COVID-19: Implications for business

COVID-19: Briefing note #93, February 23, 2022

The COVID-19-pandemic accelerated our need for a new kind of growth.

The COVID-19 pandemic served as an accelerant in multiple ways. This week, McKinsey looked at how the pandemic spurred the adoption of telehealth and e-commerce, exacerbated pressure on nurses, and made company operations more complex. In the big picture, it increased the urgency for a new vision of global growth, one that benefits more people and leaves our planet healthy.

Crises such as COVID-19 can become watersheds of policy and strategy. In an editorial published in Fortune, Klaus Schwab, the founder and executive director of the World Economic Forum, and Bob Sternfels, McKinsey’s global managing partner, propose pursuing a sustainable, inclusive growth agenda that supports the health of the natural environment while improving the livelihoods of wider population segments. Leaders can shape a resilience agenda by addressing the interrelationships between climate, healthcare, labor needs, supply chains, digitization, finance, and inequality and economic development.

The pandemic ignited telehealth: as of mid-2021, utilization was 38 times higher than before the pandemic. However, McKinsey’s most recent Physician Survey showed that most doctors don’t love telehealth as much as patients do. Most expect to return to a primarily in-person delivery model over the next year, and 62 percent said they recommend in-person over virtual care to patients.

The pandemic essentially forced consumers to try e-commerce and to increasingly rely on product ratings and reviews to give them the confidence to make purchases. The total number of global reviews roughly doubled in the year after COVID-19 started. On The McKinsey Podcast, McKinsey partner Dave Fedewa and McKinsey senior expert Chauncey Holder discuss how companies need to adapt to the new world in which reviews matter more than ever.

Healthcare workers and their organizations continue to face unparalleled demands stemming from the COVID-19 pandemic. Thirty-two percent of registered nurses surveyed in the United States in November said they may leave their current direct-patient-care role, according to McKinsey’s latest research. Healthcare organizations can consider a number of medium- and longer-term strategies to support their workforces.

As companies look at areas to automate, they need a clear, complete picture of service processes. The complexity of services, which often involve coordinating multiple functions in nonlinear ways, makes bad handoffs a perpetual problem. Add to these factors the burgeoning number of customer touchpoints and the accelerated move to remote working since the start of the COVID-19 pandemic, and the challenge looms even larger. An approach we call process insights—which marries technology tools and analytics in a disciplined, three-stage process—shows promise.

While our theme this week is the pandemic’s accelerating effects, we also looked at the opposite: how COVID-19 can spur lightning-fast pullbacks. Although consumer confidence is growing, desire for travel has shown a faltering recovery due to sporadic COVID-19 outbreaks. Our examination of China’s tourism industry showed that a predictable pattern is emerging where desire for travel recovers roughly two months after a decline. Furthermore, travelers’ preferences are shifting, with implications for travel companies.

Here are other key findings from our research this week:

• Signed in November, the US Infrastructure Investment and Jobs Act will provide more than $1 trillion in public investment. One core component of the legislation is addressing the country’s aging water system. The act provides funding to replace lead pipes, address emerging contaminants in small and disadvantaged communities, and support rural water projects.
• A relative lack of top software companies threatens Europe’s economic competitiveness. But Europe could take a lead in software and build large players by playing to the continent’s strengths: vertical B2B software, software platforms for digitizing small and medium-size enterprises, and horizontal platforms built on European R&D excellence.
• Software sourcing, now a major driver of overall product cost, requires critical investments in capabilities and technologies, as well as significant financial resources. Those players that can procure software and related services at minimum cost and risk have a distinct competitive advantage.
• Asian acquirers are key players in the Asian M&A landscape, and many are setting their sights worldwide. Our research finds that the most effective dealmakers practice programmatic M&A tied directly to a stated strategy.
• On the McKinsey on Consumer and Retail podcast, McKinsey partner David Feber and Amcor CEO and managing director Ron Delia talk about exciting innovations that could transform the packaging industry.

This week in Author Talks, Ruchika Tulshyan, an award-winning inclusion strategist and speaker, discusses her new book, Inclusion on Purpose: An Intersectional Approach to Creating a Culture of Belonging at Work (MIT Press, March 2022). She explores the bias behind terms such as “lean in” and “culture fit” and proposes that inclusion efforts target the needs of women of color.

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

COVID-19: Briefing note #92, February 16, 2022

As Omicron reminded us, health is everything.

McKinsey focused on health this week, starting with a discussion of how Omicron has played out so far and what is likely next in the pandemic’s trajectory. An article on women’s health explores the remarkable tradition of viewing it as a healthcare niche, rather than a core concern of half the world’s population. Technology is increasingly merging with healthcare, so we extrapolated this theme further to examine how to keep companies’ technology healthy.

In this episode of The McKinsey Podcast, Shubham Singhal, senior partner and global leader of McKinsey’s Healthcare and Public & Social Sector Practices, reflects on where Omicron has taken us so far and where we go from here. Omicron spread so fast because it evades prior immunity and is more transmissible, allowing it to out-compete the previously dominant strain. Society will begin viewing COVID-19 as endemic when we’re comfortable getting on with life even though the risk of disease is not zero (and for the unvaccinated, it remains high).

Half of the world’s population is women, and women account for 80 percent of consumer-purchasing decisions in the healthcare industry. Yet women’s health has been considered a niche market and a mere subset of healthcare. A particularly illuminating statistic: only 1 percent of healthcare research and innovation is invested in female-specific conditions beyond oncology. Changing how the industry thinks about women’s health is an important step toward identifying value-creating opportunities for meeting women’s healthcare needs.

FemTech is an emerging category consisting of tech-enabled, consumer-centric solutions addressing women’s health. Depending on scope, estimates for FemTech’s current market size range from $500 million to $1 billion, and forecasts suggest opportunities for double-digit revenue growth. Our analysis of 763 companies indicates that the dynamics underlying FemTech are accelerating and that public awareness, company formation, and funding are surging.

When employees feel understood and supported by their employers, they tend to be happier, more effective, and more likely to stick around. Companies can use the power of AI and machine learning to coach employees. An AI-driven system can be designed to identify key moments when employees would benefit from a “nudge” that guides them toward positive actions, including improving their health, accessing training, and trying a different performance approach.

To protect the health of our work environments from ransomware, everyone from the board and C-suite to down the line must work to ingrain security into an organization’s DNA. Ransomware costs are expected to reach $265 billion by 2031. Supply chain attacks rose by 42 percent in the first quarter of 2021 in the United States, affecting up to seven million people, while security threats against industrial control systems and operational technology more than tripled in 2020.

Here are other key findings from our research this week:

• McKinsey’s Global Insurance Report 2022 explores long-term challenges facing the industry as well as a raft of trends unleashed by COVID-19. Insurers face fundamental strategic questions of how to create more value for shareholders and how to reframe the role of insurance in society. The report proposes nine imperatives that will help carriers navigate the current environment and focus on the businesses of which they are the best natural owners.
• With a target of a 78 percent reduction in economy-wide greenhouse-gas emissions by 2035 now enshrined in law, there is a strong impetus to transition the United Kingdom’s energy system to net zero. Looking at electricity demand, technology, and the grid, McKinsey examines options available to investors, regulators, policy makers, and energy companies.
• Companies used to outsource business processes primarily as a cost-saving strategy. Today, companies outsource to capitalize on sophisticated provider offerings, including customized industry solutions and advances in digital technology, such as AI, analytics, and machine learning.

In this edition of Author Talks Amy Webb, a leading futurist and business adviser, talks about her recent book, The Genesis Machine: Our Quest to Rewrite Life in the Age of Synthetic Biology (Hachette Book Group, February 2022), coauthored by microbiologist Andrew Hessel. The book explores a new field of science that combines engineering, design, and computers with biology, enabling the engineering of living cells. Webb says that synthetic biology—the ability to reprogram the fundamental units of life—is going to change industries such as healthcare, agriculture, and industrial materials.

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

COVID-19: Briefing note #91, February 9, 2022

The CEO job description just got a bit longer.

CEOs have always carried a heavy workload, but the issues they confront today add several fresh layers. Climate change requires a new way of looking at asset value that models the potential impact of various types of risk. COVID-19 and its aftermath means leaders must engage empathetically in topics relating to their employees’ well-being. This week, McKinsey examined how the pandemic and other world events have added to leaders’ list of most important tasks.

Climate change and the risks it imposes upon assets and markets is one of the biggest challenges confronting CEOs and other leaders today. The real-estate industry is already facing the need to build new capabilities that allow it to assess how climate-change risks alter values and what subsequent actions to take. Part of capability building involves understanding both physical risks and transition risks stemming from regulatory, social, and market reactions to climate change (exhibit). Once real estate and other leaders understand value impact, they can proceed to decarbonizing and finding new sources of value throughout the climate transition.

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COVID-19 brought on a new set of employee pressures, including trying to take care of work and children at a time when school doors close suddenly, and managing the 24/7 nature of working from home. These burdens also imply a new set of pressures for CEOs and other leaders as they attempt to support overburdened workforces. On the McKinsey Talks Talent podcast, McKinsey talent experts Bryan Hancock and Bill Schaninger discuss how leaders must engage in employees’ lives and well-being in ways they seldom did in the past.

We’re in one of the most bewildering labor markets in a generation, said Asutosh Padhi, McKinsey’s managing partner for North America, in a CNN Business Perspectives commentary. CEOs can respond by expanding recruitment efforts to people who have work experience but don’t have degrees; supporting more “gateway jobs,” or stepping-stone positions that provide an income boost; and by challenging their organizations to embrace a more inclusive, skills-based approach to hiring and talent management.

Across industries, product-development functions are encountering a perfect storm of supply chain issues arising from the pandemic, the current labor mismatch, and evergreen themes of managing cost, quality, and time. Rather than becoming part of the much-bemoaned war for talent, companies can develop the capabilities of their existing workforce to fill skills gaps.

As the economy continues to reel from the effects of COVID-19, consumer-packaged-goods companies are under more pressure than ever. Prices for food and packaging commodities have increased by more than 22 percent. Manufacturing wages and labor costs rose in 2020 from 5 to 20 percent of total costs. To respond to these rapid, sweeping changes, companies need to transform their operating models to the new reality.

Given that economies are expected to shift away from stimulus spending and other policy supports, forecasters and economists generally project a slower pace for global growth in 2022—but one that is still faster than prepandemic levels. January’s Global Economics Intelligence executive summary focuses on how inflation is playing out around the world, efforts to control it, and its impact on growth and employment.

Here are other key findings from our research this week:

• To better understand recent developments in sustainable packaging, we mapped regulations in 30 countries and found four common patterns. To ensure they comply with evolving requirements, packaging companies should track regulatory changes in their focus markets and implement processes to address future requirements proactively.
• Responding to a McKinsey survey, two out of three Americans told us their social values now shape their shopping choices, and 45 percent believe retailers should actively support Black-owned businesses and brands. Most retailers will need to make changes to meet the needs of these “inclusive consumers” by sourcing products that dovetail with consumer values and by communicating the changes to the public.
• Up to four-fifths of a product’s lifetime emissions are determined by decisions made at the design stage. By building on proven cost-optimization techniques, companies can get those choices right.
• Myths often hold back heavy industries from activating agile working practices. However, agility in heavy-industry organizations can be used to make operational improvements, to enhance run activities, to augment all-important safety standards, and ultimately to become an enduring source of competitive advantage.

In this edition of Author Talks, Neil Hoyne, Google’s chief measurement strategist, discusses his new book Converted: The Data-Driven Way to Win Customers’ Hearts (Penguin Random House, February 2022). Data alone is not the answer for companies trying to grow, Hoyne says. Instead, companies can find growth by creating the right data strategy, leadership, and processes.

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

COVID-19: Briefing note #90, February 2, 2022

The postpandemic world calls for fresh leadership ideas.

Organizations increasingly recognize that modern leadership means knowing how to make the most of digitization and technology, diverse talent, and the opinions of a range of stakeholders. This week, McKinsey dug for the details. Articles and an interactive explore how companies can take advantage of advanced-intelligence technology and become truly data driven. A new interview series illuminates how three Black leaders developed their leadership styles, while further articles explore casting the idea net wider.

Leading industrial and manufacturing companies are using machine-intelligence technologies to move the needle on a broad set of performance indicators, achieving three or four times the impact of average players. The full scale of the opportunity is set to continue as more use cases evolve from simple dashboards to greater levels of autonomy.

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What exactly does it mean to be a data-driven enterprise, and what would such an organization look like by 2025? Our interactive helps executives envision success by defining seven characteristics of a data-driven organization, how each would differ from what we typically see today, and how to achieve each step. Companies able to make the most progress fastest stand to capture the highest value from data-supported capabilities.

McKinsey created the Connected Leaders Academy to equip Black, Hispanic, Latino, and Asian leaders with the network and capabilities to achieve their professional aspirations. In our new interview series, My Leadership Journey, participants from the private sector, academia, the arts, and other walks of life reflect on their formative experiences and leadership styles. Jason Wright, president of Washington’s football team, the Commanders, told McKinsey about getting cut nine times from the NFL and talking his way back to opportunity by honing a narrative about what he could contribute. Stephanie Hill, executive vice president of Lockheed Martin’s Rotary and Mission Systems, discussed the importance of accepting uncomfortable challenges to build a career. Barry Lawson Williams, founder and former managing general partner of Williams Pacific Ventures, who has also served on 16 major public-company boards, spoke about how he built a network that helped position him for lucky breaks.

What does an army veteran who has returned from deployment five times have to teach a McKinsey organizational expert? Plenty, as a letter and conversations between Adria Horn, executive vice president of workforce at Tilson, a national telecom provider, and senior partner Aaron De Smet revealed. Horn reached out to McKinsey after reading about how companies can reengage employees postpandemic. She shared her view of parallels between soldiers returning from war zones and employees coming back to the office after living through the COVID-19 pandemic. The resulting conversation explores the alienation of return and how employers can work from a place of empathy.

Brainstorming is supposed to result in conversations like the one between Horn and De Smet. But too often, the value of casting the net wide for opinions is undercut by participants feeling pressured to conform. A structured approach that guides a group through anonymous brainstorming and silent voting removes some of the risks that can thwart honest discussion.

Here are other key findings from our research this week:

• Based on a survey of physicians who serve predominantly Medicare fee-for-service and Medicare Advantage patients, we estimate that up to $265 billion worth of care services could shift from traditional facilities to the home by 2025 without a reduction in quality or access. Care at Home could create value for payers, healthcare facilities and physician groups, providers, technology companies, investors, and, above all, patients.
• Korean companies would benefit from portfolio restructuring by making governance more transparent and by advancing women’s equality at work. In a wide-ranging conversation, André Andonian, managing partner of McKinsey Korea, discusses McKinsey’s near- and long-term goals in the country and how Korea is preparing for the post-COVID-19 economy.
• Investors are directing more funds to projects involving lunar and beyond orbital regimes, which have traditionally attracted less attention than regimes at lower altitudes. All signs point to continued growth.

Even the most seasoned professional was a neophyte at some point, a fact celebrated in our My Rookie Moment video series, in which McKinsey colleagues discuss the first time they had to deal with a particular challenge. The latest edition features stories about “leaps of faith,” in which partners had to do something for which they felt unprepared. Yarns include a tale of on-command public speaking and the recollection of facing a client who demanded different conclusions.

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

COVID-19: Briefing note #89, January 26, 2022

Tackling the other big global crisis.

Since March of 2020, we have focused this weekly update on sharing research into the health emergency facing the world. This week, we took a break from the COVID-19 pandemic to zero in on the other crisis that poses threats to lives and livelihoods: climate change, and the need to transition to a net-zero world. Additional articles looked at pressing issues including why the loss of US manufacturing has increased inequality, and how the Great Attrition is playing out in nursing.

A new report from the McKinsey Global Institute looks at what an economic transformation to net-zero emissions would entail. The transformation would affect all countries and all sectors of the economy, either directly or indirectly. In six sections of the report, we assess economic shifts for 69 countries and changes in sectors that produce about 85 percent of overall emissions, as well as provide estimates for what it will all cost (exhibit).

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The report includes an examination of effective decarbonization actions, which include shifting the energy mix, increasing energy efficiency, and enhancing sinks of both long- and short-lived greenhouse gases. Another section illustrates the economic and societal adjustments that would enable a successful transition to net-zero emissions by 2050, focusing on demand, capital allocation, costs, and jobs. We examine which sectors of the economy are more exposed to a net-zero transition, and how the transition could play out in various countries and regions. A section about actions for stakeholders explores what companies, financial institutions, and governments and multilateral institutions can do.

Also this week: revitalizing US manufacturing could be fundamental to resolving inequities while driving sustainable, inclusive growth. Today, the manufacturing sector represents just 10 percent of US GDP and jobs but drives 20 percent of the nation’s capital investment, 35 percent of productivity growth, 60 percent of exports, and 70 percent of business R&D expenditure. Strengthening the sector could also address the pervasive supply chain issues wreaking havoc all over the world, easing short-term disruption caused by the pandemic while improving global competitiveness in the midterm to long term.

During a time of unprecedented need, what can employers do to prevent losing nurses, the backbone of the healthcare workforce, to the Great Attrition? The McKinsey Podcast speaks with senior partner Gretchen Berlin, a registered nurse, about the need to pay nurses adequately and to ensure that there’s sufficient staffing, respite, and gratitude.

Here are other key findings from our research this week:

• In October 2020, coking coal accounted for more than half of the cost of the raw materials needed to produce a metric ton of steel via a blast furnace—a rare occurrence by historical standards. Though prices have fallen since then, steelmakers should consider the effect of longer-term coal price increases as part of their planning and adjust their plans as the implications evolve.
• The new normal for sporting goods includes increased health awareness, acceptance of athleisure, thriving e-commerce, and sustainability as a core concern. McKinsey’s summary of the state of the industry suggests strategies for navigating the trends.
• New and better digital tools can help companies analyze voice conversation and unlock the full potential of digital investments to improve customer service.

In the latest edition of our Author Talks series, John Koenig, author of The Dictionary of Obscure Sorrows (Simon & Schuster, November 2021), discusses how and why he invents new words for emotions and sensations. From “kenopsia” (the eeriness of places left behind) to “suerza” (a feeling of quiet amazement that you exist at all), Koenig’s made-up words pinpoint universal experiences and demonstrate how creative human language can be.

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

COVID-19: Briefing note #88, January 19, 2022

Fallout from the pandemic demands targeted action.

For much of the COVID-19 pandemic, leaders have tried to prepare for what might unfold. Today, some of those possibilities have arrived as undeniable challenges that demand new ways of operating. This week, McKinsey looked at fallout, including inflation, young peoples’ mental-health struggles, a pattern of “jolting” growth, and the demand for government agencies to improve customer service.

Not since the 1970s has inflation been such a central issue for companies, so finding creative ways to mitigate price increases is a dormant skill in many organizations. McKinsey experts offer a series of steps supply-chain leaders can use to determine whether a price increase is fair, starting by identifying the main cost inputs that have the highest level of change, estimating the percentage of the total cost these inputs make up, and calculating an acceptable price-increase range (exhibit). Response strategies include using a strong fact base for win–win negotiating and exploring new suppliers.

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A series of McKinsey consumer surveys and interviews indicated unprecedented behavioral-health challenges facing Generation Z and stark differences among generations. Gen Z respondents were more likely than other generations to report having been diagnosed with a mental-health or substance-use issue, as well as more likely to have sought no treatment for the problem. Gen Z respondents were also two to three times more likely than other generations to report thinking about, planning, or attempting suicide in the 12 months spanning late 2019 to late 2020.

There could be a postpandemic boom on the horizon, but it will likely depend on business leaders’ ability to respond to productivity and growth “jolts” caused by the pandemic. The onset of COVID-19 brought a set of discontinuities that drove the first jolt to growth and productivity. Now, near-term uncertainties pose risks to growth; however, responding effectively could translate to a second jolt. The potential third and final jolt may be the largest as companies reshape their long-term strategies to reflect—and define—the next normal.

On the McKinsey on Government podcast, McKinsey partner Tony D’Emidio and associate partner Marcy Jacobs discuss how the pandemic forced many government agencies to modernize the customer experience (CX) amid high demand for unemployment and healthcare assistance. Transparency has improved, but there is more work to do so that when citizens fill out applications or forms, they get status updates instead of just wondering what happened. Another insight: better CX brings costs down because satisfied customers call with fewer questions.

Here are other key findings from our research this week:

• Road freight accounts for 53 percent of CO₂ emissions within global trade-related transport, a share expected to rise to 56 percent by 2050 if current trends continue. Road Freight Zero: Pathways to faster adoption of zero-emission trucks is a joint publication by the World Economic Forum and McKinsey that describes how countries can reach their emissions goals for road freight.
• With a market of more than $2.8 trillion worldwide, fragmented retail is poised to be transformed by “eB2B” players: portals and applications that replace the in-person sales model for small retailers and restaurants. By understanding the market structure and properly setting the scale and speed of change, companies can design an eB2B solution capable of disruption.
• Reaching net zero in the cement and construction value chain by 2050 will require the buildings and construction industry to decarbonize three times faster over the next 30 years versus the previous 30. At the COP26 Climate Change Conference in Glasgow, Scotland, McKinsey brought together global property owners, contractors, materials suppliers, investors, equipment manufacturers, and disruptors to define the path forward. Among the takeaways: the industry can boost innovation by developing common standards and shared R&D resources.

What makes a CEO great? In this edition of Author Talks, McKinsey senior partners Carolyn Dewar, Scott Keller, and Vik Malhotra discuss their new book, CEO Excellence: The Six Mindsets That Distinguish the Best Leaders from the Rest (Scribner, March 2022). The authors interviewed 67 CEOs worldwide who met their criteria for excellence and diversity of both background and approach and identified keys to excellence that can provide lessons for any type of leader.

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

COVID-19: Briefing note #87, January 12, 2022

People are the fuel that will power the next industrial revolution.

Amid the Omicron surge, it’s perhaps poignant to note that all the advanced technology in the world means nothing without a population capable of adopting it and creating with it. COVID-19 vaccines are a good example of a technology that depends on people’s acceptance. This week, McKinsey explored how people in various industries and sectors relate to technology and the power of these interactions.

The McKinsey Talks Operations podcast brings together the CEOs of Flex, Protolabs, and Western Digital to discuss why the Fourth Industrial Revolution will be people powered. Digital manufacturing and production will change how the world makes goods but only if there is training and development to teach workers the skills to use these technologies. With the current labor mismatch in many countries, now is the time to further engage workers for a digitally enabled future.

A pivot to telemedicine, remote work, and other technologies helped a leader in pediatric medicine manage the onslaught of COVID-19. Boston Children’s Hospital president and CEO Dr. Kevin Churchwell calls for more innovation to cope with a sharp rise in children and young adults with behavioral- and mental-health issues. This generation of kids is being reared under physical distancing, lockdowns, and school closures. Churchwell believes that those presenting with mental-health issues would benefit from a tech-enabled continuum of care that encompasses the family, the primary-care pediatrician, the school system, the hospital, and the state.

Sarah Bond, Microsoft’s corporate vice president for game creator experience and ecosystem at Xbox, describes how recognizing that game playing is a fundamental human trait helped Microsoft create its “ubiquitous global gaming ecosystem.” Investments in cloud gaming, the Game Pass subscription service, and cross-platform play allow gamers to participate anywhere, anytime, on any device.

Tulsa Remote, a program that enabled Tulsa, Oklahoma, to attract 1,300 remote workers to the area, also prioritizes the human need for connection. In addition to giving relocators $10,000, the program provides membership to a local coworking space and assists in finding housing. Events, both virtual and in-person, are intended to mitigate the potential isolation of remote work. The initiative has attracted 50,000 applicants and is making a meaningful impression on the local economy.

In a typical organization, only a specific department and designated functions are accountable for quality in design, development, operations, and even postmarket activities. But in a smart-quality organization, everyone owns quality. Pharmaceutical and medtech companies can create value by redesigning key quality processes along these principles.

Here are other key findings from our research this week:

• As the move toward cleaner technologies progresses, the metals and mining sector will provide the raw materials required for the energy transition. The required pace of transition means that the availability of certain raw materials will need to scale up quickly—and, in certain cases, at volumes ten times or more than the current market size. We expect materials shortages, price fly-ups, and the need for technological innovation and substitutions.
• Stakeholder capitalism asks leaders to prioritize long-termism over short-term gain. In the latest episode of the Inside the Strategy Room podcast, senior partner Dame Vivian Hunt and senior adviser to McKinsey Bruce Simpson, CEO of the Stephen A. Schwarzman Foundation, discuss research and experience that strongly link stakeholder capitalism to traditional sources of value.

What makes a CEO great? In a recent edition of Author Talks, McKinsey senior partners Carolyn Dewar, Scott Keller, and Vik Malhotra discuss their new book, CEO Excellence: The Six Mindsets That Distinguish the Best Leaders from the Rest (Scribner, March 2022). The authors interviewed 67 CEOs worldwide who met their criteria for excellence and diversity of both background and approach and identified keys to excellence that can provide lessons for any type of leader.

Also in Author Talks, Tareq Azim, founder of Empower Gym, trainer of NFL greats, and creator of the Afghan Women’s Boxing Federation, talks about his new book, Empower: Conquering the Disease of Fear (Simon & Schuster, January 2022), which was coauthored with Seth Davis. Azim discusses how he created a place for women to practice the most male-dominated activity in the most male-dominated society of all time and how anyone can find inner strength.

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

COVID-19: Briefing note #86, January 5, 2022

Omicron demands renewed focus on familiar pandemic themes.

A new year is here, but COVID-19’s latest surge feels so very last year—not to mention the year before that. To kick off 2022, McKinsey looked at issues that many people thought would have started to resolve as the virus died down, but which instead require renewed engagement. Topping our list this week are employee burnout and hits to tourism. But there is positive news as well: reports on the state of mobility and pharmaceuticals reflect that pandemic-inspired changes are leading some industries in new directions.

Compared with nonparents, employed parents are more likely to miss days of work because they are experiencing symptoms of burnout (exhibit). Companies need to understand what the compound pressures of employment and parenting during a pandemic are doing to these workers and consider a list of interventions to counteract their experience of burning the candle at both ends.

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Women also are reporting higher-than-average rates of burnout. In a new episode of The McKinsey Podcast, senior partners Alexis Krivkovich and Lareina Yee discuss results from the recently released Women in the Workplace 2021 report. Forty-two percent of women report being burned out, a percentage that is higher than it was last year and higher than it is for men. Reasons include the fact that one in three women, and 60 percent of mothers with young children, spend five or more hours a day on housework and caregiving.

Early January is when many of us go on a diet and re-up at the gym. Here’s another tune-up option: take our “Can you turn attrition into attraction?” quiz to test how good you are at combatting burnout, rewarding employees in meaningful ways, and strengthening bonds with your teams.

Our “year in review” recap of 2021 highlights themes that many were hoping to leave behind, including the pandemic and the Great Resignation, as well as aspirations, such as inclusive growth and digital transformation, that will only grow in importance. The “year in images” collection showcases the most evocative art we published last year, while the “year in charts” collection tells visual stories about virus cases and vaccination rates, diversity targets and employee experiences, and how sustainable growth might be attained.

Another consequence of COVID-19 is the devastation wrought on tourism markets worldwide. We looked at a key US market and found that the financial impact of the pandemic on New York City is six times that of the September 11 attacks, costing the city $1.2 billion in lost tourism-related tax revenue. New York can reinvigorate its tourism industry by encouraging domestic travel and by reimagining business travel.

McKinsey reflected upon how the pandemic has affected mobility and where the sector is headed. Among the findings: half of the consumers in our recent Global COVID-19 Automotive & Mobility Consumer Survey stated a clear preference to travel less than they did before the COVID-19 pandemic. Among the forecasts: by 2035, in an accelerated scenario, the largest automotive markets in the world (that is, China, the European Union, and the United States) will be fully electric.

The pandemic has also reshaped the pharmaceuticals industry, and changes are still under way. We conducted a survey of senior executives in commercial roles at global pharma companies and found that more than 80 percent think that companies will fully embrace agile ways of working, and 66 percent believe that companies will move away from the traditional sales rep model because of restricted access, virtual interactions, and perceived low return on investment.

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

• Quantum computing is about a decade away from widespread commercial application. Less well known, but also important, are two related technologies that could become available much earlier: quantum sensing and quantum communication. We explore the market landscape for both, looking at opportunities, risks, and demand.
• Based on the results of our latest McKinsey Global Survey, we identify the different stages of a transformation’s life cycle to understand where value is lost and what companies can do to preserve it. According to our analysis, three core actions are especially predictive of value capture.
• One way to accelerate decarbonization in the shipping sector is to implement “green corridors”: specific trade routes between major port hubs where zero-emission solutions are supported. A new report, The next wave: Green corridors, probes the feasibility of two such selected corridors—with encouraging results.

Two books in our Author Talks series address the workplace issues so prevalent in our research from this past year. Joan C. Williams, distinguished professor of law and chair of the Hastings Foundation, discusses her latest book, Bias Interrupted: Creating Inclusion for Real and for Good (Harvard Business Review Press, November 2021). Jennifer Moss, Harvard Business Review contributor and nationally syndicated radio columnist, shares her recent work, The Burnout Epidemic: The Rise of Chronic Stress and How We Can Fix It (Harvard Business Review Press, September 2021).

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

For McKinsey’s 2021 perspectives on the business impact of COVID-19, visit our archive of several dozen briefing notes published throughout the year.