COVID-19: Implications for business in 2021

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Our latest perspectives on the coronavirus outbreak, the twin threats to lives and livelihoods, and how organizations can prepare for the next normal.

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COVID-19: Briefing note #85, December 15, 2021

Debriefing 2021 reveals the agenda for the coming year.

’Tis the season for McKinsey to look back, survey, and publish a variety of “state of” reports. This week, we took a measure of labor, economic opportunity, and education in the United States; examined logistics in India and grocery in China; and analyzed 12 key ways in which the world changed this year. In all regions and sectors, the COVID-19 pandemic shaped the story in 2021, and the recovery helps set priorities for 2022.

The labor mismatch in the United States has pushed private-sector wages to increase at more than double the long-term pre-COVID-19 growth rates, yet positions remain unfilled. Some underlying factors are directly related to the impact of the pandemic and may be temporary. But deeper structural shifts could have a longer-lasting impact. Companies seeking labor resilience should learn to measure risk, design bold interventions, and ensure strong executive-level support.

Our second American Opportunity Survey revealed that Americans are aware of the labor market changes: 49 percent of respondents said that most Americans have opportunities to find good jobs, up seven percentage points from March, when we first conducted our survey. Their biggest economic worry, by far, and a prime barrier to sustainable and inclusive growth? Access to healthcare and/or health insurance.

Taking a measure of US student achievement after pandemic-era school closures is a bleak business: students in majority-Black schools are five months behind where they would otherwise have been, both in math and reading. Students in majority-White schools are now just two months behind historical levels. If current trends persist, historically disadvantaged students could remain up to a grade level behind their peers. Educational systems can invest now to ensure all students have the chance to recover from the pandemic’s many setbacks.

The impact of the COVID-19 crisis shows that India’s logistics sector needs structural reforms more than ever. In the warehousing function, companies could consider shrinking their product mix, allocating more inventory to essential items, and introducing processes to reduce levels of human contact. In the transport function, key steps include using efficient multimodal transportation more extensively.

McKinsey’s report on the state of China’s grocery industry reveals a paradox: this huge market leads in online commerce and is growing rapidly but is also highly unproductive, with the lowest sales per square meter in the world. The report covers topics including emerging trends that will shape the competitive landscape, the path to profitability for different retail models, and the sweeping impact of changing consumer preferences and technology.

In a year-end look at how the pandemic has reset the ways we live, work, and do business, the McKinsey Global Institute showcases 12 of the most thought-provoking charts from our research over the past year. The rise of the Asian consumer, the changing workplace, and pandemic-era changes that could yield higher productivity are among the topics in focus.

No discussion of 2021 would be complete without a debrief on the highlight of the year: the release of the COVID-19 vaccines. On the Inside the Strategy Room podcast, Pfizer’s CFO Frank D’Amelio discusses the decision to put $2 billion of capital at risk and never look at the business case during development.

Here are some of this week’s other key findings from our research:

This week, we feature three books in our Author Talks series. Simon Mundy, Moral Money editor at the Financial Times, discusses his new book, Race for Tomorrow: Survival, Innovation and Profit on the Front Lines of the Climate Crisis (William Collins, January 2022). The book relates the personal tales of people around the world dealing with the effects of climate change.

David Schonthal, professor of strategy, innovation, and entrepreneurship at Northwestern University’s Kellogg School of Management, discusses his new book, The Human Element: Overcoming the Resistance That Awaits New Ideas (Wiley, 2021). Innovators should consider factors including how much energy has to be expended to adopt a new idea and what emotions it brings up in those who interact with it.

Rob Cross, the Edward A. Madden Professor of Global Leadership at Babson College, discusses his new work, Beyond Collaboration Overload: How to Work Smarter, Get Ahead, and Restore Your Well-Being (Harvard Business Review Press, 2021). Through roughly 800 interviews with high performers, Cross identifies what makes collaboration effective and what is just a big time-suck.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #84, December 8, 2021

The virus is not the only thing with a talent for transformation.

If you could say anything positive about the COVID-19 pandemic—and its latest twist, the Omicron variant—it might be that it forced a lot of people to get better at accepting and acting upon the need for change. This week, we looked at three ways in which business leaders are transforming their organizations, as well as changes reshaping mortgages, infrastructure, healthcare, and the workplace.

CEOs today face tough operational obstacles, including difficulty in finding workers and an upward price spiral for goods. The prices for basic commodities including steel, semiconductors, and natural gas have risen, as have container-shipping costs. The need for decarbonization adds a long-term challenge to the total picture. To get ahead of operational difficulties, leaders can set up resilient, risk-tolerant supply-chain structures, double down on digitization, and achieve real-time visibility and systematic responses to external developments.

Business building is one of the top strategic priorities for organizations—double the share of recent years. That’s because business leaders expect half of their companies’ revenues five years from now to come from products, services, or businesses that do not yet exist, according to the latest McKinsey Global Survey on new-business building. This year’s survey provides insights to move organizations up the learning curve faster.

McKinsey talked to more than 350 senior executives about their plans for transforming sales, general, and administrative activities. Of the executives surveyed, 91 percent are planning to maintain or increase investment in digital technology in the coming years. More than half of respondents (compared with just over a quarter last year) said remote working has increased productivity compared with pre-COVID-19 levels. This boost is leading organizations to aspire to an average of 20 percent savings through optimizing real-estate portfolios.

Before we go any deeper into the topic of change, let’s admit that it’s not easy. On the McKinsey on Government podcast, McKinsey senior partner Kirk Rieckhoff discusses why change is so hard for systems and organizations, how to put teams together that can embrace a transformation, and the steps that lead to success.

The mortgage industry has been gradually adopting technology to streamline processes. But there is still an opportunity for investors to help make getting mortgages easier, faster, and cheaper, with increased digitization and automation, and through offerings from nonbank lenders, next-generation subservicers, nonqualified mortgage lenders, and companies bundling home-buying services.

The December edition of Voices on Infrastructure explores the transformational power of the Infrastructure and Investment Jobs Act and the EU Green Deal. The collection includes articles about how rail-industry leaders optimize project development to meet changing environmental, social, and governance expectations, and the opportunities for infrastructure investors to modernize transportation and help Europe meet its decarbonization goals.

Healthcare payers can take a more active role in the healthcare of members with comprehensive care models that are expected to eventually lower total medical costs.

Parents are transforming the workplace in a way unlikely to please employers: by leaving it. Employers are wise to offer parents creative flexibility in how, when, and where they do their jobs. Employers can improve health equity by ensuring benefits are easy to access and understand, destigmatizing receiving care, and exploring benefits that help with basic needs such as housing and transportation.

Here are some of this week’s other key findings from our research:

Our Author Talks series features Pulitzer Prize winner and New York Times editorial-board member Farah Stockman. In her book, American Made: What Happens to People When Work Disappears (Penguin Random House, October 2021), Stockman follows three workers laid off from manufacturing jobs that provided not only paychecks but also status, meaning, and the basis of connection to American life.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #83, December 1, 2021

Part of any recovery is fixing the things that broke.

It’s exhilarating to think about creating new technology that will help build sustainable and inclusive growth. But this week, McKinsey delved into the less glamorous work of repairing what is hobbled, leaky, or damaged. Time and inertia have eroded the United States’ water system, while the COVID-19 pandemic did a number on global travel in both tourism-dependent regions such as Thailand and emerging markets where tourism is less developed.

The need for investment in the US water system is at an unprecedented level. Among other problems, on average, 14 to 18 percent of total daily treated potable water in the United States is lost through leaks. Fortunately, an exciting set of technologies is making it possible to achieve water objectives more efficiently, while the Infrastructure Investment and Jobs Act includes significantly higher investment in desalination, water conservation, and water recycling. If players across the system are strategic, there is a unique opportunity to prepare the system to be resilient, safe, and affordable for the generations to come.

Countries that are heavily dependent on international tourism, such as Thailand, need to mend a revenue crater created by the pandemic. Passenger occupancy on international flights to Thailand dropped by 95 percent in September 2021 compared with the previous year, while hotels only filled 9 percent of their rooms. Thailand’s travel industry can seek growth by bundling product offerings, promoting ecotourism and cultural tourism, and investing in infrastructure in destinations attractive to domestic tourists, among other options.

Countries where tourism is still being developed face a related, but different, set of repairs. In September 2020, Omar El Hamamsy took on the role of CEO of Orascom Development, a real-estate and hospitality multinational, when there was plenty to fix. It was six months into the COVID-19 pandemic, seven months after the sudden passing of the company’s previous CEO, and amid an 84 percent drop in the number of global international tourist arrivals. In an interview with McKinsey, Hamamsy discusses the unique challenges of managing the company’s properties located in emerging markets.

Here is some of this week’s other research:

  1. The latest issue of McKinsey on Investing examines how a multitude of industries were reshaped by the COVID-19 pandemic. In a collection of nine feature articles, 16 elaborate charts, and two pages of facts and figures with the power to surprise, the publication explores themes of interest to private-markets investors.
  2. Elevating clinical drug supply to best-in-class standards can deliver benefits including cost savings in clinical drug supply of 15 to 20 percent. Companies can explore new ways to achieve supply-chain flexibility in sourcing, employ advanced analytics for patient forecasting, and develop external partnerships with contract research organizations, among other strategies.
  3. Healthcare payers have an opportunity to improve nutrition and have a positive impact on health. Early evidence suggests that medically tailored meal programs lead to fewer emergency-room visits and admissions to hospitals and skilled-nursing facilities, as well as lower monthly medical spending.
  4. The accelerating global energy transition has implications for the oil-field-services-and-equipment sector. Players must act swiftly and pursue an informed strategy because waiting for the upswing is not an option in the long run.

Our Author Talks series features Wil Haygood, a journalist and Boadway Visiting Distinguished Scholar at Miami University. His new book Colorization: One Hundred Years of Black Films in a White World (Alfred A. Knopf, October 2021) examines a century of Black cinema history and the insights it offers into Black culture and civil rights in the United States.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #82, November 24, 2021

The COVID-19 pandemic locked us down, but in the future, we aim to fly.

After nearly two years of lockdowns, travel bans, and at-home school and work, there’s some poetic justice in the robust development of advanced air mobility. The industry, which includes more than 250 companies developing electric vertical takeoff and landing (eVTOL) aircraft, attracted more than $5.4 billion in investment in just the first nine months of 2021. By 2030, thousands of eVTOLs could be flying above cities, delivering both cargo and passengers. McKinsey’s video-rich package delves into advanced air mobility, where technology stands now, how it could play out, and what it means for the future of cities and society.

Three CEOs shared their companies’ visions for air mobility. Florian Reuter, CEO of aircraft manufacturer Volocopter, spoke to McKinsey about the multirotor eVTOL two-seater aircraft his company plans to offer for commercial use in 2024. Bonny Simi, Joby Aviation’s head of air operations and people, talked with us about how air taxis may change where people live and how they commute and travel. Joby’s eVTOL aircraft seats five people—a pilot and four passengers—and can travel at speeds of up to 200 miles per hour. And Daniel Wiegand, CEO of Lilium, explained how his company’s aircraft are designed to minimize noise emissions—something he believes will be crucial to community acceptance—and with electric and battery power for sustainability.

It can be hard to imagine a future of easy, cheap, and fast transportation when today the world’s containers are stuck in an expensive holding pattern. In a follow-up to their August video about why shipping costs skyrocketed during the COVID-19 pandemic, McKinsey’s logistics experts forecast when shipping rates may normalize and at what level, identify challenges that may prolong the record costs, and explain how the Chinese New Year next February may affect shipping rates.

McKinsey surveyed a diverse group of supply-chain executives globally to learn what steps they had taken to shore up their supply chains over the past year. Among key findings: companies were more likely than expected to increase inventories, and less likely either to diversify supply bases or to implement nearshoring or regionalization strategies.

Axel Hefer, CEO of Trivago, a global accommodation search platform, has seen a big shift toward travel domestically and to neighboring countries. In an interview with McKinsey, he describes how it could take years for the industry to rebuild trust in the idea that intercontinental travel is a low-risk activity.

Here are some of this week’s other key findings from our research:

Here’s something to discuss around the Thanksgiving table: our new edition of McKinsey for Kids starts with the mess scattered around a typical kid’s bedroom and ends in Asia, where K-pop is influencing the world’s popular culture. What ties it all together? A deep dive for young people into global trade. We go back to ancient Mesopotamia, through the Industrial Revolution, and onto container ships to explain why and how the socks on your floor, the songs on your playlist, and the food in your lunch box come from all over the world.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #81, November 17, 2021

It’s time to set priorities for the next era.

This week, McKinsey delved into priority setting, starting with ideas about how the wealth of ten top economies might be put to more productive use. We continued exploring what’s most important now with a breakdown of what the United States intends to tackle with its new $1.2 trillion infrastructure bill and in articles about COP26, M&A trends, and corporate responsibilities. We also reached outside our sphere, querying dozens of journalists about what they view as the top stories of our time.

McKinsey took stock of the underlying health and resilience of the global economy as it begins to rebound from the COVID-19 pandemic and questioned how productively global wealth is being used. Asset values in ten major economies are now nearly 50 percent higher than the long-run average relative to income. From 2000 to 2020, for every $1 of net new investment, twice as much debt and four times as many liabilities have been created. Historically, the growth of net worth has largely reflected investments that drive productivity and growth, in addition to inflation. Over the past two decades, however, increases in asset prices—driven largely by soaring real-estate prices—made up 77 percent of net-worth growth.

The first article in our new series, Reinvesting in America, breaks down the Infrastructure Investment and Jobs Act, signed into law this week. The act allocates an estimated $1.2 trillion in total funding over ten years, including $550 billion in new spending during the next five, divided between improving the surface-transportation network ($284 billion) and society’s core infrastructure ($266 billion).

Our key takeaway from COP26 was that the net-zero imperative is no longer in question—it has become an organizing principle for business. McKinsey analysis indicates that a net-zero transition would require $150 trillion of capital spending, two-thirds of it in developing economies. Net-zero commitments are outpacing the formation of supply chains, market mechanisms, and financing models. We propose five considerations that can help executives define an effective net-zero program for the next few years.

M&A deal value was up 175 percent from a year earlier for large transactions, according to McKinsey’s review of global M&A trends. By the end of August, the value of large global M&A transactions had already surpassed $3.9 trillion, making the $4.5 trillion record set in 2007 appear within reach. The continued high premiums make extracting greater value from transactions more important than ever. Private-equity firms are increasingly prioritizing full-fledged business building, and corporate players are working harder—and sometimes paying more—to find hidden jewels.

In this episode of the Inside the Strategy Room podcast, two authors of a new McKinsey Global Institute report examine how the value that companies bring to economies, societies, and households has changed. Between 1995 and 2018, the contribution of large corporations to their home countries’ economies rose by ten percentage points in terms of share of GDP. But those corporations are relying less and less on assets and labor—less physical capital and fewer employees per unit of revenue—which raises a wide set of questions.

We know what we think the big topics will be in the coming year, but we wanted to learn what members of the media consider most significant. McKinsey asked dozens of journalists and media leaders around the world two big coverage questions. First, what business, economics, or policy theme do they predict will dominate media in 2022? And second, what topic do they think will be under covered, and why does it merit more attention? Our interactive presentation lets our audience choose which journalists or publications they want to hear from.

Here are some of this week’s other key findings from our research:

Our Author Talks features Giulio Boccaletti, honorary research associate at the Smith School of Enterprise and the Environment, University of Oxford, and a former McKinsey partner. He discusses his new book, Water: A Biography (Pantheon, September 2021), which examines how societies throughout history have managed water resources and what the institutions that protect us from water events can learn from the past.

Our new edition of McKinsey for Kids starts with the mess scattered around a typical kid’s bedroom and ends in Asia, where K-pop is influencing the world’s popular culture. What ties it all together? A deep dive for young people into global trade. We go back to ancient Mesopotamia, through the Industrial Revolution, and onto container ships to explain why and how the socks on your floor, the songs on your playlist, and the food in your lunch box come from all over the world.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #80, November 10, 2021

Bouncing back higher requires tackling underlying obstacles.

This week, McKinsey continued its exploration into how to grow economies sustainably and inclusively by focusing on the United States, its regions, and specific programs. We also examined the global fight against climate change in interviews with the authors of two books on the topic and with an article on building resilience.

The United States can achieve sustainable and inclusive growth if it can address issues including the struggles of young people, who are building wealth at a much slower pace than their peers did half a century ago, and large gaps in workforce participation, wages, and higher-education attainment. Other challenges include climate change, which is affecting people in different geographies in the United States in various ways, and slower productivity growth. McKinsey proposes a series of no-regrets actions to create the conditions for economic growth that mitigates climate change and benefits a wide swath of the population.

Though the region enjoys a strong economy and lower unemployment than the national average, Minneapolis–St. Paul has dramatic prosperity gaps between Black and White residents. Median Black household income is less than half the median White household income ($42,200 compared with $90,100, respectively), and workers of color were one and a half to two times likelier to report loss of income during the pandemic. To address root causes of inequities, leaders can increase access to capital for entrepreneurs, eliminate policies and practices that result in bias and exclusion, expand mentorship, and support the reskilling of workers.

States can leverage data to prepare for the US Treasury’s $10 billion Homeowner Assistance Fund program, intended to help homeowners avoid defaults and delinquencies through assistance with mortgage, insurance, and utility payments. A well-designed strategy to gather and analyze data will help states support homeowners most at risk. Going further to build dynamic models of the impact of different decisions and scenarios can also help states test various potential policies.

This week, we spoke with three authors for our Author Talks series, two of whom tackle climate change. Katharine Hayhoe, chief scientist for The Nature Conservancy, discusses her new book, Saving Us: A Climate Scientist’s Case for Hope and Healing in a Divided World (Simon & Schuster, September 2021). Hayhoe examines the facts of climate change and suggests personal and policy changes that can improve the situation.

In his new book, Speed & Scale: An Action Plan for Solving Our Climate Crisis Now (Penguin Random House, November 2021), John Doerr, investor and chairman of venture capital firm Kleiner Perkins, highlights ten big, global objectives by which we can cut carbon emissions. These include how we electrify transportation, decarbonize the grid, and manufacture concrete and steel.

Even in a scenario in which aggressive decarbonization results in just 1.5°C of warming above preindustrial levels by 2050, the number of people exposed to severe climate hazards could still increase to a quarter of the global population. Leaders need to build resilience against climate events into their plans. Insurance, civil-engineering, agricultural, and financial-services companies all have roles to play in encouraging and enabling investment in sustainability and resilience.

Here are some of this week’s other key findings from our research:

  • The global economy is exhibiting strong overall demand, according to McKinsey’s Global Economics Intelligence executive summary for October. The public-health situation has improved in most surveyed economies, especially as COVID-19 vaccination programs make real progress. The main economic challenges are supply-chain bottlenecks and rising inflation. Fortunately, most economists and forecasting institutions expect that these difficulties will be relatively short lived.
  • In McKinsey’s new report, The Internet of Things: Catching up to an accelerating opportunity, we estimate that by 2030, the IoT could enable $5.5 trillion to $12.6 trillion in value globally. We found that the factory setting will account for the largest amount of potential economic value from the IoT, about 26 percent, in 2030. The human-health setting is second, representing about 10 to 14 percent of estimated value in 2030.
  • Sue Barsamian is a seasoned software executive who serves on the boards of companies including Five9, Box, and NortonLifeLock. In a wide-ranging interview, she discusses product–market fit, why unit economics always matters, and what’s making her optimistic about board diversity.

Our new edition of McKinsey for Kids starts with the mess scattered around a typical kid’s bedroom and ends in Asia where K-pop is influencing the world’s popular culture. What ties it all together? A deep dive for young people into global trade. We go back to ancient Mesopotamia, through the Industrial Revolution, and onto container ships to explain why and how the socks on your floor, the songs on your playlist, and the food in your lunch box come from all over the world.

Our third Author Talks features Azeem Azhar, creator of the Exponential View newsletter, on his new book, The Exponential Age: How Accelerating Technology Is Transforming Business, Politics and Society (Diversion Books, September 2021), which in the United Kingdom is titled Exponential: How to Bridge the Gap Between Technology and Society (Random House Business, September 2021). Azhar hopes the book will serve as a road map for how societies can deal with the effects of AI, automation, and big data.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #79, November 3, 2021

Endemic COVID-19 is one more problem we’ll have to live with.

We can still dream about putting the COVID-19 genie back in the bottle, but the more likely reality is that the virus will become an endemic problem we just have to get used to. Climate change is similar in some ways: a difficulty we have to plan for, deal with, and overcome every day. This week, McKinsey proposes multiple approaches to these and other ongoing struggles.

Soon, the daily risks we run with COVID-19 may seem as much a part of normal daily life as the risks we run when we drive or navigate flu season. A complete approach to managing endemic COVID-19 first requires society to reach a consensus on what is an acceptable disease burden. We will then need a comprehensive approach to track progress against this standard, define new disease-management protocols to limit deaths, and establish practices to slow transmission.

Underscoring how the virus is morphing into an endemic concern, our latest report on the coronavirus effect on global economic sentiment revealed that uncertainty over COVID-19 is no longer executives’ foremost economic worry. Instead, they perceive the mounting fallout on the supply chain and inflation as the biggest threats to growth in their companies and economies.

Portfolio-alignment tools are computational models the financial sector can use to set climate targets and measure progress. These tools use forward-looking climate scenarios to estimate the division of the global carbon budget by sector and geography. This allows financial institutions the freedom to extend financing to heavy emitters, provided that the financing goes toward the responsible retirement or decarbonization of emitting assets and that decarbonization or retirement is successfully achieved.

Advanced technologies critical to stopping climate change that are already mature could deliver about 60 percent of the emissions abatement needed by 2050. But further abatement must come from climate technologies that aren’t quite ready. Our estimates suggest that next-generation technologies could attract $1.5 trillion to $2 trillion of capital investment per year by 2025. Established companies, start-ups, and investors will need a nuanced understanding of technical advances, customer demands, and policy environments.

Carbon markets have become increasingly fundamental to achieving net-zero greenhouse-gas emissions. A joint paper by McKinsey and research partners in Singapore discusses the rapid emergence of carbon markets as a viable asset class. Institutional investors could help corporations and nations use carbon markets to achieve global climate goals while also fulfilling their own mandates.

If Africa can use its large renewable-energy-generation capacity and rich natural capital endowments strategically, it could catalyze economic growth and make a substantial contribution to the global net-zero transition. McKinsey’s Green Africa report highlights ten opportunities that could deliver growth, boost resilience, and abate emissions on the continent.

Here are some of this week’s other key findings from our research:

Our Author Talks series features former McKinsey consultant David McCloskey on his debut novel, Damascus Station (W. W. Norton & Company, October 2021). The novel was inspired by the author’s pre-McKinsey career as an analyst with the CIA, when he worked in field stations across the Middle East and focused on Iraq, Lebanon, and Syria, and counterterrorism issues.

Also in Author Talks, Paul Polman, the cofounder and chair of IMAGINE and former CEO of Unilever, discusses his book Net Positive: How Courageous Companies Thrive by Giving More Than They Take (Harvard Business Review Press, October 2021). Leadership and systems changes are needed so that businesses can focus on being successful by solving the world’s problems.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #78, October 27, 2021

How can the world deliver growth and sustainability and inclusion?

McKinsey routinely highlights near-term obstacles that affect the organizations we serve, as in this week’s collection of articles about a distressing aftershock of the COVID-19 pandemic: inflation. But this week, we also offer an expansive reflection by McKinsey’s leadership on a vision for the future.

How do we go about building a future that delivers growth, sustainability, and inclusion? McKinsey’s global managing partner Bob Sternfels and colleagues Tracy Francis, Anu Madgavkar, and Sven Smit deliver a proposal for how changemakers in business, government, and society can forge such a path. First and foremost, the three goals cannot be viewed as trade-offs but rather as fundamentals that strengthen and reinforce one another.

McKinsey recently examined inflation from several angles. The COVID-19 pandemic has driven radical shifts in demand, buying patterns, and perceived value across value chains, which in turn have led to sharp spikes in commodity prices. While procurement teams should continue efforts to fight material-cost increases and creatively reduce sourcing costs, adjusting prices is essential in today’s inflationary environment to improve margin position and align the prices of a wide range of industrial goods with their value to customers.

Pandemic price spikes and commodity cost increases are concerns for many business leaders, but for CFOs, inflation and its repercussions are calls to action. To get clarity on how price increases have affected their profit-and-loss statements, CFOs first have to ask the right questions about market dynamics, financial performance, and leadership incentives. Swift action to mitigate the effects of price spikes is often essential because it takes time for benefits to materialize.

After a decade of defense-spending growth, the budget for the US Department of Defense could flatten and not keep pace with inflation. The budget isn’t the only thing that is changing. Defense leaders have renewed interest in adopting innovative technologies, such as quantum computing, artificial intelligence, and hypersonic weapons. Balancing the budget will require a new cost-reduction approach that sets market-backed targets across all areas.

Bathroom tissue may not be a glamorous topic, but it’s an effective bellwether of consumer sentiment, as panic buying during the outset of the pandemic illustrated. Today, the five trends shaping the global tissue industry point to larger consumer themes, including the need to be e-commerce ready and sustainable. Rising inflation is expected to fuel demand for private-label and lower-cost products.

Here are some of this week’s other key findings from our research:

  • The number of public-company listings in the United States peaked in the mid-1990s, at nearly 6,000, but has fallen by about half over the past 20 years. While pundits worry, our analysis shows that reports of corporates’ demise have been greatly exaggerated.
  • As businesses emerge from the pandemic, more than 80 percent face critical skills gaps. In these new circumstances, we believe the age-old art of apprenticeship can be central to an organization’s strategy for improving capabilities.
  • Dwindling supplies of fresh water pose a material business risk: one estimate shows that the lack of clean fresh water threatens some $425 billion of value across more than 500 companies. New analysis shows how companies can reduce water risk by targeting renewable-energy purchases and investments.

It’s not for goofing off; it’s for sharpening your problem-solving skills. What nine-letter word are we searching for? “Crossword,” of course—as in McKinsey’s weekly crossword. Each puzzle is created with the McKinsey reader in mind and includes a business theme (of varying degrees of subtlety) for you to noodle over.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #77, October 20, 2021

Within regional stories lie universal postpandemic themes.

This week, McKinsey experts examined the Asian postpandemic economy and looked into other regional issues including trends reshaping Europe’s power markets, how the United States can decarbonize its power system by 2035, and Germany’s journey toward net zero. Within these deep dives in specific regions are global lessons, including the need to massively accelerate renewable energy generation and to truly understand the digital-native consumer.

Two years since McKinsey labeled this the Asian century and in the wake of the extraordinary shock of COVID-19, the region is exhibiting remarkable resilience. The Asian economy contracted by 1.5 percent in 2020, while the world economy shrank by 3.2 percent; Asia is expected to rebound faster both this year and next. Windows of opportunity for Asia include leveraging regional trade networks, boosting growth through innovation and productivity, putting climate change at the top of the corporate and policy agenda, and serving a changing consumer sector.

European power markets have entered a period of unprecedented change. Power prices have risen to about four times the historical average in a number of European countries. More uncertainty lies ahead: electricity demand is expected to increase steadily in Europe, due in part to electrification of transport. A future energy system dominated by intermittent renewable power raises questions about total-capacity rollout. When utilities and large power buyers face such question marks, strategic risk management becomes a matter of survival.

In April 2021, the United States set a target to create a “carbon pollution-free power sector by 2035.” McKinsey experts present a potential “zero-by-35” decarbonization scenario for the United States in which each regional power market would reach net-zero greenhouse-gas emissions without offsets from other sectors.

Achieving climate neutrality by 2045 is feasible for Germany, though daunting. Our research shows that the transformation to net-zero emissions can be achieved at net-zero cost for society as a whole, delivering a favorable business case for Germany and a leap to a new technological age. Germany has to tackle key challenges in the five most emissions-intensive sectors: energy, industry, transportation, buildings, and agriculture.

Here are some of this week’s other key findings from our research:

  • Traditionally, earnings per share is viewed as a major driver of returns to shareholders. But our historical and updated analyses point to economic profit as a better indicator of corporate performance. McKinsey experts explain why investors should examine a company’s total profit after the cost of capital is subtracted.
  • COVID-19 forced colleges and universities worldwide into online education. McKinsey identified the best online higher-education practices by surveying academic research as well as the reported practices of more than 30 institutions, and by conducting ethnographic market research. Vital building blocks include creating a seamless journey for students (single sign-on is key), adopting an engaging approach to teaching, and facilitating interpersonal connections.
  • Shareholders in semiconductor companies have seen high double-digit returns throughout the pandemic, despite supply-chain issues and growing divergence in global trade. To keep the momentum going, semiconductor players might want to consider focusing on gaining leadership in profitable segments by leveraging M&A and partnerships, building agility, and pursuing new technologies and innovations.
  • COVID-19 has been hard on fashion: apparel companies lost more than 90 percent of their profits in 2020, according to the McKinsey Global Fashion Index. Data will be the key for the fashion industry to unlock the insights needed to reengage customers in the coming months and years.

Our Author Talks series features Emory University law professor Dorothy A. Brown, a nationally recognized scholar on race, class, and tax policy, about her latest book, The Whiteness of Wealth: How the Tax System Impoverishes Black Americans—and How We Can Fix It (Crown, March 2021). US tax policy often favors behaviors and activities more common among White households, putting Black taxpayers at a disadvantage.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #76, October 13, 2021

The drama of COVID-19 has cast leaders in new roles.

All the world’s a stage, but the COVID-19 pandemic has rewritten the script. Executives are now asked to play different parts. This week, McKinsey looked at the morphing demands on CFOs and asset managers, and at how C-suite leaders across industries must understand and embrace digitally enabled strategies and business models.

The job of CFO has been transformed by the pandemic, according to the latest McKinsey Global Survey. Crisis management, social and environmental issues, and the accelerated adoption of technology are occupying time previously devoted to strategic leadership and finance capabilities. Between 2016 and 2021, the share of finance leaders who say that they are responsible for their companies’ digital activities has more than tripled. Procurement, board engagement, and investor relations are also newly important focuses for CFOs.

We’re all tech executives now, to some extent. Across industries, competitive differentiation today emerges from superior digital capabilities and technology endowment, more agile delivery, and a progressively more tech-savvy C-suite. To better understand how leading banks achieve more with their technology budget, we looked at how their workforce is configured, on three dimensions: spending, roles, and talent. Banks that have reconfigured all three have achieved a significant uptick in output from their technology budgets. Consumer-packaged-goods (CPG) manufacturers must leverage digital and analytical capability to accelerate productivity. CPG companies must also unravel the conundrum of e-commerce, which offers a growth channel but not necessarily a profitable one. On the McKinsey on Consumer and Retail podcast, McKinsey’s Lidiya Chapple and Tatiana Sivaeva explain how CPG companies can profitably meet online consumers’ needs.

McKinsey’s annual report on North American asset managers, whose industry profits reached close to $73 billion in 2020, highlights ways in which the industry’s role is changing. Investors increasingly want their asset managers to expose them to opportunities outside of traditional asset classes and industry sectors. Asset managers are getting more help from technology-enabled mass customization, which can broaden access to value propositions that have typically been the preserve of institutional and high-net-worth investors.

Here are some of this week’s other key findings from our research:

Our Author Talks series features Indra Nooyi, former chairman and CEO of PepsiCo, about her new book “My Life in Full: Work, Family, and Our Future” (Penguin Random House, September 2021). Reflecting on her own experience, the first woman of color and immigrant to run a Fortune 50 company argues that winning the war for talent requires creating a new system in which women can both manage their families and climb to the top at work.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #75, October 6, 2021

Some problems are relentless and call for an unrelenting response.

As the COVID-19 crisis drags on, executives, particularly in developed economies, are feeling worse about the state of the economy and their own companies’ prospects. It’s natural that a challenge as unremitting as the pandemic should produce alternating hope and despair. This week, McKinsey examined the backslide in executives’ views, and a variety of similar issues that require problem-solving as dogged as the problems themselves, including vaccine development, transport decarbonization, employee needs, and the extraterrestrial junkyard.

Just as the rise of the Delta variant ushered in a fresh wave of COVID-19 cases, so it appears to have resuscitated executives’ worries about the economy. In our latest McKinsey Global Survey, 65 percent of respondents say that they expect improvements in their home economies, down from a range of 73 to 79 percent who have said so since March 2021.

By region, the pandemic is the top risk to growth in every region except Latin America and cited most often by those in developing markets and Asia–Pacific.

In a wide-ranging interview with McKinsey, Richard Hatchett, CEO of the Coalition for Epidemic Preparedness Innovations, or CEPI, discusses the work of the largest vaccine-development initiative focused on viruses that are potential epidemic threats. Among other big challenges, there is still work to be done to optimize existing COVID-19 vaccines. CEPI is evaluating mix-and-match dose strategies, where first and second doses could be from different manufacturers, to improve the performance, as well as fractionated, or dose-sparing strategies, to boost coverage.

The organization is also examining the optimal intervals between doses and whether two or three doses are required.

What will it take to move the transport infrastructure industry toward carbon zero? Globally, more than $2 trillion of transport infrastructure investments will be needed each year until 2040 to fuel economic development. The transport sector is the largest contributor of greenhouse-gas emissions within the European Union, and emissions are still growing. McKinsey’s road map lays out changes needed in planning, design, tender, procurement, and operations that can help the industry forge a more sustainable path forward.

What do workers want? Our research is clear: workers are hungry for purpose, to feel their work is valued, and their opportunities are growing, all in a comfortable physical and digital environment with the right work–life balance. It is possible to deliver an excellent employee experience, but organizations may need to profoundly reorient themselves away from a traditional top-down model to one based on the fundamentals of design thinking.

Even in space, we need to clean up after ourselves. About 11,000 satellites have been launched since Sputnik 1 in 1957. In the next few years, roughly 70,000 satellites could enter orbit if proposed plans come to fruition—an explosion of interest based on potential new markets and more sophisticated technologies. Unless actively deorbited, they will remain there for months to hundreds of years. McKinsey’s Aerospace & Defense Practice examines how to handle the four main types of extraterrestrial trash.

Here are some of this week’s other key findings from our sector research:

Our Author Talks series features Parag Khanna, founder and managing partner of FutureMap, speaking about his book Move: The Forces Uprooting Us (Simon & Schuster, October 2021). The globalization scholar discusses the migration patterns he expects will occur over the next ten to 30 years and how societies should prepare.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #74, September 29, 2021

To address vaccine hesitancy, first comprehend it.

The first step to solving a problem is to understand it. That’s one of the keys to getting at least some unvaccinated Americans to take action. This week, McKinsey examined vaccine hesitancy and identified some of the reasons for resistance, which, once removed, could help build a bridge to herd immunity. McKinsey experts used this same problem-defining approach to examine how to improve women’s work lives, reduce methane emissions, make organizational transformations more effective, and drive revenue in meal delivery.

More than 63 percent of the US population have received at least one dose of a COVID-19 vaccine, and more than 54 percent have been fully vaccinated, as of September 16, 2021. A minimum of roughly 80 million additional individuals would still need to be vaccinated in the next few months for the country to have a chance at reaching herd immunity. Among the unvaccinated, 14 percent are “Unlikely adopters,” who may never take the shot, while 7 percent are “Interested,” meaning that they plan on getting the vaccine. The most dynamic unvaccinated group is the “Cautious” category, people who may get vaccinated if their concerns can be addressed. Aiding in scheduling appointments, as well as addressing worries about long-term side effects, could help move this group into the vaccinated category.

McKinsey and LeanIn.Org’s Women in the Workplace study reflects experiences from 423 participating organizations and more than 65,000 survey respondents. In spite of the challenges of the COVID-19 pandemic and its effect on the workplace, women’s representation has improved across the corporate pipeline since 2016, but there are also persistent gaps. Women of color continue to lose ground at every step: between the entry level and the C-suite, their representation drops off by more than 75 percent. In the past year, one in three women has considered leaving the workforce or downshifting their career—a significant increase from one in four in the first few months of the pandemic. Companies need to take bold steps to address burnout and to recognize and reward the women leaders who are driving progress.

Curbing emissions of methane from agriculture, oil and gas, coal mining, solid-waste management, and wastewater management will be critical to solving the net-zero equation. New McKinsey research shows that these five industries could achieve a 20 percent reduction in global annual methane emissions by 2030 and a 46 percent reduction by 2050—enough for a significant shift toward a 1.5°C warming pathway. McKinsey proposes three “no regrets” actions to begin reducing methane emissions now.

As leaders steer organizations out of the COVID-19 pandemic, many are recognizing the need for transformation. The question is, how many people must be involved in a transformation for it to be effective? McKinsey analyzed data from 60 organizations that are at least two years into their transformations and discovered the bare minimum: at least 7 percent of employees should own some part of the change project. That may seem low, but the average company involves only 2 percent of its employees.

Food delivery has become a global market worth more than $150 billion, having more than tripled since 2017. McKinsey identifies the most promising revenue models, which include “dark kitchens,” customer-specific menu engineering, and brand spin-offs.

Here are some of this week’s other key findings from our sector research:

  • Increasingly, private-equity (PE) firms are closely managing the companies they own. To run these portfolio companies, they are choosing CEOs who understand the higher metabolic rate that PE requires. McKinsey, along with top PE executives, created a playbook for newcomers to the role of portfolio-company CEO that provides insight, guidance, and a series of steps to take control of this demanding leadership challenge.
  • It’s time for US auto dealerships to prepare for an electric-vehicle (EV) future. Everyone from sales staff to maintenance workers will need training to work with this technology. McKinsey’s confidence in the segment comes from impressive sales numbers, despite the COVID-19 pandemic: Europe and China achieved fourth-quarter 2020 sales increases of 60 percent and 80 percent, respectively, over the previous quarter. In the United States, EV sales increased nearly 200 percent between the second quarter 2020 and the second quarter 2021.

Even the most seasoned professional was a neophyte at some point, a fact celebrated in our My Rookie Moment video series, in which McKinsey colleagues discuss the first time they had to deal with a particular challenge. This edition features stories about the nerve-racking process of giving a colleague tough feedback for the first time, and the humbling experience of receiving it.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #73, September 22, 2021

COVID-19 vaccines demonstrate how to achieve the impossible.

Vaccination rates, vaccine hesitancy, herd immunity—these have become topics that occupy our everyday thoughts. It can be jarring to remember that less than a year ago, nobody, outside of clinical-trial volunteers, could get a shot at all. How the world got from there to here in record time is the story of achieving an impossible goal. This week, McKinsey explored how Pfizer’s leadership team took on a challenge that they initially believed was undoable. We also examined other difficult feats, including delivering sustainable infrastructure, making electric vehicles (EVs) profitable, and adapting to climate change, and contemplated steps to achieving them.

If you want to leave the meeting room, first make a decision. That was one of the systems Pfizer developed to advance its apparently impossible agenda of distributing a vaccine in eight months, said Angela Hwang, Pfizer’s head of biopharmaceuticals, in an interview with McKinsey senior partner David Quigley. This interview is part of COVID-19 vaccines: The road to recovery and beyond, a series that includes a broad array of voices leading the historic global effort to develop, distribute, and provide equitable access to COVID-19 vaccines, including the Africa CDC; CEPI; Gavi, the Vaccine Alliance; and Moderna.

As illustrated by our “chart of the day,” vaccination has helped countries dramatically reduce the rate of hospitalization due to COVID-19, among other benefits. Now Pfizer is focusing on the next big vaccine challenges, including shots for younger kids, heartier formulations, and doses that can manage new variants.

The September edition of Voices on Infrastructure features four articles that explore how leaders are tackling the seemingly insurmountable task of building sustainable infrastructure and retrofitting existing assets. In an interview, Sadek Wahba, chairman and managing partner of I Squared Capital, discusses some of the most exciting investment cases for sustainable infrastructure, including floating solar and floating wind turbines, as well as offshore wind. Lara Poloni, president of AECOM, and Nick Smallwood, CEO of IPA and head of the UK government’s Project Delivery Function, identify top concerns for the construction industry. These include prioritizing whole-life carbon measurement and scaling up the capacity to retrofit existing social infrastructure and housing to improve energy efficiency. Densely packed urban residents are particularly vulnerable to the effects of climate change. McKinsey Sustainability and C40 Cities—a network of 97 global cities dedicated to addressing climate change—offer a starting set of 15 high-potential actions for cities to consider. Finally, solving problems requires first understanding them completely. Help us develop a consistent set of sustainability metrics by answering McKinsey’s full asset-life-cycle survey.

Despite growing sales, EV profitability is only slightly above breakeven for many auto makers. McKinsey research is clear that the automotive future is electric, so figuring out how to make it profitable is essential to both OEMs’ business models and the decarbonization of the transportation system. McKinsey’s in-depth report explores how OEMs can boost EV profitability.

Here are some of this week’s other key findings from our sector research:

Our Author Talks series features Ella Bell Smith, a professor of management at the Tuck School of Business at Dartmouth College. She discusses her re-released book, Our Separate Ways, With a New Preface and Epilogue: Black and White Women and the Struggle for Professional Identity (Harvard Business Review Press, August 2021). She makes a case for why companies need to spend more on developing Black women to take on senior roles and why women in general should seek out revenue-generating positions. Even the most seasoned professional was a neophyte at some point, a fact celebrated in our My Rookie Moment video series, in which McKinsey colleagues discuss the first time they had deal with a particular challenge. The latest edition features stories about the nerve-wracking process of giving a colleague tough feedback for the first time, and the humbling experience of receiving it.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #72, September 15, 2021

To reach the post-COVID-19 era, vaccine supply chains must improve.

Nine months since the first COVID-19 mass vaccination program began, only 1.4 percent of people in low-income countries have received at least one dose. The problem is not just of procurement, but also of distribution and the lack of strong cold-chain infrastructure in some parts of the world. Solving these problems is the only way to get from where we are now to the post-COVID-19 era. Once the vaccination challenge—and the pandemic itself—has been overcome, CEOs will face a new set of priorities, which our experts defined this week. We also explored mindsets and skills, including automating, partnering, and developing and supporting diverse talent, that will be crucial for future leaders.

Each of the COVID-19 vaccines has a different profile, but they all have one thing in common: the need for cold-chain vaccine storage. Broadly speaking, developing countries have less mature cold-chain systems than do high-income economies, with various degrees of maturity within them. Procuring vaccines will not be enough to vaccinate the world: cold-chain systems need investment and improvement to get doses into arms effectively.

As promised last week, McKinsey senior partner Homayoun Hatami and global leader Liz Hilton Segel offer an information-packed interactive examining the five priorities of CEOs in the new normal. To prepare for the post-COVID-19 era, leaders need to do more than fine-tune their day-to-day tasks; they need to be ready and willing to rethink how they operate, and even why they exist. In the future, CEOs must be proactive on sustainability, know how to derive value from cloud computing, focus on cultivating talent, design organizations for speed, and communicate purpose across their organizations.

Energy companies face societal pressure and increased regulation to significantly reduce fossil-fuel dependency. Leaders in the sector should consider a promising solution: autonomous plants. Such future plants link technology, data, and advanced visualizations with operations to ensure that assets learn from each action taken, as well as from historical data and derived insights. These plants progressively improve their operations over time to run with a lower carbon footprint as well as more safely and profitably.

To improve the track record of public–private partnerships, government policy makers can align with the private sector to better manage the risks of undertaking a large project. Transferring specific project risks and responsibilities—including development, construction, and operation—to private-sector investors and lenders leverages the risk-management capabilities of the private sector, while the public sector often remains the project’s legal owner.

US business leaders face a moral and economic imperative at the societal level: to make employer-sponsored healthcare work better for America’s workers. Poor health costs the US economy about $3.2 trillion annually from premature deaths and lost productivity. Compared with high-income peer countries, the United States has a 46 to 50 percent higher disease burden rate for 20- to 40-year-old workers, and a 17 to 33 percent higher disease burden rate for those over 40 years old. Employers can consider a suite of changes to improve employee health and productivity.

How can mining companies attract and retain more women workers? A global survey with more than 1,000 respondents examined the diversity problem within mining, where only 8 to 17 percent of the workforce is female, the gender pay gap is large, and the rate of women who ascend from entry level to executive ranks is low. Leaders who want to fix the problem should set parity goals, cultivate potential employees from colleges and even high schools, and create “buddy” and “sponsor” programs that provide support.

Here are some of this week’s other key findings from our sector research:

  • Like streaming music or driving electric cars, eating cultivated meat—grown in a bioreactor rather than in an animal’s body—may eventually seem totally normal, says CEO Josh Tetrick in an interview about his cultivated-meat company, Eat Just, Inc.
  • On the Inside the Strategy Room podcast, Howard Ungerleider, president and CFO of Dow, describes his role in executing the Dow Chemical and DuPont merger in 2017 and their subsequent split into three separate companies. The highly complex transaction, which took four years, transformed the chemical industry landscape.
  • When Kevin Gallagher, CEO of Santos, Australia’s largest domestic gas supplier, first took the top job in 2016, he realized that the company needed to break its boom-and-bust cycle with a new business model. He divested noncore assets and set a break-even oil price as a consistent metric to generate free cash flow through the cycle. This article explores lessons companies can derive from Santos’s successful turnaround.

Even the most seasoned professional was a neophyte at some point, a fact celebrated in our My Rookie Moment video series, in which McKinsey colleagues discuss the first time they had to deal with a particular challenge. This edition features stories about the nerve-racking process of giving a colleague tough feedback for the first time, and the humbling experience of receiving it.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #71, September 8, 2021

What will be the top priorities in the next normal?

As companies and industries plan for life after the COVID-19 pandemic, one of the trickiest tasks will be to identify a new set of priorities. Throughout this crisis, coping and keeping up with the ever-shifting situation have taken precedence. But a contagious virus will not always be the top concern for organizations, and other urgent issues, including sustainability, cloud computing, and competition for talent, will require top-of-mind focus. This week, McKinsey examined how leaders can identify and address what matters most in the postpandemic world.

In the wake of COVID-19, a top priority for many companies has been to address talent questions, including how to optimize hybrid teams, attract and retain workers with needed capabilities, and make the most of scarce skills. Forward-looking organizations are choosing flow-to-work operating models, which create pools of resources that can be deployed flexibly and on demand. These pools are formed based on similarity of skills, rather than similarity of business functions, making it easier for organizations to access the right skills when they need them.

What is the key to outstanding performance in banking? According to a recent McKinsey analysis, location is today’s biggest factor, accounting for about 65 percent of the standard deviation in price to book. Banks that choose to prioritize location should consider looking for investments and acquisitions that expose them to flourishing markets. In expanding markets, they should consider prioritizing high-demand products and services and profitable customer segments.

To operate efficiently and support their organizations’ missions, corporate legal departments should focus on four key priorities: defining their functional purpose clearly, preparing for both a changing legal ecosystem and a new wave of corporate litigation, and competing for talent with law firms and the public sector.

Next week, watch for McKinsey senior partner Homayoun Hatami and global leader Liz Hilton Segel offering a deep dive into the five immediate priorities for CEOs now. Imperatives include centering strategy around sustainability and making the most of the cloud-computing revolution.

Here are some of this week’s other key findings from our sector research:

In a new edition of our Author Talks series, Vanessa Bohns, a professor of organizational behavior at Cornell University, discusses her book, You Have More Influence Than You Think: How We Underestimate Our Power of Persuasion, and Why It Matters (W. W. Norton, September 2021). People often have more impact on others than they realize, so learning how to use that power can be more important than focusing on acquiring more influence. Our latest edition of McKinsey for Kids is designed to help 18-year-olds (or so) explore automation and the future of work (heads-up: there could be robots involved). Our “find your fit” mini quiz suggests a few occupations that a kid might consider.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #70, September 1, 2021

How high can industries bounce back?

While the COVID-19 pandemic was unspooling, many in various industries asked themselves, “How bad can it get?” Now that some recoveries are under way, leaders are increasingly wondering how good, how high, and how long the postcrisis bounce will be. This week, McKinsey examined the global recovery in car sales and discussed with Moderna’s chief executive why developing the COVID-19 vaccine may lead to a robust era of drug discovery. Consumer-sector and bank executives, as well as corporate boards, are rethinking approaches to set the stage for successful comebacks.

Few industries were hit as hard by the pandemic’s arrival as automotive and mobility. Now, our survey of consumers in China, France, Germany, Italy, Japan, the United Kingdom, and the United States shows that consumers’ intent to purchase cars is close to pre-COVID-19 levels, fueled by positive outlooks in the United States and China. Car dealerships are getting busier, and many are eagerly seeking more inventory to sell. Overall, mobility is picking up steadily.

Moderna was able to develop a COVID-19 vaccine in only 11 months in part because it already had nine vaccines in clinical trials using messenger RNA (mRNA) technology, says CEO Stéphane Bancel. We are now in a world where mRNA as a platform has been derisked for use in vaccines and can be authorized for emergency use. Moderna is studying the use of its mRNA platform to help transform the treatment of infectious diseases in the next five years.

Consumer behavior throughout various phases of the pandemic surprised even consumer-behavior experts. On the McKinsey on Consumer and Retail podcast, McKinsey partner Kari Alldredge; Anne Grimmelt, a senior knowledge expert in McKinsey’s Consumer Packaged Goods Practice; and Anjali Lai, a senior analyst at Forrester, discuss being shocked by how much bread baking and pet buying went on during lockdowns and how heartily consumers embraced a return to big brands. Because consumers can’t accurately predict their own behavior shifts, companies should get better at mining online data and using advanced analytics to spot trends.

Changes in technology, markets, and the labor force provoked by the pandemic have altered the mandate for many corporate boards. On the Inside the Strategy Room podcast, McKinsey experts discuss corporate boards that are engaging more deeply on broader questions of talent—far beyond just who is CEO and how much compensation they get—and company culture.

Northwestern Mutual executives were all set to roll out a proprietary financial-planning tool the company wanted its network of independent financial advisers to embrace. Then the pandemic hit. The crisis required pivoting to virtual engagement, which resulted in creating more opportunities for outreach and better uptake and understanding of the tool.

Here are some of this week’s other key findings from our sector research:

Our new edition of McKinsey for Kids is designed to help 18-year-olds (or so) explore automation and the future of work (heads-up: there could be robots involved). Our “find your fit” mini quiz suggests a few occupations that a kid might consider. Our Author Talks series features Tiziana Casciaro, professor of organizational behavior at Toronto’s Rotman School of Management on the new book she coauthored, Power, for All: How It Really Works and Why It’s Everyone’s Business (Simon & Schuster, August 2021). The book explains why power comes not from rank but from knowing what is valued and how to deliver it. Also on Author Talks, global development executive April Rinne talks about her new book, Flux: 8 Superpowers for Thriving in Constant Change (Berrett-Koehler Publishers, August 2021), which explores how individuals and organizations can develop adaptable mindsets.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #69, August 25, 2021

The Delta variant has moved the goalposts.

Some parts of the world felt a surge of optimism in the spring, as vaccination rates were climbing and COVID-19 cases dropping. Those regions now face the disappointment of a reversal, thanks to the spread of the Delta variant. Such whiplash is starting to feel like a way of life for people everywhere, as well as for industries including shipping, retail, and healthcare. This week, McKinsey published updated research examining when the pandemic might end and attempted to estimate when some pandemic-related disruptions could return to what we used to call normal. 

Among high-income countries, cases caused by the Delta variant reversed the transition toward normalcy first in the United Kingdom, during June and July of 2021, and subsequently in the United States and elsewhere. McKinsey’s analysis supports the view of others that the Delta variant has effectively moved overall herd immunity out of reach in most countries for the time being. The United Kingdom’s experience nevertheless suggests that once a country has weathered a wave of Delta-driven cases, it may be able to resume the transition toward normalcy. Beyond that, a more realistic epidemiological endpoint might arrive not when herd immunity is achieved but when COVID-19 can be managed as an endemic disease. The biggest overall risk would likely then be the emergence of a significant new variant.

One of the most economically pervasive pandemic effects is a boom in shipping costs. In a video explaining why container shipping prices have surged, McKinsey partners say that sending a container from Asia to Europe or North America cost roughly $2,000 before the pandemic and $12,000 or more today. Though demand should remain high in the coming months as retailers prepare for the holiday season, prices should begin to come down by the end of the year.

While many of consumers’ pandemic-inspired digital habits are sticking, the acceleration into digital channels now seems to be leveling off in both Europe and the United States. Companies can build on their digital surge by creating strategies based on long-term value, investing aggressively in tech talent, and being smarter about how they work with data.

McKinsey’s July survey of 100 large private-sector US hospitals revealed that amid returning patient volumes and continuing COVID-19 hospitalizations, challenges in clinical-support staffing remain high. Eighty-four percent of survey respondents report trouble with turnover and vacancies in their nursing staffs. This may only be the start of greater challenges, as 22 percent of the nursing workforce reported in our Spring 2021 Future of Work in Nursing Survey that they may leave their roles providing direct patient care in the next year.

US consumer spending recovered in the second quarter of 2021, driven by increasing vaccination rates, stimulus payments in March 2021, and the general reopening of the economy. Consumers’ pent-up demand and willingness to spend in some discretionary categories caused spending to grow at 20 to 30 percent year over year, reaching 4 to 7 percent above pre-COVID-19 levels.

Here are some of this week’s other key findings from our sector research:

Our new edition of McKinsey for Kids is designed to help 18-year-olds (or so) explore automation and the future of work (heads-up: there could be robots involved). Our “find your fit” mini quiz suggests a few occupations that a kid might consider. McKinsey’s annual reading list is back, with 100-plus book recommendations shared by more than 40 leaders and personalities. Be sure to download McKinsey’s 124-page collection Author Talks and read some of our best interviews with authors of recently published books on business and beyond. Finally, check out McKinsey on Books for our monthly business best-seller rankings—prepared exclusively for McKinsey Global Publishing by NPD BookScan—as well as a collection of books by McKinsey authors on the management issues that matter. Next up in books: peruse the long list for the annual Financial Times and McKinsey Business Book of the Year Award (the winner will be announced December 1), and register now for the digital short-list-announcement event on September 23.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #68, August 18, 2021

The pandemic’s side effects come in many forms.

As the COVID-19 pandemic wears on, its impact is obviously felt in every region, every industry, and indeed every aspect of life. Nonetheless, some of the pandemic’s side effects still have the power to surprise. This week, McKinsey looked at a few of these unexpected consequences, including an explosion in the number of online ratings consumers give to products and services, the acceleration of trends reshaping the bank workforce, dramatic changes in Chinese car-buying behavior, and the possible decline of cash as a part of everyday life.

When lockdowns forced consumers to remain at home, US e-commerce experienced ten years’ growth during the first quarter of 2020. One less discussed outcome is the surge in the volume of online ratings and reviews—40 to 80 percent higher during the core pandemic months in 2020 than they had been a year earlier. The old levers of brand equity, greater ad spending, and big promotions are simply less relevant in an age when consumers have access to so much word-of-mouth feedback. Companies, McKinsey suggests, can respond in six ways, such as adopting technological tools to analyze reviews and using consumer feedback to redesign products.

The global banking industry had already been undergoing major changes when the pandemic struck. In the previous decade, branch footprints shrunk by about 20 percent in the United States and by 60 percent in Nordic countries. McKinsey’s pre-COVID-19 research suggests that the number of people in almost all bank-branch roles will decline over the next decade. The global pandemic accelerated these banking-workforce trends, making it more important for banks to focus now on upskilling and reskilling at scale. Successful players are currently building a scalable learning infrastructure and investing in a learning culture.

Of the huge health challenges created by COVID-19, perhaps the least understood is its impact on global mental health. McKinsey interviewed Garen Staglin, the chair and cofounder of One Mind, a nonprofit whose mission is to accelerate brain-health research and mental-health advocacy. CEOs and other senior executives need to make a personal commitment to corporate behavioral-health programs if they are to succeed, he says. These leaders should focus on reducing the stigma of mental illness and on cultivating a corporate culture conducive to mental wellness.

Chinese consumers have changed their vehicle preferences and car-buying habits in the wake of COVID-19. McKinsey’s most recent survey of approximately 2,400 auto consumers in 19 major Chinese cities shows declining brand loyalty, a marked preference for trading up among consumers with less-expensive vehicles, and a significant increase in the use of digital channels during the vehicle-purchase process. While overall vehicle sales fell in China in 2020, sales of new-energy vehicles (NEVs) grew by an impressive 22 percent. Our survey reveals that 63 percent of Chinese consumers are willing to purchase NEVs, up from 20 percent in 2017.

Here are some of this week’s other key findings from our sector research:

  • In an interview with McKinsey, Dr. John Nkengasong, the first director of the Africa CDC, discusses what it will take to roll out COVID-19 vaccines on a continent-wide scale, to increase vaccine manufacturing within Africa, and to enhance coordination across its borders. These outcomes could help Africa better control its response to COVID-19 and any future infectious diseases.
  • China’s top manufacturers aspire to make innovative products without needing to import core technologies. To achieve these R&D goals, Chinese companies should allocate more resources to higher-risk, longer-term R&D projects and nurture creative talent by designing career pathways that reward innovation with status and incentives. Companies should also consider splitting R&D into two parts: one focused on innovation, the other on excellence in project execution.

McKinsey takes summer reading seriously. Here are some resources to help you find business books that captivate and enlighten:

In The Pay Off: How Changing the Way We Pay Changes Everything (Elliott & Thompson, July 2021), a new book coauthored with Natasha de Terán, former SWIFT CEO and McKinsey alumnus Gottfried Leibbrandt discusses how the pandemic accelerated the move away from cash. The book analyzes the implications of electronic payments—already huge in China—for banks, cryptocurrencies, and society’s relationship with money.

McKinsey’s annual reading list is back, with 100-plus book recommendations shared by more than 40 leaders and personalities. Be sure to download McKinsey’s 124-page collection Author Talks and read some of our best interviews with authors of recently published books on business and beyond. Finally, check out McKinsey on Books for our monthly business best-seller rankings—prepared exclusively for McKinsey Global Publishing by NPD BookScan—as well as a collection of books by McKinsey authors on the management issues that matter. Next up in books: peruse the long list for the annual Financial Times and McKinsey Business Book of the Year Award (the winner will be announced December 1) and register for the digital short-list-announcement event, on September 23.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #67, August 11, 2021

The Delta variant threatens health, as well as recent positive economic data.

Among the many cruel and strange aspects of the COVID-19 pandemic is the fact that good and bad news often seem to arrive at the same time. Death rates may fall to new lows while case counts begin a precipitous climb; hospitalizations may drop dramatically in one region while reaching a breaking point in another. This month, McKinsey had good news to report on many aspects of the world economy, but also offered a sobering look at how variants—in particular, the Delta variant—are bringing a fresh tide of bad news.

McKinsey’s Global Economics Intelligence executive summary for July notes strengthening global industrial activity, the return of consumer demand, and growing trade momentum amid the backdrop of a worsening pandemic wave. The Delta variant of the coronavirus spread to more countries in recent weeks, and the total number of cases officially logged soared past half a million per day. The global number of deaths is now about two-thirds as high as it was at the peak of the previous wave, in April of this year. As the virus spreads, the potential rises for a vaccine-resistant strain to emerge. Meanwhile, in poorer countries, vaccines are scarce, and most populations are little protected.

Here are some other key findings from our sector research this week:

McKinsey takes summer reading seriously. Here are resources to help find books that captivate and enlighten:

In their newly released Nudge: The Final Edition, Harvard professor Cass Sunstein and University of Chicago professor Richard Thaler update their 2008 book on interventions aimed at getting people to act in their own best interests. In a conversation with McKinsey, the authors discuss how nudges can help people make better choices and combat “sludge,” which are processes burdened by aggravating requirements.

McKinsey’s annual reading list is back, with 100-plus book recommendations shared by more than 40 leaders and personalities. Be sure to download McKinsey’s Author Talks 124-page collection and read some of our best interviews with authors of recently published books on business and beyond. Finally, check out McKinsey on Books for our monthly business best-seller rankings—prepared exclusively for McKinsey Global Publishing by NPD BookScan—as well as a collection of books by McKinsey authors on the management issues that matter. Next up in books: stay tuned for this year’s unveiling of the long list for the annual Financial Times and McKinsey Business Book of the Year Award on August 16 (the winner will be announced December 1), and register for the digital short-list-announcement event on September 23.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #66, August 4, 2021

When change accelerates, so does the need to learn.

Even before the COVID-19 pandemic, uncertainty was rising. Brexit, trade disputes, and decarbonization were already having a profound impact on many industries and regions. Then the pandemic ushered in an era of shutdowns, hybrid work, and reversals, like the one some regions are experiencing now as variants bring renewed surges in case counts. This week, McKinsey examined the one constant throughout this turbulent era: the need to learn, adapt, and change.

The COVID-19 crisis and subsequent move to hybrid working models accelerated the need for new workforce skills, particularly social, emotional, and advanced cognitive abilities. Fifty-eight percent of respondents to our recent global survey said that closing skills gaps became a higher priority since the pandemic began. That statistic only hints at the need for retraining: research from the McKinsey Global Institute finds that more than 100 million workers in eight large economies may need to switch occupations by 2030. Companies should make a comprehensive inventory of skills across their organizations, create “skills hubs” for ongoing learning, and build learning ecosystems through partnerships with communities and educators.

Strengthening more than 100 historically Black colleges and universities (HBCUs) in the United States could increase Black worker incomes by about $10 billion and boost the economy with $1.2 billion in incremental business profits, $300 million in decreased student-loan debt, and $1 billion in additional consumer expenditures. For some HBCUs, 2020 was their strongest-ever year of fundraising; if this level can be sustained over time, these institutions can continue the critical work they have been doing since 1837.

In this era of accelerated change, adaptability not only can but must be nurtured. Developing the adaptability muscle requires self-care, a focus on purpose, the ability to recognize the default mindset, deeper connections with colleagues, and an environment where it is safe to learn.

Large-scale government overhauls are always challenging, but are particularly difficult in times of crisis, when leaders are under pressure to deliver fast results. McKinsey’s experience is that dual focus on performance and organizational health leads to the most successful transformations. Two case studies of large US government agencies demonstrate how practices such as setting aspirational goals, creating a transformation office, and accurately assessing progress can lead to meaningful change.

Here are some other key findings from our sector research this week:

  • According to the popular “Rule of 40” metric, a software-as-a-service company’s growth rate when added to its free cash flow rate should equal 40 percent or higher. McKinsey research finds that barely one-third of software companies achieve this. Our experts analyze the four main approaches of companies that do and suggest ways to emulate them.
  • In private equity, making an “add-on” strategy work depends on the successful integration of companies. The pitfalls are many, however, and deals can wither as a result. McKinsey experts suggest best practices for optimal integrations.
  • Point-of-sale financing in the United States has grown significantly over the past 24 months. McKinsey provides an overview of the “buy now, pay later” market, details key factors influencing growth, and offers ideas for market entry for banks and partnerships for merchants.
  • The rise of autonomous vehicles is shifting demand for automotive chips. McKinsey analyzes the current semiconductor market, which includes some OEMs considering in-house design.

Our Author Talks series features Michael Useem, a professor at the University of Pennsylvania’s Wharton School, where he is also the director of the Center for Leadership and Change Management. He discusses his new book The Edge: How 10 CEOs Learned to Lead—and the Lessons for Us All, which explores the thought processes behind leaders’ pivotal choices. Also on Author Talks, Jeffrey E. Garten discusses his book, Three Days at Camp David: How a Secret Meeting in 1971 Transformed the Global Economy. The former dean of the Yale School of Management and undersecretary of commerce in the Clinton administration examines the end of the gold standard and its ramifications for world markets. Our most recent edition of McKinsey for Kids introduces younger audiences to mangrove forests and explains why building a “business case” for mangroves can help protect Bengal tigers and king cobras. For more perspectives, please see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles relating to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #65, July 28, 2021

It’s time to focus on healing.

The $1.5 trillion global wellness market—encompassing health, fitness, nutrition, appearance, sleep, and mindfulness—is growing at 5 to 10 percent a year. It makes sense that consumers, after everything they have endured throughout the COVID-19 crisis, are seeking ways to take control of their well-being. Sectors including travel and education are also focusing on recovering from their pandemic wounds. This week, McKinsey took a deep dive into how a range of companies are trying to help consumers heal, and how companies and sectors can heal themselves.

As part of our series on The Next Normal, McKinsey experts forecast what the wellness industry will look like by the end of the decade. By 2030, consumers may get tattoos where they buy mascara; seek advice from the fridge, which talked to the mattress, about what to eat in order to sleep better; and triage their medical conditions at home before reaching out to a doctor. As consumers increasingly consider wellness when they make purchases, the opportunity to serve their needs is growing.

Over the past year, McKinsey has interviewed a number of wellness-industry leaders. Shaun Robert Jenkins, head coach of fitness studio Tone House, in New York City, discusses overcoming pandemic-related obstacles with a brand focused on omnichannel delivery, community, and authentic extensions and partnerships. Nick Vlahos, CEO of The Honest Company, talks about building a relationship with a consumer at the pivotal moment when she is pregnant with her first child. Brian McNamara, CEO of GlaxoSmithKline Consumer Healthcare, and Scott Melville, CEO of the Consumer Healthcare Products Association, both predict a future in which consumers will proactively manage their own health.

Appearances seemed to matter less to many people under lockdowns during the pandemic, which likely helped contribute to the 33 percent drop in global sales that the beauty industry suffered in 2020. On the McKinsey on Consumer and Retail podcast, McKinsey experts discuss the incipient rebound that is occurring in the fragrance category. Beauty brands are bouncing back, with quiz-type diagnostics that help consumers discover new products in a fun way; personalized packaging; and a wider adoption of “social selling,” which is already gaining traction in China.

Mental healthcare is a key component of wellness, but the stigma that surrounds mental-health conditions often prevents sufferers from seeking treatment. Companies can combat mental-health stigma by providing all employees with education on the topic, training managers to recognize the signs of mental illness and substance abuse, and adopting nonstigmatizing language.

Healing is vitally needed in K–12 education, where the average student is now five months behind in math and four months behind in reading. The economic ripple effects may cause a $128 billion to $188 billion loss to the US economy once these students enter the workforce. Educators should work to safely reopen schools, use outreach programs to reengage students who have disconnected from learning, and help make up for learning loss with tutoring and after-school programs. Moreover, the education system should consider exploring ways to benefit from technology, hybrid models, remote learning, homeschooling, and learning hubs over the long term.

Travel is another sector that has emerged bruised from pandemic lockdowns. To prepare for a rebound, the travel industry must build capacity, invest aggressively in digital innovation, and look for collaboration opportunities to help make flying easier for consumers. An app that would allow travelers to manage verified certifications for COVID-19 vaccines and test results, for example, would be handy. In a recent interview, Airbnb CEO Brian Chesky explains how the company experienced wild highs and lows throughout the pandemic: early on, the business dropped 80 percent in eight weeks and the company had to lay off 25 percent of its workforce. But by the end of the year, the company had launched a successful IPO.

Our most recent edition of McKinsey for Kids introduces younger audiences to mangrove forests and explains why building a “business case” for mangroves can help protect Bengal tigers and king cobras. For more perspectives, please see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles relating to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #64, July 21, 2021

How does it end—and where does it leave us?

Case numbers are resurging in parts of the world where the COVID-19 pandemic was waning, falling in places that saw huge surges recently, and just beginning to rise in previously little-impacted parts of the globe. Trying to determine the end of a story while the plot is still twisting is difficult. But this week, McKinsey sought answers to the burning questions of how the pandemic can finally be vanquished and how vaccines can reach the world, as well as what companies can do to mitigate new geopolitical risks and cope with inflation and volatility.

While 49.6 percent of inhabitants of high-income countries had received at least one dose of the vaccine as of July 14, only 1 percent of those in low-income countries had.

The world is unlikely to ever reach global herd immunity, but it can contain the virus with a combination of vaccines, improved testing, and smarter quarantining, based on known outbreaks, rather than large, blunt lockdowns. This was one conclusion of an interdisciplinary panel of global-health, national-security, and technology experts that McKinsey assembled to envision how the pandemic might end. By 2025, COVID-19 will have cost the world between $16 trillion and $35 trillion. A multifaceted approach to solving this pandemic and averting others should include scaling nanobiophysics technology in order to create precision molecular testing and improving data-sharing systems.

Dr. Seth Berkley, CEO of Gavi, the Vaccine Alliance (a public–private global-health partnership that works to increase access to immunization in poor countries), spoke with McKinsey about the effort to get COVID-19 vaccines into arms across the world. Through a partnership with 193 countries and territories, Gavi has been involved in securing two billion doses of COVID-19 vaccines for the second half of 2021, with the goal of immunizing every healthcare worker in the world. Obstacles to worldwide vaccination remain huge: while 49.6 percent of inhabitants of high-income countries had received at least one dose of the vaccine as of July 14, only 1 percent of those in low-income countries had.

The velocity of change coming out of the pandemic is generating new forms of financial and operational risk as companies grapple with inflation, capacity constraints, and supply-chain disruptions. Higher inflation has returned to the United States and the European Union, with volatility in prices for commodities including lumber and steel. To strategize for both the near and long term, companies are wise to establish procurement nerve centers that bring together specialists in supply chain, planning, finance, operations, and engineering.

In the next two decades, competition for global influence is likely to reach its highest level since the Cold War. Current tensions are most apparent in the unfolding competition between China and the United States, the homes of 76 of the world’s 100 most valuable companies. To manage geopolitical risk, boards should devote time to big-picture questions. Companies also need to think critically about their corporate narratives and decide whether they are global entities or whether ties to a specific country or region are more important.

Other key findings from our sector research this week:

Our Author Talks series features Melody Wilding, an executive coach, licensed social worker, and professor of human behavior about her book Trust Yourself: Stop Overthinking and Channel Your Emotions for Success at Work. She addresses the complexity of being both highly sensitive and high achieving, a combination she says can be a competitive advantage in those who know how to overcome self-doubt. Our most recent edition of McKinsey for Kids introduces younger audiences to mangrove forests and explains why building a “business case” for mangroves can help protect Bengal tigers and king cobras. For more perspectives, please see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles relating to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #63, July 14, 2021

The future of work is far from settled.

The COVID-19 pandemic ushered in the opportunity to rethink how we work. It’s a sea change that occurs less than once in a generation and has the potential to reshape society in countless ways. This week, McKinsey examined the need for humility as leaders, organizations, and employees grapple with learning best practices, testing solutions, and admitting that nobody has all the answers in hand.

Companies risk alienating their employees—and even losing them—if they refuse to acknowledge the disconnect between how employers and their workers see the future. Employers want to reestablish normality by bringing workers back to the office; employees want far more work-from-home. For employers, the risks are high: recent surveys found that 40 percent of workers globally are considering leaving their current employers by the end of the year. Companies must acknowledge that figuring out a hybrid working model will be a long-term project and require a significant period of testing and learning.

Research with more than 500 senior executives across eight industries helped McKinsey identify key things companies should do to create a robust and productive operating model for hybrid work. Companies that increased performance throughout the pandemic invested more time crafting clear goals and clarifying strategy; empowered small, cross-silo teams to make decisions; spent more time on coaching and recognition; and adopted new collaboration technologies. Going back to the office isn’t a silver bullet, especially in light of weary and stressed workforces. Instead, companies need to build muscle in these key areas in order to make a return to the workplace successful.

Since the start of the pandemic, 42 percent of employees globally have reported a decline in mental health. Mental-health conditions cause absenteeism, presenteeism, and approximately $1 trillion worth of lost productivity a year, according to the World Health Organization. The good news is that a meta-analysis shows that for every dollar companies spent on wellness programs, their healthcare costs fell by approximately $3.27 and their absenteeism costs by about $2.73. McKinsey identified six main types of digital offerings that could be helpful for companies implementing an employee well-being strategy. These include mindfulness tools, data-collection wearables, meditation and hypnosis apps, and virtual mental-health services.

Forward-thinking retail companies are creating thoughtful guidelines for hybrid work, training employees to bounce back from burnout, and proactively reskilling their workforces. On the McKinsey on Consumer and Retail podcast, partners Bryan Hancock and Ashish Kothari discuss retail companies that need to add new skills because of the sectors’ mass pivot to omnichannel during the pandemic. They share examples of companies that have replaced some work with automation and then redirected employees’ time and energy to new tasks that can grow the business.

Chairman and CEO of State Street Corporation Ron O’Hanley oversees one of the oldest American financial institutions, with $38.0 trillion in assets under custody and administration, and $3.5 trillion in assets under management. On the Inside the Strategy Room podcast, he talks about his view of taking a stand on environmental, social, and corporate governance issues as part of mitigating investment risk. Remote work has made it harder to give employees opportunities for apprenticeship, slowed innovation, and created mental-health risks. Communicating to employees how values play into the big picture helps reestablish bonds.

Other key findings from our sector research this week:

  • Seth Moore, former chief strategy and analytics officer of online retailer Overstock.com, who is now a senior adviser to McKinsey, clears up several misconceptions about dynamic pricing in a retail context. It’s not about changing prices frequently, nor is it a blend of art and science. It’s plain old science, whereby an algorithm can increase the rate at which a retailer makes good pricing decisions. Personalizing prices for customers is a delicate matter; the best strategy is to offer “just for you” discounts that make a shopper feel like they won something.
  • McKinsey’s analysis of 54 markets around the world found that over half of all postal carriers are well positioned to enter the financial-services market. If postal executives can leverage their existing distribution networks to provide financial services, their companies could become a more integral part of their customers’ everyday lives and create enduring business models.

Our Author Talks series features Shankar Vedantam, host of NPR’s Hidden Brain podcast, about his book Useful Delusions: The Power and Paradox of the Self-Deceiving Brain (W. W. Norton, March 2021), coauthored with Bill Mesler. No one likes the idea of being duped, but our ability to persuade ourselves enables bonds and passions that logic would rule out. Our most recent edition of McKinsey for Kids introduces younger audiences to mangrove forests and explains why building a “business case” for mangroves can help protect Bengal tigers and king cobras. For more perspectives, please see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles relating to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #62, July 7, 2021

When two distinct goals are imperative, the only choice is to solve for both.

Throughout the COVID-19 pandemic, businesses and governments faced the need to solve multiple, competing priorities simultaneously. One of the toughest: how to keep an economy going while at the same time shutting it down to protect citizens from infection. As some regions emerge from the worst of the health crisis, it’s tempting to think that there could be a return to focusing on just one main concern. But this week, McKinsey experts examined sectors, particularly defense and national infrastructure, where solving for dual imperatives is more important than ever.

Defense forces, which typically account for at least 50 percent of governments’ carbon emissions, could help prevent climate change—and the many risks it implies—by taking dramatic action to decarbonize. Obstacles to change include the primacy of having mission-critical capability and long equipment life cycles (which means fossil-fuel-powered equipment in use now, or coming into service shortly, will still be fielded in 2050). But defense forces can begin setting priorities for decarbonization by categorizing their emissions as those for which they are directly responsible and those resulting from the supply chain, and by how much emissions reductions would impact mission-critical initiatives.

The May 2021 ransomware attack on Colonial Pipeline, the United States’ largest pipeline network for delivery of refined petroleum products, made one thing clear: national critical infrastructure just inherited a new imperative, which is to build cyber resilience. In light of the new level of threat, companies will have to improve their knowledge of their own operations and vulnerabilities and establish high-fidelity baselines for the devices on their networks so they can detect subtle anomalies. Owners and operators must move to a zero-trust mindset and need to improve their systems’ ability to respond and establish control.

In the not-so-distant future, waste products such as used cooking oils and agricultural residues will fuel airplanes in the sky. One country championing the use of such sustainable aviation fuels (SAFs) is India. McKinsey’s recent report with the World Economic Forum’s Clean Skies for Tomorrow Coalition—which is working toward making carbon-zero flying a reality by the middle of the century—is a blueprint for India’s ongoing transition to SAFs. The coalition’s community in India has set the goal of flying 100 million passengers on SAFs at a 10 percent blend by 2030.

Here are some other key findings from our sector research this week:

  • On the Inside the Strategy Room podcast, Tanya Baker, global leader of Goldman Sach’s internal incubator GS Accelerate, talks about what it takes to foster entrepreneurship. Two big lessons: if you have to choose between a great idea and a great team of people, pick the people, because ultimately talent rules outcomes. Her second takeaway: people who have been successful in other roles at Goldman Sachs are not always the same people who will succeed at building a new business. Entrepreneurship often requires a separate set of skills.
  • On The McKinsey Podcast, senior partners Kim Baroudy and Massimo Mazza discuss the state of entrepreneurship outside the confines of Silicon Valley. Europe’s fragmentation—its 24 languages and multiple regulatory environments—is a hidden strength, as it forces founders to think internationally. Capital growth and the kinds of companies achieving scale in Latin America is changing fast. Silicon Valley can feel flattered by imitation, as tech hubs grow in Tel Aviv, São Paulo, Frankfurt, London, Shanghai, Paris, Berlin, and Stockholm.
  • How did Nordic companies come to form the vanguard of innovation in digital, mobile, and instant payments? Claus Bunkenborg, CEO of MobilePay; Peter Klein, executive vice president, strategy and solutions, for new payment platforms at Mastercard; and Lars Sjögren, CEO of P27 Nordic Payments, discuss the influence of Nordic history and business culture on the sector. One theory: a history of wars has forced these small countries to learn to compromise and collaborate.

Our most recent edition of McKinsey for Kids introduces younger audiences to mangrove forests and explains why building a business case for mangroves can help protect Bengal tigers and king cobras. For more perspectives, please see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles relating to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #61, June 30, 2021

How do we make technology rise to our aspirations?

Part of the great reset, as companies and countries envision a post-COVID-19 future, is rethinking how technology can serve our needs. Science-fiction scenarios may depict computers developing minds of their own, but the work of updating algorithms, adjusting risk models, and deciding how data will be leveraged is still very much a human job. This week, McKinsey made the case for why open-data ecosystems for finance is the next frontier and examined the technology rethink required in retail, insurance, banking, automotive, photonics, and biotech.

Robust digital financial infrastructure proved its worth during the COVID-19-crisis, helping governments cushion people and businesses from the economic shock. The McKinsey Global Institute discusses the next step: economies that embrace data sharing for finance could see GDP gains of between 1 and 5 percent by 2030, with benefits flowing to both consumers and financial institutions. The research examines 24 use cases in banking and payments, focusing on the European Union, United States, United Kingdom, and India.

The retailer of the future will harness the power of data, quantum computing, artificial intelligence, and augmented reality, says serial entrepreneur and senior adviser to McKinsey John Straw on the McKinsey on Consumer and Retail podcast. The biggest mistake retail companies make? Unwillingness to invest in something that doesn’t automatically feed the bottom line. The biggest win: using cutting-edge technology to give consumers a way of envisioning their lives if they go ahead and buy.

In a McKinsey Quarterly interview, Bart Schlatmann, the CEO of Allianz Direct, discusses how to build a scalable, new, digital business inside of an older, more established company. The direct-to-consumer insurance business inside financial-services giant Allianz serves multiple European markets on a single platform. The CEO’s first move was to put himself under pressure: with approximately 70 engineers, he promised to launch a business in two markets within 18 months.

The COVID-19 pandemic created significant challenges for financial institutions in both modeling and model-risk management. Institutions should use six strategies to update their models, including using agile modeling, upgrading data architecture, and embracing automation.

Batteries and fuel cells get the attention, but hydrogen combustion is a nascent zero-emissions technology that some automotive OEMs, component suppliers, and start-ups are reconsidering. Low capital-expenditure requirements for combustion engines, decreasing hydrogen prices, and the relative efficiency of some types of vehicles are making this technology, once considered too expensive, increasingly relevant.

Another technology ripe for reinvention is photonics. Although the laser market has steadily increased since the 1970s, innovation and revenue growth have slowed over the past decade. The creation of integrated devices combining lasers, sensors, and optics could usher in a new age of opportunity.

Europe’s biotech industry has remained resilient through one of the worst economic crises in decades. Despite a brief downturn in 2020, share-price evolution has been positive overall since the beginning of the pandemic, and funding continues to grow at a record rate. Future success will depend on improving the translation of research into new companies, raising more capital, cultivating entrepreneurial talent, and building global networks.

Here are some other key findings from our sector research this week:

Our most recent edition of McKinsey for Kids introduces younger audiences to mangrove forests and explains why building a “business case” for mangroves can help protect Bengal tigers and king cobras. For more perspectives, please see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles relating to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #60, June 23, 2021

With enough data and insight, can we get a peek at the future?

“Business forecasting exists to make astrology look good,” says McKinsey’s global managing partner Kevin Sneader, paraphrasing John Kenneth Galbraith’s famous quip before outlining eight trends that he predicts will define 2021 and beyond. Despite the complexity of trying to peer into the future, this week McKinsey experts propose what’s ahead for capital markets, corporate organization, and medical research. In a deep analysis of the state of Black America, our experts envision what the future could be for nearly 13 percent of the US labor force.

To get a handle on what’s to come, McKinsey finance and risk experts, with input from the McKinsey Global Institute, offer eight charts depicting the retreat of the virus in some regions, increasing economic stability, and near-term growth. Further charts examine how economies have recovered from crises in the past and model possible outcomes.

On the Inside the Strategy Room podcast, Sneader discusses the eight trends that will shape the post-COVID-19 economy. He predicts that e-grocery and telemedicine will stick and that “revenge travel,” where people vacation after being cooped up, will kick in. Companies will likely focus on developing more resilient supply chains and attempting to recover in ways that meet their sustainability targets. More than anything, pandemic-era innovations will reshape life for a long time to come.

What will the future look like for Black Americans, who make up 12.9 percent of the US labor force but earn only 9.6 percent of total wages? Achieving better standards of living, jobs, education, healthcare, food, and consumer goods will depend on changes to the world Black people currently face. The McKinsey Global Institute concluded that hiring with a diversity focus, strengthening schools, upgrading the quality of jobs that many Black workers currently have, and supporting Black entrepreneurs are key to closing the prosperity gap.

On The McKinsey Podcast, organizational experts Chris Gagnon and Elizabeth Mygatt discuss how companies can future-proof themselves, making them more able to handle disruptions like the one they just went through. Leaders should examine their company’s value agenda as though they were a private-equity firm scrutinizing a potential deal. Being clear about what everyone is trying to accomplish helps leaders choose the right talent, create a project-oriented organization, and build up speed.

Some companies are using their plans for a COVID-19 as the basis for complete strategy overhauls. But not every company wants or needs to do that. Instead, they can use strategy inserts or short interventions. In particular, companies should examine opportunities to allocate resources to growth pockets, get ahead of climate risks, and adopt new technologies.

"Rollercoaster" is one term that’s been used to describe the performance of capital markets during the pandemic. McKinsey finance experts Tim Koller and Peter Stumpner provide more nuance and reflection on the Inside the Strategy Room podcast. After the big market drop last year, a handful of companies—mostly in the tech, electric vehicle, and semiconductor industries—began diverging from the market. The result is the Mega 25, companies that accounted for 40 percent of the total market cap added in one year. The experts discuss how sustainable these valuations are and whether the word “bubble” applies.

Here are some other key findings from our sector research this week:

Our Author Talks series features Mia Bay, a professor of American history at the University of Pennsylvania, discussing her new book Traveling Black: A Story of Race and Resistance (Harvard University Press, 2021). Bay examines the history of exclusion and harassment Black Americans have faced as they attempted to drive, fly, park, lodge, or even eat on the road. Our most recent edition of McKinsey for Kids introduces younger audiences to mangrove forests and explains why building a “business case” for mangroves can help protect Bengal tigers and king cobras. For more perspectives, please see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles relating to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #59, June 16, 2021

Life beyond the COVID-19 pandemic holds much promise.

There’s a lot to look forward to once the COVID-19 pandemic eventually fades into history. As viral-spread and economic-fallout curves both flatten in some parts of the world, signs of change and growth indicate a bright future. Our central pandemic-related analysis this week explores a possible new age of global prosperity, with high rates of economic growth and surging healthcare innovation. Individual groups and industries—including Black US entrepreneurs, medical researchers, and the hospitality sector—have the opportunity to benefit from a reset in context and attitudes.

In the postpandemic era, much is possible. Just with the technology that is currently available—no unheard-of breakthrough required—it’s possible to achieve 3 to 4 percent global economic growth each year for a decade. Leaders won’t need to make a hard choice between sustained and inclusive growth. Instead, growth can be better overall if it’s more equitable. The pandemic experience provoked what could become a renaissance in public-health innovation and delivery. McKinsey’s analysis goes deep and broad to discover what could happen next.

Black US entrepreneurs face unequal access to capital, which makes recovery harder for their businesses. But the recent racial-equity reckoning in the United States has focused multiple industries on finding solutions to that and other obstacles for Black business owners. Banks can increase access to capital, and corporations can offer emergency grants. Financial institutions can both increase financial education and design systems that are more user friendly and communicative.

With the technology that is currently available—no unheard-of breakthrough required—it’s possible to achieve 3 to 4 percent global economic growth each year for a decade.

How can corporations maintain their cultures in a world of hybrid work? On the McKinsey Talks Talent podcast, talent experts Bryan Hancock, Bill Schaninger, and Brooke Weddle discuss the opportunity that companies have to reinvent their cultures. Leaders can focus on helping employees find purpose and make the office the new off site, a place where intentional togetherness occurs. There is a risk, however, that a divide will grow between remote workers and those who come into the office.

If the office is the new off site, the home is the new clinical-trial site. To the growing list of unintended pandemic consequences, add the decentralization of clinical trials. In the face of severe disruption to clinical-trial research during lockdowns, trial sponsors mobilized rapidly to preserve continuity of care and data integrity—for example, by adopting remote consent and patient monitoring, videoconference assessments, and at-home phlebotomy. The medical industry can now build on the unplanned migration to off-site trial settings.

Leisure travel, particularly to outdoor and beach settings, is likely to be a bright spot in the US hospitality industry’s recovery. In a video conversation, Vik Krishnan, leader of McKinsey’s work in the US travel industry, discusses the hospitality sector and suggests pockets of emerging demand in which industry leaders should focus resources.

The Inside the Strategy Room podcast steps back and examines lessons from the pandemic experience of managing through extreme uncertainty. McKinsey experts Patrick Finn, Mihir Mysore, and Ophelia Usher discuss how leaders must be willing to revisit assumptions, change direction, and admit mistakes when the firmament is shaking. Also key: an integrated nerve center of decision makers who can think and act quickly. Above all, leaders who have lived through hardships are essential in such circumstances.

Our Author Talks series features Kirsten Neff, an associate professor of educational psychology at the University of Texas at Austin, discussing her new book Fierce Self-Compassion: How Women Can Harness Kindness to Speak Up, Claim their Power and Thrive. Neff examines why women shame themselves for failure and how they can learn to be kind to themselves while fighting for their professional wants and needs. Our most recent edition of McKinsey for Kids introduces younger audiences to mangrove forests and explains why building a “business case” for mangroves can help protect Bengal tigers and king cobras. For more perspectives, please see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles relating to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #58, June 9, 2021

Understanding who we have become.

Change accelerates under pressure, as illustrated by the last year and a quarter. This week, McKinsey drilled into numerous changes that have reset the context for companies, employees, and societies. McKinsey experts analyzed changes to consumer profiles in Asia, the consequences of women’s exodus from the workforce, and why more than 70 HR leaders believe this is a new era for their profession. Our author interview this week suggests a way of getting a handle on the ever-morphing human landscape: we all need to become anthropologists, skilled in recognizing the cultural patterns around us (see more on our latest Author Talks below).

Half of global consumption growth over the next decade will come from Asia, according to research from the McKinsey Global Institute. Falling poverty rates, rising incomes, shrinking household size, aging populations, and more women earning more money are all factors reshaping Asian consumer trends. Those who wish to sell to these consumers need to understand factors including their growing interest in sustainability, Asian brands, and new forms of ownership. Another trend to keep in mind: inequality is growing and was likely exacerbated by the pandemic.

HR leaders believe their profession has transformed in the wake of the COVID-19 pandemic. After years of pressure to digitize their roles and move employees into “self serve” solutions, McKinsey’s interviews with more than 70 chief HR officers in Europe revealed an impulse to revive human interaction. These leaders believe they must engage personally to bring in and retain strategic talent and improve morale. One reason for the pivot: they learned during the pandemic, when decisions had to be made at lightning speed, that leadership talent is everywhere and just needs the right support to flourish.

Pressure can accelerate change, but sometimes reverses it. That’s the sad story behind the 2.3 million US women who left the workforce in the first year of the pandemic. The latest US Bureau of Labor statistics show that recent employment gains dramatically favor men. A political scientist who studies this “shecession” and an HR executive who left her job to oversee her children’s online schooling discuss the lost paychecks, stalled careers, and lower lifetime earning that could reverberate for decades to come.

Another thing women lose by leaving the workforce? Purpose. McKinsey organizational experts found that 70 percent of people say they derive their purpose in life through their work. On The McKinsey Podcast, partner Naina Dhingra and senior partner Bill Schaninger discuss why companies should serve as conduits for the unique purpose of each of their employees, rather than imposers of a collective purpose. The pandemic has made employees contemplate these questions more than ever, with millennials the most concerned that work provides a sense of meaning.

US healthcare consumers say they gained weight, exercised less, and delayed care throughout the pandemic. Their view of healthcare providers and what they want in the future changed too, according to McKinsey surveys. Healthcare providers should adapt to the post-COVID-19 environment by focusing on the “whole person” and offering incentives to both consumers and providers to research costs and options.

Here are some other key findings from our sector research this week:

Our Author Talks series features Gillian Tett, the Financial Times markets and finance columnist and US managing editor, on her book Anthro-Vision: A New Way to See in Business and Life. Tett explores how anthropologists get inside the minds of people in order to understand other cultures and how leaders can do the same to appraise their own environments. Our most recent edition of McKinsey for Kids introduces younger audiences to mangrove forests and explains why building a “business case” for mangroves can help protect Bengal tigers and king cobras. For more perspectives, please see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles relating to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #57, June 2, 2021

Problems were to be expected, but not these problems.

The pandemic has left businesses and governments to grapple with a perplexing collection of supply-chain and logistical disruptions. Over a year ago, we knew we were facing upheavals in health, education, and workplace systems. Ramifications such as the semiconductor shortage, however, were harder to predict. This week, McKinsey examined a variety of unexpected pandemic consequences and looked for ways to address them.

The global semiconductor shortage threatens economic recoveries and poses an urgent problem for carmakers, which have already announced production rollbacks—and billions of dollars in expected revenue losses—as a result. McKinsey experts examined the causes of the shortage, including a drop in consumer demand for vehicles at the onset of the pandemic, which prompted semiconductor suppliers to shift production to other products. Automakers and suppliers should consider significant strategic changes to head off a repeat.

Grocery is another industry that has been turned upside down by the pandemic, not once but multiple times as consumers respond to the evolving situation. At Tesco, online sales doubled in the United Kingdom, where the company has a strong online business, and in Central Europe, where growth is coming off a low base, said Matthew Simister, Tesco’s Central Europe CEO, in an interview. Growing e-grocery leads to the question of whether brick-and-mortar grocers will survive in Europe, and if so, which formats are best positioned for success? McKinsey identified amply stocked “soft discounters” and moderately sized, centrally located “hypermarkets light” as winning models. Leading players are participating in the automated warehouse revolution that is lowering labor costs and supporting e-grocery. Another crucial tactic: convincing shoppers that a grocer offers the best value by strategically discounting, improving private-label lines, and offering a large variety of cheap products.

The devastation in India is among the saddest unanticipated turns in the pandemic. After the first wave of the disease faded quickly in 2020, the current disaster took the lives of nearly 28,000 people in one week last month, amid 2.3 million new reported cases. The world should take action, write partner Pooja Kumar and senior partner Navjot Singh, with support for oxygen and vaccine production and distribution. Such help not only serves a humanitarian purpose but also lowers the risk that variants will threaten recoveries elsewhere.

Some of the health repercussions of the pandemic are indirect, such as the side effect of fewer people seeking treatment for mental and behavioral health problems. McKinsey’s behavioral-health-services interactive tracks how many people are accessing care for problems including substance abuse and serious mental illness.

Other key findings from our sector research this week:

  • Large companies create flows to households in OECD economies differently today compared with 25 years ago. The McKinsey Global Institute mapped the pathways through which a dollar of company revenue reaches households. Comparing two periods, 1994–96 and 2016–18, productivity gains amounted to 25 percent in real terms, though wages grew only 11 percent. Where did the gains from labor productivity go? Predominantly to capital income.
  • Industrial companies can digitally transform with six building blocks, including upskilling and focusing on data management. There’s good reason to try: a McKinsey analysis of 350 industrial companies found that those that made investments in automation, e-commerce, and other areas achieved higher revenues and total returns to shareholders than digital laggards.
  • Refrigeration pioneer Dometic Group has spent the past 100 years innovating into areas including mobile homes, sports and outdoor tools, and home food and beverage equipment. On the Inside the Strategy Room podcast, Peter Kjellberg, chief marketing officer and head of global verticals at Dometic, explains his system to test whether a company will support a brand reinvention: look into the CEO’s eyes, and if he or she does not display genuine enthusiasm, forget it.

Our Author Talks series features Shankar Vedantam, host of NPR’s Hidden Brain podcast, about his Useful Delusions: The Power and Paradox of the Self-Deceiving Brain, coauthored with Bill Mesler. No one likes the idea of being duped, but our ability to persuade ourselves enables bonds and passions that logic would rule out. Our most recent edition of McKinsey for Kids introduces younger audiences to mangrove forests and explains why building a “business case” for mangroves can help protect Bengal tigers and king cobras. For more perspectives, please see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles relating to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #56, May 26, 2021

How can we prepare better for next time?

When a crisis turns into a recovery, or vice versa, leaders must toggle between managing for the present and the future. This week, McKinsey examined how sectors including health, air travel, consumer retail, and wealth management can plan for the long term even as they cope with the immediate disruptions of the pandemic. The bottom line: modeling, predicting, and planning are all important, but investing with courage is essential.

Five dollars a person. That’s how much McKinsey’s experts project it will cost to prevent another pandemic like COVID-19, which has caused what may become a $16 trillion global economic disruption. By spending a total of $357 billion over the next decade on preparations including pathogen surveillance, global immunization, and medical supply stockpiles, countries can reduce the likelihood of a repeat.

Other health concerns need preventative action too. Europe can improve the medical conditions that erode roughly 15 percent of its GDP by investing in solutions for mental health, obesity, back pain, diabetes, and smoking, among other problems. The pandemic’s devastating consequences—a half-million lives and 7.5 percent of GDP lost in 2020 alone—have created a unique moment for Europe to rethink health-resource allocation, funding, and delivery models.

On The McKinsey Podcast, the firm’s air-travel experts Alex Dichter and Robin Riedel discuss the near- and long-term concerns of the air-travel industry, which suffered roughly half a trillion dollars in revenue loss in 2020. Airlines are thinking about safety, recovering business, and how to bring back employees and equipment. In the future, sustainability, cargo by drone, and customer experience will be among the top priorities.

Let there be no doubt: top executives confirm that their organizations are switching to hybrid for work that isn’t essential to perform on site. The Five Fifty, a quick look accompanied by a deep dive, illustrates that while leaders know hybrid is the future, they and their employees are mired in doubt and anxiety about what it all means.

It was a year of big percentages for European grocers: in 2020, the online grocery channel grew by 55 percent, 60 percent of customers changed their shopping behaviors, and the industry sold 8 percent more groceries by volume. Looking ahead, European grocers should expect grocery spending to decrease slightly, some of the behavioral changes to stick, and healthy and sustainable food preferences to grow.

An April McKinsey survey of 29,000 respondents in 24 countries found that while the pandemic drove rapid adoption of digital channels, growth has plateaued in the past six months and may begin to slip back as the virus retreats. Companies can hold onto new digital customers by gaining their trust, investing in “phygital,” and innovating to provide excellent experiences, particularly in education, grocery, and healthcare.

COVID-19 underscored how important it is to have tools that improve decision making in a crisis. One such tool is “nowcasting,” a prediction model that uses complex econometric techniques and contemporaneous data to provide a timely view of economic indicators. McKinsey experts suggest a new approach to nowcasting that involves improving the quality and reducing the number of variables.

Last year was a wild ride for financial advisors, who steered clients through turmoil and saw 9 percent growth—a record—in median assets per advisor compared with the year prior. McKinsey’s annual report on The state of North American retail wealth management collected data from roughly 70,000 North American financial advisors. Among findings: fee-based revenues grew but were offset by a decline in fee pricing.

Our most recent edition of McKinsey for Kids introduces younger audiences to mangrove forests and explains why building a “business case” for mangroves can help protect Bengal tigers and king cobras. For more perspectives, please see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles related to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office. 



COVID-19: Briefing note #55, May 19, 2021

Making the most of the great reset.

After a long pandemic pause, some parts of the world are finally contemplating a restart. Where the virus is subsiding, people can begin assembling an approach to life and business that combines what they miss about the time before COVID-19 and what they discovered during the pandemic. That future must include a plan for those, such as the unemployed, who are still stuck on pause.

This week, McKinsey took a deep dive into employment and workplace issues, with multiple studies, articles, and podcasts.

A McKinsey survey of 100 executives found that 90 percent envision a future with some combination of remote and on-site work, but most (68 percent) have no detailed plan for how it will work. The surveyed executives, from a wide range of industries, have good reason to desire a future with remote options: large numbers say it has led to increases in productivity and customer satisfaction.

To help companies design their strategies, McKinsey experts suggest hybrid approaches for general and administrative functions, categorizing them into four types with varying needs for interaction. Office versus home is not the only paradigm; options include teams that work mostly remotely but come together for periods of intense collaboration, or hub-and-spoke systems where remote workers can come into satellite or coworking spaces as desired.

On the McKinsey Talks Talent Podcast, partners Susan Lund and Bryan Hancock and senior partner Bill Schaninger discuss new McKinsey Global Institute research on the lasting impact of the pandemic on labor demand. In the United States, 17 million people are in jobs that may see less demand, while globally 100 million people may need new skills. The daunting panorama, particularly for workers in retail and travel, underscores the need to reskill and move jobs to people and people to jobs.

Vaccine development need never be the same after the pandemic. McKinsey researchers examined how it was possible to gain approval for three COVID-19 vaccines in a mere 11 months. The unprecedented speed was due to regulators moving faster, companies and governments accepting high investment risk for billions of dollars, around-the-clock lab work, and—because the virus spread with tragic speed—accelerated clinical trials. Some of the victories, such as fast decision making within pharma companies and high tolerance for investment risk, could be applied to future drug development.

Viral-vector gene therapy is emerging as a scientific superstar, its power demonstrated by one of the early-approved COVID-19 vaccines. This technology poses abundant promise but also several challenges, including the expense and side effects of high doses.

Even amid so much change, television advertising is still relevant. Advertisers often simply hand off their broadcast strategies to media agencies, but evaluating data faster, adjusting ad placement, and increasing the frequency of media tenders can help companies get the most out of their TV spending.

Our Author Talks series features Dambisa Moyo, an economist who currently sits on the boards of Chevron, 3M, and Condé Nast, on her new book, How Boards Work: And How They Can Work Better in a Chaotic World (Basic Books, 2021). The book outlines traditional board tasks and describes new “cultural frontier” responsibilities. In their new book, Noise: A Flaw in Human Judgment (Hachette Book Group, May 2021), strategy experts Daniel Kahneman and Olivier Sibony examine the unwanted variability in professional judgments and explain how to practice “decision hygiene.” Our most recent edition of McKinsey for Kids introduces younger audiences to mangrove forests and explains why building a “business case” for mangroves can help protect Bengal tigers and king cobras. For more perspectives, please see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles related to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #54, May 12, 2021

Don’t let the pandemic whittle away at the workforce.

The pandemic has hit everyone hard, but some groups have suffered in unique ways. Working mothers, Asian Americans, and nurses are among those whose difficulties at work and at home—which for many is now the same stressful place—could result in a retreat from their careers. As employers prepare to emerge from the crisis, they must find creative ways to support the hardest-hit communities, which can require rethinking long-held beliefs.

The pandemic has been brutal for working mothers, a third of whom say they are considering leaving the workforce or downshifting their careers. One of the culprits is the double shift, the eternal burden of working mothers that has gotten worse during the COVID-19 crisis and is even more troubling for women of color. Companies can help by providing emergency childcare and tutoring services, offering to continue remote work for those who want it, and revising hiring standards to eliminate the bias against gaps in employment.

A McKinsey survey of 400 frontline nurses revealed that 22 percent may leave their jobs providing direct patient care in the next year, a reflection of the physical and mental strain the pandemic has placed upon the profession. Employers should counteract this by improving in four key areas: providing more recognition, incentives, and breaks; offering flexible scheduling; finding opportunities for nurses to provide telemedicine services and other innovative patient-care delivery methods; and reskilling, so that nurses can keep up with technological advances.

Asian Americans have long struggled for equality in the workplace, a fact reflected by their low representation in senior-level jobs relative to their representation in entry-level jobs. In a series of charts based on survey data from McKinsey’s latest Women in the Workplace report, created in partnership with LeanIn.org, we explore the negative effects the pandemic has had on Asian Americans, concerning stress levels, engagement in work, and sense of opportunity. Solutions include promoting the practice of sponsorship and expanding workplace flexibility.

McKinsey also looked at the US dairy industry’s tumultuous first pandemic year, which included milk dumping in April 2020 even as some store dairy cases sat empty. Our survey of 50 US dairy CEOs in the fourth quarter of 2020, followed by interviews, revealed a sense of optimism combined with concern over changing consumer tastes. Best practices this year include being proactive about health and sustainability messaging, expanding the talent pool to include remote workers, and making supply chains more resilient.

On The McKinsey Podcast, former Unilever CEO Paul Polman and McKinsey senior partner Dame Vivian Hunt discuss why, increasingly, the way for companies to deliver resilience, longevity, and growth is to build stakeholder capitalism. The pandemic illustrated how expensive it is to let a health problem fester; companies should learn this lesson and apply it to broad social issues including the environment and diversity.

Our Author Talks series features former Best Buy CEO and chairman Hubert Joly on his new book, The Heart of Business: Leadership Principles for the Next Era of Capitalism (Harvard Business Review Press, May 2021). Mr. Joly, who currently lectures at Harvard Business School, writes about what it means to lead with purpose and humanity. Our most recent edition of McKinsey for Kids introduces younger audiences to mangrove forests and explains why building a “business case” for mangroves can help protect Bengal tigers and king cobras. For more perspectives, please see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles related to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #53, May 5, 2021

How can we prepare the workforce for the postpandemic world?

During the pandemic, we learned to cope; in the postpandemic world, we need to learn to thrive. Companies emerging from the crisis are realizing that workforces require new capabilities to face the digital and environmental future. This week, McKinsey examined what industries should do to develop the talent and knowledge they need.

To flourish during and after the pandemic, companies need a new set of skills, including social and emotional, advanced cognitive, and digital capabilities. In a recent McKinsey Global Survey, 69 percent of respondents said that building the skills of existing staff is more important than any other method of talent building, including hiring. It’s time for companies to strategize talent development and identify the most effective options, including digital learning and in-person workshops.

Boards and management responded to the pandemic by working harder and collaborating more on crisis management. Having found more effective ways to work together, directors and managers should build on the momentum by continuing to hold some meetings remotely, even when it is no longer required for health reasons, engaging in more formal and informal contact, and focusing on corporate resilience.

Business leaders are feeling good about the global economy. In the April McKinsey Global Survey on economic sentiment, 73 percent of respondents said they believe that conditions will improve in the next six months. The share of executives expecting conditions to worsen has shrunk by more than half in the past three months. Sentiment is most buoyant in North America and Greater China and most negative in India and Latin America, where the pandemic has recently taken a devastating toll.

Meanwhile, workers may be too groggy to feel optimistic about anything. This edition of the McKinsey Quarterly Five Fifty, a quick look accompanied by an optional deep dive, examines “the great exhaustion,” in which nearly half of all workers surveyed report symptoms of burnout brought on by hybrid work.

The world could gain a new seventh largest economy by 2030 if Indonesia can return to its prepandemic growth rate. McKinsey proposes ten ways to reignite Indonesia’s economy, including by investing in its healthcare system, adopting modern agricultural technologies, and promoting domestic tourism.

Here are some other key findings from our sector research this week:

Our most recent edition of McKinsey for Kids introduces younger audiences to mangrove forests and explains why building a “business case” for mangroves can help protect Bengal tigers and King cobras. Our Author Talks series features Ohio State University professor Angus Fletcher on his new book, Wonderworks: The 25 Most Powerful Inventions in the History of Literature, about a neuroscience-based method of reading and teaching literature that reveals its power to inspire. For more perspectives, please see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles related to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #52, April 28, 2021

The pandemic is a fierce teacher, but how do we apply the lessons?

We know the COVID-19 pandemic has changed consumer behavior, attitudes toward office work, and even some views about society itself. But knowing something and knowing what to do about it are two different things. This week, McKinsey looked across industries and sectors at how knowledge—increasingly, though not exclusively, generated by advanced-analytics technology—can be used to improve the way we tackle challenges.

The pandemic reshaped what consumers buy and how they go about getting it. The challenge for consumer-packaged-goods companies is to redesign their supply-chain operating models to be resilient enough to meet new consumer demands. Because each company is different, key first steps include identifying unique strengths and honing in on the most critical objectives.

Among the most obvious pandemic takeaways: workplaces will never be the same, and companies that want to lure workers back in will have to dangle more than a sterile “cube farm” and lukewarm office coffee. But for tenants, it’s not obvious how the future will play out in their office spaces, so owner/operators must take the lead, offering more flexible leasing models, redesigning layouts to accommodate hybrid work, and supplying a “wow factor.”

The pandemic gave many business leaders practice in thinking about an external issue as a core concern. Stakeholder capitalism, similarly, asks business leaders to define their mission as creating long-term value not only for shareholders but also for customers, suppliers, employees, communities, and others. Making stakeholder capitalism work requires five steps, including identifying stakeholders, defining ways to serve them, and committing to a long-term outlook.

Private markets experienced a year of disruption, starting with a “COVID correction” in the second quarter and followed by a K-shaped recovery that favored private equity and left real estate lagging. These are some of the insights found in the McKinsey Global Private Markets Review 2021, a thorough analysis of the bumpy ride of 2020.

Here are some other key findings from our sector research this week:

  • Advanced analytics could revolutionize cancer treatment, but use of this technology is underdeveloped. The field is held back by factors that include a lack of data scientists with oncology expertise. But companies that solve the biggest problem—a cultural tendency toward skepticism of analytics techniques—will move fastest in adopting these game-changing tools.
  • Digital analytics have transformed nearly every part of how companies operate, except for the one that guides them all: strategy. It’s time for leaders to bring advanced analytics into the strategy room to help reduce bias, identify trends, and spot growth opportunities.
  • As companies rebuild and restructure for the next normal, they need to determine how and where to invest in new capabilities. CFOs are ideally positioned to identify capability needs, articulate the value in investing in them to C-suite leaders, and steer resources where they are most required.
  • The McKinsey Podcast this week delves into that most complex of human relationships. No, not with Mom, the ex, nor the teenage offspring. Instead, Tera Allas, director of research and economics in McKinsey’s London office, examines the power our bosses have over us, why working from home changed some dynamics, and how important it is to organizations for bosses to be better at the job.

Business leaders crave new perspectives. In Our Asian Voices, a new feature, 72 Asian colleagues at McKinsey raise their voices and share their stories. For more perspectives, please see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles related to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #51, April 21, 2021

Now that the pandemic has changed us, what else needs to change?

The COVID-19 crisis forced a sudden, new way of life upon the world, which scrambled for practical ways to adapt. This week, McKinsey looks at the less obvious, more fundamental ways in which the pandemic has forever altered us, revealing new priorities, capabilities, and outlooks.

We examine how the pandemic created a new sense of urgency to make US manufacturing more competitive. The crisis underscored domestic manufacturing’s role in providing critical health, safety, and national-security products as well as the sector’s need to invest, modernize, and revitalize the manufacturing process.

In an interview on how to prevent future health crises, Dame Sally Davies describes how the COVID-19 pandemic provided a master course, through success and failure, on vaccine development, data deployment, and global collaboration. Dame Sally, the United Kingdom’s chief medical adviser for nine years and now the master of Trinity College, Cambridge, established the Trinity Challenge, a coalition of leaders dedicated to preparing for future health emergencies.

McKinsey provides much-needed comic relief in this video by two lecturers at Stanford’s Graduate School of Business. They identify humor as the key to connecting with colleagues, now that a pandemic and screens stand in the way. Their online course and new book make a case for why being a better leader today requires lightening up and having a few laughs.

Other key findings from our sector research this week:

  • In this chart-driven analysis of the challenges Black Americans face at work, we examine ten key factors contributing to the inequality these workers experience.
  • Our latest edition of the Five Fifty draws up a contradiction: the companies that most prioritize design have nearly double the revenues of their peers, but less than 10 percent of McKinsey survey respondents said their firms have reached their full design potential. This quick read—with optional deep dives—examines how to maximize design’s potential for growth.
  • Fintech start-ups are nipping at banking incumbents, but an active, business-building response can turn the tables. The article provides specific examples of big banks, including Goldman Sachs and State Bank of India, which successfully broke the status quo with new initiatives.
  • The Fourth Industrial Revolution means that new digital and analytics tools can help labor-intensive manufacturers predict and manage employee attendance, skill matching, and turnover. Our authors explain how using these tools can boost productivity and earnings by double-digit percentages.
  • A recent episode of The McKinsey Podcast asks, “How can we learn to be better learners?” Elizabeth Young McNally, a global leader of the McKinsey Academy, and Matthew Smith, McKinsey’s chief learning officer, discuss how to build “muscle” for adopting new skills. Put their ideas into practice with the 3x3x3 approach, McKinsey’s heuristic for creating goals and the accountability to achieve them.

Business leaders crave new perspectives. In Our Asian Voices, a new feature, 72 Asian colleagues at McKinsey raise their voices and share their stories—on what Asian identity means, what allies can do to support them, and how they are processing this moment. Our Author Talks series features two authors on how to make authentic connections: Communications consultant Susan McPherson discusses her new book about replacing superficial networking with the pursuit of genuine relationships, and Karin M. Reed, a former broadcast journalist and communications expert, talks about her book on making remote meetings effective. For more perspectives, please see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles related to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #50, April 14, 2021

No one is safe until we are all safe, so how can vaccine programs work for everyone?

With multiple approved vaccine candidates worldwide and manufacturing capacity that covers 85 percent of the world’s population, hope is surging. But getting vaccination right is multifaceted, with abundant opportunities for missteps, and complicated by variants that can throw even the best-oiled system into disarray.

The McKinsey Podcast this week features senior partners Lieven Van der Veken and Tania Zulu Holt outlining what we’ve learned so far about a well-built vaccine rollout. Each country’s program is a complex system of component parts, and the challenge is making sure a weakness in one area doesn’t delay or derail everything else. A key question countries face is how to inspire popular acceptance of the vaccine. The answer? Perhaps another Elvis, who played a role in promoting the polio vaccine in the 1950s.

Employers can also play a key role in the quest for herd immunity. In a recent McKinsey survey of more than 400 US-based companies, over 40 percent of employees said they would be significantly more likely to get the vaccine if their employers helped them do it. Paid time off to get vaccinated was the most popular incentive, but information and appointment help also rated high.

Such efforts are not just niceties. If new variants take hold, US herd immunity will not occur if the populations that describe themselves as either “cautious” or “unlikely” abstain.

We looked into which sectors will benefit from a rebound in consumer spending, including the wellness arena, a $1.5 trillion market growing at 5 to 10 percent per year. The new edition of The Next Normal takes a deep dive into the post-COVID-19 world of shopping, where the tech-enabled “store of the future” can double retailers’ earnings before interest and taxes (EBIT) margins. The catch? Retailers need to make plans for the “phygital” future now, or get left behind. For a look at how a century-old fashion firm is preparing, see our interview with Tiger of Sweden’s CEO.

Other key findings from our sector research this week:

Business leaders crave new perspectives. In Our Asian Voices, a new feature, 72 Asian colleagues at McKinsey raise their voices and share their stories—on what Asian identity means, what allies can do to support them, and how they are processing this moment. Our Author Talks series features top Hollywood voice and dialect coach Denise Woods discussing her new book on how to use breath and vocal variety and color for better communication. For more perspectives, please see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles related to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.



COVID-19: Briefing note #49, April 7, 2021

In the new world of work, which are the ties that bind?

As economies reopen, many companies plan to combine remote work with time in the office to get the best mix of productivity and collaboration. But with employees feeling anxious and burned out, getting the balance of the new hybrid model right is critical. We surveyed 5,000 employees to find out what they’re saying about remote work and summarized the findings in a dozen charts. Here’s an important one: any communication helps a little, but detailed information on policies and plans helps much more.

Along with employee burnout and anxiety has come a lot of soul-searching. After a year of the COVID-19 pandemic, people are reexamining and remaking every part of their lives, especially their jobs. In another survey, we found that more than 70 percent of employees say that their sense of purpose is defined by their work. Companies that ignore this do so at their peril because employees also say that if their job doesn’t give them purpose, they’ll leave for one that will.

This week, we looked into the next normal for several sectors, starting with airlines. Leisure trips will fuel the recovery, but it won’t be easy or quick. As senior partner Alex Dichter explains in a companion video, the industry could take on as much as $1.1 trillion in new debt by 2024. A successful return to profit will depend on its ability to restructure, raise equity, and invest for growth.

Other key findings from our sector research this week:

  • For automakers and other mobility companies, the future will be clean, connected, and electric.
  • Fuel retail will also be affected. The industry has thrived by offering well-stocked convenience stores. Now, forecourt owners will need to add new lines, including electric-vehicle charging.
  • The resumption of the credit cycle will offer new opportunities in consumer lending.
  • Eat your own cooking: semiconductor companies make the chips that make artificial intelligence (AI) possible, and can benefit by applying AI to their own operations.
  • Every industry is moving to the cloud—but not all will succeed. The McKinsey Quarterly Five Fifty forecast is “cloudy, with a chance of billions.”

We were pleased to speak with two notable industry leaders this week. John Waldron of Goldman Sachs discussed business priorities in the postpandemic era with global managing partner Kevin Sneader and senior partner Carolyn Dewar. And Twilio CEO Jeff Lawson talked about how to close the communication gaps between business leaders and software developers in a conversation with senior partner Paul Roche and partner Shivam Srivastava.

Business leaders crave new perspectives. In Our Asian Voices, a new feature, 72 Asian colleagues at McKinsey raise their voices and share their stories—on what Asian identity means, what allies can do to support them, and how they are processing this moment. Our Author Talks series features the writers of the best new business books; in this week’s edition, Joann S. Lublin talks about power moms. For more perspectives, please see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles related to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Mark Staples, an executive editor in the New York office.



COVID-19: Briefing note #48, March 31, 2021

It’s year two of the COVID-19 crisis. What comes next?

One year ago this month, WHO declared a global pandemic. Through a long and dismal year, McKinsey has tracked the development of COVID-19 and its devastation and disruption. Today, we mark the milestone with a set of new reports and articles that look ahead with considerable optimism to the second year of the pandemic.

Public health is still the chief concern. In the latest installment of our perspectives on when the pandemic will end, we see progress toward normalcy during the second quarter of 2021 in the United Kingdom and the United States and herd immunity in the third quarter. The new wave of cases in the European Union means that these transitions are likely to come later. But new variants of the coronavirus and other risks threaten that timeline.

New US COVID-19 cases rose sharply in late 2020 and, until recently, declined nearly as steeply during the first few months of 2021. This pattern is similar to that of other respiratory viruses in the winter months, but in this case, many are not sure precisely why it has happened. One unexplored factor may be at work: the different patterns of human interactions. Some people get out and about much more than others, but most epidemiological models don’t account for that.

The global economy has rebounded from the lows of 2020 (stock markets have too, though in different ways), but its future direction is hazy, even by the standards of economic forecasting. Throughout the crisis, we have offered two essential tools for business leaders to plot a course; this month, we updated both of them. In April 2020, we published a set of nine scenarios as part of our economic model and surveyed thousands of global business executives about their economic outlook. Our latest survey finds greater optimism about the economy and corporate prospects than at any time since the crisis began—and on a few fronts, more than in the past several years. Still, weak demand continues to threaten corporate growth, and the pandemic remains the biggest risk to growth in respondents’ countries. See our interactives about the scenarios and the surveys here.

Productivity has long been a weak spot in global growth, but the crisis might have kick-started a rise in productivity. As companies shifted rapidly to online channels, automated production tasks, increased operational efficiency, and sped up decision making and innovation of operating models, productivity also rose—and more growth may be in store. New McKinsey Global Institute research finds that there is potential to accelerate annual productivity growth by about one percentage point in the period to 2024. The stakes are high. One percentage point of additional productivity growth per year in every country to 2024 would imply an increase in per capita GDP ranging from about $1,500 in Spain to about $3,500 in the United States.

How do companies find the extra gear needed for a sustained burst in productivity? As our researchers suggest, speed thrills but also chills: companies need to work through five critical questions in the next few months to lock in the speed of the pandemic response in a way that does not wreck mental health or cause employees to burnout. According to a McKinsey survey, productivity is up for about half of all workers, with the other half reporting no change or lower productivity. Tilting that balance will be vital.

Also this week: The McKinsey Podcast listened in on the postpandemic state of fashion (it’s sweatpants today, but tomorrow will be different). And our industry researchers took a look at African banking in the new reality and the path forward for European grocers.

Business leaders crave new perspectives. In Our Asian Voices, a new feature, 72 Asian colleagues at McKinsey raise their voices and share their stories—on what Asian identity means, what allies can do to support them, and how they are processing this moment. Our Author Talks series features the writers of the best new business books; in this week’s edition, Saadia Madsbjerg speaks on making money moral. For more perspectives, please see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles related to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Mark Staples, an executive editor in the New York office.



COVID-19: Briefing note #47, March 24, 2021

After a year when consumers did everything differently, what changes will stick?

Consumer behavior has changed: it’s a truism of COVID-19 analysis. What’s missing is a sense of what behaviors have changed for good and what are likely to revert to prepandemic norms. A new report from the McKinsey Global Institute offers a view: e-grocery shopping is here to stay, while remote learning for primary grades could be headed for the dustbin of history. We devised a “stickiness” index (or, if we’re being academic, a gauge of behavior plasticity) to assess all the big shifts of 2020.

This week, we spoke with two prominent executives about what’s stuck with them from their pandemic experience. Chris Kempczinski, CEO of McDonald’s, spoke with senior partner Greg Kelly about how the company has worked hard to stay relevant. For a restaurant chain in the crisis, that means excelling at delivery; McDonald’s expanded the number of its locations offering delivery to more than 30,000. Leena Nair, chief human-resources officer of Unilever, shared her strategies for caring about 150,000 employees with senior partner Mary Meaney and executive editor Astrid Sandoval. For those in the workforce wondering when 2020’s pace of work might relent, here’s one encouraging sign: Nair says, “This speed is unsustainable.”

Also this week, our industry researchers examined the potential for Vietnam to rebuild tourism, the ecosystem opportunity for mobility companies, and the pleasant surprises B2B companies have discovered as they adapted to online sales.

Finally, in the pandemic, many of us have spent more time with our children than we used to, and we’ve learned from them. In our new edition of McKinsey for Kids, we attempt to return the favor by taking a look at the food distribution system and food waste. Please share it with your young people, and let us know what they think.

Business leaders crave new perspectives. Check out our series of Author Talks, which features the writers of the best new business books. This week’s additions to the series include Gregory B. Fairchild on the next frontier in racial equality and Nicolai Tillisch on how to frame ambition (and not let it frame you). For more perspectives, please see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles related to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Mark Staples, an executive editor in the New York office.



COVID-19: Briefing note #46, March 17, 2021

In 2020, consumer goods and retail were shaken. What will it take to return to stirring performance?

The future usually arrives in an orderly fashion. But for consumer goods and retail, a year like no other meant that the future showed up early, and in an ugly mood. In March 2020, COVID-19 shut down retail locations across the world, forcing consumers to change their buying behaviors, and as a consequence, these two sectors may never be the same again.

Two new reports look at the changes wrought by COVID-19 in the United States and assess their long-term effects. In consumer goods, we examine four effects on demand and costs. Demand has proved highly variable and may remain so for some time; company performance has been all over the map, even within the same category; growth soared in 2020, and large companies captured a big chunk of it; and most costs will likely remain higher in 2021.

In retail, our research with the Retail Industry Leaders Association finds that success in a post-COVID-19 world will require hastened progress on four long-standing imperatives and three new strategies that will be increasingly critical in coming years. Consider one of the older yet still fundamental challenges: the shift to omnichannel, led by digital shopping. Our survey reveals that 65 percent of retailers base decisions about their store network on brick-and-mortar performance, without considering how changes might affect omnichannel. In a world where consumers pick their retailers based on digital offerings, that’s a recipe for irrelevance.

This week, the McKinsey Global Survey returned for its annual look at IT strategy. The pandemic made clear that the technology imperative is stronger than ever. One key finding: more than half of respondents said that technology transformations have lifted revenues, reduced costs, and improved employee experiences in the past two years.

Finally this week, new research in operations finds that “lighthouses”—leading-edge manufacturing sites—are demonstrating that the benefits of an infusion of digital can go beyond mere productivity to create a higher base for future growth. A new report from our organizational researchers examines how HR can build the organization of the future; our corporate-finance experts look at the state of corporate restructuring in Europe; and The McKinsey Podcast talks through what it will take to build a more resilient and responsive government.

With vaccinations underway, executives everywhere are thinking about the critical next months of the pandemic. Start with the McKinsey Download Hub to find McKinsey’s latest research, perspectives, and insights on the management issues that matter most, from leading through the COVID-19 crisis to managing risk and digitizing operations. Also consider our special collection of reports on the next normal, which are a product of Our New Future, a multimedia series we created with CNBC. Our report collection includes a 172-page report on technology and data transformation, a 130-page report on the path to true transformation, a 206-page report on reimagining the postpandemic organization, a 157-page report on the challenge of climate change, and a 202-page report on reimagining operational resilience.

You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles related to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Mark Staples, an executive editor in the New York office.



COVID-19: Briefing note #45, March 10, 2021

After a year of COVID-19, women in the workplace want out, and companies seek growth in all directions.

Here’s one of the more intriguing statistics from last year’s Women in the Workplace research: 77 percent of men think they share the load at home equally with their partners, while just 40 percent of women agree. Sounds like the guys have some “splainin” to do. Given that imbalance, and the enormous burden (three hours a day, or more) that COVID-19 has added to women’s workload, it may be less surprising that one-quarter of women in corporate America are thinking about leaving. Senior partners Alexis Krivkovich and Lareina Yee dig into the details, in the latest edition of The McKinsey Podcast. And our salute to International Women’s Day charts the impact to date and hints at the way forward.

This week, McKinsey’s Inside the Strategy Room podcast looked at a different kind of exit: the shift that companies need to make as COVID-19 fades and the next normal takes hold. Senior partner Martin Hirt and partner Anna Koivuniemi explain how, with all signs pointing toward a significant, possibly historic economic rebound, companies need to pull out all the stops. Our research shows that outperformers seek growth in every dimension: core expansion, geographic, up and down the value chain, and in adjacent spaces.

Regarding that rebound: stock markets seem to have embraced the possibilities. Our latest capital-markets research reviews the four acts of the 2020 stock-market drama. What comes next is anybody’s guess. But the “Mega 25,” which reeled in 40 percent of total public market gains in 2020, will have much to say about future developments.

Also this week, our industry researchers investigated the potential for incumbent telcos to unleash digital attackers and surveyed consumers on all things mobility: autos, both gas and electric powered; trucks; and autonomous vehicles.

With vaccinations underway, executives everywhere are thinking about the critical next months of the pandemic. Start with the McKinsey Download Hub to find McKinsey’s latest research, perspectives, and insights on the management issues that matter most, from leading through the COVID-19 crisis to managing risk and digitizing operations. Also consider our special collection of reports on the next normal, which are a product of Our New Future, a multimedia series we created with CNBC. Our report collection includes a 172-page report on technology and data transformation, a 130-page report on the path to true transformation, a 206-page report on reimagining the postpandemic organization, a 157-page report on the challenge of climate change, and a 202-page report on reimagining operational resilience.

You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles related to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Mark Staples, an executive editor in the New York office.



COVID-19: Briefing note #44, March 3, 2021

This week in McKinsey research: online learning has underwhelmed. Vaccine development, however, is on pace for a surprising milestone.

Although teachers around the world have different styles and standards for learning, there is one thing on which they seem to agree: a computer is no match for a classroom as a place for kids to learn. We asked teachers in eight countries to rate the effectiveness of remote learning between March and July of 2020. They gave it an average score of five out of ten. The grades were especially harsh from teachers in Japan and the United States, where nearly 60 percent rated the effectiveness of remote learning at between one and three out of ten. That barely beats skipping school altogether. While the quality and support systems around remote learning have likely improved since then, this is still a striking indictment.

Reopening schools depends in part on COVID-19-vaccine development, manufacturing, and distribution. In our estimate, if all clinical trials succeed, and if manufacturing commitments to scale up production hold true, more than 14 billion doses could be produced by the end of the year. Since most vaccines require two shots, that’s enough to vaccinate nearly 80 percent of the global population.

That said, there’s a lot of green between the ball and the pocket: new variants of concern have emerged; not all populations have equitable access to supplies; and technology transfer at the required scale is complex and far from assured.

These challenges also worry business leaders seeking the next normal. We recently surveyed 300 European senior executives to understand their strategy during COVID-19 and find out what was working best. One critical finding was that business-model innovation was by far the most important strategic lever. Almost 90 percent of the successful companies said that new digital experiences, new partnerships, faster product development, and other changes to the business model had made them more effective.

This week, our diversity and inclusion researchers produced two new reports. In the first, we consider the Black experience in the US private sector, which we hope serves to highlight the scale of the issues facing Black workers and leads to better understanding of the challenges they face, thereby galvanizing action for system-level change and better and scaled solutions. In the second, we look closely at private equity, in which gender and racial diversity are stronger in entry-level positions than in more senior roles. One idea for asset managers to consider: diversity assessments of investment targets, to assess risk and to understand the value-creation opportunity from improving diversity, equity, and inclusion.

Finally, the new edition of the Five Fifty looks at healthcare, where ten promising innovations might speed effective responses to future pandemics and health crises.

With vaccinations underway, executives everywhere are thinking about the critical next months of the pandemic. Start with the McKinsey Download Hub to find McKinsey’s latest research, perspectives, and insights on the management issues that matter most, from leading through the COVID-19 crisis to managing risk and digitizing operations. Also consider our special collection of reports on the next normal, which are a product of Our New Future, a multimedia series we created with CNBC. Our report collection includes a 172-page report on technology and data transformation, a 130-page report on the path to true transformation, a 206-page report on reimagining the postpandemic organization, a 157-page report on the challenge of climate change, and a 202-page report on reimagining operational resilience.

You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles related to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Mark Staples, an executive editor in the New York office.



COVID-19: Briefing note #43, February 19, 2021

The pandemic has hit America hard. Our new #America2021 series looks at how the country can recover.

The US presidential transition is always a time for the country to reflect and reset. The 2021 transition is much more than that; given the once-in-a-century pandemic, it is a watershed moment. This week, we published a series of five memos offering our latest perspectives on four issues confronting the country and how public- and private-sector leaders could organize to drive change on them.

Defeat COVID-19. Will 2021 be the year in which the United States gains a decisive upper hand in its fight against the pandemic? We argue that it is reasonable to hope that the first half of the year could be a bridge to “normalcy,” when many aspects of social and economic life can resume without fear of excess mortality. This memo condenses the recent history of the COVID-19 crisis into must-see charts and sets out six considerations for those building bridges to normalcy.

Rebuild the economy. For America’s leaders, innovators, and changemakers, the post–World War II recovery offers valuable lessons for encouraging productivity, innovation, and social-capital creation in a post-COVID-19 future. Global managing partner Kevin Sneader and senior partner Shubham Singhal explore the good policies, political commitment, and hard work that will be needed to replicate those successes.

Advance racial equity. Repairing the frayed social fabric in the United States is not a new problem. But as the civil unrest of 2020 showed, it has become increasingly urgent. Our experts contribute ideas for inclusive growth for all races and the impact, in particular, of higher Black participation in different roles in the economy—a goal that the pandemic has set back.

Commit to climate action. The global transition to a low-carbon economy is well underway. In the United States, 23 states have established emission-reduction goals, and 12 have instituted carbon-pricing policies. Making good on those intentions will require new information, products, operations, and market innovations from public officials and business leaders. Our experts bring the best of McKinsey’s decades of research to the task.

Organize for change. To make all this happen, public-sector leaders will need to move swiftly and decisively, bringing the whole of government to bear across all four priorities, even as they revitalize a federal workforce with plummeting morale and lack of trust in government leadership. In the final memo of the series, we distill the lessons from successful government-change programs in a set of tactical ideas for leaders to consider.

Also this week, the McKinsey Global Institute published the first of three reports that examine the postpandemic economy. In The future of work after COVID-19, we assess the lasting impact of the pandemic on labor demand, the mix of occupations, and the workforce skills required in eight countries with diverse economic and labor-market models: China, France, Germany, India, Japan, Spain, the United Kingdom, and the United States. Our research concludes that because of the pandemic, up to 25 percent more workers than previously estimated may need to switch occupations.

With vaccinations underway, executives everywhere are thinking about the critical next months of the pandemic. Start with the McKinsey Download Hub to find McKinsey’s latest research, perspectives, and insights on the management issues that matter most, from leading through the COVID-19 crisis to managing risk and digitizing operations. Also consider our special collection of reports on the next normal, which are a product of Our New Future, a multimedia series we created with CNBC. Our report collection includes a 172-page report on technology and data transformation, a 130-page report on the path to true transformation, a 206-page report on reimagining the postpandemic organization, a 157-page report on the challenge of climate change, and a 202-page report on reimagining operational resilience.

You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles related to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Mark Staples, an executive editor in the New York office.



COVID-19: Briefing note #42, February 10, 2021

From lab to jab: How will the world ship vaccine doses to those in need? Our latest logistics research takes a look.

More than 12 billion vaccine doses have been announced by manufacturers for release in 2021, subject to successful clinical trials. The earth’s population is 7.8 billion. Coverage for a first dose seems adequate, until you consider the logistics. Manufacturing is concentrated in a handful of countries; regions without manufacturing must import the vaccine.

Our new research looks into the considerable obstacles blocking these flows, including the need for ultracold supply chains, lack of air-cargo capacity, and counterfeiting. What’s needed is collective action on an unprecedented scale among manufacturers, governments, customs authorities, and others.

Some countries, such as the United Kingdom, are equipped with adequate vaccine manufacturing to meet domestic needs. But the United Kingdom faces other problems, such as the plight of small and medium-size businesses, which we described in June 2020. Our update shows that on many measures, life is getting better for these companies. But many are still dependent on government support, and anxious about what comes next.

Companies everywhere are reckoning with the first-order effects of the pandemic and trying to anticipate those of the second order. In this week’s episode of the McKinsey Talks Talent podcast, our experts help you get out in front of the changes in middle management. Faster, flatter, leaner: companies have been trying for decades to thin their ranks. But amid the challenges of the pandemic, middle managers can still make valuable contributions, in new ways.

Stock markets seem to have established their own form of herd immunity. This week, marking the 50th anniversary of Nasdaq, senior partner Vijay D’Silva and executive editor Roberta Fusaro spoke with Nasdaq CEO Adena Friedman about how markets are staying relevant, and partner Tim Koller weighed in on how markets should be more inclusive, share more information, inspire innovation, and bring the world together.

Also new this week, we explored the nine traits of future-ready companies, tracked down a winning formula for specialty chemical companies, and spoke with the new CEO of NXP Semiconductors.

Finally, we conclude Our New Future, a series of management discussions in partnership with CNBC; our final topic is the need for resiliency. Senior partner Katy George leads the discussion, joined by Arvind Krishna, CEO of IBM. One essential insight: resiliency isn’t a lever to be pulled; rather, it’s a combination of actions, technologies, and strategies that companies work on every day.

With vaccinations underway, executives everywhere are thinking about the critical next months of the pandemic. Start with the McKinsey Download Hub to find McKinsey’s latest research, perspectives, and insights on the management issues that matter most, from leading through the COVID-19 crisis to managing risk and digitizing operations. Also consider our special collection of reports on the next normal, which are a product of Our New Future, a multimedia series we created with CNBC. Our report collection includes a 172-page report on technology and data transformation, a 130-page report on the path to true transformation, a 206-page report on reimagining the postpandemic organization, a 157-page report on the challenge of climate change, and a 202-page report on reimagining operational resilience.

You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles related to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Mark Staples, an executive editor in the New York office.



COVID-19: Briefing note #41, February 3, 2021

Executives still feel positive about the economy, advanced industrial companies are plotting their exit from the pandemic, and more.

The pandemic continues to dominate global economic sentiment. In our newest McKinsey Global Survey of more than a thousand executives from all industries, the outlook is still positive, though not quite as strong as in early December 2020. Majorities of executives continue to believe that conditions in their home economies and in the global economy will improve over the next six months.

We also ask leaders about their home countries. The story there is mixed. Sentiment in India is up and is nearly as positive as it is in China. But in Asia–Pacific and Europe, the share of executives that is optimistic fell by double digits. And in Latin America, just 30 percent are optimistic, the lowest figure globally.

Advanced industrials companies are among the world’s largest—and those most affected by the pandemic. Worldwide, these firms (including advanced electronics, aerospace and defense, and automotive and assembly companies) employ almost 25 million people and generate about $9.3 trillion in annual revenue. The crisis has hurt sales, margins, and growth. In our new comprehensive report, we outline ten actions that industrials can take to undo the damage and pivot to a postcrisis future. Among the ideas: take advantage of the stunning developments in e-commerce. Companies that embed digital sales into their marketing models see five-times-faster revenue growth compared with previous levels, as well as 30 percent higher acquisition efficiency and cost reductions of 40 to 60 percent within sales.

Our researchers continue to track the long-running crisis of our time: climate change. In a new report, we address the potential for voluntary carbon markets. Some companies need carbon credits to offset emissions they can’t get rid of by other means. Others might have credits to sell. But carbon markets have a mixed track record. To build a better one, buyers, sellers, and a few other stakeholders need to come together. Our research for the Taskforce on Scaling Voluntary Carbon Markets, led by Mark Carney and Bill Winters, explains what’s needed. And in this week’s edition of the McKinsey Podcast, McKinsey experts discuss what can be done to truly decarbonize global business at scale.

Also new this week, we outline a new portfolio model for biotech; consider the potential for “smart quality” assurance in pharmaceuticals; and share tips for government leaders to unlock diversity and inclusion. Finally, we are pleased to speak with Richard N. Haass, president of the Council on Foreign Relations, about his new book The World: A Brief Introduction (Penguin Press, May 2020), in the latest installment of Author Talks.

With vaccinations underway, executives everywhere are thinking about the critical next months of the pandemic. Start with the McKinsey Download Hub to find McKinsey’s latest research, perspectives, and insights on the management issues that matter most, from leading through the COVID-19 crisis to managing risk and digitizing operations. Also consider our special collection The Next Normal: The Recovery Will Be Digital. The first four installments—a 172-page report on technology and data transformation, a 130-page report on the path to true transformation, a 206-page report on reimagining the postpandemic organization, and a 157-page report on the challenge of climate change—are available now. The final installment is coming as part of Our New Future, a multimedia series we created with CNBC.

You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles related to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Mark Staples, an executive editor in the New York office.



COVID-19 and the great reset: Briefing note #40, January 27, 2021

Vaccine rollout has run into problems. Our new research explores where and why.

McKinsey research intently continues to examine the progress of SARS-CoV-2 vaccine development and distribution. Last week, we updated our series on the end of the pandemic to consider the emergence of new strains of the virus and a slow start to vaccine rollout. Both represent serious threats to the timetable. This week, we looked more closely at the problems in vaccine distribution. We start by mapping the operating path, from raw materials to post-vaccination care. At every step, risks and challenges are emerging. But so too are collaborative approaches that can help countries achieve herd immunity.

The pandemic has been a tough, real-life stress test for government disbursement schemes, highlighting not only opportunities but also gaps and vulnerabilities. Our new research across 12 countries shows both. One key finding: getting aid to those who need it is greatly bolstered by digital payment channels, a basic digital identification system used by most people, and simple data on individuals and businesses that are tethered to that digital ID.

Gone but not forgotten: in the crisis, global CO2 emissions briefly plunged, then resumed. Today, as economies rebuild, the climate challenge is again top of mind. For a new report published this week, we teamed up with the World Economic Forum (WEF) to examine natural climate solutions. Simply put, these are techniques to increase carbon storage and avoid emissions—through better conservation, restoration, and management of our priceless natural resources. There is no clear path to mitigate the damaging effects of climate change that doesn’t include natural climate solutions. The case is complete when you consider the urgent need to slow the destruction of the natural world. (We’re also collaborating with WEF on the Davos Agenda, the first of two events being held in place of its usual annual meeting.)

Also this week, we looked at procurement in the next normal, the greatly exaggerated rumor of the death of the vending machine in Japan, the dramatic shifts in sporting goods over the past year, and the rising value of industrial brands.

With vaccinations underway, executives everywhere are thinking about the critical next months of the pandemic. Start with the McKinsey Download Hub to find McKinsey’s latest research, perspectives, and insights on the management issues that matter most, from leading through the COVID-19 crisis to managing risk and digitizing operations. Also consider our special collection The Next Normal: The Recovery Will Be Digital. The first four installments—a 172-page report on technology and data transformation, a 130-page report on the path to true transformation, a 206-page report on reimagining the postpandemic organization, and a 157-page report on the challenge of climate change—are available now. The final installment is coming as part of Our New Future, a multimedia series we created with CNBC.

You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles related to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Mark Staples, an executive editor in the New York office.



COVID-19 and the great reset: Briefing note #39, January 20, 2021

Asia is at an inflection point. New research looks at developments in industrial technology, renewables, travel, ASEAN’s vast human capital, and China’s education system.

In 2020, the largest health and economic crisis in recent history forced companies across sectors into extraordinary measures to protect their people and maintain operations. Did the technologies of the ongoing Fourth Industrial Revolution (or Industry 4.0) help? Our new survey of industrial companies (two-thirds in Asia) suggests three outcomes, starting with a huge win for companies that had already scaled digital technologies. Those that were still scaling faced a reality check, and 2020 was a wake-up call for those that hadn’t yet started on their Industry 4.0 journeys.

Other technologies are also changing life in Asia. While coal is expected to remain a significant component of India’s energy mix, the country is placing big bets on renewable power, which could make up nearly half of the global total electricity capacity by 2035. Among the biggest believers is Sumant Sinha of ReNew Power. Our interview explores why renewables are different in Asia.

Our 2020 research offered a perspective on the coming rebound in travel: how far, how fast, and where. Now, in an interview with McKinsey, the president of online travel unicorn Traveloka explains the nuts and bolts of the rebound. The critical moves for this company? Giving a thousand employee-volunteers the tools they needed to help customers with more than 150,000 refund requests; extending credit to strapped customers who were having trouble saving for their big trip; and thinking about the local market beyond the big beach destinations popular with international tourists.

For many people, those beaches are a major part of the allure of ASEAN countries, along with sunshine, great food, and history. But as our recent research shows, there is more to ASEAN than just that, and now is a good time to rethink ASEAN and its 650 million people, $3 trillion economy, ten countries, and history of robust growth: 5 percent over the past 20-plus years. In the latest Future of Asia Podcast, our experts delve into the question of whether ASEAN can maintain that track record after the difficult challenges of COVID-19. Short answer: yes, if the region can harness its extraordinary resources.

Across Asia, and the world, work is changing as digitization and automation spread. Hundreds of millions of people may need to raise and refresh their skills; some may need to change occupations. Up to one-third of these transitions may be needed in China. If China gets this right, it could establish a helpful reference point to other economies. The McKinsey Global Institute’s new report looks at the skills revolution that the country needs to keep raising its standard of living.

Also this week, our researchers looked at scenario-based cash planning, the next wave of M&A in advanced industries, lessons from the fastest growing companies in logistics, and the potential for digital and analytics in steel.

With vaccinations underway, executives everywhere are thinking about the critical next months of the pandemic. Start with the McKinsey Download Hub to find McKinsey’s latest research, perspectives, and insights on the management issues that matter most, from leading through the COVID-19 crisis to managing risk and digitizing operations. Also consider our special collection The Next Normal: The Recovery Will Be Digital. The first four installments—a 172-page report on technology and data transformation, a 130-page report on the path to true transformation, a 206-page report on reimagining the postpandemic organization, and a 157-page report on the challenge of climate change—are available now. The final installment is coming as part of Our New Future, a multimedia series we created with CNBC.

You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles related to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Mark Staples, an executive editor in the New York office.



COVID-19 and the great reset: Briefing note #38, January 13, 2021

The COVID-19 crisis wrenched energy demand from its growth trajectory and workers from their cubicles. What happens next?

For a time in 2020, we stopped driving, flying, commuting. And we stopped buying the fuel needed to do these things. Today, even as economies have restarted, fuel demand remains subdued. McKinsey’s Global Energy Perspective 2021, an annual report, analyzes the ways in which the COVID-19 pandemic has permanently shifted energy-demand curves. Demand is likely to return to 2019 levels within one to four years, with electricity and gas rebounding fastest. But we do not foresee a return to the previous trajectory of growth in demand.

In the longer term, the energy transition—already underway before 2020—will accelerate. Power consumption doubles by 2050 as energy demand electrifies, wealth increases, and green hydrogen picks up momentum. Oil demand peaks in 2029; gas, in 2037. But fossil fuels continue to play a major role in the energy system in 2050. Our reference-case modeling helps you understand all the twists and turns.

With workforces now located in kitchens, basements, and attics, what will happen to all those sleek urban office towers and their glossy suburban counterparts? The answer has to start with their current tenants. Our latest survey of CXOs, which focused on the corporate center, finds that most companies are intensely debating the issues raised by COVID-19’s work-from-home experiment, and many companies are planning substantial shifts in the next three to nine months. In the short term, 70 percent of corporate-center executives plan to reconfigure office space, as do 54 percent of business-unit leaders. Over the midterm, 30 percent of corporate centers want to terminate existing leases early, compared with 14 percent of business units. Finally, as they look to the longer term, 55 percent of corporate centers plan to shift toward fewer and lower-cost locations. Business heads showed more willingness to stay put.

In a crisis, it’s all hands on deck. Bank tellers are becoming financial advisors; fresh-faced managers are leading enormous projects; and companies are intently searching for people with the aptitude to become data analysts and mobile web designers. In this month’s edition of the McKinsey Quarterly Five Fifty, we document the trend underpinning it all: reskilling.

Also this week, we researched the long-term effects of the pandemic on biopharma, explained the nine keys to becoming a future-ready company, and considered the long-run implications of 2020 on cybersecurity in Latin America.

Executives everywhere are thinking about the critical next months of the pandemic. Start with the McKinsey Download Hub to find McKinsey’s latest research, perspectives, and insights on the management issues that matter most, from leading through the COVID-19 crisis to managing risk and digitizing operations. Also consider our special collection The Next Normal: The Recovery Will Be Digital. The first four installments—a 172-page report on technology and data transformation, a 130-page report on the path to true transformation, a 206-page report on reimagining the postpandemic organization, and a 157-page report on the challenge of climate change—are available now. The final installment is coming as part of Our New Future, a multimedia series we created with CNBC.

You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles related to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Mark Staples, an executive editor in the New York office.



COVID-19 and the great reset: Briefing note #37, January 6, 2021

One year ends, another begins. From disruption to transition, McKinsey research traces the pandemic’s arc.

One way or another, 2021 is likely to be the year when the world transitions to the next normal. As executives take stock of what’s just happened, and what’s to come, they won’t go far wrong by considering the ten trends that authors Kevin Sneader and Shubham Singhal analyzed and the effects of those trends on the global economy, business, and society. First up in the next normal: “revenge shopping” as many consumers open their wallets for goods and services they’ve done without recently. Other trends to ponder—none traditionally associated with recessions—include startling growth in the number of new businesses, an incredible rise in productivity, permanent changes in consumer behavior, and the “bio revolution,” which may soon create different mechanisms of production for 60 percent of the global economy’s physical inputs. One thing’s for sure: 2022 won’t look anything like 2019.

Our recent survey of global executives focused on the here and now: even in the short term, optimism is growing. Our December 2020 survey of global executives detected the highest levels of optimism since the COVID-19 pandemic began. Executives in Europe, North America, and developing markets report concerns more acute than others did; those in Europe, for example, remain especially worried about unemployment. But even these respondents are less downbeat than they were in the previous quarter. Looking ahead, the respondents’ expectations for their home economies are increasingly positive: 61 percent say global economic conditions will be better six months from now, up from 51 percent in mid-October.

The United States is the global economy’s linchpin; it’s no surprise that the rollout of COVID-19 vaccines there is under intense scrutiny. Our latest research details five challenges to at-scale vaccine adoption. Chief among these: consumer skepticism. According to our most recent US consumer research, 63 percent of respondents are cautious about the vaccines or unlikely to be vaccinated. The antidote? Conviction, convenience, and costlessness. If the 100 million Americans who are uncertain about the COVID-19 vaccine can be brought around through a combination of education, easy access, and affordability, the benefits will be enormous. We estimate that new investment of about $12 billion, in addition to current programs, could bring forward the pandemic’s end by three to six months and generate an additional $800 billion to $1.2 trillion in US GDP.

Also this week, our industry researchers examined four topics: consumers’ uptake of US fintech offerings, the resilience imperative for medtech supply chains, B2B sales in Brazil, and the future of insurance in Africa.

Finally, we closed the books on 2020 by offering three summaries of a difficult, often desperate, and, yes, disruptive year: highlights of our publishing, including our top ten, insights from the McKinsey Quarterly and the McKinsey Global Institute, and editors’ picks; a tale of 2020 in 20 McKinsey charts; and, similarly, the 20 photos and illustrations that helped us tell the visual story of a remarkable time. Thank you for reading, and best wishes for a better new year.

Executives everywhere are thinking about the critical next months of the pandemic. Start with the McKinsey Download Hub to find McKinsey’s latest research, perspectives, and insights on the management issues that matter most, from leading through the COVID-19 crisis to managing risk and digitizing operations. Also consider our special collection The Next Normal: The Recovery Will Be Digital. The first four installments—a 172-page report on technology and data transformation, a 130-page report on the path to true transformation, a 206-page report on reimagining the postpandemic organization, and a 157-page report on the challenge of climate change—are available now. The final installment is coming as part of Our New Future, a multimedia series we created with CNBC.

You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles related to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Mark Staples, an executive editor in the New York office.

For McKinsey’s 2020 perspectives on the business impact of COVID-19, visit our archive of several dozen briefing notes published throughout the year.

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