| This week, we look at how leaders can avoid drawing conclusions about strategy—and people—too quickly. Plus, managing employees through mergers, and Sascha Hower, the supply-chain leader of e-commerce giant Wayfair, on the future of delivery. The Shortlist team wishes you happy holidays and a wonderful new year. See you back here in January. |
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| The desire for coherence (or fitting complex ideas into simple mental frames) is part of being human. In the business context, it can prompt people to draw conclusions faster than they should. This is what’s known as the halo effect: company performance, good or bad, creates an overall impression—a halo—that shapes how we perceive its strategy, leaders, employees, culture, and other elements. |
| Imagine a company that is doing well, with rising sales, high profits, and a sharply increasing stock price. The tendency is to infer that the company has a sound strategy, a visionary leader, motivated employees, an excellent customer orientation, a vibrant culture, and so on. But when that same company suffers a decline—if sales fall and profits shrink—many people are quick to conclude that the company’s strategy went wrong, its people became complacent, it neglected its customers, its culture became stodgy, and more. In fact, these things may not have changed much, if at all. |
| These distortions don’t apply only to company performance; the halo effect can also alter how we view individual performance. When it comes to hiring decisions, structured interviews can help mitigate the halo effect. Candidates are measured against valid indicators—the attributes and experiences defined as being most important for success in the position. Basically, it comes down to putting first impressions aside and exploring the facts. |
| Executives can reduce the impact of the halo effect in other types of business decisions by first acknowledging their intuitions and then taking a minute to ask themselves: “What sort of judgment would I make if I set aside my first impressions?” It’s the mental equivalent of a blind taste test, where consumers are asked about products whose brand names have been removed: without the strong glow of a brand’s halo, consumers can say what they really think. |
| Whether executives are facing hiring decisions or other important choices, they need to make judgments based on evidence that is independent and valid, and not merely inferred from what they already know—or think they know. |
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| OFF THE CHARTS |
| Ten trends reshaping business and society |
| The McKinsey Global Institute looked at ten global trends in 2019, from Asia’s rise and an increasingly digital India to the declining labor share of income and the emergence of corporate superstars. One trend, related to exports, showed a fundamental shift away from manufactured goods and toward services. Although goods are still traded at higher volumes, certain services are growing up to three times faster. |
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| MORE ON MCKINSEY.COM |
| Managing through mergers | For employees, mergers create vast organizational anxiety—in most cases, change will be dramatic for one or both merging companies. Managers must acknowledge the power culture holds for workers, not ignore it. We delve into how to do so. |
| Advancing women’s equality in Africa | Progress toward gender parity has stalled over the past four years, but new research shows that if Africa moves to close gender gaps, it can secure a substantial growth dividend in the process. |
| Germany’s energy transition at a crossroads | Germany has been a leader in the transition to a low-carbon-energy system, but it will still miss most of its energy-transition targets for 2020. Urgent action is needed to get back on track. |
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| THREE QUESTIONS FOR
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| Sascha Hower of Wayfair |
| Wayfair has come a long way from its humble origins in—you guessed it—a college dorm room. Today, the company sells $8.6 billion in furniture and home goods to 19 million active customers in Europe and North America. Sascha Hower, Wayfair’s head of supply chain, Europe, spoke with McKinsey recently about how Wayfair is poised to meet massive new demand for home goods.
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| What will the parcel-delivery landscape look like in 2030? |
| E-commerce has recently seen double-digit growth in many categories, including home goods. As millennials and Gen Zers—people who are mobile and online all the time—start making homes for themselves, we expect the category’s already tremendous growth to take off. We foresee the market tripling by 2030 as new generations start buying new kinds of products and buying the things they need more frequently. |
| As they increase their purchases, are customers also going to expect to get their goods faster? Do you see one-day delivery as the emerging standard? Or even two-hour delivery? |
| Speed has been a major accelerator for e-commerce. I think that trend will continue, toward same-day delivery—not for all goods, but for many. If you buy a wardrobe, you probably won’t need it same day. But how about decor or some wall art or a guest bed, because you have visitors coming, maybe unexpected guests? There will be a few categories like this where you wouldn’t expect same-day delivery, but with customers becoming used to it and even educated into it, why not? |
| It’s not only speed—customers’ service expectations will also rise by 2030. Take home furniture. These goods are bulky. They’re heavy. They’re prone to damage. And today, they’re often delivered by transportation companies that have tended to do 100 percent of their business in B2B. That’s very different from not only delivering to a retail customer but also going into somebody’s home, their personal space. |
| Do you see any technologies that are going to help with these challenges? |
| We do. This could be things like machine-learning applications that help predict better when exactly the parcel gets delivered and where. We have so many pieces of information on every parcel. Across our system, we have data on hundreds of millions of events every single day. Our job is to figure out how to best use them to offer a best-in-class customer experience, to be precise in predicting where the parcel goes, to be precise in knowing in case something might go wrong. |
| Intelligent routing, a type of software that helps integrate returns or ad hoc collections into delivery schedules, will also become even more important. Returns are a well-known feature of e-commerce. A customer emails—“I have a return. Can you please pick it up?”—which was not planned into the delivery route. With new technologies, both machine learning and smart-routing software, we will be able to. |
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| BACKTALK |
| Have feedback or other ideas? We’d love to hear from you. |
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Copyright © 2019 | McKinsey & Company, 3 World Trade Center, 175 Greenwich Street, New York, NY 10007
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