| Plus, performance (review) anxiety |
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December 14, 2018 |
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| Our best ideas, quick and curated |
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| This week, how to differentiate success from struggle in the Internet of Things and how to survive (and maybe even thrive in) year-end performance-review season. Plus, what Sunil Sanghvi, a senior partner and agriculture expert, is reading. Subscribe to get the Shortlist in your inbox on Fridays. |
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| An athletic shirt that measures heart rate. A school backpack that relays a child’s location. Networked homes full of smart appliances and tools. |
| The Internet of Things (IoT) already makes it possible for intelligent products to simplify people’s daily lives. For companies, it’s revolutionizing the tracking and maintenance of physical objects, while its massive new streams of data improve decision making. Linking the physical and digital worlds could generate up to $11.1 trillion a year in economic value by 2025, in settings including retail, healthcare, manufacturing, and technology. |
| But there are substantial differences in how well companies apply IoT in their businesses. To better understand what differentiates success from struggle, we surveyed IoT executives at 300 companies that have scaled up IoT use beyond pilots. |
| What we found: the companies getting the most from IoT were nearly three times likelier than competitors to add IoT connectivity to existing products—to play to their strengths, in other words, rather than betting on unfamiliar markets or product lines. |
| Take an agricultural-equipment manufacturer that shifted R&D investments to IoT-enabled products and services in existing lines of business. Farm-based sensors read soil conditions continuously, relaying the information to a cloud-based analytics platform that farmers could monitor on their mobile devices. Other sensors tracked irrigation levels and sent alerts whenever moisture readings hit predefined points. With these real-time insights, farmers were able to optimize water and fertilizer use, increasing yields over the growing season. |
| IoT leaders also understand that scale helps maximize impact. Leading companies implemented on average 80 percent more IoT applications than their counterparts. More widespread usage, it seems, forces a cultural shift by stoking organizational energy. Success also requires changes to a business process—the hard job of modifying the way a company does something. |
| Finally, a couple of caveats: if the CEO and top team aren’t providing visible encouragement and adequate resources, efforts are likely to stall. Privacy and data-security risks need to be top of mind, since IoT creates many more information nodes for hackers to penetrate. |
| And even if you already have a good IoT track record, don’t think you can go it alone. IoT ecosystems are growing and improving by the day. Some bigger companies are doing well by collaborating with smaller players that have high levels of expertise in areas such as software development. After all, the Internet of Things is only as good as the Web of Experts steering it. |
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| PODCAST |
| Performance (review) anxiety |
| Performance reviews: we give them, we get them—and most of us fret about them. McKinsey leaders Bryan Hancock and Bill Schaninger share the latest research in managing performance successfully. |
| They’ve found that three practices—linking performance goals to business priorities, coaching by managers, and differentiating compensation—are mutually reinforcing, and their cumulative effects on performance management are dramatic. |
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| MORE ON MCKINSEY.COM |
| Where failing fast is no big deal | Ping An’s Jessica Tan talks about the role emerging technologies have played in the Chinese financial conglomerate’s expansion. |
| Anchoring, away! | Anchoring bias—a psychological phenomenon in which a number sticks in your mind and influences you—can hold back the budgeting process, influencing your targets despite your best efforts. Here’s how to address it. |
| Mexico: Latin America’s digital-government powerhouse | The country’s digital efforts thus far have been laudable. But higher ambitions could fuel productivity and economic growth, boosting the country’s GDP by 7 to 15 percent. |
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| WHAT WE’RE READING | Sunil Sanghvi |
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| Sunil Sanghvi is a senior partner in Chicago and previous leader of McKinsey’s Global Agriculture Practice. For the past few years he has reduced his work hours, giving him more time for exercise, meditation, and reading. |
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| I organize my book shelves thematically. One topic that has always captivated me is where humans came from and where we are going. Big History: From the Big Bang to the Present by Cynthia Stokes Brown; A Short History of Nearly Everything by Bill Bryson; Guns, Germs, and Steel by Jared Diamond; and Sapiens: A Brief History of Humankind by Yuval Noah Harari—all delve into the incredible story of a species that has developed the intelligence and tools to deduce the origins and evolution of the universe. |
| Harari’s Homo Deus: A Brief History of Tomorrow contains a series of mind-blowing projections about where we are headed: the displacement of much of current human work by artificial intelligence (AI); the evolution (within maybe 100 years) of some humans to a new species as people try to give their children every genetic head start in life; and humanity’s search for happiness and immortality. A must read! |
| A second theme that grabs me is how to live a good life. In pursuing emotional and spiritual peace, I have found value in the Dalai Lama’s writings; The Art of Happiness is a terrific example. In pursuing physical well-being, Spark: The Revolutionary New Science of Exercise and the Brain by John J. Ratey had a big impact on me (the importance of getting your heart rate up). So did Matthew Walker’s Why We Sleep: Unlocking the Power of Sleep and Dreams, which got me to make behavior changes that now have me sleeping much better. Being Mortal by Atul Gawande has been inspirational for me as my parents have gotten older. And Doing Good Better by William MacAskill has been a wonderful read, as we think through our family’s charitable giving this holiday season. |
| Finally, I would call out some of the beautiful literature I have had the pleasure to read. I just finished The English Patient by Michael Ondaatje. Others that come to mind include When We Were Orphans by Kazuo Ishiguro; All the Light We Cannot See by Anthony Doerr; Doctor Zhivago by Boris Pasternak; and anything written by my favorite author, James Lee Burke. To circle back to my first topic, Yuval Harari argues that in the future AI may create better literature than Pasternak and better symphonies than Mozart. At this point, that is a bridge too far for me, but who knows?! |
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| BACKTALK |
| Have feedback or ideas? We want to hear from you. |
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