An unprecedented confluence of global forces caused extreme energy prices, widespread inflation, supply disruptions and talent shortages. It’s also a situation with some contradictions.
Amid this uncertainty, some players are building and scaling whole new businesses at incredible speed while others are leveraging M&A to accelerate strategic shifts. Most players are shifting their operating models to be more adaptive, and nearly all are boosting their ESG strategy to create a stronger value proposition.
On February 22, 2023, McKinsey’s Global Infrastructure Initiative (GII) hosted a roundtable discussion with owners, developers, contractors, materials suppliers, and investors in Iberia to explore the path forward. They surfaced five themes and levers for value creation and company transformations in volatile times:
- The transformation imperative is stronger than ever, and leaders are leaning in. Some companies are already in transformation mode and others are still in early stages of the transformation process. For instance, participants agreed that construction, historically a relatively inert industry, is now on the cusp of dramatic transformation. “The traditional model is showing signs of exhaustion,” said one leader. Increasing industrialization in construction, changes in customer mindsets for residential construction (e.g., build to rent, co-living, senior living) and the talent supply chain challenge are indicators of the current changing context.
- Maintain a focus on company purpose with sustainability at the core. Uncertain and volatile times call for bold leadership. Quick adaptability and flexibility are key, but it is crucial to keep the primary focus on long-term goals and avoid letting short-term events derail the objectives of transformation and value. Shift mindsets to embrace a more comprehensive definition of success and look beyond the immediate term. In this sense, sustainability has become a core pillar of organizational purpose, as it is increasingly demanded by analysts, investors, financiers, and now also customers. “The customer push for sustainability has helped extend the sustainability purpose across the company,” said one leader.
- Prioritize a robust and inspiring culture. Leaders should redefine their organization’s culture and values, taking active steps to align their culture with the goals of the transformation. Role modelling the company’s purpose and vision will help build cohesive teams and boost the confidence of stakeholders. Even as organizations incorporate more use of technology such as artificial intelligence, it is essential to keep people and customers at the heart of organizational culture.
- Value creation opportunities are found in every crisis. Participants expressed a common belief in how this industry is used to volatility and learning from each crisis. “The 2008 crisis catalyzed many strategic moves that has helped us protect the business for the current uncertainty; we are stronger now,” said one leader. Multiple examples of value creation have been found in times of uncertainty that inspire companies to accelerate innovation. “We have found win-win solutions in collaboration with clients that were triggered by the supply chain crisis and the need to reinvent ourselves,” another leader explained.
- Continuous collaboration will be crucial going forward. In finding new opportunities in every crisis and in pursuit of sustainability goals, participants agreed on the value proposition that Iberia can bring to Europe and the world if the opportunity is converted into the right bold moves by all stakeholders (investors, companies, public sector). Collaboration between the whole ecosystem and legislation to accelerate change will be key to capture this unprecedented opportunity where Iberia has a natural right to play.
