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News

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

7.12.2021
Company: McKinsey & Company, Inc. Prague

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 (exhibit), and achieve real-time visibility and systematic responses to external developments.

Exhibit

Manufacturers see digitization, AI, and automation as top drivers of productivity and profitability for the coming three years.

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.

 

 

Tags: Finance | IT | Manufacturing |

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