I founded McKinsey’s CEO practice: Here’s why operational excellence is a liability right now

Carolyn Dewar, founder of McKinsey's CEO practice, argues that operational excellence and execution discipline—qualities that drove corporate success over the past decade—are now becoming liabilities in a rapidly changing business environment. She advises CEOs that traditional efficiency-focused management styles may hinder adaptability to emerging market disruptions.

Dewar's perspective challenges a fundamental assumption underlying modern corporate strategy: that operational excellence consistently creates competitive advantage. For years, businesses that perfected execution, cost control, and process efficiency dominated their sectors. However, Dewar identifies a critical inflection point where these strengths have begun constraining innovation and agility. When markets shift rapidly—driven by technological breakthroughs, macroeconomic volatility, or unexpected disruptions—organizations optimized purely for efficiency often lack the flexibility to pivot. This represents a significant departure from the McKinsey playbook that shaped boardroom thinking for decades. The advice carries weight given Dewar's direct access to hundreds of C-suite decision-makers. CEOs face a genuine dilemma: dismantling operational discipline risks inefficiency and cost overruns, yet maintaining rigid execution frameworks may cause them to miss transformative opportunities or respond too slowly to existential threats. This tension is particularly acute in technology-adjacent industries where disruption cycles have compressed. Organizations must now balance efficiency with strategic optionality—building redundancy in critical areas, maintaining diverse skill sets, and accepting some operational slack to enable rapid reallocation of resources. For investors and stakeholders, this signals a potential wave of organizational restructuring as corporations experiment with flatter hierarchies, faster decision-making protocols, and tolerance for measured failure. The implications extend beyond individual firms to market dynamics broadly, as companies recalibrate resource allocation and risk management approaches.

• →Operational excellence that drove corporate success for a decade now constrains agility in volatile markets
• →Rigid execution discipline may cause organizations to miss transformative opportunities or respond too slowly to disruptions
• →CEOs must balance efficiency with strategic flexibility by maintaining organizational slack and faster decision-making
• →This shift suggests a wave of corporate restructuring toward flatter hierarchies and tolerance for measured risk-taking
• →The traditional McKinsey efficiency model requires fundamental rethinking in rapidly changing business environments