Introduction: The public-sector challenge

Hello. I am Ian Davis, managing director of management consultants McKinsey & Company. Today I am not going to talk not about business, as you might expect, but rather about the public sector, and more important, the role we all have in ensuring that we continue to have an effective and efficient public sector.

While it is very easy to focus on the private sector as the locus of economic activity, fundamental to the strength of any society—and indeed of the private sector—is, I believe, a strong and productive public sector.

I emphasize this because public-sector productivity and success is not necessarily a given. Indeed, every single major government in the world today is facing a set of challenges in the next decade that will not be easy—not at all. And the ways those challenges are resolved will have a significant impact on the vibrancy of our entire society. The choices we make will affect our long-term prosperity and stability.

All you have to do is look at the beginning of the 20th century to realize that peace and prosperity cannot be taken for granted. In 1910 people believed that the economic boom would last forever,...