For years, public companies were typically in the driver’s seat when it came to information they wanted investors and the public to know. They filed reams of data in required public disclosures — often as many as 10,000 a year — but it was typically too cumbersome for even analysts to get through all of it, according to Andy West, global co-leader of strategy and corporate finance practice at consulting firm McKinsey & Company.
Meanwhile corporate executives’ calendars were keyed to quarterly earnings, investor days and budgets, with all of it connected together in investor relations, to support a general effort to synthesize the data available and make sure the story you told investors was simple while allowing management some flexibility in terms of how they allocated resources, he said in a recent interview.
Now, with the advancement of generative artificial intelligence that can help scrape and synthesize data about businesses from myriad sources at lightning speed, companies need to adapt to make sure they have a clear view of how the world is thinking about their enterprises.
“CFOs should have a baseline understanding of their external image and how it aligns with their internal goals. If you don’t understand it, you’re kind of flying blind,” West said, noting that CEOs along with CFOs, who are naturally aggregators of information for their organizations, need to both focus on the issue. “It is a bit of rewiring on the part of executives and operating processes inside organizations…No longer can you wait for this to be on your own timeline and agenda — you have to do it in the natural course of things.”
The simmering frustration against healthcare practices and claim denials that appeared to fuel some morbidly gleeful reactions to the tragic fatal shooting of UnitedHealthcare CEO Brian Thompson on social media earlier this month is one of the latest examples of the kind of powerful consumer sentiment that can affect companies.
West did not comment directly on the shooting except to say that it was an “incredibly tragic situation,” but he noted that in the healthcare sector there is a vast amount of policy data and other information that can be used to create different narratives, not all of which are accurate. He asserted that the sheer volume of data available on companies, what he called “information ubiquity,” and the need on the part of executives to be proactive about it is “a big topic that’s only going to become more relevant.”
For the past two and a half years, the consulting firm McKinsey has been offering a new service that helps clients assess the wide range of information that is bubbling up about them. It then compares how the company is viewed on the outside to its goals, projects and internal reality. Known as holistic impact thesis or HIT, McKinsey uses AI to gather data globally and then gives the client its opinion on how the market would perceive the company’s performance given all the information available — information that goes well beyond financial metrics.
How does HIT work? West says McKinsey gathers unstructured data from all sorts of sources, such as online platforms GlassDoor and LinkedIn where employees sometimes vent concerns about their employers, to posts by consumers about a company on social media feeds and public filings.
“You take that unstructured information and apply GenAI to it and agents in specific use cases and add insight extraction on top of that and you can actually say a lot about a company's performance…and it creates really really interesting insights,” West said, noting that the the technology also enables teams to synthesize data from public filings quickly.
“Before, if I wanted to go through 10-Ks and other disclosures, I would have to have a team for weeks, reading everything and hope that they found everything,” West said. “Now it takes about 35 seconds.”
To date, McKinsey has provided HIT as a stand-alone service or an add on to about 600-700 clients, though it’s ideal for larger public Fortune 1000 or 2000 companies because there is more public data available. West declined to comment on the cost of the service but noted that the company also uses it as a bellwether to determine whether strategies that a client is pursuing will be effective broadly.
“This looks at whether [the strategy] is going to be in line with what society is expecting,” he said, considering not just the impact on a profit and loss statement but, based on data available, also whether the project would, for example, de-motivate employees. “The last thing we want to do is have a really great project that creates a different problem.”
