity and ambition and vision are really sort of the skill set that is innately human.
And we think leaders are going to be really in high demand that are truly visionary and aspirational.
The second one that stood out, and this is probably the one I heard the most about at Davos, Shelley, I don't know if same for you, is judgment.
Models don't have values unless they're encoded by humans.
How do you think about judgment at a premium for encoding values?
Yes, in models, but also the ability to make tough calls and apply ethics or judgment when the situation is ambiguous, when the trade-offs are not straightforward and it's not an optimization problem.
And the third, the one maybe is the most overlooked so far, we think is creativity, right?
Again, if you think about models will beat humans in many rules-based decisions or optimization pathways.
They will
And yet they're not really trained to think orthogonally, to connect things that might not have been obvious connections.
They don't have style.
They don't set trends.
So I think this idea of creativity may be a place where companies you know more and more look to you know sort of move up in the value ranking of their sort of skill mix, if you will.
Thank you, Becca.
Okay, these are great points, Shelly.
Becca talked about audacity, ambition, vision, judgment.
That's a nice segue to the topic of leadership generally within what may have felt like a relentlessly tough operating environment for several years now.
How has the role of the leader changed generally during this time?
Yeah.
Look, leading any large organization has always been a really difficult task, right?
But I think, as we look at the data on this, we actually have been tracking the number of issues that a CEO and their top team need to manage at a given time.
And about 10 years ago, that number was around four or five issues.
Today that number is closer to 10 this idea of resilience in an uncertain world where things are changing.
It's not just building a resilient organization, but being a resilient leader, right.
Grit being able to push through and acknowledge that some things won't work and then move on to the next thing.
And ultimately you get to something that does work.
This notion of exothermic behavior.
So giving off energy that can inspire your people.
And then a really important one, which goes back to what Becca said, is this notion of a learning quotient, your ability to be a learning animal, right.
Because if you've got more issues to deal with and the world is changing rapidly you have to be someone who is in the mindset of continuously learning.
And the other big thing that has come up in a number of these discussions at Davos is this idea of how do we also build leadership factories in our organization and building the next generation.
Because if you think about the issues doubling, if you don't have a strong bench of people who are really well-developed leaders that have broad exposure to well, then there's no way that any one person can cover it.
And the last thing I'd say is there's a real premium on leaders who can remain anchored in a long-term vision but demonstrate the agility to act decisively in the short term as situations change.
Because I'm not sure when certainty will get here, if it ever comes back.
Right, right.
Makes sense.
So far, we've talked about big headline themes from Davos and what they meant for leaders.
Were there any under-the-radar moments or surprises that you encountered last week that you think could turn out to be big news this year?
Sure.
I think that my pick for Game Changer to watch in 26 and 27 would be physical AI.
There's pretty compelling evidence and growing conviction that the sort of humanoid robot, the autonomous vehicles, et cetera may be a reality at scale sooner than some of us, myself included, had expected.
Potentially, industrial scale by 2027 or at some point in 2027.
Which, of course, would have pretty crazy and far-reaching implications for industries, everything from trucking to warehousing and manufacturing.
One of the use cases that got a lot of attention, I think, at Davos and wanted to watch would be could humanoid robots actually fill some of the healthcare worker and care worker gap, for example?
So look for me as we grapple with the significant changes that are going to come as a result of AI.
How do we think about ensuring that the economic benefits, the bounty of all that progress, is shared in a broad way?
And we recently released a book, McKinsey Global Institute, called A Century of Plenty.
This notion that actually in the world, if you kind of look at all the things we need to prosper, there's actually abundance of those things.
You see inequality within countries at unprecedented levels over the last 30 years, particularly in mature economies.
And AI has the opportunity to either accelerate that inequality or...
If we take a holistic frame, we can actually benefit.
One issue we haven't talked about is sustainability.
How did the topic come up, if at all, last week?
You know, sustainability was really very much in the spotlight at Davos, I think, for several years.
And this year, markedly less so.
And so I think some would say it was even, like, you know, missing.
I think when you go a little bit deeper, you'd say sustainability was present.
As an example, the World Economic Forum designated 2026 the year of water.
There was programming themes around water, nature, a few others.
But the tone of the conversations was very specific or had transformed a little bit.
So from let's call it, you know a unifying global mandate around climate to I would call it a more grounded conversation, with real discussions around trade-offs between sustainability and reaching those goals, whether it was competitiveness affordability, energy security, et cetera.
It was enough different in the agenda that we actually went and asked a bunch of the CEOs we were speaking with.
You know, does this reflect your own agenda?
I'd call it.
Two thirds of the folks we spoke with very scientific said actually we're doing as much or we're doing more.
But two things are different.
One, we're talking about it a lot less.
And two, we are framing less in sort of this sort of headline global unifying mandate and much more balanced around smart business.
At Davos, French President Macron framed Europe's competitiveness as urgent right amid the rising instability and made the case for decisive action to protect economic interests.
Shelley?
Any reflections on how leaders might deliver on strengthening competitiveness in Europe?
Yeah.
Look, this was certainly a topic given the broader geopolitical context that we're living through.
I think there was broad acknowledgement that this is really the moment to live into this for Europe that the private sector will need to play a very significant role.
And there were probably four things that came out.
I think one was this idea of building a vibrant defense industry and industrial base.
The second is back to the point on AI making sure Europe doesn't fall behind on the or further behind on the AI infrastructure and technology play.
I think the third is deregulation and simplifying structure, in particular, simplifying and making it easier to do business.
And then the fourth is the obvious one, which is, you know rethinking, through alliances and partnerships and trade quarters.
And I think there's a level of realistic optimism.
Fantastic discussion, Becca and Shelley.
Thanks again for making the time to join us today.
Thank you.
Thanks so much for listening to the McKinsey Podcast.
I'm Lucia Raheli.
And I'm Roberta Fasaro.
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