When the McKinsey consultant Chris Bradley tries to explain the changing nature of corporate competition, he turns to the fictional universe of Harry Potter. A few exceptional “wizard” companies have emerged this century, which seemingly operate in a different dimension to their non-magical “muggle” counterparts, he says.
Mostly US and Chinese technology giants, such as Amazon, Xiaomi and Nvidia, these magical companies are characterised by extraordinary dynamism, intense investment levels and global impact. They can reshape — or, in some cases, conjure up entirely new — markets. In so doing, they drive a disproportionate share of the world’s economic growth, which has been captured in their profits and soaring stock market valuations. Duller corporate muggles, on the other hand, huddle in older, lower growth industries, such as finance, consumer goods, construction and transport, largely unloved by investors.
“Something strange is afoot in the industrial landscape whereby a small set of firms in a few arenas have really driven all the dynamism and value creation in the world in a way that is historically unusual,” Bradley tells me, snapping back into more traditional McKinseyese.