The energy and materials sectors had another eventful year in 2024. Alongside immediate market challenges posed by regional conflicts, supply chain disruption, and evolving industrial policies, companies had to grapple with the ongoing energy and materials transitions, digitization, and demographic shifts.1
As external conditions become harder to predict, companies are looking inward at what they can control. Those companies that focus on organizational performance in 2025 may be best placed to thrive in this evolving environment.
From our work with companies in the energy and materials sectors, we have observed seven key trends, which, if taken into account, could help these companies excel this year:
- Transforming productivity and cost remains critical, as energy and materials companies face inflation and supply chain disruptions, and lower productivity, compared to pre-COVID-19 pandemic levels.2
- Mergers, acquisitions, and divestment activity—alongside alternative structures such as joint ventures—are becoming increasingly common as leaders aim to reallocate capital to higher-growth, lower-risk segments and geographies. Such portfolio rebalancing is expected to be a powerful driver for value creation and growth in the energy and materials sectors going forward.3
- Identifying organizational superpowers is increasingly important in a competitive landscape. To get ahead of competitors, organizations must first identify, and then cultivate, their distinctive capabilities.
- Talent bottlenecks are emerging as businesses compete for the skills required to support digitization, while continuing to adapt to the energy and materials transitions, and evolving employee expectations.4 To stay ahead of talent bottlenecks, organizations could embrace analytics models that forecast skills needs linked to strategic business plans. In our experience, many organizations are already turning to predictive analytics to help identify potential shortages and skill gaps.
- Global capacity centers for technical talent have proliferated over the past two years as bottlenecks for energy talent take center stage.5 Companies that are rethinking their global footprint for technical support are accessing larger talent pools, achieving significant cost savings, and improving speed to market.6 Centralizing the delivery of technical products and services can also accelerate the standardization of processes and sharing of best practices, leading to higher quality and consistency in technical work.
- Culture is a secret ingredient for distinctive performance, with healthier organizational cultures resulting in a threefold improvement in performance.7 Leading energy and materials companies are establishing a competitive advantage by motivating employees to share knowledge, innovate, and deliver results.
- Embracing AI is no longer optional. The explosion of interest in gen AI represents a huge opportunity for companies. Coupled with digital and analytics more broadly, gen AI will ultimately be integrated into all levels of organizations, from strategic decision-making through to daily operations.8 Those companies that embrace gen AI in their operating models may now have an advantage.
Below we take a closer look at three of these trends which have been front of mind for executives in the first quarter: transforming organizational productivity and cost, embracing AI, and strengthening organizational superpowers.
Transforming organizational productivity and cost
Companies across the global energy and materials sectors are facing higher costs driven by inflation and supply chain disruptions. At the same time, companies are looking to improve their productivity and efficiency.9 Companies that make and sustain cost and productivity improvements, as the foundation of outperformance, are the ones that are likely to thrive. Organizational structure—together with transformed ways of working—are core to delivering these improvements.
Such improvement efforts start with a robust understanding of current competitiveness versus peers, through benchmarking to inform targets. These targets can then be looked at in the context of a company’s strategy and what drives overall business performance and shareholder returns.10
Improvement levers that are showing the greatest success include process simplification, rethinking global footprint with the creation of global capability centers, deploying digital and AI technologies, and implementing more agile engineering and frontline operating models to streamline decision-making processes and enhance operational efficiency.11
Tuning your organization to get value from AI
In the world of technology, it’s never just the technology that matters. Fully capturing the AI opportunity requires organizations to move away from viewing technology in isolation.
Technological deployment needs to happen alongside fundamental shifts in the operating model and be supported by the necessary change management. Organizations may need to rethink their talent, structures, and processes, in addition to the technology and data aspects of a digital and AI transformation, to identify the specific ways in which embedding AI use into ways of working can improve productivity.12
For example, one mining company honed their focus on delivering value, which requires consistency across all organizational levels. This company made the algorithms underlying its AI tools as transparent as possible, increasing frontline employees’ confidence in using them, and enabling adjustments as ore conditions change.13 Both leaders and frontline operators understand and fully support the use of this technology in their daily decision-making processes and, two years after initial deployment, employees are still using and improving these tools.
Identifying and strengthening your organizational superpowers
What makes an organization unique in the market compared to its competitors? The answer: It is often where a strategic advantage lies. Rather than relying on gut feel, anchoring these discussions in strategic and business model clarity can help leaders identify—and then cultivate—their organization’s distinctive capabilities or “superpowers.”
Once these superpowers are clear, organizations can align resources and efforts to maximize the impact of these competitive spikes—whether that involves restructuring teams, investing in specific technologies, or developing specialized training programs.
McKinsey recently worked with the leadership team of a major oil and gas refining company to develop its organizational capabilities across engineering and corporate support functions. By assessing the company’s current activities across these functions—and evaluating how major competitors approached them—it was able to build a plan to reallocate resources and restructure the organization to better deliver on its superpowers.
Another energy company has built a strategy around the belief that value is added through creative financing and ongoing, active portfolio management. Asset management and venture structuring are two of its superpowers, but the implications of this awareness go beyond strengthening individual talent pools. The company has moved toward a holding structure that allows its different operating companies to have separate ownership models and to take advantage of financial engineering specific to their business segment. The model also provides the flexibility required to make portfolio moves in the future—whether carve-outs, divestments, or acquisitions—thus strengthening and reinforcing the core organizational superpowers.
Taking on all seven trends at once can be a very daunting prospect. Leaders can start by asking a few key questions to pinpoint where best to focus their efforts this year:
- Is your organization and operating model competitive today? How have your organizational costs evolved over the past five years? And how does this compare with leading peers?
- How does the productivity of your workers compare with pre-COVID-19 levels? What changes to your operating model, ways of working, leadership, and culture are required to improve frontline and engineering productivity?
- How can you foster a culture that embraces change and experimentation? What strategies can enhance your organization’s agility in the AI transition?
- What changes to your operating model—structure, process, people, or culture—are needed to support, build, or strengthen your organizational superpowers?
With 2025 expected to be another dynamic year for the energy and materials sectors, companies that embrace these organizational trends could set themselves up now to outperform in the future.
The authors wish to thank Robert Belanger for his contributions to this article.
1 Global Energy Perspective 2024, McKinsey, September 17, 2024; Global Materials Perspective 2024, McKinsey, September 17, 2024.
2 Global Energy Perspective 2024, McKinsey, September 17, 2024; Global Materials Perspective 2024, McKinsey, September 17, 2024.
3 Jeremy Brown, Robert Belanger, and Tom Grace, “Success in the M&A rebound: Riding the coming wave of upstream deals,” McKinsey, February 24, 2023; “Mining M&A in 2024—Gold dominates M&A space for 2nd consecutive year,” S&P Global, March 20, 2025.
4 “Has mining lost its luster? Why talent is moving elsewhere and how to bring them back,” McKinsey, February 14, 2023; Giulio Carbone, Ignacio Fantaguzzi and Robert Belanger, “Employee retention trends and challenges in the oil and gas industry,” McKinsey, February 8, 2024; Thomas Hale, “The United States needs more than mining engineers to solve its critical mineral challenges,” Center for Strategic and International Studies (CSIS), May 8, 2023.
5 Aly Torres, Christopher Handscomb, Ignacio Fantaguzzi, and Iyad Sheikh, “Talent squeeze: Planning for the energy sector’s talent transition,” McKinsey, February 1, 2024; “Chevron powers up engineering and innovation ENGINE in India,” Chevron, August 20, 2024.
6 “Innovation hubs: How GCCs are shaping the future of business,” McKinsey, September 11, 2024.
7 Alex Camp, Arne Gast, Brooke Weddle, and Drew Goldstein, “Organizational health is (still) the key to long-term performance,” McKinsey, February 12, 2024.
8 “Beyond the hype: New opportunities for gen AI in energy and materials,” McKinsey, February 5, 2024.
9 Alex Camp, Arne Gast, Brooke Weddle, and Drew Goldstein, “Organizational health is (still) the key to long-term performance,” McKinsey, February 12, 2024.
10 Aïsha Lemsom, Christopher Handscomb, and Robert Belanger, “Five features of operational excellence in oil and gas organizations,” McKinsey, February 8, 2024.
11 For more on how organizations can build operational excellence, see Aïsha Lemsom, Christopher Handscomb, and Robert Belanger, “Five features of operational excellence in oil and gas organizations,” McKinsey, February 8, 2024; McKinsey analysis.
12 Hannah Mayer, Lareina Yee, Michael Chui, and Roger Roberts, Superagency in the workplace: Empowering people to unlock AI’s full potential, McKinsey, January 28, 2025.
13 “Mining for operational excellence,” McKinsey, January 31, 2025.