Insights to Impact: A weekly business briefing

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February 15, 2024

This week’s headline findings:

Healthy organizations that survive and thrive through volatility display four common foundational behaviors.
Black US residents are doing better in the suburbs than in other locations but still fall short of parity.
The medtech industry may experience another banner year of innovation.

More than two decades of McKinsey research shows that organizational health remains the top indicator of a company’s long-term success and sustained performance. According to McKinsey senior partner Arne Gast and coauthors, healthy organizations exhibit four foundational behaviors, among them a clear plan to execute their vision and strategy and a keen awareness of their position in the competitive landscape. They also deliver three times the TSR of unhealthy organizations. In one study, companies that improved their organizational health saw a notable 18 percent increase in EBITDA within just a year.

In the US, Black residents continue to lag their White neighbors in health, economic, and social outcomes, according to a report on the impact of location on the state of racial equity in the US. On a recent episode of The McKinsey Podcast, McKinsey partner JP Julien notes that Black residents are doing better in the suburbs, which benefit from their proximity to high-growth cities, than in other locations but not nearly as well as they could be. Julien says that closing the racial wealth gap will require sustained private and public investment in housing, education, and economic opportunities.

For much of the past decade, the medtech industry enjoyed strong results. In recent years, however, performance has been mixed. In 2023, the US Food and Drug Administration approved a record number of novel devices, but medtech companies’ profits still fell short of investor expectations. McKinsey senior partners Karsten Dalgaard, Gerti Pellumbi, and Peter Pfeiffer and colleagues expect another strong year of innovation in 2024, especially in the cardiovascular, digital-health-device, and neuromodulation segments. Industry growth could exceed prepandemic rates in the new year, with China, Japan, and the US continuing to lead the way, but performance across geographies could remain uneven.

Further notable analysis from McKinsey:

McKinsey Health Institute’s senior partners Hemant Ahlawat, Pooja Kumar, Drew Ungerman, and coauthors lay out city-level health interventions that could provide an extra five years of healthy life per person living in an urban area and lead to healthier, happier, and more productive workforces and customers.
In an interview by McKinsey CFO and senior partner Eric Kutcher, Teradata CFO Claire Bramley talks about the importance of data analytics and long-range planning in decision making during unpredictable times.
McKinsey senior partners Kartik Jayaram and Jimmy Sarakatsannis and coauthors estimate that nearly 350 million children could emerge from “learning poverty” by 2050 if all school systems improved at the rate of the top performers.

A recent edition of Author Talks features Howard Friedman, a data scientist, health economist, and adjunct professor of health policy and management at Columbia University, speaking about his new book Winning with Data Science: A Handbook for Business Leaders (Columbia Business School Publishing, January 2024). Friedman says that business leaders can get the most from their data science teams by having conversations, learning basic concepts and frameworks, and asking good questions.

The case study collection Rewired in Action illuminates companies that have launched digital transformations to build value. Supported by technical and industry expertise from McKinsey, these organizations have changed their trajectories through the integration of digital and AI.

This briefing note, based on McKinsey’s latest published insights, was prepared by Jermey Matthews, an editor in McKinsey’s Boston office.

Do these insights resonate with you? What else should we be writing about now? Tell us by emailing insightstoimpact@mckinsey.com.

February 8, 2024

Differences in outcomes for Black Americans can be tied to community types. Our weekly digest explores topic and more.

This week’s headline findings:

A new report on the state of Black residents looks at differences in outcomes for Black Americans living in various types of communities. Outcomes are broadly better in suburban and high-growth areas of the United States, but these places generally have smaller Black populations. In almost no areas are outcomes for Black residents on par with those of their White neighbors, and, at current rates of change, it could take centuries to achieve racial parity within communities. Senior partner Shelley Stewart III and coauthors identify affordable housing and early-childhood education as priority areas for action when it comes to narrowing racial gaps in a wide range of locales.

The payments industry is confronting greater risk, intensifying regulatory scrutiny, and shifting global standards. There are indications that delinquency levels could ramp up, which may render some prior credit models unreliable. Prioritizing risk management could help payments services providers reduce potential liabilities, protect customers, and maintain regulatory compliance. But risk management isn’t only about downside: partners Ishanaa Rambachan, Julian Sevillano, Vasiliki Stergiou, and coauthors say that risk can be a lever for growth. With strong risk management in place, companies can consider, for instance, entering markets or segments that they might previously have avoided.

The medical-aesthetics market, which includes neuromodulators (such as injectable Botox) and dermal fillers, has climbed steadily since 2019, with private-equity acquisitions growing approximately 30 percent a year from 2019 to 2021. Senior partners Olivier Leclerc, Nils Peters, and coauthor point to manufacturer innovations and an increasingly diverse consumer base as reasons to expect continuing resilience. Analysis suggests the market for medical aesthetics is potentially underserved, as many consumers say they plan to try a medical-aesthetics product in coming years.

Further notable analysis from McKinsey:

Senior partner Ondrej Burkacky and coauthors detail ways for semiconductor companies to secure the new talent that will be necessary to meet the growing demand for chips. An aging workforce is making the attraction and retention of new talent a top strategic objective.
Senior partners Curt Mueller, Nicolai Müller, and coauthor suggest that companies could view operations functions as a useful testing ground for the introduction of generative AI (gen AI), in part because these functions often have well-established measurement and reporting processes that could make experiments with gen AI easier to assess.
Dipak Golechha, CFO of the cybersecurity company Palo Alto Networks, spoke with McKinsey CFO and senior partner Eric Kutcher about CFOs’ capacity to approach strategic decisions from a unique perspective. Goleccha feels that the acronym VUCA (volatility, uncertainty, complexity, and ambiguity) accurately describes the current business landscape.

A recent edition of Author Talks features Mohammed Alardhi, executive chairman of Investcorp, speaking about his new book, Connecting to the Future: A Blueprint for Dynamic Leadership (Simon Element/Simon & Schuster, October 2023). Alardhi explains how the situational awareness he developed while flying fighter jets for the Royal Air Force of Oman has helped him navigate the world of investment and asset management.

This briefing note, based on McKinsey’s latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Do these insights resonate with you? What else should we be writing about now? Tell us by emailing insightstoimpact@mckinsey.com.

February 1, 2024

What challenges and opportunities await private markets in 2024? Our weekly digest explores that topic and more.

This week’s headline findings:

Private markets face another year filled with uncertainty. Fundraising and overall deal volume were slow in 2023 and might see only modest growth in 2024. Amid this context, senior partners Fredrik Dahlqvist, Alastair Green, David Quigley, and coauthors identify ten considerations for private-market decision makers. The authors suggest that larger funds could continue to be in favor, infrastructure investing could accelerate, and real estate deal volume could ramp back up.

Individual US states could play a vital role in America’s decarbonization efforts. States should consider how to access and use national subsidies to help advance an orderly energy transition. Senior partner Adi Kumar and coauthors propose that state-level leaders can look for ways to convene public and private sector stakeholders, develop integrated energy transition plans, coordinate infrastructure projects, and catalyze the development, adoption, and scaling of climate technologies.

Semiconductor demand is expected to keep growing. Senior partners Ondrej Burkacky, Matteo Mancini, Mark Patel, and coauthors submit that, to meet this increased demand, semiconductor manufacturers could expand operations into new regions. In exploring this greenfield opportunity, manufacturers should look for locations that are secure enough to minimize supply chain risks, have access to plentiful renewable resources, and can potentially benefit from government-sponsored subsidies.

Further notable analysis from McKinsey:

A report on the state of the sporting-goods industry from senior partners Gemma D’Auria, Sajal Kohli, and coauthors reveals a renewed sense of optimism among sporting goods executives (as well as a remarkable pickleball boom).
Senior partners Valerio Dilda, Bjørnar Jensen, and coauthors say that enterprise-wide platform transformations using digital advances can help provide manufacturing and supply chain solutions.
In an interview, longtime aviation executive and inclusion advocate Michael Swiatek highlights ways for airlines to improve passenger inclusion, such as by installing more accessible aircraft lavatories.

A recent edition of Author Talks features Moshik Temkin, a fellow at Harvard University’s Belfer Center for Science and International Affairs, speaking about his new book, Warriors, Rebels, and Saints: The Art of Leadership from Machiavelli to Malcolm X (PublicAffairs/Hachette Book Group, November 2023). Temkin says that history offers examples illuminating a wide range of leadership styles.

This briefing note, based on McKinsey’s latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Do these insights resonate with you? What else should we be writing about now? Tell us by emailing insightstoimpact@mckinsey.com.

January 25, 2024

Could closing the women's health gap improve the global economy? Our weekly digest explores that topic and more.

This week’s headline findings:

Closing the women’s health gap could provide a $1 trillion boost to the global economy.
Banking leaders at Davos assessed an uncertain environment.
US wealth managers face a turbulent marketplace.

Women spend 25 percent more time in poor health than men, and more than half of this gap occurs during women’s working years. Expanding research into women’s health issues could improve lives while also boosting productivity. In a new report from the McKinsey Health Institute, senior partners Kweilin Ellingrud, Lucy Pérez, and their coauthors say that for every $1 invested in women’s health—including funding to address medical conditions that disproportionately affect women—$3 in economic value could be created. The impact on the global economy could equate to at least $1 trillion annually by 2040.

In a Davos debriefing, senior partner Ishaan Seth recaps banking-related themes that emerged from the recently wrapped World Economic Forum Annual Meeting. Generative AI (gen AI) was not a major topic at last year’s event, but this year, it was nearly impossible to have a conversation that didn’t touch on its implications. Ensuring preparedness for “crucible moments”—pivotal decision points that can make or break a company—is also claiming an increasing share of business leaders’ attention amid the current context of uncertainty. And while Davos delegates were largely hopeful about the possibility of an economic soft landing and pleasantly surprised at the ongoing resilience of consumer spending, banking leaders (who are acutely aware that consumer savings have become heavily depleted over the past year) still see a macroeconomic picture marked by fragility.

The shifting macroeconomic landscape could create intensifying competition within the wealth management industry in the United States. Many wealth managers are implementing more affordable client acquisition strategies, such as direct-to-consumer marketing. Meanwhile, clients are increasingly seeking one-stop-shop solutions. Senior partners Jonathan Godsall, Jill Zucker, and coauthors say that wealth managers could reposition their franchises by pursuing strategies such as expanding their offerings, leveraging gen AI capabilities, and reallocating resources to highest-conviction priorities.

Further notable analysis from McKinsey:

Senior partner Richard Sellschop and coauthors outline strategies for achieving next-generation operational excellence.
Senior partner John Murnane and coauthors detail the potential effects of cargo delays resulting from newly enacted restrictions on ships transiting the Panama Canal.
Senior partner Peter Dahlström and coauthors examine the rise of the Nordic software industry.
Partner Emma Loxton interviews Ariane Gorin, president of Expedia for Business, about Expedia Group’s attempts to capture B2B growth.

This briefing note, based on McKinsey’s latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Do these insights resonate with you? What else should we be writing about now? Tell us by emailing insightstoimpact@mckinsey.com.

January 18, 2024

Will 2024 offer stagnation—or a chance to lift productivity? Our weekly digest explores that topic and more.

This week’s headline findings:

Uncertain moments can provide opportunities for productivity boosts.
Better preparation for the CEO role can help incoming leaders start strong.
A quick quiz might lead to improved employee engagement.

Ongoing economic uncertainty could provide companies with a three-sided productivity opportunity. By upskilling workers and updating operations, offsetting higher input prices and interest rates by leveraging capital, and investing in technology and innovation, companies can boost their growth and profitability even while navigating a shifting landscape. Senior partners Asutosh Padhi, Sven Smit, and their coauthor say that business productivity gains writ large could eventually translate into GDP growth, higher living standards, and the advent of future abundance.

Thirty percent of CEOs don’t make it past year three in the role. In discussions with dozens of CEOs from around the world, senior partners Carolyn Dewar and Vik Malhotra have found that many CEOs feel they could have performed better in year one. Four key elements of preparation can help a prospective CEO hit the ground running: assess your motivations and expectations, inform your outlook on the future of your company and industry, inject humility into your perspective, and deeply understand the board’s selection process so you can align your vision with it.

More than half of employees say they are disengaged at work, according to recent McKinsey research. Senior partner Aaron De Smet and coauthors suggest that employers can use a short quiz to help determine where workers fall on the satisfaction spectrum. By understanding employee archetypes—from disruptor to thriving star—and improving engagement through different tactics tailored to each group, employers can create healthier workplaces while improving organizational performance.

Further notable analysis from McKinsey:

Senior partner Warren Teichner and coauthors identify five trends reshaping the $1.8 trillion global consumer wellness market, including at-home testing kits and AI-powered personalization.
Partner Kersten Heineke and coauthors say an urban mobility shift—from cars to bicycles—could help cities reduce emissions, reclaim wasted space, and save money for their residents.
The newest McKinsey Explainer offers a primer on fintech, a concept that involves using technology to advance financial services.

This briefing note, based on McKinsey’s latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Do these insights resonate with you? What else should we be writing about now? Tell us by emailing insightstoimpact@mckinsey.com.

January 11, 2024

Which digital ideas are flying under the radar? Our weekly digest explores that topic and more.

This week’s headline findings:

Ten unsung digital ideas could shape the business landscape.
Regulators and risk functions are readying guardrails for AI.
Preparation is essential for a smooth CEO succession.

Generative AI (gen AI) is getting a lot of attention, but it’s important that business leaders not ignore other digital topics that are core imperatives. Senior partners Kate Smaje and Rodney Zemmel identify ten ideas flying slightly under the radar that could help shape the modern business landscape. Among them: innovators dominate headlines, but only those that scale a technology can dominate markets (more than 40 percent of digital and AI transformations stall out at the scaling phase); well-implemented digital solutions compound competitive advantages (the distance between digital AI leaders and their competitors has increased by 60 percent over the past three years); and—as simple as it sounds, it’s sometimes overlooked—the ultimate purpose of new digital initiatives is to build value (organizations that lead successful transformations deliver, on average, 2.7 times the value they initially expected).

Regulatory bodies are weighing possible policies governing the use of AI and gen AI. Concerns involve issues such as intellectual property infringement, privacy violations, and the spread of misinformation. Senior partner Daniel Mikkelsen and coauthors say organizations should prepare now by self-regulating to avoid potential legal, financial, and reputational risks. Among the no-regrets actions that organizations can take today: create transparency on AI and gen AI usage, implement governance structures that ensure oversight and accountability, and educate users about their individual rights.

When a CEO prepares to exit the role, the moment is fraught with risks for both the executive and the organization. Finding the right time can be difficult, as many CEOs feel they can’t leave when times are tough but don’t want to leave when things are going great. In an appearance on McKinsey’s Inside the Strategy Room podcast, senior partners Carolyn Dewar, Kurt Strovink, and partner Blair Epstein say CEOs should prepare for their successions (in consultation with their boards) from day one, ensure their potential successors receive proper leadership development and experience, and err on the side of leaving too early instead of too late. After the transition happens, former CEOs should get out of the way (and consider taking some time off before diving into anything else).

Further notable analysis from McKinsey:

Senior partner Ludwig Hausmann and coauthors detail strategies for airlines to cope with more pronounced seasonality as summer travel demand ramps up and winters get comparatively quieter.
Senior partner Ben Ellencweig and coauthors survey automotive customers about car connectivity (integration with external entities such as a smartphone or a broader cloud-based network). Key insights: many consumers say they will switch automotive brands if it means better connectivity, and most consumers favor subscription-based pay models for connectivity services.
The newest McKinsey Mobility Consumer Pulse Survey examines sentiment regarding electric-vehicle (EV) charging. Partner Shivika Sahdev and coauthors find that many prospective car buyers won’t even consider an EV purchase until chargers are as ubiquitous as gas stations.

This briefing note, based on McKinsey’s latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Do these insights resonate with you? What else should we be writing about now? Tell us by emailing insightstoimpact@mckinsey.com.

December 21, 2023

Eight priorities dominate the CEO agenda for 2024. Our weekly digest explores that topic and more.

This week’s headline findings:

Conversations with CEOs coalesce around eight top-of-mind topics for 2024.
There’s a risk that generative AI could widen the racial wealth gap.
Reducing shrink could save retailers billions of dollars.

Amid one of the most difficult operating environments in recent memory, organizations are setting agendas for the coming year. Drawing on conversations with business leaders, senior partners Homayoun Hatami and Liz Hilton Segel offer eight CEO priorities for 2024. Geopolitics, the energy transition, and generative AI (gen AI) all make the grade as vital topics. But as they consider these important issues, CEOs mustn’t forget to also value their middle managers.

Gen AI could widen the racial wealth gap in the United States by $43 billion per year. But applied strategically, the technology also has the potential to strengthen pillars of Black economic mobility, such as financial inclusion, affordable housing, and the narrowing of the digital divide. Senior partner Mark McMillan and coauthors outline strategies for ensuring gen AI is deployed equitably and in ways that help rather than hinder Black Americans’ progress.

Retail shrink, which encompasses not just theft but also factors such as waste and spoilage, cost US retailers more than $110 billion in 2022. Partner Bill Mutell and coauthor suggest approaches for mitigating these losses, such as taking a store-by-store approach to security, creating proper incentives for managers, and using technological solutions to rein in risks while freeing staff to focus on customer experience. One oft-overlooked issue: employee theft, which in 2022 accounted for 29 percent of US retailers’ shrink.

Further notable analysis from McKinsey:

Senior partner Celia Huber and coauthors detail six key steps for any aspiring corporate board member.
Senior partner Daniel Rexhausen and coauthors identify actions for retailers looking to revamp their approaches to sustainable packaging.
The newest McKinsey Explainer offers a primer on the various roles and interdependencies within the C-suite.

This briefing note, based on McKinsey’s latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Do these insights resonate with you? What else should we be writing about now? Tell us by emailing insightstoimpact@mckinsey.com.

December 14, 2023

Top insights from 2023 are collected in McKinsey’s year in review. Our weekly digest explores that topic and more.

This week’s headline findings:

Highlights from a year’s worth of insights appear in McKinsey’s 2023 year in review.
A transaction can often provide an opportunity for transformation.
Generative AI (gen AI) could be a boon for consumer marketing.

Explore our most compelling insights from the past 12 months in McKinsey’s annual year in review. Prominent topics include gen AI, the energy transition, and the power of digital transformation. For further year-end edification, also see our year in charts and year in images.

Many organizations focus on near-term synergies in the wake of a deal. But senior partner Chris Hagedorn and coauthors suggest that transactions can provide opportune moments to fully reimagine newly combined businesses. A transformational approach to M&A can turn deals into levers for executing new strategies and delivering value creation.

Gen AI could boost consumer marketing capabilities by automating processes, enabling hyperpersonalization, and breaking through creative constraints. Senior partner Kelsey Robinson and coauthors say marketers can use gen AI as a tool to analyze competitor moves, assess consumer sentiment, and test new product opportunities. Companies can begin their gen AI journeys by defining the most relevant use cases, identifying the proper teams, and pinpointing potential risks.

Further notable analysis from McKinsey:

Senior partner Matteo Pacca and coauthors outline the market conditions that will be necessary for same-day delivery services to thrive.
Senior partner Kartik Jayaram and coauthors say companies are broadening their commitments to nature beyond carbon reduction by focusing on issues such as biodiversity and nutrient pollution.
The newest McKinsey Explainer details the difference between a chief information officer and a chief technology officer.

A recent edition of Author Talks features Dr. Fei-Fei Li, professor of computer science at Stanford University and founding director of the Stanford University Institute for Human-Centered Artificial Intelligence, speaking about her new book, The Worlds I See: Curiosity, Exploration, and Discovery at the Dawn of AI (Macmillan, November 2023). Li highlights the importance of creating AI governance models that prioritize human dignity.

This briefing note, based on McKinsey’s latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Do these insights resonate with you? What else should we be writing about now? Tell us by emailing insightstoimpact@mckinsey.com.

December 7, 2023

Decarbonization will require solving four interconnected problems. Our weekly digest of insights explores that topic and more.

This week’s headline findings:

A successful net-zero transition will require achieving not one but four central objectives.
The fashion world is rife with uncertainty in the face of headwinds.
Research reveals four mindsets that can help family-owned businesses excel.

Although there has been meaningful momentum, the world is not on track to reach net-zero emissions by 2050. Getting there will require tackling four interconnected problems: emissions reduction, affordability, reliability, and industrial competitiveness. Senior partners Tomas Nauclér, Daniel Pacthod, Sven Smit, Humayun Tai, and coauthors offer several principles that can guide decision makers along the way, such as creating incentives, driving down costs, building effective financial mechanisms, and anticipating bottlenecks.

According to McKinsey analysis of industry forecasts, the fashion world can expect top-line growth of 2 to 4 percent in 2024, with the luxury segment generating the largest share of profit. But uncertainty abounds as economic volatility and geopolitical tensions create potential headwinds. Senior partners Anita Balchandani, Achim Berg, Gemma D’Auria, and coauthors outline ten emerging themes for the year ahead, including a new generation of influencers, fierce competition in the realm of fast fashion, and greater regulatory scrutiny of the industry. (Download the full State of Fashion 2024 report.)

Family-owned businesses account for more than 70 percent of global GDP and about 60 percent of global employment. Some notable ones have been successful for more than a century. Analysis from senior partner Acha Leke and coauthors suggests four mindsets that are critical for high-performing family-owned businesses. Adopting them could quadruple a business’s value over the next decade.

Further notable analysis from McKinsey:

Senior partner Alastair Green and coauthors say that new approaches are making it easier to decarbonize buildings profitably.
A briefing looks at useful ways to rethink the role of middle managers.
The two newest McKinsey Explainers offer primers detailing the core responsibilities of chief financial officers and chief transformation officers.

This briefing note, based on McKinsey’s latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Do these insights resonate with you? What else should we be writing about now? Tell us by emailing insightstoimpact@mckinsey.com.

November 30, 2023

Public–private–philanthropic partnerships could help combat climate change. Our weekly digest of insights explores that topic and more.

This week’s headline findings:

Public–private–philanthropic partnerships are forming to address systemic climate and nature challenges.
Globalization is evolving as connections fray and a new paradigm emerges.
Travel brands’ loyalty programs are due for reinvention.

Multistakeholder initiatives involving public–private–philanthropic partnerships (or 4P models) could play vital roles in tackling climate and nature challenges. These collaborations can include, for example, transactional financing or knowledge-sharing platforms. Senior partners Hamid Samandari, Daniel Pacthod, and coauthors offer a framework for assessing the materiality, suitability, and feasibility of 4P efforts.

The world has never been more interconnected, but geopolitical tensions, supply chain breakdowns, and a backlash against globalization are combining to fray the ties that bind the world together. Senior partners Michael Birshan, Joe Ngai, Olivia White, and coauthor outline priorities for organizations confronting a new paradigm of global interconnectedness. Leadership teams should work to boost their familiarity with geopolitical nuances, undertake scenario planning that accounts for dynamic world events, and think about diversifying (as opposed to decoupling) supply chains.

Travel brands practically invented modern-day loyalty programs. But it might be time for a reinvention. Rule changes and benefit clawbacks have left many loyalty program members feeling dissatisfied and—increasingly—disloyal. Partners Clay Cowan, Jillian Tellez Holub, and coauthors detail a mindset shift, encouraging travel brands to think about loyalty as more than just points and miles. Elevated customer experiences and data-driven personalization can be the cornerstones of new loyalty initiatives.

Further notable analysis from McKinsey:

Partners David Champagne, Alex Devereson, and coauthors suggest that AI adoption, which is already accelerating drug discovery for biopharmaceutical companies, could revolutionize clinical trials.
Partner Greg Santoni and coauthors examine the potential for renewable natural gas to help reduce emissions across multiple American industries.
Senior partner Joydeep Sengupta and coauthors say that mortgage brokers and incumbent banks could create win–win collaborations as brokers play a widening role in home loan origination.

A recent edition of Author Talks features Pulitzer Prize winner Walt Hickey speaking about his new book, You Are What You Watch: How Movies and TV Affect Everything (Hachette Book Group, October 2023). Hickey highlights data demonstrating that pop culture has influenced things such as workplace dynamics, the tourism economy, and even security procedures at banks.

This briefing note, based on McKinsey’s latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Do these insights resonate with you? What else should we be writing about now? Tell us by emailing insightstoimpact@mckinsey.com.

November 16, 2023

How can organizations adapt to climate change? Our weekly digest of insights explores that topic and more.

This week’s headline findings:

Adaptation to climate change is becoming as important as mitigation, but many leaders lack adaptive strategies.
Amid economic uncertainty, building new businesses remains a priority for many CEOs.
The real estate industry might benefit from the targeted application of generative AI (gen AI).

Even as attempts to mitigate climate change continue, private and public sector actors will need to consider strategies for adaptation to global warming. Some current adaptation plans exist, but most lack adequate specifics. Senior partners Philipp Koch, Homayoun Hatami, Hamid Samandari, and coauthors outline a framework for adaptive action that is divided into four categories: developing a climate-risk-management mindset, identifying technological and behavioral adaptation levers, making economic and societal adjustments, and leveraging governance, institutional support, and commitment.

Economic uncertainty hasn’t stopped business leaders from prioritizing the building of new businesses, according to a recent McKinsey survey. Fifty-eight percent of leaders reported that creating new revenue streams has become more important because of the current economic environment. Organizations with more experience in building new businesses tend to achieve higher success rates. Senior partners Markus Berger-de León, Paul Jenkins, and Ari Libarikian suggest that taking a portfolio approach to new-business creation can help diversify risk while cautioning leaders not to expect that every new business venture will become a big winner.

Because the real estate industry is awash in data—about properties, communities, tenants, and the market itself—it might be fertile ground for the use of gen AI. Industry use cases for gen AI could include engaging with customers, sifting through leasing documentation, aiding investment decisions, and drawing architectural plans. Senior partners Matt Fitzpatrick, Vaibhav Gujral, and coauthors detail steps for real estate players to take now, including creating a library of useful gen AI prompts, focusing more sharply on proprietary data, and assessing the risks of using gen AI in a real estate context.

Further notable analysis from McKinsey:

Senior partner Cindy Levy and coauthors say that cloud-powered technologies could help accelerate decarbonization efforts.
Partner Tim Koller and coauthors examine ways to reduce bias by mapping motivation.
Senior partner Scott Blackburn and coauthors offer a new approach for successfully transitioning military veterans into the private sector workforce.

This briefing note, based on McKinsey’s latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Do these insights resonate with you? What else should we be writing about now? Tell us by emailing insightstoimpact@mckinsey.com.

November 9, 2023

Innovation and growth, done right, can work hand in hand. Our weekly digest of insights explores that topic and more.

This week’s headline findings:

Companies that out-innovate and outgrow peers tend to focus on aspiration, activation, and execution.
McKinsey research suggests that US holiday shoppers this year will pay more attention to prices and are planning to trade down.
Eight principles can help a chief of staff provide maximum value to a leader.

Analysis of 53 large public companies that have both outgrown and out-innovated peers finds a few common traits that have led to success. These innovative growers tend to invest productively in R&D (often by developing strong patents), look to expand into adjacent business areas in which they can excel (using AI to identify opportunities), and use programmatic M&A (in some cases to build out product ecosystems). Partners Matt Banholzer, Rebecca Doherty, Alex Morris, and coauthor suggest that dedicated management attention, paired with patience, can help companies balance the twin goals of growth and innovation.

New consumer research from McKinsey examines US shoppers’ moods as the holiday season approaches. Seventy-nine percent of consumers say they plan to trade down, and most consumers are less inclined to splurge. Younger shoppers are more likely to use “buy now, pay later” plans and also are more willing to pay for same-day delivery. Senior partner Kelsey Robinson and coauthors say retailers should look for ways to personalize promotions, inspire consumers through storytelling, and use omnichannel strategies to meet shoppers where they are.

With responsibilities that can range from administrative to strategic, a modern-day chief of staff can play an outsize role in the success of a CEO—or an organization. Senior partner Andrew Goodman and coauthors draw on conversations and research to compile eight recommendations that might help a chief of staff excel. Among them: be careful to define the role’s scope, get things right on day one, and exert influence without playing politics.

Further notable analysis from McKinsey:

On an episode of McKinsey’s Forward Thinking podcast, Stephen King, a senior economic adviser to HSBC Bank, speaks about the resurgence of inflation—and offers historical perspective dating back to the Roman Empire.
Partner Tim Koller and coauthors analyze the data on dividends and find that large, stable corporations almost never cut dividends as a strategic choice to invest in growth.
Partner Kersten Heineke and coauthors outline best practices for companies looking to offer their employees mobility budgets—allowances that subsidize (and encourage) the use of sustainable transport.

A recent edition of Author Talks features Columbia Law School professor Anu Bradford speaking about her new book, Digital Empires: The Global Battle to Regulate Technology (Oxford University Press, September 2023). Bradford foresees a regulatory scuffle between the world’s three leading digital powers—China (with its state-driven model), the European Union (with its rights-driven model), and the United States (with its market-driven model).

This briefing note, based on McKinsey’s latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Do these insights resonate with you? What else should we be writing about now? Tell us by emailing insightstoimpact@mckinsey.com.

November 2, 2023

Marketing can be a vital component of growth. Our weekly digest of insights explores that topic and more.

This week’s headline findings:

CEOs seeking growth should consider partnering more closely with their chief marketing officers (CMOs).
Financial-services firms need strategies for handling nonfinancial risks.
Executives who adopt a venture capital (VC) mindset might be more willing to make bets focused on long-term disruption.

CEOs who embrace marketing as a core component of growth are twice as likely as their peers to top 5 percent annual growth rates. But more than 40 percent of Fortune 500 companies don’t have a growth- or customer-related role established on their CEOs’ executive committees. Companies often saddle their CMOs with poorly defined purviews, underestimate marketing’s ability to propel growth, and use the wrong metrics to assess marketing’s efficacy. Drawing on survey research and conversations with CMOs and other C-level growth executives, senior partner Marc Brodherson and coauthors offer guidelines for properly measuring the effects of marketing, clarifying CMOs’ remits, and strengthening the relationships between CEOs and CMOs.

Financial institutions have well-established approaches for managing financial risks related to balance sheets and cash flows. But they may lack defined strategies for managing nonfinancial risks—those (such as financial crimes) that stem from people, processes, systems, and external events. Nonfinancial threats can involve bigger reputational effects and more expensive and complicated remediation efforts than financial threats. Senior partners Thomas Poppensieker, Sebastian Schneider, and coauthors suggest five principles—including flexible governance, timely monitoring, and carefully chosen metrics—that can help financial institutions design a framework for nonfinancial risk appetite.

Large, established companies sometimes focus too much on maintaining legacy strengths instead of seeking growth. Staircase Ventures founder Janet Bannister—in a conversation with McKinsey senior partner John Kelleher and coauthor—advises executives to act more like VC firms by creating a portfolio of long-term bets designed to topple the status quo. Incumbent players need to develop both the will and the skill to disrupt themselves.

Further notable analysis from McKinsey:

Partners Vik Krishnan, Nina Lind, Steve Saxon, and coauthor review the aviation industry’s financial results by subsector. The industry overall is recovering from its pandemic lows, but it remains in a slump—with airlines the biggest drag on performance.
Partners Bryan Hancock and Brooke Weddle explain the shift from credentials-based hiring (in which college degrees or other bona fides are required) to skills-based hiring (in which the main requisite is the ability to do the job).
Senior partner Tanguy Catlin and coauthors project that the rise of autonomous vehicles could disrupt the auto insurance industry, shifting focus from individual-driver risk to technology risk.

A recent edition of Author Talks features Suzanne Heywood, a former McKinsey senior partner who is now the chief operating officer of Exor Group, speaking about her new book, Wavewalker: Breaking Free (HarperCollins, October 2023). Heywood says her difficult childhood—she spent most of it at sea, sometimes in physical peril—has taught her how to be a resilient leader who doesn’t panic under threat.

This briefing note, based on McKinsey’s latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Do these insights resonate with you? What else should we be writing about now? Tell us by emailing insightstoimpact@mckinsey.com.

October 26, 2023

Courageous growth flows from aspirational mindsets. Our weekly digest of insights explores that topic and more.

This week’s headline findings:

Research reveals that outperforming companies share a differentiating trait: the courage to make bold investments, even in turbulent times.
Consumer companies can use six strategies to profitably rewire their operating models.
The rise of the “zero consumer” is forcing some retailers and consumer goods manufacturers to reinvent themselves.

Companies that embrace courageous growth initiatives—even amid global disruptions—are more likely to outperform their industry peers. Senior partners Michael Birshan, Paul Jenkins, Greg Kelly, Ari Libarikian, Jill Zucker, and coauthors suggest strategies to build enterprise-wide resilience through bold transformation. Companies should create aspirational cultures by fostering innovative mindsets and a commitment to sustainable, inclusive growth; activate growth pathways by strengthening core businesses using data and AI, expanding into adjacent businesses to add value streams, and divesting from underperforming businesses where necessary; and execute with excellence by helping employees feel ownership of growth efforts.

Consumer companies aiming to innovate faster and grow more profitably than competitors should consider revamping their operating models. Partner Shaun Callaghan and coauthors outline six strategies to enable superior growth, improved margins, and innovation at scale: prioritize around consumers’ needs, instill a culture of accountability, use data and AI across the organization, upgrade talent, create a team-based approach, and elevate technology and engineering excellence. Streamlining by building simpler organizational structures—while eliminating low-value work—can help companies focus on what matters most.

Senior partner Dymfke Kuijpers and coauthors examine the growing global cadre of “zero consumers”—shoppers associated with zero boundaries (between physical and digital channels), zero midrange brands (these consumers either go cheap or splurge), zero loyalty (they’ll switch brand preferences at the drop of a hat), and net zero (they value sustainability and transparency). In response to the rise of zero consumers, consumer companies should consider taking steps such as strengthening their value and premium offerings, ramping up their personalization capabilities, and reshaping their societal footprints.

Further notable analysis from McKinsey:

The McKinsey Global Institute presents its “Global Trade Explorer”—a digital experience that allows users to visualize the evolution of the world’s trade flows.
McKinsey Health Institute analysis from senior partner Hemant Ahlawat and coauthors finds that helping older adults engage more in society can improve health outcomes while also boosting countries’ GDP.
Partner Henning Soller and coauthors suggest that financial-services firms should prepare now for the onset of quantum computing by identifying potential use cases. Securities lending, payments, and wealth management are among the financial realms that could be transformed by quantum computing.
The newest McKinsey Explainer offers a primer on the global stocktake, a comprehensive assessment of the world’s climate progress.

A recent edition of Author Talks features Ron Shaich, founder of Panera Bread and Au Bon Pain, speaking about his new book, Know What Matters: Lessons from a Lifetime of Transformations (Harvard Business Review Press, October 2023). Shaich says the key to creating and sustaining successful enterprises is to always act with intent, by identifying today what will matter tomorrow.

This briefing note, based on McKinsey’s latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Do these insights resonate with you? What else should we be writing about now? Tell us by emailing insightstoimpact@mckinsey.com.

October 19, 2023

A global banking transition is under way.

This week’s headline findings:

McKinsey’s Global Banking Annual Review 2023 tracks a significant transition, in which the world’s financial funds are shifting away from banking’s balance sheets.
Europe has a unique opportunity to capitalize on the transformative power of generative AI.
Shifting technology trends are forcing telecom companies to reassess how they attract and retain tech talent.

Rising interest rates have boosted global banking profits, giving the sector its best results since 2007. But a “great banking transition” is under way: transactions and balance sheets are drifting toward other types of institutions—including digital-payments specialists and alternative-asset-management firms. In this year’s Global Banking Annual Review, senior partners Miklós Dietz, Alexander Edlich, Asheet Mehta, Eckart Windhagen, and coauthors outline five priorities for financial institutions hoping to future-proof themselves. Among the authors’ suggestions: develop distinctive technology, elevate risk functions (which could have a broader role to play in a fast-changing environment), and either scale or exit the transaction business.

Europe’s regional attributes create unique opportunities and challenges as organizations increasingly look to make the most of generative AI (gen AI), say senior partners Holger Harreis, Gökhan Sari, Alexander Sukharevsky, and coauthors. For example, Europe’s multiple languages and cultures and complex regulatory environment could complicate the use of gen AI, but these same characteristics might also offer local players a home field advantage.

Telecom companies might once have been the employer of choice for tech talent, but fiercer competition for STEM graduates is making hiring more difficult, even as telcos’ demand for tech talent increases. Tech trends shaping the industry—including AI and quantum technology—make attracting, cultivating, and retaining tech talent more important than ever. Senior partner Tomás Lajous and coauthors outline a three-phase telco talent approach: identify the talent implications of the business strategy, assess talent gaps and define priorities, and design a tech talent operating model.

Further notable analysis from McKinsey:

Partners Rajesh Krishnan, Zachary Silverman, Dominic Skerritt, and coauthor highlight survey results suggesting that four elements underlie successful organizational transformations: will, skill, rigor, and scope.
Senior partner Liz Hilton Segel interviews Lila Snyder, the CEO of Bose. Snyder says organizational transformation requires finding people who have “the gene for change.”
Senior partner Jeffrey Algazy and coauthors encourage medical affairs teams at pharmaceutical companies to focus on five priorities, including integrating end-to-end data into decision making and developing differentiated medical strategies.

A recent edition of Author Talks features BBC journalist Ros Atkins speaking about his new book, The Art of Explanation: How to Communicate with Clarity and Confidence (Wildfire, September 2023). Atkins says that good communication can flow from asking oneself, “Does this sound like me?”

This briefing note, based on McKinsey’s latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Do these insights resonate with you? What else should we be writing about now? Tell us by emailing insightstoimpact@mckinsey.com.

October 12, 2023

Women in the corporate workplace have grown more ambitious since the pandemic.

Here are this week’s headline findings:

McKinsey’s Women in the Workplace 2023 report, based on a large-scale study of organizations employing a total of more than ten million people, dispels several myths about the state of women in corporate America and Canada.
A study comparing the total shareholder returns (TSR) from 1,000 large-cap American corporations reveals five distinct paths to TSR outperformance.
Drone delivery services are becoming more widespread, with additional use cases surfacing and regulatory standards coalescing.

The ninth McKinsey Women in the Workplace report, conducted in partnership with LeanIn.Org, shows substantial leadership gains for women, with C-suite representation climbing from 17 percent in 2015 to 28 percent in 2023, but continuing underrepresentation for women of color at nearly every step on the corporate ladder. Senior partners Alexis Krivkovich, Lareina Yee, and coauthors spotlight several other noteworthy findings. For instance, women are now more ambitious than before the pandemic as a result of new workplace flexibility, the biggest barrier for women is the first step up into management ranks (perhaps better characterized as a “broken rung” than a “glass ceiling”), and workplace microaggressions against women can have a large and lasting effect, making women who endure them more likely to think about quitting their jobs.

A study examining large American corporations reveals that very few have been able to beat market TSR by 5 percent or more over a ten-year period. Partner Tim Koller and coauthors identify five main routes to TSR success. Among them: offer new or enhanced products (for example, a breakthrough medicine), undertake a turnaround (such as by revamping core operations), or simply outmanage peers (through superb strategy and execution).

Consumer package delivery via drone is already a fact of life in some places—especially Asia–Pacific. Globally, the number of packages delivered by drone grew by more than 80 percent from 2021 to 2022. Partner Robin Riedel and coauthors project that commercial drones will complete more than one million deliveries by the end of 2023. Expanding use cases (including healthcare and restaurant deliveries), coupled with greater regulatory clarity, are making drone deliveries an increasingly viable option.

Here’s some further notable analyses from McKinsey:

Partner Shivika Sahdev and coauthors assess what it will take to make fast-charging public networks for electric vehicles profitable in the United States. Ancillary revenue from retail sales or advertising, as seen now at gas stations, might help boost charging networks’ bottom lines.
Senior partner Mark Patel and coauthors offer semiconductor players a road map for reducing upstream emissions. Purchased raw materials account for the majority of the industry’s upstream emissions, which could be mitigated by partnering with suppliers to develop decarbonization strategies.
The newest McKinsey Explainer offers a primer on Web3, a concept involving a decentralized internet powered by blockchain technology.

This briefing note, based on McKinsey’s latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Do these insights resonate with you? What else should we be writing about now? Tell us by emailing insightstoimpact@mckinsey.com.

October 5, 2023

Are new concerns reshaping global expectations for growth?

This week’s headline findings:

The latest McKinsey Global Survey on the economy reveals sentiment diverging by region, as concerns about an economic slowdown in China become more prominent.
A new report, The promise of travel in the age of AI, assesses the potential for advanced data science to revolutionize the travel industry.
An interview with the global chief investment officer at one of the world’s largest real estate firms looks at how hybrid work is creating new real estate opportunities.

A McKinsey Global Survey that was in the field from August 31 through September 8 finds overall economic sentiment leaning more positive than negative for the second quarter in a row. But senior partner Sven Smit and coauthors note that differences emerge when results are examined on a regional level. European respondents report a more negative collective outlook than their North American counterparts. And while inflation fears remain top of mind across the globe, apprehensions about slowing economic activity in China have come to the fore for Asia–Pacific’s respondents. Private sector respondents were, on the whole, increasingly optimistic about their own companies’ prospects.

Advances in AI could profoundly alter how the travel industry serves customers, develops products, and manages operations. In collaboration with Skift Research, senior partner Ben Ellencweig and coauthors explain how AI can help travel companies use data to more narrowly segment customers, aiding efforts to hyper-personalize marketing and services. AI can also identify promising product niches while empowering workers to find operational solutions to complex problems.

In an episode of McKinsey’s Deal Volume podcast, partner Brian Vickery speaks with David Steinbach, global chief investment officer of Hines, one of the world’s largest real estate investors, developers, and service providers. Steinbach compares the upheaval of this real estate moment to the disruption that e-commerce brought to the retail sector. As city tax bases erode and office space tenants discover different needs, Steinbach predicts that real estate industry change will accelerate.

Further notable analysis from McKinsey:

Senior partner Mauro Erriquez and coauthors herald a new era of procurement, in which shifts in technology and demography enable unique opportunities to create value across the supply chain.
Partners Emily Field, Bryan Hancock, Marc Metakis, and coauthor outline ways to equip middle managers with the skills and support they need to help their organizations succeed.
The newest McKinsey Explainer offers a primer on hydrogen energy, an alternative fuel source that will require significant investment but could help reduce global emissions.

The case study collection Rewired in Action illuminates companies that have launched digital transformations to build value. Supported by technical and industry expertise from McKinsey, these organizations have changed their trajectories through the integration of digital and AI.

A recent edition of the Inside the Strategy Room podcast features partner Emma Gibbs speaking with John Horn, professor of practice in economics at Olin Business School at Washington University in St. Louis, about his new book, Inside the Competitor’s Mindset (MIT Press, April 2023). Horn details how to predict competitors’ future moves by stepping into their shoes.

This briefing note, based on McKinsey’s latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Do these insights resonate with you? What else should we be writing about now? Tell us by emailing insightstoimpact@mckinsey.com.

Insights to Impact: A weekly briefing on creating sustainable and inclusive growth

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Decarbonization will require solving four interconnected problems. Our weekly digest of insights explores that topic and more.

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Innovation and growth, done right, can work hand in hand. Our weekly digest of insights explores that topic and more.

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Marketing can be a vital component of growth. Our weekly digest of insights explores that topic and more.

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Courageous growth flows from aspirational mindsets. Our weekly digest of insights explores that topic and more.

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A global banking transition is under way.

October 12, 2023

Women in the corporate workplace have grown more ambitious since the pandemic.

October 5, 2023

Are new concerns reshaping global expectations for growth?