As 2025 comes to a close, one thing is clear: operations has become the engine of transformation. In this episode of McKinsey Talks Operations (MTO), hosts Daphne Luchtenberg and Christian Johnson revisit the year’s most powerful conversations, bringing into focus five priorities shaping the future of operations: unlocking next-generation productivity, building resilience in a geopolitical and economic landscape, decarbonizing operations, transforming work with digital and gen AI, and winning with talent as the role of operations leadership continues to evolve.
The following conversation has been edited for length and clarity.
Christian Johnson: It’s been an incredible year for us here at MTO and for reinventing operations—from the rise of robotics and AI in all its forms, especially gen AI and agentic AI, to navigating tariffs and geopolitics and building greener, more resilient supply chains.
Daphne Luchtenberg: In this episode, we’re taking a step back to reflect on what we learned in 2025. At the start of the year, we set out five priorities shaping the next generation of operations—our why and our how.
Christian Johnson: On the why side, we focused on three big ambitions. The first is next-generation productivity: unlocking efficiency, innovation, and excellence through smarter collaboration models. Second, sustaining resilience: strengthening supply chains, production networks, and logistics to withstand disruption. And third, decarbonizing operations: meeting the dual mission of reducing carbon and cost through smarter capital deployment and green business building.
Daphne Luchtenberg: Achieving those ambitions requires powerful enablers—the how, if you like. That means harnessing digital and generative AI to accelerate decision-making and scale impact responsibly. And it means winning with talent: empowering people, building new capabilities, and reskilling workforces to adopt those digital tools and find new ways of working.
Christian Johnson: At the center of it all is a distinctive operations strategy—one that connects innovation directly to business strategy. It’s about moving beyond cost reduction to cement operations’ role in leading resilient growth and lasting competitive advantage.
Daphne Luchtenberg: That’s the story of 2025—operations as the engine of transformation. And now, as we close out the year, let’s revisit some of the standout conversations and insights that brought these priorities to life.
Christian Johnson: 2025 began with shifting tariffs, volatile trade relationships, and big questions about how global supply chains would adapt early in the year. McKinsey’s Daniel Swan described the uncertainty coming out of 2024, reflecting on both why and how leaders could turn turbulence into productivity. Let’s listen in.
Daniel Swan: I think it’s hard to say that 2024 was anything other than an interesting year. There are three things that I’ve seen people really wrestling with consistently. The first is that it does feel like there’s a lot of uncertainty in the world today, whether that’s macro uncertainties like geopolitics and tariffs and trade, et cetera, or more of, what’s the economy going to look like? What is job growth going to look like? What is consumer spending going to look like? I think there’s been a lot of things that make it hard for people to really plan their business, plan their operations, and know exactly what moves they should make—or even what moves they should consider.
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Daphne Luchtenberg: That uncertainty set the tone for 2025. But as Daniel pointed out, the most successful organizations didn’t just respond to volatility—they used it as a catalyst to rethink productivity and performance. That episode, “Powering productivity: Operations insights for 2025,” became one of the year’s top-performing conversations, resonating with leaders everywhere who were rethinking how to unlock efficiency and innovation in turbulent times.
Daniel Swan: When we really get to the core of where the problems or the opportunities are in your business, and how do we apply those solutions that are both technology—core tech, digitization, generative AI, AI—with some more traditional things—process improvement, capability building, et cetera—that’s where we’re seeing people unlock really exciting productivity improvements.
Christian Johnson: Turning disruption into advantage defined much of 2025, especially for organizations navigating the new tariff reality. As global trade policy shifted, leaders had to decide not only whether they would transform but also when and how. Here’s McKinsey Senior Partner Valerio Dilda.
Valerio Dilda: The question is not whether these companies will need to transform. It’s more about when and how to trigger that transformation, because the name of the game is getting ahead of the curve in terms of the way they operate their supply chain. That will make the difference between those who will be winning or losing in many sectors. This applies, by the way, to both the workforce part of it and the capital part of the supply chain.
Christian Johnson: Once again, true visibility into supply chains has become table stakes. McKinsey’s Roman Belotserkovskiy put it clearly.
Roman Belotserkovskiy: When working with clients here in North America, with the volatility, we have seen many changes in policy or tariffs that sort of came and went. For most clients, it’s been a bit of a challenge to really understand the exposure, and I think it has surfaced some of the weaknesses many organizations have regarding visibility into tier-one, tier-two, and tier-three supply chains. So, it’s about understanding your tariff exposure—and broadly speaking, it’s not just tariffs, right? It’s trade restrictions; it’s other policy decisions that are being made—understanding your broad exposure to all those drivers is really fundamental before you can plan any sort of actions. It’s also so you can create different strategies for different scenarios, given the volatility we’re seeing.
Daphne Luchtenberg: What began as a year of uncertainty became a year of reimagination—one where leaders built resilience in response to volatility, using disruption as a catalyst for stronger, more adaptable operations.
Christian Johnson: That drive for adaptability means technology now plays a much bigger role. Leaders began turning to digital and generative AI not just to react faster, but to reimagine how work gets done.
Daphne Luchtenberg: And we saw that shift most clearly in how organizations used AI—not to automate old processes, but to redesign work itself. Fittingly, the conversation ended up being one of the most listened-to episodes of the year: “The future of customer experience: Embracing agentic AI.” In that episode, McKinsey’s Oana Cheta explained how AI is moving from efficiency to transformation. Let’s listen in.
Oana Cheta: More than two years in, companies are shifting from AI curiosity to AI accountability and full engagement execution. For agentic AI, what’s top of mind for our clients as they move to the next phase? First, ROI and business impact. Companies are under increasing pressure to demonstrate real, measurable returns from their AI initiatives and further justify their investment. Next, this is not about automating tasks anymore; it’s about redesigning how work is done. And this is not an efficiency play—it’s a transformation play.
Christian Johnson: Gen AI and AI are especially powerful ways to turn reimagination into reality. Let’s hear Oana explain further.
Oana Cheta: Deploying AI alone or gen AI alone is not enough. Companies must redesign their processes to integrate AI at the core of their operations. AI should drive decision-making workflows and outcomes. It’s not just an add-on. Then, of course, there’s the build/partner decision. And then finally, we’re moving into the shift from generative AI to agentic AI. The future is not about managing AI; it’s about collaborating with AI agents that think, act, and optimize in real time.
Daphne Luchtenberg: As we heard from McKinsey Partner Eric Buesing in “Beyond the bot: Building empathetic customer experiences with agentic AI,” agentic AI isn’t just smarter—it’s modular, connected, and deeply human in how it learns and responds. He explained it perfectly.
Eric Buesing: I like to think of AI agents like Lego blocks. Each one is a small, specialized AI worker that’s designed to do just one thing, and to do that one thing really well. It might be fetching the right document, running quick math or metrics checks, scheduling a meeting with a technician, critiquing an output, or checking compliance on their own. They’re simple and focused, but when you connect them—just like when you put Legos together—they form really complex structures and workflows. And when they do form these structures, they operate very much like you would when interacting with another human. They can reason, they can prioritize, they can remember current and past interactions, and they can do things faster without wait times.
Christian Johnson: That image really captures the shift. We’re seeing AI not as a single tool, but as a system of intelligent collaborators that can help people work seamlessly across functions.
Daphne Luchtenberg: And it’s not just customer experience. Across supply chains, gen AI is sparking a transformation that could rival the invention of the shipping container. Knut Alicke described it in “Beyond automation: How gen AI is reshaping supply chains.”
Knut Alicke: People overestimate the impact of new disruptive tech in the short term, and they underestimate the new disruptive tech in the mid term or long term. For me, it’s very clear that we are at a moment similar to the time when the container was invented. The container completely changed global supply chains, how they were operated, significantly increased their level of efficiency, and made things possible that were not possible before.
Christian Johnson: It’s no surprise that Knut’s episode became one of our most downloaded this year. That just shows how important this topic has been.
Daphne Luchtenberg: Together, these stories show the power of digital and generative AI in transforming both the front end of customer experience and the backbone of global operations. By putting technology at the center of decision-making, companies are building the foundation for next-generation productivity.
Christian Johnson: That focus on adaptability naturally evolved into a new way of working—one where productivity wasn’t just about doing things faster, but about doing them smarter. By combining human experience with digital and AI-driven tools, leaders found ways to unlock real, sustained performance gains.
Daphne Luchtenberg: And one of the areas where that transformation really came to life was in R&D, where leaders began rethinking not just what they built, but how they built it. In our episode, “Transforming R&D with AI: Breaking barriers and boosting productivity,” McKinsey’s Ben Meigs explained why it’s not enough to simply automate old processes.
Ben Meigs: To get the largest benefit from AI, you can’t just automate steps in that legacy process. You need to fundamentally rethink the way that products are concepted, designed, and taken to market, really end to end. We don’t trust 100 percent of human-written code. That’s why you have code reviews. And in hardware engineering, you have stage gates. The stage gates that worked for human engineers 20, 30, 40 years ago will need to change, probably significantly, with AI.
Christian Johnson: That same idea of rethinking a process end to end is reshaping much more than software development or R&D productivity. It’s sparking a much deeper reinvention of how companies design new products and services. What started in labs and design centers is now transforming entire organizations, as leaders apply the same principles of transparency, integration, and continuous improvement across every process—from finance to logistics to healthcare. By making work visible, they’re uncovering bottlenecks, inefficiencies, and untapped value that were hidden in plain sight.
Daphne Luchtenberg: That’s where process mining and process intelligence come in, giving leaders the clarity to see how work really happens and where performance can improve. In “Unlocking value with process intelligence in healthcare and beyond,” Cardinal Health CEO Mike Kaufmann described the scale of impact this visibility can have.
Mike Kaufmann: I believe that if you fully implement process mining or process intelligence, you can improve your bottom line by 3 to 5 percent. So if you’re a $100 million bottom-line company, there’s probably at least $5 million involved in that, with a tenfold ROI. If you’re a $2 billion company, I believe there’s at least $100 million there, and maybe more as you get complicated—and also maybe more if you include the insights and things, right?
Christian Johnson: So that’s next-generation productivity in action—using technology and data transparency to uncover value that was hiding in everyday operations.
Daphne Luchtenberg: We’re seeing that same mindset take hold in robotics and automation, where intelligent systems are learning to work alongside people. In “Rewriting the robotics playbook: From promise to performance,” McKinsey’s Ani Kelkar explained how embodied AI is enabling true human-machine collaboration.
Ani Kelkar: When we think about embodied AI, it’s really the intelligence that enables this adaptability, and it combines things such as perception, decision-making, as well as physical interaction within the real world, including interactions with humans and collaborative actions between robots and humans. Oftentimes, this is learned through a trial-and-error or simulation perspective. Unlike traditional robots, which were very much rule-based and required structured environments, general-purpose robots can handle that ambiguity, navigate complex spaces, and learn new things.
Christian Johnson: As robotics continues to evolve, flexibility is becoming just as important as efficiency. In “The robotics revolution: Scaling beyond the pilot phase,” Ujjwal Kumar of Teradyne Robotics described how AI-enabled collaborative robots, or cobots, are creating that next leap in productivity.
Ujjwal Kumar: If you want both productivity and flexibility, we need to look at newer types of robotics. Collaborative robots can be moved around the factory floor as required. They can be integrated into existing [systems]. This is where, in my view, we are also going to see huge gains from AI-enabled advanced robotics in the coming years, as tasks that were previously very difficult to automate—like navigating in complex, dynamic environments—become doable.
Daphne Luchtenberg: From process transparency to human-machine collaboration, next-generation productivity is being built at every level of operations, connecting data, people, and intelligent technology to redefine what’s possible. And increasingly, those same tools and ways of working are driving another essential outcome: lowering emissions and building greener, more sustainable operations.
Christian Johnson: In the past, decarbonization may have seemed like the next sort of shiny object—something that companies would abandon when the next shiny object came along. But this year we learned that, at least for some companies, that’s not been the case. Instead, these organizations have quietly made decarbonization a core business priority, embedded in procurement and product design, as well as supplier relationships. I spoke with McKinsey’s Anna-Christina Fredershausen about how that mindset shift will increasingly separate leaders from followers in the next era of operational excellence.
Anna-Christina Fredershausen: A few years ago, a lot of companies set ambitious decarbonization targets, and there is this initiative called the Science Based Targets initiative—SBTi—where you use a uniform language, a nomenclature, to define targets and make sure that everybody speaks about the same level of emissions when they set targets, and that they’re aligned, basically, with the goals of the Paris Agreement. Looking at those so-called SBTi targets, we can see that while they have been quite ambitious in the past, a few companies are now postponing them or reducing them a bit. I think what we can also see is that, at the same time, they’re looking at decarbonization measures that are more in the money and that really help them to mitigate the cost that is upcoming due to regulation, as well as using the opportunity to make a business out of it.
You need an integrated group working on this topic, and it cannot be a separate group that works on decarbonization while the rest works on the regular business. So what you can see now is also a mindset shift: It is being integrated into the overall business. If we take procurement, for example, as one function, you can see that, for traditional supplier selection a few years back, carbon might not have been one of the decision factors. Now, carbon is often part of the selection process, and it is one of the factors that suppliers are being asked for.
Daphne Luchtenberg: We’re already seeing what that looks like in practice. In our episode, “Safer, greener, faster: AI-powered supply chains in action,” Sanjit Biswas, CEO of Samsara, shared how data and AI are helping organizations hit both cost and carbon goals.
Sanjit Biswas: When it comes to sustainability, once you have all this data about your logistics and supply chain operations, you can be a lot smarter about how you plan your day-to-day operations, how you operate your equipment—and those little details matter. If you can save anywhere from 2 to 5 percent on fuel, that’s a massive decrease in your carbon emissions. It’s also a huge cost savings measured in the millions for a lot of our customers.
Christian Johnson: In this way, decarbonization has become one of the fundamental operations disciplines. So it’s measured, managed, and scaled just like cost, quality, or performance have traditionally been. But the shift to a more digital, sustainable world isn’t just about technology—it’s also about people. The global operations workforce itself is transforming.
Daphne Luchtenberg: In our episode called “Beyond cost savings: The global footprint of innovation hubs,” McKinsey’s Indy Banerjee described how global operations hubs have become miniature versions of the enterprise itself—places where leadership, innovation, and talent come together to drive the business forward.
Indy Banerjee: What’s changed across the last three decades is that the story has really changed from lower-cost talent being able to do lower-complexity functions to essentially being a microcosm of the firm. And that’s the reason why, in our own thinking, we call it the global operating model, because it’s an enterprise looking at their overall talent footprint and then deciding—from a platform perspective, talent perspective, and how they work—what should get globally distributed.
Christian Johnson: Yeah, that was a fascinating conversation, showing that the workforce itself can become the engine of global transformation, driving innovation wherever it operates. And that’s where our story concludes this year—with talent—because ultimately, the future of operations will be written by the people who build it.
Daphne Luchtenberg: This also means the individuals who are leading that future every day: the COOs who turn ambition into execution and strategy into results. The role has never been more complex or more critical. It demands operational mastery, digital fluency, and the ability to inspire people across the organization. In our episode “COO excellence: The next generation of leadership,” McKinsey Partners Darryl Piasecki and Tony Gambell shared what it takes to succeed in one of the most demanding and dynamic roles in business today.
Darryl Piasecki: Put simply, operations delivers a strategy. Other functions, of course, are valuable, but ultimately the operation produces the goods or services in a manner driven by the business strategy.
Christian Johnson: That evolution has made the COO role one of the most pivotal in business, combining strategic vision with deep operational discipline. Let’s hear Darryl explain further.
Darryl Piasecki: Today, CEOs are spending an increasing share of time focused externally. We’ve all seen the impact of rapid media cycles and social pressures on companies. This leaves less time to focus internally on the operation, and this is where the COO can fill that role. Now, it’s not to say that’s as simple as putting their heads down and just producing. The COO must recognize what the operations mandate is and have a clear, actionable vision and a well-defined agenda.
Daphne Luchtenberg: The COO’s relationship with the CEO is therefore critical for the entire organization.
Tony Gambell: The COO has to be tied in with the CEO on everything. The CEO defines the vision and strategy for the company. The COO delivers the vision, which can be complex and difficult when things are changing every day. Supply chain strategies take a long time to shift, but CEOs are expected to deliver all the time. So that relationship is going to be really important between the CEO and COO: to have trust and give respect to the challenges that the COO faces every day.
Daphne Luchtenberg: And, as Tony explained, even the strongest strategy and the clearest vision only succeed when the right people are in place to make it happen.
Tony Gambell: The reality is, you could have the best vision and the best plan to deliver that vision, but you really do need people to execute. I work with COOs quite often and talk through the different people on their teams to understand their capabilities, their capacity, and their overall will to drive the type of performance that the COO is aiming to achieve. There’s always a gap, and there’s always something to work through. Some of that is solved with leadership, but a lot of that is solved with finding the right people for the right roles to execute.
Christian Johnson: So, whether it’s advancing digital transformation, embedding sustainability, or redefining leadership itself, the future of operations depends on talent—the people who are turning strategy into performance every day.
Daphne Luchtenberg: That’s the perfect note to end on. From resilience to innovation, from sustainability to talent, 2025 has shown us that operations isn’t just where the work gets done—it’s where the transformation happens.
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