McKinsey CEO adviser says efficiency is no longer enough

Corporate leaders are being pressed to rethink where their companies compete and how they win, according to Carolyn Dewar, a senior partner at McKinsey & Company who leads its global CEO Practice. In a Fortune commentary, Dewar argued that strong execution alone is no longer enough as artificial intelligence, geopolitical shifts, industrial policy and infrastructure limits alter markets at the same time.

Dewar wrote that many companies spent the past decade being rewarded for operational discipline. She cited rigor, resilience, digitization and the ability to scale established models as strengths that created substantial value during that period.

Her warning is that those same strengths can become limiting if leadership teams rely on them while the basis of competition changes. Dewar argued that many senior executives built their careers in an era focused on running the existing business, leaving fewer prepared to challenge the assumptions that made those businesses successful.

Strategy returns to the center

Dewar said executive teams, boards and investors are now facing a basic question: if the company were being built from the ground up today, where would it play and what would give it an edge. She wrote that for many leadership teams, that kind of strategic work requires capabilities that have not been used at full strength in years.

According to Dewar, companies now need to reassess which business models remain defensible as technology and economics change together. She also argued that leaders must examine where value is shifting, which capabilities may become more valuable, and which inherited beliefs are being protected because they worked in an earlier period.

In some sectors, Dewar wrote, value pools are moving faster than executives are used to. She added that investors in some industries are already reassessing future advantage more quickly than companies are reviewing the foundations of their own models.

Dewar did not dismiss execution. She wrote that operational discipline remains highly important, but argued that management tools and performance systems cannot replace a broader strategic reset when the business context has changed.

Planning cycles face pressure

Dewar said the most effective leaders are returning to first principles. In her view, they are asking which customer problems their companies are best placed to solve, where customers still face friction, and what technology now makes possible.

She wrote that these questions should not be treated as side projects. Dewar argued that companies should put their strongest operators and leaders on them, while senior executives take direct responsibility for debating the future shape of the business.

Dewar also criticized the traditional strategy process used by many organizations. Annual planning and three-year roadmaps, she argued, increasingly fail to match the speed and scale of current change.

According to Dewar, leaders now have to make larger strategic calls more quickly and with less certainty than in the past. She wrote that stronger teams are making time for ongoing strategic debate, testing assumptions repeatedly, tracking where value is moving and acting before every answer is known.

The hardest choices, Dewar argued, may involve clean-sheet thinking, founder-style ambition and decisions about where to shift capital, talent and leadership attention. She said that can mean moving resources away from businesses or advantages that may no longer increase in value as they once did.

Dewar concluded that judgment, imagination and strategic courage under uncertainty are becoming more important leadership skills again. Her broader message to executives was that the capabilities rewarded in the last era may not be enough for the next one.

This story draws on original reporting from Fortune.