An Interview with Scott McDonald, CEO, Oliver Wyman
Fletcher Forum: You’ve spoken about the contrast between the personal positions that CEOs take and corporate positions, as well as how – for a lot of companies – they are increasingly becoming one and the same. How has your personal vision driven the work that you do at Oliver Wyman?
Scott McDonald: It is pretty new that CEOs are taking these personal positions.
I take relatively limited public views on behalf of Oliver Wyman. I’m quite careful as I represent a multi-dimensional group of people. I don’t want to speak on their behalf unless I’m confident that they want me to. I have taken views on things like climate change, refugees, and immigration. I think that they have had – for good or for bad – some shaping of Oliver Wyman because they have often become policies of the company. For instance, my view on refugees got taken up enthusiastically by most of the company.
I have mixed views on whether me taking positions is a good thing or not. It’s obviously satisfying because I get to pick a cause that I think is important and that I care about. However, I could easily imagine a situation where someone in my position could wake up next week having a different cause that could be forced on the company – I think I’d find that really irritating.
FF: Do you think when a cause that a business might take up is so interwoven with the politics or the interests of the CEO, it might become harder for businesses to evolve going forward?
SM: When you’re talking about the social causes of a company or where it chooses to politically intervene – the question is, who are they associated with? If it’s the CEO, it means every time you change the CEO you get a new set of causes for the company. But on the other hand, it would also be a bit strange in the current environment if you had a business with a set of social policies with the CEO not having a say in any of them. I suspect you’ll start to see situations in which companies, rather than CEOs, have policies because you can’t have a company change administrations and have all existing social policies change. On the other hand, CEOs often do change everything – they change the organizational structure, they change the people, and the strategy, so why not change the social causes? Until we clarify how this will work, I think it will be confusing for the staff, the customers, and the shareholders.
FF: Do you think as businesses increasingly take up a political mantle they are increasingly going to have to take on factors that they’ve traditionally left up to public entities – such as risk, resource allocation, and environmental protection?
SM: Absolutely. If you are a company that decides to open a new business, the case you’ll have to present is: what are the financial returns, what are the various risks and what have we done to address them, how does this affect customers, and where are we going to find the people to do it. For the moment, I think people are supporting social causes without that kind of robust case, without really having thought through everything you might in the pure business case. That will have to change.
FF: Where do you see the business case for being more environmentally sustainable? Do you witness this in the clients that you interact with today?
SM: I think the environmental case for most companies is starting to become pretty strong. If you don’t do it, the publicity around you is going to be so bad that you’re going to struggle to attract employees, you’re going to struggle to find customers, and you may struggle to find shareholders. I think for Oliver Wyman, we have to go back and think about our main groups and shareholders and ask ourselves: if we do more work around climate change, are we able to attract better people, can we do more work with clients, and do we make our shareholders happier? My own view on the answers to those questions is yes, yes, and yes.
FF: How much of that will be driven by governments and do you think corporate strategy will be to pre-empt what government regulation will exist in that space? Or will it be largely a government induced set of priorities?
SM: I think both will happen in the end but, there’s a long tradition of companies that know they’re on the brink of regulation taking action to prevent that and trying to show that they can get the situation under control and can make the right decisions. I actually think the most important thing is that most of the important areas will be regulated to some extent, and it’s essential to have a productive relationship with the regulators. We found this in the financial services sector where we do a lot of work. There used to be no relationship at all but in the last five years, they have had to develop productive relationships to try and get this balance right between regulation and business.
FF: How do you think that might play out for the fintech sector, particularly in the U.K. with the new Open Banking Ruling?
SM: The fintech sector is a huge focus now, and so far they’ve been relatively lightly regulated because governments want innovation; they want challengers to the existing sector; they want new ideas. Ultimately, there needs to be a balance between what makes a strong safe system, what provides better services and pricing for customers, and what still leaves the opportunity for a business to have a decent return. I think Open Banking is a good example of this kind of development that they’re going to have to continually monitor and adjust.
FF: What do you think has been the general reaction to that ruling of financial services firms and how do you think that might translate to a similar initiative here in the U.S.?
SM: I think it’s early and just exploratory. What we see with a lot of our clients is open-mindedness around trying to understand more about how it will work, and especially how it will work at scale, as well as understand both how it will affect customer experience and what it ultimately means for the business. What will the businesses look like in the end? Where will you make the profits and returns?
FF: What is the perception in the industry of how Brexit might affect business?
SM: There is a great deal of uncertainty. No one knows precisely what’s going to happen. While most businesses are evaluating and planning for multiple scenarios, our clients are deeply frustrated by the lack of direction, which is forcing them to make decisions without the facts.
About the Interviewee
Scott McDonald is the President & CEO of the Oliver Wyman Group, which includes Oliver Wyman, NERA Economic Consulting and Lippincott. Scott sits on the Executive Committee of Marsh & McLennan Companies (MMC), which has four leading brands – Marsh, Guy Carpenter, Mercer and Oliver Wyman – and more than 60,000 staff in over 100 countries.
Scott has degrees in Finance & Economics from McGill University and International Relations from Cambridge University.