McKinsey Explainers

A context window is how information is entered into a large language model (LLM). The larger the context window, the more information the LLM is able to process at once.

Wellness is about more than feeling good. It’s a thriving business that is poised to keep growing.

The global energy transition is entering a new phase. These ten McKinsey Explainers highlight what leaders need to know to grow through—and not just react to—the new climate era.

Biodiversity is the multitude of diverse organisms across an ecosystem. It is essential for supporting the health and sustainability of all life on Earth.

AI guardrails help ensure that an organization’s AI tools, and their application in the business, reflect the organization’s standards, policies, and values.

Davos, Switzerland, is where the World Economic Forum holds its annual meeting. Delegates from many sectors converge for several days of talks and meetings to address urgent global issues.

Natural climate solutions, or NCS, are nature-based actions that either reduce or sequester greenhouse gas emissions, helping to protect, restore, and manage nature to further global climate goals.

Retrieval-augmented generation, or RAG, is a process applied to large language models to make their outputs more relevant for the end user.

Net zero is an ideal state where the amount of greenhouse gases released into the Earth’s atmosphere is equal to the amount removed. Emission removal and reduction through decarbonization efforts are needed to reach net zero.

Decarbonization is the reduction and removal of carbon dioxide and other greenhouse gases from the atmosphere.

Wind energy is a renewable source of electrical or mechanical power that could help transform the energy sector.

Sustainable fuels are made from renewable materials instead of from fossil fuels. They include biofuels made from organic matter, so-called green gasoline, and hydrogen-based fuels.

Hydrogen energy is an alternative to fossil fuels that may represent a cleaner way to power our world.

Scope 1, 2, and 3 emissions are greenhouse gases that are released across an organization’s entire value chain. Scope 3 emissions are the most complex, as they are released before and after a product is delivered or consumed.

Leadership is a set of mindsets and behaviors that aligns people in a collective direction, enables them to work together and accomplish shared goals, and helps them adjust to changing environments.

Generation Z comprises people born between 1996 and 2010. This generation’s identity has been shaped by the digital age, climate anxiety, a shifting financial landscape, and COVID-19.

A digital twin is a digital replica of a physical object, person, system, or process, contextualized in a digital version of its environment.

Digital transformation is the rewiring of an organization, with the goal of creating value by continuously deploying tech at scale.

Cloud computing allows companies to store their infrastructures remotely via the internet, ultimately reducing costs and creating value.

This may be India’s century. We look ahead at seven trends likely to shape the country for years to come—and help it achieve its development goals.

Circularity refers to practices that optimize resource use and minimize waste across the entire production and consumption cycle, emphasizing sustainability and economic efficiency.

Travel is roaring back after the COVID-19 pandemic nearly decimated the industry. Here’s what you should know about the journey ahead.

Productivity measures the amount of value created for each hour that is worked in a society.

AI is here to stay. To outcompete in the future, organizations and individuals alike need to get familiar fast. This series of McKinsey Explainers dives deep into the seven technologies that are already shaping the years to come.

A digital twin can drive growth and innovation. Here's how to determine whether using one could benefit your company.

Machine learning is a form of artificial intelligence that is able to learn without explicit programming by a human.

Deep learning is a type of machine learning that is more capable, autonomous, and accurate than traditional machine learning.

Inflation is the gradual loss of purchasing power, reflected in a broad rise in prices for goods and services.

Quantum computing is a new approach to calculation that uses principles of fundamental physics to solve extremely complex problems very quickly.

Artificial intelligence is a machine’s ability to perform some cognitive functions we usually associate with human minds.

Generative artificial intelligence (AI) describes algorithms (such as ChatGPT) that can be used to create new content, including audio, code, images, text, simulations, and videos. Recent breakthroughs in the field have the potential to drastically change the way we approach content creation.

Amid decade-high CFO turnover, former chief financial officers share advice on what matters most today for securing the top job in finance.

Mock exams can help banks prepare for regulatory reviews and synchronize business objectives and risk management.

Prompt engineering is the practice of designing inputs for AI tools that will produce optimal outputs.

Artificial general intelligence (AGI) is a theoretical AI system with capabilities that rival those of a human. Many researchers believe we are still decades, if not centuries, away from achieving AGI.

It’s three values held by many organizations working to be mindful and supportive of different groups of individuals.

Economic inclusion is when people not only have their basic subsistence needs met but also are productive, fulfilled, and fully empowered to make choices about their lives.

Tokenization is the process of creating a digital representation of a real thing. Tokenization can be used to protect sensitive data or to efficiently process large amounts of data.

Fintechs are companies that rely primarily on technology and cloud services—and less so on physical locations—to provide financial services to customers.

The C-suite is the group of executives responsible for running an organization.

Broadly speaking, a chief information officer focuses on internal technology, while a chief technology officer focuses on emerging technologies and product strategy.

The operations lead is the counterweight to the external-facing CEO, building organizational resilience and employee empowerment.

A chief transformation officer is the high-level orchestrator of a business transformation.

The CFO role was named for its original function of overseeing an organization’s finances, but it’s now seen as a cross-cutting common denominator linking every part of an organization.

The new mandate? Propel technological and operating-model changes in HR while still keeping the “human” in human resources.

CMOs are responsible for more than marketing their company’s products or services. They should also forge strong partnerships with their C-suite colleagues to drive growth.

The CEO is the person ultimately responsible for the success of a company. Their job is to develop strategy and deploy the resources to deliver on it.

The global stocktake is an assessment of progress made toward mitigating global warming since the Paris Agreement in 2015. The results from the first-ever global stocktake will be discussed at COP28.

Web3 is a term used to describe the next iteration of the internet, one that is built on blockchain technology and is communally controlled by its users.

Cultivated meat is animal protein grown in a lab from animal cells.

COP refers to the United Nations’ annual conference on climate change. Its 28th meeting (COP28) is scheduled to begin November 30, 2023, in Dubai, United Arab Emirates.

Good brain health means more than just the absence of disease. It also includes overall healthy cognitive functioning, resilience, and a state of well-being where individuals feel able to fulfill their potential.

Generative AI has hit the ground running—so fast that it can feel hard to keep up. Here’s a quick take pulled from our top articles and reports on the subject.

An organization faces business risk when it is exposed to a situation that can lead to decreased profits or even bankruptcy.

Burnout is the feeling of depletion, cynicism, and emotional distance that results from a lack of impact or autonomy at work.

Fast fashion retailers have sped up their production processes, getting new styles to customers at a record pace—and creating significant environmental and social challenges.

Financial inclusion is when everyone can access financial services that can help them build wealth, including savings, credit, loans, equity, and insurance.

The gig economy refers to the workforce of people engaged in freelance and side-hustle work.

Space junk refers to fragments left behind in space. Most space junk is debris from rocket-launching material and disused satellites.

Psychological safety is the absence of interpersonal fear. Feeling psychologically safe allows people to perform their best at home, school, and work.

A board of directors is a governance entity that oversees and supports management on behalf of shareholders and other stakeholders to maximize value creation.

E-commerce is the buying and selling of goods online. By optimizing e-commerce as part of a broader digital commerce transformation, sellers stand to attract more customers and earn more profits.

Bioengineering is the application of engineering principles to improve disease prevention and treatment, agricultural production, energy sustainability, and more.

Social media comprises the applications and websites that allow people to interact with other users, businesses, communities, and content.

In marketing, personalization is when seller organizations use data to tailor messages to specific users’ preferences.

Talent management includes all the ways that organizations bring employees on board, keep them happy and productive, and help them continue to develop their skills over time.

Semiconductors are the unsung heroes of the technology world: parts manufactured from pure elements that work behind the scenes to power and connect everything from smartphones to cars.

Effective meetings are all about purpose, preparation, and presentation.

Business transformations are designed to boost overall performance through increased revenue, lower operating costs, and better customer satisfaction and workforce productivity.

Influencer marketing is a collaboration between popular social-media users and brands to promote brands’ products or services.

It’s what organizations do to protect their own and their customers’ data from malicious attacks.

Agile is a way of working that seeks to harness the inevitability of change, rather than resist it.

Decision making is simply the process of making a choice. But decision making often isn’t easy and can be particularly complex in an organizational context.

Design thinking is a systemic, intuitive, customer-focused problem-solving approach that organizations can use to respond to rapidly changing environments and to create maximum impact.

CBDCs are digital currencies issued by central banks. Their value is linked to the issuing country’s official currency.

EVs are vehicles powered by electricity and an electric motor rather than a conventional gasoline-fueled internal-combustion engine.

It's an informed perspective about how work could shift and how workforces and workplaces can prepare for those changes.

Resilience is the ability to not only recover quickly from a crisis but to bounce back better—and even thrive.

Proof of stake (PoS) is a consensus protocol in blockchains. It is a way to decide which user or users validate new blocks of transactions and earn a reward for doing so correctly.

5G is the fifth generation of wireless technology. Its increased speed, lower latency, and improved reliability stand to revolutionize a wide variety of industries.

A recession is the part of an economic cycle that involves an economic contraction.

Blockchain is a secure database shared across a network of participants, where up-to-date information is available to all participants at the same time.

Exascale is the next milestone in computing. It’s a higher level of computer performance that will have unprecedented impact on society and the economy.

The supply chain is the interconnected journey that raw materials, components, and goods take before their assembly and sale to customers.

Innovation—in a business context—is the systematic practice of developing and marketing breakthrough products and services for adoption by customers.

It's everything an organization does to put customers first, managing their journeys and serving their needs.

It's the next phase in manufacturing's digitization, driven by the rise of data, connectivity, and other tech trends.

It describes objects and a variety of technologies that connect the digital and physical worlds.

It's when you interact with your customers over whatever channels they prefer.

The term “food insecurity” refers to the economic and social conditions that limit access to safe, nutritious food—and sufficient amounts of it. More than two billion people worldwide experience food insecurity.

It describes how much an entity, such as a country, is increasing and improving the goods and services it produces.