Saturday, March 30, 2019

Brexit: The bigger picture—Revitalizing UK exports in the new world of trade

UK companies can navigate shifts in global trade patterns by focusing on fast-growing services and digital trades, redoubling efforts in emerging markets, and digitizing their supply chains.
Brexit: The bigger picture—Revitalizing UK exports in the new world of trade

The West of Shetland comes of age

Despite challenges, the West of Shetland is increasingly important to offshore UK oil and gas activity. Four levers can help lower breakeven costs to make the province globally competitive.
The West of Shetland comes of age

Five trends shaping the future of Medicaid

The Medicaid program has experienced significant changes since 2010, when the Affordable Care Act was passed. Five trends are likely to affect how the program will change over the next five to ten years.
Five trends shaping the future of Medicaid

OFSE quarterly: Oil price slump slows recovery

Crude oil prices continued on a downward trajectory in the fourth quarter, resulting in a somber outlook for the sector going into 2019. OFSE performance in the last quarter itself was mixed, with outcome varying greatly at company level.
OFSE quarterly: Oil price slump slows recovery

Tuesday, March 26, 2019

Organizational culture in mergers: Addressing the unseen forces

Understanding culture, and proactively managing it, is critical to a successful integration. This requires a comprehensive approach.
Organizational culture in mergers: Addressing the unseen forces

How to avoid losses and prune projects proactively

It’s common for companies to hang on for too long to projects or parts of the business that are underperforming. Two effective techniques can help executives decide when to hold on to an asset and when to let it go.
How to avoid losses and prune projects proactively

Saturday, March 23, 2019

China Brief: The state of the economy

Welcome to the first edition of China Brief. In this series, linked to our monthly podcast, McKinsey on China, our China-based partners share the latest insights from this dynamic market.
China Brief: The state of the economy

Friday, March 22, 2019

The future of manufacturing

In this episode of the McKinsey Podcast, Simon London speaks with McKinsey senior partner Katy George and partner Enno de Boer about the future of manufacturing—think digital and advanced analytics, not robots.
The future of manufacturing

Improving the management of complex business partnerships

Adhering to four key principles can help companies increase the odds that their collaborations will create more value over their life cycles.
Improving the management of complex business partnerships

The hidden benefits of value-added services in commercial lines insurance

Value-added services can help insurers improve profitability, own the customer interface, and reinvent their product offerings. To capture these benefits, companies must understand the changing needs of customers and brokers and expand new services beyond a core offering.
The hidden benefits of value-added services in commercial lines insurance

Reducing lapses in healthcare coverage in the Individual and Medicaid markets

Patterns in how consumers move in and out of Medicaid and Individual market coverage have important implications for both private- and public-sector stakeholders.
Reducing lapses in healthcare coverage in the Individual and Medicaid markets

Three Questions to Gauge Emotional Intelligence

Thursday, March 21, 2019

The tougher competitors in emerging markets

Companies in developing economies are becoming battle hardened as they vie for growth and plug into advanced technologies. Wealth is piling up in areas of economic vitality.
The tougher competitors in emerging markets

How residential energy storage could help support the power grid

Household batteries could contribute to making the grid more cost effective, reliable, resilient, and safe—if retail battery providers, utilities, and regulators can resolve delicate commercial, operational, and policy issues.
How residential energy storage could help support the power grid

China’s chemical industry: New strategies for a new era

China looks set to remain the fastest-growing major chemical market, but important changes are under way. To succeed in this next stage of development, players will need to embrace a new set of strategies.
China’s chemical industry: New strategies for a new era

A winning growth formula for dairy

Modest growth forecasts, shifting consumer tastes, and increased competition will force executives to seek new opportunities.
A winning growth formula for dairy

Pushing Back on Pervasive Technology

Wednesday, March 20, 2019

Advanced analytics in asset management: Beyond the buzz

Leading firms are applying advanced analytics across the full asset-management value chain—with real-world results.
Advanced analytics in asset management: Beyond the buzz

Technology + operations: A flywheel for performance improvement

New automation techniques can provide the first step toward continuous, tech-enabled redesign of critical operations—forming an intuitive ops-to-tech cycle in which tech improves ops, and vice versa.
Technology + operations: A flywheel for performance improvement

How to resist the allure of ‘glamour’ projects

Shiny new initiatives can distract you from paying attention to other valuable but mundane projects and investments.
How to resist the allure of ‘glamour’ projects

Saturday, March 16, 2019

Thomas L. Friedman: Why I’m optimistic

There’s reason to be hopeful about our future. The New York Times columnist explains why in a conversation with James Manyika.
Thomas L. Friedman: Why I’m optimistic

Bancassurance: It’s time to go digital

As customers and banks shift to digital technologies, bancassurers need to rethink their distribution model.
Bancassurance: It’s time to go digital

Thomas L. Friedman: Lifting people back into the middle class

James Manyika and the New York Times foreign affairs columnist discuss what it will take to restore high-wage jobs in the face of technological disruption.
Thomas L. Friedman: Lifting people back into the middle class

Keys to a sustainable transformation: A conversation with Seth Goldstrom

Transformations must truly change the trajectory of the organization to thrive over the long run. Here are four essential steps to ensuring lasting change.
Keys to a sustainable transformation: A conversation with Seth Goldstrom

Thomas L. Friedman: Why simple fixes don’t work anymore

One-word answers are not enough in today’s complex world, when people have differing priorities as citizens, consumers, and workers.
Thomas L. Friedman: Why simple fixes don’t work anymore

Thomas L. Friedman: An interview with Mother Nature

The New York Times foreign affairs columnist shares what the environment can teach us about thriving in an age of disruption in a conversation with James Manyika.
Thomas L. Friedman: An interview with Mother Nature

Supercharging retail sales through geospatial analytics

A retailer can now use geospatial analytics to understand the interactions between its online and offline channels. With these insights, it can create a higher-performing retail network.
Supercharging retail sales through geospatial analytics

Thomas L. Friedman: Technology moves in steps

From flat, to fast, to deep, technology is advancing in stages and changing our world. The New York Times columnist forecasts what’s next in conversation with James Manyika.
Thomas L. Friedman: Technology moves in steps

The journey to a new tomorrow: A conversation with Ron Kuerbitz, CEO, agilon health

Ron Kuerbitz, Chief Executive Officer, agilon health, shares his perspective on consolidation of the sector, the role of technology, and what he’s most excited about for the future. He spoke with Neha Patel, Partner, McKinsey & Company in December 2018.
The journey to a new tomorrow: A conversation with Ron Kuerbitz, CEO, agilon health

Thomas L. Friedman: The three climate changes

The New York Times foreign affairs columnist tells James Manyika why he thinks the environment, globalization, and technology are transforming our world.
Thomas L. Friedman: The three climate changes

Friday, March 15, 2019

Transforming Medical Affairs: Tapping the alchemy of storytellers and digital start-ups

The Head of Digital Strategy and Medical Innovation, US Clinical Development and Medical Affairs at Novartis discusses how disruptive technologies and digital innovation are inspiring a start-up mind-set within the organization.
Transforming Medical Affairs: Tapping the alchemy of storytellers and digital start-ups

The public–private imperative in urban mobility: A view from Canada

Josipa Petrunic imagines a low-carbon, smart-mobility future for Canada. In this interview, she describes how CUTRIC, the consortium she leads, is bringing the public and private sectors together to make it happen.
The public–private imperative in urban mobility: A view from Canada

New carmaker on the block: Byton’s CEO on China’s car of the future

Carsten Breitfeld, an industry veteran turned disruptor, explains how his Chinese-conceived, globally oriented start-up is tuned for the emerging mobility transformation. 
New carmaker on the block: Byton’s CEO on China’s car of the future

Wednesday, March 13, 2019

Snapshots of the global mobility revolution

How will regional variations in China, Europe, Brazil, India, and the United States reshape cars, carmakers, and the automotive “user experience”?
Snapshots of the global mobility revolution

What makes an organization ‘healthy’?

In this episode of the McKinsey Podcast, Simon London speaks with McKinsey partners Rajesh Krishnan and Brooke Weddle about the ins and outs of organizational health.
What makes an organization ‘healthy’?

Tuesday, March 12, 2019

Zero-based productivity: Going granular and end-to-end across the supply chain

Companies often believe they have extracted all significant cost savings from their supply chains. A zero-based approach can unlock additional value.
Zero-based productivity: Going granular and end-to-end across the supply chain

Sharing in mobility: An interview with Lyft’s Raj Kapoor

The company’s chief strategy officer describes Lyft’s aspirations to contribute to a broader mobility ecosystem.
Sharing in mobility: An interview with Lyft’s Raj Kapoor

How the oil and gas industry can improve capital-project performance

Management practices and digital technologies used by other industries can help oil and gas companies boost capital-project productivity.
How the oil and gas industry can improve capital-project performance

Powering mobility’s future: An interview with WiTricity’s Alex Gruzen

A leader at the forefront of wireless electricity explains why cars are going electric, electric is going wireless, and the mobility ecosystem is headed for major change.
Powering mobility’s future: An interview with WiTricity’s Alex Gruzen

How governments in emerging economies can help boost and sustain growth

A focus on public-sector efficiency and competitive dynamics for companies are keys to outperformance.
How governments in emerging economies can help boost and sustain growth

An Executive Guide to the Spring 2019 Issue

The Only Way Manufacturers Can Survive

Vijay Govindarajan (Tuck School of Business, Dartmouth College) and Jeffrey R. Immelt (Athenahealth, New Enterprise Associates, Desktop Metal)

Although most manufacturers are beginning to flirt with emerging technologies, not one has successfully pulled off a digital transformation. CEOs still have to figure out the art and science of it. This article explores why it’s so difficult for industrial companies in particular and shares key insights from the authors’ deep experience and research. One of the authors (Immelt) spearheaded a digital transformation, among several other major change initiatives, at GE, and the other (Govindarajan) has been studying innovation and change in large companies, including GE, for decades.

GE was probably the first manufacturer to internalize that digital technologies could disrupt its businesses. It faced uphill battles in its efforts to start and sustain its digital transformation, and those experiences provide useful insights for executives wrestling with the challenge. To escape inertia and enable their companies to become digital-industrials, leaders of manufacturers must prevent core competencies from becoming rigidities that inhibit change, integrate digital hires with engineers (who learn, think, and function very differently) to form a new set of capabilities, and champion a shift from a culture of continuous improvement to one of constant innovation.


How Digital Leadership Is(n’t) Different

Gerald C. Kane (Boston College), Anh Nguyen Phillips (Deloitte), Jonathan Copulsky (Northwestern University), and Garth Andrus (Deloitte)

The rapid changes associated with digital disruption can be so disorienting that many of us assume the leadership handbook must be completely rewritten for the digital age. Is this true? Or are greater and greater levels of uncertainty causing us to neglect the essentials? Is it possible that the leadership challenges of the digital world are more the same than different, but we are overly focused on what’s different because we are so alarmed by the threats to the status quo?

There is something to be said for both arguments. Over the past five years, in a joint research project with MIT Sloan Management Review and Deloitte, the authors of this article have studied how business and leadership are changing as a result of digital disruption. They have found that while many core leadership skills remain the same, the particular demands of digital disruption call for certain new skills, as well. Here, they explore which are which and what can be learned from organizations that are digitally maturing — that is, those that have been transformed by digital technologies and capabilities that improve processes, engage talent across the organization, and drive new value-generating business models.


It Pays to Have a Digitally Savvy Board

Peter Weill (MIT Sloan School of Management and MIT Center for Information Systems Research), Thomas Apel (Stewart Information Services Corp.), Stephanie L. Woerner (MIT CISR), and Jennifer S. Banner (Schaad Cos. and BB&T Corp.)

As companies seek to improve their business models, customer experience, operational efficiency, and more through new technologies, their boards must help them move forward at a sufficient pace. Those that do are likely to see better financial results than those that don’t, according to a machine learning analysis of the digital know-how of all the boards of U.S.-listed businesses. After examining data from surveys, interviews, company communications, and the bios of 40,000 directors, the authors of this article found that companies with digitally savvy boards significantly outperformed others on key metrics such as revenue growth, ROA, and market cap growth.

When boards lack digital savvy, they can’t play their critical guiding role. But companies can fix that by understanding what kinds of characteristics to look for in existing and new board members, managing board agendas differently, and cultivating new learning opportunities.


Nondisruptive Creation: Rethinking Innovation and Growth

W. Chan Kim and Renée Mauborgne (INSEAD)

Although disruption is all around us, it isn’t the only way to innovate and grow. Indeed, a single-minded focus on disruption leads companies to overlook another important approach — what the authors call nondisruptive creation. This alternative approach involves creating new markets where none existed before.

Most companies remain stuck in the mindset that in order to create, you must disrupt or destroy, but that’s not the case. Nondisruptive creation breaks our existing frame on innovation and growth and allows us a much broader view of how to generate value. In this article, the authors define the concept, offer a framework to help leaders charged with driving innovation to achieve the kind of growth that best suits their company, explain which strategies trigger nondisruptive creation and which lead to disruption, and examine how managers can identify new problems to solve and new opportunities to seize.


What to Do When Industry Disruption Threatens Your Career

Boris Groysberg (Harvard Business School), Whitney Johnson, and Eric Lin (United States Military Academy)

When industries are disrupted, so are the people who work in them. Companies can shift and enhance their institutional know-how by hiring new people, but it’s difficult for individuals to swap out well-honed skills quickly enough to suit changing markets. Even as they recognize their need to gain new skills, they seldom adapt rapidly, because skills are accumulated slowly through years of formal education, training, and work experience. Learning takes time.

After World War II, managers who climbed the corporate ladder often had an expectation of implicitly guaranteed lifetime employment, inducing them to deepen their institutional knowledge and their commitment to the company. But today, people rarely stick with one organization for a lifetime. And so, as industry volatility has increased, the responsibility for career management has shifted from companies to individuals. In this article, the authors discuss how to diagnose the risks that disruptive industry forces pose to your career — and offer advice on how to mitigate the threats.

To stay ahead of developments that may disrupt your professional life, make two evidence-based diagnoses: How volatile is your industry? And what explains the volatility? Answers to those questions will equip you to disrupt your own career preemptively, if warranted. You might seek a new role in your company, deploy your skills with another company in the same industry, or bolster capabilities that make you attractive across industries.


A Structured Approach to Strategic Decisions

Daniel Kahneman (Princeton University), Dan Lovallo (University of Sydney and McKinsey & Co.), and Olivier Sibony (HEC Paris and Saïd Business School, University of Oxford)

Making strategic decisions — whether you’re considering an acquisition, figuring out whether to launch a new product, or choosing a startup to fund — involves boiling down a large amount of complex information so that you can rate competing options or arrive at a yes-no call on a single path. Such decisions are evaluative judgments and thus are highly susceptible to errors that stem from known cognitive biases or from random factors (known as “noise”).

The unreliability of human judgment has long been recognized and studied, particularly in the context of hiring. For instance, a vast amount of evidence indicates that unstructured interviews lead to evaluations that have very little predictive value. That’s because the interviewer forms a mental model (colloquially known as an “impression”) of a candidate, a process that psychologists have shown has three specific limitations: excessive coherence, a “quick and sticky” quality (we form our models rapidly and alter them slowly), and biased weighting.

The authors draw inspiration from that body of research and experience to suggest a practical, broadly applicable approach to reducing similar errors in strategic decision-making. They outline the core elements of that process, which, like the practice of structured interviewing in hiring, includes assessing attributes one at a time before arriving at a final judgment. The authors explain how to apply this approach to both one-off and recurrent decisions. The process is easy to learn, involves little additional work, and (within limits) leaves room for intuition.


Understanding China’s Next Wave of Innovation

Mark J. Greeven (IMD), George S. Yip (Imperial College Business School), and Wei Wei (GSL Innovation)

In recent years, a handful of Chinese companies have emerged as global innovators and have garnered a lot of attention. This group includes online retail giant Alibaba, appliance maker Haier, search and data technology provider Baidu, and Tencent, a provider of a social communication and gaming ecosystem. Although these businesses are challenging the R&D strategies of foreign multinationals and providing valuable lessons on how to make ideas commercially viable, there’s a less obvious force to be reckoned with in China as well. Thousands of innovative companies are quietly disrupting numerous industries, overtaking incumbents, and developing new products and new business models. From electronics startups to manufacturers of hand tools, these emerging innovators are not easy to spot — yet they pose real threats, often in unexpected places.

The authors interviewed hundreds of executives, entrepreneurs, and investors in China and studied more than 200 Chinese companies in an effort to understand how innovation is being practiced there and how it is changing. Through this research, they identified three types of emerging innovators, each of which presents a different set of challenges for rivals. The authors refer to them as hidden champions, tech underdogs, and change makers. They describe each type of innovator in detail so that companies seeking to operate in China or compete globally can see how each one conducts business and understand what multinationals may be up against in the future. To stay in the game, non-Chinese multinationals must look beyond industry borders, be attuned to these potential threats, and rethink their assumptions about how to innovate successfully.


When Patients Become Innovators

Harry DeMonaco (MIT Sloan School of Management), Pedro Oliveira (Copenhagen Business School), Andrew Torrance (University of Kansas School of Law), Christiana von Hippel (University of California, Berkeley), and Eric von Hippel (MIT Sloan School of Management)

Health care consumers are increasingly able to conceive and develop sophisticated medical devices and services to meet their own needs — often without any help from companies that produce or sell medical products. This “free” patient-driven innovation process enables people to benefit from important advances that are not commercially available. Commercial producers of medical devices and services can benefit, too. For them, patient do-it-yourself efforts can be free R&D that informs and amplifies in-house development efforts.

In this article, the authors examine two examples of free innovation in the medical field: one for managing type 1 diabetes and the other for managing Crohn’s disease. They set these cases within the broader context of the “free innovation” movement that has been gaining momentum in an array of industries and apply the general lessons of free innovation to the specific circumstances of medical innovation by patients. They also explore some of the nuanced questions surrounding patient innovation, such as safety concerns and the legal implications of DIY designs. Even in cases where there are significant safety risks, the authors think it would be a mistake to limit patient innovation. When it addresses medical problems unserved by commercial solutions, they argue, we may well see a net gain in safety and quality of life for the whole population of affected patients. And we can expect safety to improve as low-cost clinical trial methods are developed to enable patient communities to test their own innovations.


An Executive Guide to the Spring 2019 Issue

Growth Is Not a Zero-Sum Game

My fifth-grade daughter is learning some basic laws of physical science in school this year, and I’ve been thinking about one of them in relation to a few articles in the spring 2019 issue of MIT SMR. Here’s the law, paraphrased somewhat: In a closed system, energy can neither be created nor destroyed. It’s just rearranged.

Could something similar be said about businesses and the value they generate? Companies are destroyed all the time — whether by their own hand, by macro forces, or by competitors they underestimated or didn’t see coming. But each time a new player emerges, is it always at the expense of something else? Should we view growth and destruction as simply value rearranged?

Far from it, argue INSEAD professors W. Chan Kim and Renée Mauborgne. They coin the term nondisruptive creation to describe how lots of new markets have come into being without negative consequences for existing industries and businesses. The authors walk us through a range of examples (life coaching, microfinance, online dating) and provide a framework for defining new problems to solve and seizing new opportunities. They remind us that companies needn’t destroy in order to create and grow.

Still, many do, and organizations that are behind the curve digitally are especially vulnerable to disruptive threats. No one knows this better than leaders of industrial companies. Dartmouth innovation expert Vijay Govindarajan and former GE CEO Jeffrey R. Immelt explain how tech giants, digital natives, and startups swooped in to create a market for studying machines’ performance data and helping manufacturers’ customers get more out of what they’ve bought. That’s an opportunity the manufacturers might have carved out for themselves if they’d been further along in their digital transformation efforts.

Through their research and experience, Govindarajan and Immelt have come to believe that survival in the fourth industrial revolution requires full-on commitment to going digital. That’s tough to manage in companies that are geared for continuous improvement rather than constant innovation, the authors say. But not doing it is no longer an option, and they provide hard-earned insights about fighting the inertia that inevitably sets in.

Of course, when industries are at risk, so are their people. Harvard Business School professor Boris Groysberg and his coauthors Whitney Johnson and Eric Lin share what they’ve learned about managing careers in volatile settings. Drawing on their analysis of the professional services industry and on existing research across sectors, they offer useful advice on how to preempt your own disruption by spotting early signs of volatility at your company, transferring your skills within your industry, and making yourself an attractive candidate in other industries.

How can we think about all this in light of the energy-conservation law? I suppose the difference for business is that it’s not bound by a closed system. When companies create something that doesn’t eat into anyone else’s share of market, mind, or wallet, they open up a new world of possibility for themselves and for the people who lead and operate them. And new laws may apply.


Growth Is Not a Zero-Sum Game

The Only Way Manufacturers Can Survive

It Pays to Have a Digitally Savvy Board

How Digital Leadership Is(n’t) Different

Friday, March 8, 2019

Spending reviews: A more powerful approach to ensuring value in public finances

Spending reviews have the potential to provide significant insight into budget allocations, enabling higher productivity and greater operational efficiency.
Spending reviews: A more powerful approach to ensuring value in public finances

A practical approach to supply-chain risk management

In supply-chain risk management, organizations often don’t know where to start. We offer a practical approach.
A practical approach to supply-chain risk management

The trends transforming mobility’s future

Mobility as we know it is about to change. A handful of trends will largely determine the benefits—and costs—for business and society.
The trends transforming mobility’s future

Solving the rate puzzle: The future of electricity rate design

Systemic trends are forcing utilities to confront the need for rate design changes.
Solving the rate puzzle: The future of electricity rate design

Making electric vehicles profitable

Most OEMs don’t profit on selling electric vehicles. But addressing elements of the product and business model can put them on a better path. We have a clear roadmap for EV profitability.
Making electric vehicles profitable

How to Lead the Charge With Gender Balance

Thursday, March 7, 2019

Driving the automotive customer experience toward the age of mobility

Automotive brands need to refine and digitize the customer experience they provide—otherwise they will not be ready to develop into the mobility providers of tomorrow.
Driving the automotive customer experience toward the age of mobility

The B2B analytics playbook: Capturing unrealized potential in telcos

Telecommunications companies have been leaving money on the table by underinvesting in advanced analytics in their B2B business units relative to their B2C operations. A new tailored approach across these segments can generate much-needed growth and margins.
The B2B analytics playbook: Capturing unrealized potential in telcos

Most of AI’s business uses will be in two areas

An examination of more than 400 AI use cases revealed the two areas where AI can have the greatest impact, write the authors in Harvard Business Review.
Most of AI’s business uses will be in two areas

AI in production: A game changer for manufacturers with heavy assets

Companies with heavy assets are improving throughput, energy consumption, and profit per hour with customized AI solutions.
AI in production: A game changer for manufacturers with heavy assets

How to be objective about budgets

Addressing anchoring bias can lead to more accurate budget forecasts, better budget conversations, and more dynamic resource reallocation.
How to be objective about budgets

Wednesday, March 6, 2019

Why Great Leaders Focus On Mastering Relationships

Dozens of countries are in talks to regulate cross-border e-commerce

McKinsey Global Institute projects that the global market for cross-border, business-to-consumer e-commerce will top $1 trillion by next year, writes Susan Lund in Axios.
Dozens of countries are in talks to regulate cross-border e-commerce

How to take the ‘outside view’

It may be easier than you think to debias your decisions and make better forecasts by building the “outside view.”
How to take the ‘outside view’

Five Fifty: The silo syndrome

Working in silos can cause tunnel vision, tribalism, and weak corporate performance. What’s a silo-buster to do?
Five Fifty: The silo syndrome

Putting people at the heart of public-sector transformations

Transformation in government is a hugely complex undertaking. That makes it critical to get the people component right.
Putting people at the heart of public-sector transformations

Sunday, March 3, 2019

Saturday, March 2, 2019

Friday, March 1, 2019

The platform play: How to operate like a tech company

For tech to be a real driver of innovation and growth, IT needs to reorganize itself around flexible and independent platforms.
The platform play: How to operate like a tech company

The ‘digital land grab’ in fashion

As e-commerce and platforms evolve, fashion companies could use them to realize higher margins and build scale.
The ‘digital land grab’ in fashion

Why corporate-center efficiency matters

Getting the most out of a corporate center has never been so important or complex. The latest research points to new ways to help a center get more efficient.
Why corporate-center efficiency matters

Leadership beyond the C-suite

In this episode of the McKinsey Podcast, Simon London speaks with McKinsey senior partner Claudio Feser and associate partner Nicolai Nielsen about the research in their new book, Leadership at Scale: Better Leadership, Better Results.
Leadership beyond the C-suite

The difference between good and bad sales training: A closer look at certification

Building sales capabilities has to evolve to deliver growth and keep up with evolving needs.
The difference between good and bad sales training: A closer look at certification