Future-proofing Australia with AI and ambition

November 19, 2024Ambitious, targeted, technology-enabled transformations may be the answer to the changing makeup and productivity of Australia’s workforce.

This was the key takeaway from McKinsey & Company Australia and New Zealand’s second Transformation Summit, recently held in Sydney. Part of an international series, the event served as a forum for transformation leaders to discuss today’s pressing challenges and opportunities.

But what are the practical steps to take today?

Large organisations can help address productivity challenges by adopting new technologies.

Chris Bradley, McKinsey Global Institute Director and Senior Partner, set the scene by highlighting the challenge of Australia’s declining productivity growth, which has lagged at just 0.2% annually from 2016 to 2023¹.

Seckin Ungur, a McKinsey Partner leading the firm’s education work in Australia and New Zealand, presented the opportunity gen AI provides in this context. That is, to optimise tasks that require basic cognitive skills while increasing demand for higher social, emotional, and technological skills.

The opportunity for individuals and organisations is ready for the taking. Up to 1.3 million Australians will need to change occupations by 2030 to remain productively employed² due to new technologies. If organisations embrace this challenge, gen AI has the potential to boost project automation adoption rates by 8%³, offering a much-needed lift to the country’s productivity.

“The imperative is on large organisations to support an uplift in Australia’s productivity through gen AI adoption. Are we set up to enable this transition?” - Seckin Ungur, Partner at McKinsey & Company, on the gen AI opportunity.

Seckin Ungur, Partner, McKinsey & Company, on the gen AI opportunity.

Set ambitious strategies that integrate talent and technology, then communicate them effectively.

Transformations should unlock the full potential of an organisation. On a panel discussion, leaders with diverse transformation experiences emphasised the importance of presenting a strong business case to secure top management’s commitment before embarking on any transformation.

Panellists shared both the complexity and the payoff of involving and equipping talent at all levels throughout the transformation. Mobilising the entire organisation to own initiatives brings organisational knowledge and perspective that may be lacking with a select transformation team.

“Transformation is about creating an ambitious level of change. Start by looking ahead and identifying an opportunity, narrow it down and then do something about it.” - Chris Hartley, Partner at McKinsey & Company, on setting ambitious targets.

Chris Hartley, Partner, McKinsey & Company, on setting ambitious targets.

Remain focused and respond to evolving organisational goals and market demands.

Jason Inacio, Partner at McKinsey & Company, and Leader of our Transformation Practice in Australia and New Zealand, shared four main transformation archetypes: productivity, growth, digital/AI, and operating model. Shaped by an organisation’s ambition and context, these could be deployed sequentially or simultaneously. To determine which approach to follow, the essential process of prioritisation must take place.

In the rapidly evolving economic context, strategies should be adjusted regularly to capture the organisation’s full potential. Speed was emphasised amidst a competitive market, with attendees compelled to begin sooner rather than later.

“Transformations have become less holistic; they need to be targeted according to your need of the moment.” - Jason Inacio, Partner at McKinsey & Company, and Leader of our Transformation Practice in Australia and New Zealand

Jason Inacio, Partner, McKinsey & Company, shares strategic approaches to transformation.

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From addressing Australia’s productivity challenges to harnessing the power of AI and digital technologies, the McKinsey Transformation Summit underscored the importance of strategic planning, clear communication, and adaptive approaches to drive transformations that achieve sustainable growth and performance.

For more information or to register for the next event, please contact the McKinsey Transformation Team. Discover more about McKinsey’s Transformation capabilities and our latest insights.

_{1 Based on modified GNI (GNI*) metric used by the Ireland Central Statistics Office to measure the size of the Irish economy by excluding Globalisation effects. It is equal to GNI less the depreciation of Intellectual property (IP) and leased aircraft), and GNI refers to gross national income which is equal to gross domestic product, plus net receipts from abroad of compensation of employees, property income and net taxes less subsidies on production Source: OECD data explorer (Productivity Levels), Ireland Central Statistics Office (CSO)}

_{2 Source: ABS, O*NET; McKinsey Global Institute analysis}

_{3 Source: ABS; O*NET; McKinsey Global Institute analysis}