| This week, how businesses move from perpetual crisis to perpetual motion. Plus, harnessing the power of purpose, and Dickon Pinner, the global head of McKinsey’s Sustainability Practice, on the stirrings of a green postpandemic recovery. |
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| A year of transition. Despite a resilience-testing 2020 rolling into a still-unsettling 2021, the good news is that barring any (more) unexpected catastrophes, businesses can start to shape their futures rather than just grinding through the present. We’ve seen that the strongest companies are reinventing themselves by embracing pandemic-driven change. That will surely continue this year. |
| In a recent article, we enumerated key business trends to watch, including rising consumer confidence, a wave of innovation, a green recovery, supply-chain fortifications, and a rapid move to the future of work. Let’s go through just a few of them: |
| Unleashing pent-up demand. As consumer confidence returns, so will spending. That has been the experience of all previous economic downturns. China, the first country to be hit by the COVID-19 pandemic, is also the first to be emerging from it, and its relieved consumers have begun to act and spend largely as they did in precrisis times. The rebound will likely emphasize hard-hit services, particularly those that have a communal element, such as restaurants and entertainment venues. Globally, leisure travel will bounce back, driven by the very human desire to explore. Business travel, by contrast, is expected to take longer to recover. |
| Innovation and entrepreneurship. Everything is going digital, from online customer service to remote working to supply-chain reinvention to the use of AI and machine learning to improve operations. Healthcare, too, has changed substantially, with telehealth and biopharma coming into their own. The COVID-19 crisis has created an imperative for companies to reconfigure or transform their operations. Did the technologies of the Fourth Industrial Revolution (or Industry 4.0) help those companies in their efforts? A new McKinsey survey suggests three outcomes: a win for companies that had already scaled digital technologies, a reality check for those that were still scaling, and a wake-up call for those that hadn’t started on their Industry 4.0 journeys. |
| The future of work is already here. Postpandemic, the McKinsey Global Institute estimates that more than 20 percent of the global workforce (mostly in high-skilled jobs in sectors such as finance, insurance, and IT) could work away from the office most of the time—and be just as effective. Automation, digitization, and other technologies are weighing more heavily on workforces, too, with more than half of employees needing significant reskilling or upskilling by 2022, according to the World Economic Forum. Automation will leave few roles untouched—and not everyone will be reskilled or redeployed successfully. Here are a few tips for leaders to give their talent and their organizations the best opportunity to thrive in an uncertain future. |
| Hitting the dismount. Whether their companies are thriving amid COVID-19’s chaos or still in survival mode, CEOs across industries tell us they face tough choices, including figuring out how to adopt faster and more agile approaches. Here’s what those changes will actually look like. |
| So are you a future-ready company? Some companies are doing better than others grappling with trends that will unwind the old views of management. While no one organization has cracked the code, we found nine imperatives that define the most future-ready companies. |
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| OFF THE CHARTS |
| Finding where the ‘we’ overlaps with the ‘me’ |
| When a company’s purpose is aligned with its employees’ purpose, good things happen. To harness the power of purpose, CEOs and other senior executives must pressure-test that purpose with their teams, their employees, and themselves. Our research found that nonmanagement employees were just as likely as top leaders to say that purpose should be more of a priority, even as they differed with leaders on what that purpose should focus on. |
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| PODCAST |
| ‘True Gen’ and the Latin American consumer |
| Members of Generation Z are not just younger versions of millennials. Two McKinsey partners who are experts on Latin American consumers talk about the differences, as well as debunking the idea of Latin American consumers as optimists. “Gen Zers do not like to define themselves according to any labels,” said Fernanda Hoefel, a McKinsey partner based in São Paulo. “It’s more important for them to connect to the essence of what they are and to the essence of what they see in things, as opposed to any labels. They’re different from millennials.” |
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| MORE ON MCKINSEY.COM |
| Why 2021 will be distinctly digital | The dramatic shift to living and working online has accelerated changes across the entire business landscape. We’ve compiled a list of must-reads to help business leaders prepare. |
| Navigating the budget crisis for US states | The COVID-19 pandemic has created and underscored countless financial-management challenges for state governments. To meet these fiscal demands, states can use the budget as a strategic-management tool. |
| Mental health in the workplace: the coming revolution | Employees need, and increasingly demand, resources to help them cope with mental-health problems. Here’s how organizations can make services more accessible to improve employee wellbeing. |
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| THREE QUESTIONS FOR |
| Dickon Pinner |
| Dickon Pinner, a senior partner in San Francisco who leads McKinsey’s Sustainability Practice globally, spoke on CNBC recently about how organizations can transform to become more sustainable, and why a green postpandemic recovery is critical.
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| Why is a green recovery critical on the path to the next normal? |
| Confronting climate change was critical even before COVID-19. Now, as we work to protect lives and livelihoods from both the public-health and economic crisis as a result of the outbreak, investments in climate-resilient infrastructure and the transition to a lower-carbon future can drive the postpandemic recovery by providing significant near-term job creation and increasing economic and environmental resiliency for the long term. |
| Research has shown that climate change can actually contribute to pandemics. For example, rising temperatures can create favorable conditions for the spread of certain infectious, mosquito-borne diseases, such as malaria and dengue fever. Addressing climate change now can help us become more resilient for the future. |
| How do you counsel CEOs to act to prevent the risk climate change poses not only to their businesses but also society at large? |
| It’s so important that companies have a complete and granular understanding of how their own businesses are shaping climate change. Without that, leaders are likely overexposed to the risks, such as physical climate threats to their infrastructure or falling demand for their products, and underexposed to opportunities, like building resilience in their operations, investing in innovation, or reducing emissions. |
| Climate change is already having socioeconomic impacts in specific regions. Our research has shown how disruptions will affect workability, livability, assets, infrastructure services, food systems, and natural capital. They all rely on a stable climate, which we do not have. |
| That’s why courageous leadership is needed like never before—and that’s across industry, regulation, tech, and capital. We’ll need the creativity and dynamism of business to be an engine for innovation and delivery. We’ll need finance to mobilize capital, reward productivity, and price risk. And we’ll need thoughtful regulation to direct market forces and solve equity issues. |
| In which industries can a more sustainable approach to business have the most impact? |
| Perhaps the unsurprising answer is: all of them. The entire global economy needs to transition to avoid the most serious effects of climate change in the future. To give an example, agriculture may become the “new oil and gas.” As the world’s eyes turn to the inefficiencies in the food and land-use industries, agriculture will become increasingly recognized as one of the big untapped decarbonization and negative emissions levers. I also think that insurance markets will grow and change significantly. The world is overexposed to the risk of climate change, and underinsured, which will drive innovations like parametric pricing, insurance-linked securities, and public–private partnerships to manage their exposure. |
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| — Edited by Barbara Tierney |
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| BACKTALK |
| Have feedback or other ideas? We’d love to hear from you. |
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