COVID-19: Implications for business

COVID-19: Briefing note #100, April 13, 2022

As COVID-19 becomes endemic in much of the world, we turn our focus to sustainable and inclusive growth.

On March 2, 2020, just over a week before a global pandemic was declared, we published COVID-19: Briefing note #1. Our plan was to publish an update on the virus’s implications for business for as many weeks as the news felt urgent. We did not expect to continue for more than two years, nor to ever publish briefing note #100, as we have today.

It’s painful to reflect on these 100 editions, on the millions of lives lost, the suffering and grief, and the myriad disruptions to lives and livelihoods. But in what is perhaps a hopeful sign, we now feel the time is right to stop. COVID-19 news seems less urgent than at any time in the past two years. All of McKinsey’s published work now intrinsically accounts for the pandemic, even if it is not directly mentioned. COVID-19 has gone from being a fresh emergency to a fact of life.

In a few weeks, we will relaunch this weekly report with links to the latest McKinsey publications. Our new theme will be sustainable and inclusive growth. After more than two years of reporting on a destructive force, we look forward to sharing our research and thoughts on how people and organizations can build a better world.

McKinsey is already exploring how to achieve sustainable and inclusive growth, the topic of the inaugural episode of the new Future of America podcast. McKinsey Global Institute director and senior partner Kweilin Ellingrud and senior partner Greg Kelly discuss how leading companies can use the pandemic recovery as an opportunity to accelerate prosperity for more Americans. Customers and consumers want to be associated with companies that are making a positive difference. Companies can accelerate inclusivity and sustainability by having real awareness, committing to change, rewarding the change, and providing coaching and development to make the change happen.

After more than two years of reporting on a destructive force, we look forward to sharing our research and thoughts on how people and organizations can build a better world.

Much near-term growth will arise from a once-in-a-lifetime wave of capital spending on physical assets between now and 2027. This surge of roughly $130 trillion in investment will flood into projects to decarbonize and renew critical infrastructure. But few organizations are prepared to deliver on this capital influx with the speed and efficiency it demands. Companies should consider implementing a portfolio-synergistic strategy in which planning is top down, a major business challenge requiring savvy stakeholder management, capital markets expertise, and an understanding of complex approval processes.

Sustainable, inclusive growth will require changing the workplace to maximize the contributions of all people. In the COVID-19 era, women across all sectors have shouldered more household responsibilities, and more women report feelings of burnout. These problems can be more acute for women in healthcare, who have fewer opportunities to work remotely and report feeling greater pressure to prioritize work over family. In spite of these challenges, healthcare continues to outperform other sectors in the representation of women, who make up more than two-thirds of entry-level employees and 53 percent of employees in roles at the senior-manager level or above, which is 18 percentage points higher than the average across all sectors.

Each sector, industry, and function will have to reinvent itself to achieve maximum growth and sustainability. Procurement leaders, for example, are facing one of the toughest market environments of their careers. Procurement organizations need to take a leading role in protecting enterprise margin and growth, invest in proven technology and process automation, and build deep expertise in supply market dynamics, among other fundamental changes. A pair of articles featuring McKinsey and outside experts explore how the CFO’s role is also rapidly evolving—expanding in scope, requiring new capabilities, and demanding greater collaboration with C-suite peers. Among the most significant changes to the role is the demand for CFOs to help promote capability building and talent development within their organizations.

Here are other key findings from our research this week:

Our latest edition of McKinsey for Kids explores how programmers use games to teach computers how to think, ultimately developing AI. Kids can read, take quizzes, and watch animations to learn about how the human brain and computers are both alike and different and about a cornerstone of AI programming called “reinforcement learning.”

In our latest edition of Author Talks, neuroscience expert and Cognitas Group cofounder Dr. Laura Watkins discusses her new book (coauthored with Vanessa Dietzel), The Performance Curve: Maximize Your Potential at Work while Strengthening Your Well-being (Bloomsbury Publishing, November 2021). Using insights from neuroscience, adult development psychology, yoga, and behavioral therapy, the book proposes practical ways to improve work performance without sacrificing mental or physical health.

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

COVID-19: Briefing note #99, April 6, 2022

Some pandemic effects will take a long time to cure.

COVID-19 appears to be moving to endemicity in some parts of the world. But even in these places, some of the pandemic’s damaging consequences are only now being assessed and understood. This week, McKinsey studied the degrees of learning loss suffered by students around the world. We also looked at the pandemic’s lingering effects on the airline industry and on labor markets and examined how long it might take for some things to go back to how they used to be and why others never will.

On average, students globally are eight months behind where they would have been absent the COVID-19-pandemic, but the impact varies widely (exhibit). Within countries, the pandemic also widened gaps between historically vulnerable students and more privileged peers. We estimate by 2040, unfinished learning related to COVID-19 could translate to annual losses of $1.6 trillion to the global economy. Educational systems could consider a tiered approach to support reengagement, with more support (including social and emotional) for the highest-risk students.

Students in some regions may be more than a year behind, while in others, they may lag by four to seven months.

The COVID-19 pandemic caused airline revenues to drop by 60 percent in 2020, and air travel and tourism are not expected to return to 2019 levels before 2024. Challenges vary across the global aviation landscape. In particular, airlines need to bolster their resilience by increasing their cash reserves, which would reduce the need for bailouts every time a crisis hits, and by improving their ability to reduce supply quickly and cost-effectively when demand abruptly falls. McKinsey’s latest survey of more than 5,500 air travelers globally revealed a potential long-term challenge: the share of respondents who say they plan to fly less to minimize their environmental impact rose five percentage points since 2019 to 36 percent, and more than half of respondents said that aviation should become carbon neutral in the future. “Flygskam,” or shame about flying, plays a role. Leading airlines that build a brand promise on sustainability will likely attract a growing share of business.

In a current episode of McKinsey Talks Talent, McKinsey talent experts Bryan Hancock and Bill Schaninger discuss the power workers have gained as an indirect effect of the pandemic. Although there has been some high-profile organizing activity, the real source of worker power comes from the current high demand for labor and because remote workers have a wider-than-ever range of job choices.

Here are other key findings from our research this week:

  • On the latest episode of The McKinsey Podcast, Sven Smit, senior partner and chair of the McKinsey Global Institute, discussed some potential effects of the ongoing war in Ukraine. Refugee numbers may climb from the current few million to ten or even 15 million. The potential doubling or even tripling of food and energy prices could cause hardship for less well-off populations around the world.
  • Distributors can learn from Amazon Business and other large digital players that are building best-in-class distribution networks and offering products they used to avoid due to technical or supply chain challenges.
  • Paper and forest product CEOs should consider future-proofing companies with strategies such as “precision forestry”; by leading on environmental, social, and governance (ESG); and by harnessing digital and analytics capabilities to strengthen competitiveness.
  • The semiconductor industry’s aggregate annual growth could average from 6 to 8 percent a year up to 2030, resulting in a $1 trillion industry. Amid the growth of remote working, AI, and demand for electric vehicles, manufacturers and designers should now take stock and ensure they are best placed to reap the rewards.
  • General and administrative functions can optimize for speed and flexibility by eliminating the silos that traditionally occur between different departments. This will drive better cross-department coordination and allow leaders to realign staff more efficiently.
  • Health provider systems could prioritize efforts to meet patients’ unmet needs by creating partnerships with schools, community organizations, payers, private businesses, and government agencies.
  • In 2020, Californians bought and wore more than 500,000 tons of clothing, almost all of which will eventually enter landfills covering an area about 3.5 times the size of the City of Los Angeles. The key to reducing fashion waste is circularity—building a closed loop for recycling materials back into the manufacturing process.

Our latest edition of McKinsey for Kids explores how programmers use games to teach computers how to think, ultimately developing AI. Kids can read, take quizzes, and watch animations to learn about how the human brain and computers are both alike and different and about a cornerstone of AI programming called “reinforcement learning.”

In our latest edition of Author Talks, Todd Rose, a former Harvard University professor and the cofounder of the think tank Populace, discusses his latest book, Collective Illusions: Conformity, Complicity, and the Science of Why We Make Bad Decisions (Hachette Book Group, February 2022). The book explores why people are likely to buy into fundamental misunderstandings of what most people think.

Also in Author Talks, we spoke with Amy Zegart, a senior fellow at the Hoover Institution and the Freeman Spogli Institute at Stanford University, where she is also a professor of political science. Zegart discussed her new book, Spies, Lies, and Algorithms: The History and Future of American Intelligence (Princeton University Press, February 2022). The book explores the current state of intelligence, why the government is behind on adopting new technologies, and what the public misunderstands about the spy business.

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

COVID-19: Briefing note #98, March 30, 2022

One of COVID-19’s health effects is the transformation of healthcare.

The COVID-19 pandemic devastated the world’s health but may leave a lasting legacy of improving how the world addresses healthcare. The effort to develop and distribute vaccines demonstrated how much can be achieved with global collaboration, lessons that can be applied to ambitious improvements in well-being. This week, McKinsey explored how the pandemic changed healthcare approaches, including expectations, delivery, viral-vector gene therapy, investment, and consumer attitudes.

Humanity mobilized against COVID-19 at a speed and scale previously unseen. While far from perfect, the undertaking’s successes should inspire the world to challenge the view of what is possible. Over the past century, life expectancy has dramatically increased in most parts of the world, but the portion of life that human beings spend in moderate and poor health hasn’t changed (exhibit). The McKinsey Health Institute believes humanity could add roughly six years per person on average of higher-quality life by making six major shifts in how the world approaches health.

The past 60 years have seen massive improvements in global life expectancy...

Even when COVID-19 becomes endemic, healthcare delivery in the United States will continue to transform rapidly. McKinsey’s 14th annual healthcare conference explored the next wave of industry evolution and how healthcare organizations must innovate to thrive. The future of care delivery is evolving to become patient-centric, virtual, ambulatory, in the home, value based, and risk bearing. It will be driven by data and analytics, enabled by new medical technologies, and funded by private investors.

COVID-19 accelerated viral-vector gene therapies. Some of the earliest viral-vector-based therapies targeting rare diseases required companies to produce only about 1,000 doses across development, access programs, and two years of commercialization. In comparison, the unprecedented demand and funding for COVID-19 vaccines enabled a ten- to 100-fold increase in production when adjusted by dose amount, with over two billion doses of the AstraZeneca viral-vector-based vaccine already produced. Keeping pace with increasing demand requires the consideration of challenges, the potential for standardization, and strategizing for accelerating patient access.

In light of growing opportunities, private investors are pouring into healthcare. That becomes clear throughout McKinsey’s annual Global Private Markets Review, which delves into the data and details of a wide range of private markets asset classes, including private equity, debt, real estate, and infrastructure investing. Healthcare is a recurring theme in this year’s report: in 2021, the healthcare sector had the fastest deal-volume growth globally since 2016. Of the largest ten private equity deals in 2021, three were in healthcare, and the largest deal involved a manufacturer and distributor of healthcare supplies. Many of the top 20 private equity firms have dedicated teams for healthcare, which speaks to its growing importance within the asset class.

The number of vaccinated US respondents in McKinsey’s Consumer Health Insights Survey has remained about the same since November of 2021, when 77 percent reported that they were vaccinated. Approximately 75 percent of respondents to the February survey reported that they’d been vaccinated; in addition, 63 percent of vaccinated respondents plan to stay current on COVID-19 vaccinations as recommended by healthcare leaders. Consumers are increasingly comfortable testing for COVID-19 at home; in fact, it now ranks as the most preferred testing location. Additionally, more than half of respondents indicated that they would prefer a health plan with virtual-health benefits.

Here are other key findings from our research this week:

In our latest edition of Author Talks, Tessa West, an NYU associate professor of psychology, talks about her new book, Jerks at Work: Toxic Coworkers and What to Do about Them (Portfolio, January 2022). If anyone in the C-suite embraces jerk behaviors, it’s going to trickle down through the company because jerkish behavior is contagious at work, she says.

Also in Author Talks, science journalist Catherine Price discusses her new book, The Power of Fun: How to Feel Alive Again (The Dial Press, December 2021). People can improve their mental and physical health by getting in touch with what is really fun for them and making it a priority—rather than just vegging out in front of a screen, she says.

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

COVID-19: Briefing note #97, March 23, 2022

Uncertainty returns—but this time, the cause is not COVID-19.

The COVID-19 pandemic created short-term disruptions and provoked long-term changes in how the world lives and does business. Russia’s invasion of Ukraine is now doing the same. This week, McKinsey published on what we know about the war and some of its possible global consequences. Among them are likely impacts to supply chains and how companies think about preparing for crises, two of our other topics this week. Another article provides a hopeful look at the investment pouring into decarbonization and renewal of infrastructure.

We, like many others, are shocked by the unfolding humanitarian tragedy resulting from the Russian invasion of Ukraine (exhibit).

The Russian invasion of Ukraine has caused the greatest humanitarian crisis in Europe since World War II.

As a result of the war in Ukraine, the era of not looking too closely at supply chains, trusting suppliers, and optimizing for cost is probably over. Those behaviors, already made suspect by new tariff regimes and the COVID-19 pandemic, are now likely to be consigned to history. Our latest research finds that despite progress over the past several years, companies are still struggling to build the capabilities that their emerging digital supply chains need. The most effective capability-building programs invest in foundational, end-to-end supply chain knowledge building, coupled with advanced functional, technical, and leadership training.

As in any conflict, uncertainty is high, although it is already certain that global consequences will include disruptions to energy and food markets, testing many companies’ resilience. McKinsey’s annual global board survey of approximately 1,500 corporate directors found that a mere 7 percent of respondents gave their boards the highest rating for risk management, and only 40 percent say their organizations are prepared for the next large crisis. On the Inside the Strategy Room podcast, McKinsey senior adviser Nora Aufreiter; senior partner Celia Huber, who leads McKinsey’s board services work in North America; and associate partner Ophelia Usher discussed how boards can improve how they handle big crises.

The world will see a once-in-a-lifetime wave of capital spending on physical assets between now and 2027. Roughly $130 trillion will flood into projects to decarbonize and renew critical infrastructure. But it won’t be easy: constructing and justifying the cost of a physical asset such as a manufacturing plant is much more difficult than it was decades ago, given inflation, rigorous sustainability requirements, and rapid changes in technology and regulations.

Here are other key findings from our research this week:

  • The COVID-19 pandemic accelerated online purchases and package deliveries at an unprecedented rate. Even conservative estimates project that cross-border e-commerce in goods will expand to about $1 trillion in merchandise value by 2030, from its current value of approximately $300 billion. Regulations and tariffs are also likely to increase, as are customer expectations for speed, decentralized supply chains, and specialist segments.
  • The increasing frequency and magnitude of economic volatility have put more pressure on traditional financial planning and analysis (FP&A) processes and teams. Next-level FP&A teams have figured out how to build more speed and flexibility into their processes, which can trigger more efficient and effective operations throughout the company.
  • Health equity is an opportunity and a challenge for pharmaceutical and life sciences players. By following the data and by working together, organizations can meet needs and create a cycle of trust in underserved communities.
  • Debra Facktor, head of U.S. Space Systems for Airbus U.S. Space & Defense, spoke to McKinsey about her job responsibilities, the future of the aerospace sector, and her experience as a woman in a male-dominated industry.
  • On the McKinsey Talks Operations podcast, Bruce Lawler, managing director for the Massachusetts Institute of Technology’s Machine Intelligence for Manufacturing and Operations program, and Vijay D’Silva, senior partner emeritus at McKinsey, discussed why some companies are pulling ahead of others with machine learning.
  • On the Inside the Strategy Room podcast, Robert Uhlaner, who co-led McKinsey’s Strategy & Corporate Finance Practice until his retirement this summer, and Liz Wol, the global leader of McKinsey’s work on M&A capability building, discussed programmatic M&A. This approach to mergers and acquisitions has proven to be the most successful at delivering results—provided you execute it right.

Our latest edition of Author Talks features Reshma Saujani, founder of Girls Who Code and an activist for women’s economic empowerment, discussing her new book, Pay Up: The Future of Women and Work (and Why It’s Different Than You Think) (Atria/One Signal Publishers, March 2022). Working mothers are overburdened and exhausted, so companies that want them to come back to the workforce need to help with childcare, paid leave, and mental-health support.

Also in Author Talks, retired Navy SEAL commander Rich Diviney talks about his book, The Attributes: 25 Hidden Drivers of Optimum Performance (Random House, January 2021). Diviney dives into how we can—and should—assess and develop our own attributes, equipping ourselves for optimum performance within our lives and throughout our careers.

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

COVID-19: Briefing note #96, March 16, 2022

On the second anniversary of the COVID-19-pandemic, we reflect on what we’ve learned.

Just over two years ago, the World Health Organization declared a pandemic. Since then, one in every 1,300 people alive in 2019 has died from infection with SARS-CoV-2. Two years on, it is easy to forget how remarkable the development of COVID-19 vaccines was: moving in just 326 days from a genomic sequence to the authorization of a vaccine shattered all previous records.

For this anniversary, we reflected on ten core lessons of the pandemic (see sidebar), some of which exposed fault lines in our society and others that demonstrated amazing capabilities. A separate initiative compiled two years’ worth of research on pandemic impacts, while a third article examined how the pandemic set input prices rising and what to do about it.

As part of our examination of where the pandemic took us and what’s next, we’ve gathered interviews and articles about COVID-19 from the past two years. Interviews with General James Mattis; Steven M. Jones, co-inventor of the first Ebola vaccine; and McKinsey senior partner Shubham Singhal addressed the crisis as it occurred. Packages of articles examining the pandemic’s effects on areas including healthcare, operations, and sustainable and inclusive growth show how industries have been shaped by the experience and how leaders are looking toward the future.

The aftershocks of the COVID-19 pandemic continue to rock the global economy. Following the shutdowns of 2020 and the supply chain challenges of 2021, another wave of disruptions is now breaking over businesses around the world: rising input prices. Accurate cost models and advanced digital operations help organizations respond to rising costs and equip them with the tools and capabilities they need to thrive when prices fall.

Here are other key findings from our research this week:

This week, McKinsey senior partners Carolyn Dewar, Scott Keller, and Vik Malhotra launch their new book, CEO Excellence: The Six Mindsets That Distinguish the Best Leaders from the Rest (Scribner, March 2022). The authors spoke about their interviews with 67 CEOs as part of our Author Talks series and how they identified the traits that separate the best leaders from the pack.

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

COVID-19: Briefing note #95, March 9, 2022

Another global crisis is now overshadowing COVID-19.

For the first time in two years, concerns about another global crisis overshadowed the COVID-19 pandemic: the Russian government’s invasion of Ukraine and the humanitarian tragedy it is causing. Implications for the world economy will become more visible in the coming weeks and months; this week, McKinsey identified some immediate global economic impacts. Coincidentally, our other major publishing initiative this week is a deep dive into insurance—an industry that exists, in essence, in case things go wrong.

The Russian government’s invasion of Ukraine is causing a humanitarian crisis and economic risks. Our Global Economics Intelligence executive summary for February discusses how the invasion of Ukraine has mostly set energy prices surging. The oil price (Brent) was near $60 per barrel on December 1 but climbed steadily thereafter, touching $100 in late February. The price of natural gas and coal has similarly climbed during this period (exhibit). Prior to the invasion, the US dollar was depreciating slightly against most major currencies; it is now rising in value. Other immediate economic effects were spikes in the prices of gold, crude oil, and natural gas, as well as stock market losses.

The conflict in Ukraine set energy prices surging; prices were already rising as a result of slower OPEC output.

As part of our celebration of International Women’s Day 2022, 20 female McKinsey partners offer insights in a series of interviews on the insurance industry. Topics include operations, growth, claims management, underwriting, product innovation, digital business building, and motor insurance. Further interviews examine women’s representation in the insurance industry and look at the broader issue of diversity in insurance.

New customer expectations, low interest rates, and new sources of competition (such as leading tech companies, insurtechs, and third-party capital) are putting pressure on insurance carriers to be more innovative. It’s not easy: successfully profiting from innovation is a complex, company-wide endeavor, and most insurers have not yet consistently cracked this code. Steps for building innovation into the way an organization works include shifting resources from core business tasks to breakthrough innovation initiatives and developing distinct product-development pathways and processes.

Insurers should consider programmatic M&A: systematically acquiring small to midsize businesses, services, and capabilities and integrating them as new businesses or capabilities. Insurers can use this approach to tackle issues including sustaining growth in core life and annuity businesses and enhancing property and casualty presence in growth markets.

Here are other key findings from our research this week:

  • On The McKinsey Podcast, McKinsey partners Michael Chui and Mark Collins share their thoughts on the findings of McKinsey’s latest Internet of Things (IoT) report. Fast-growing areas include consumer applications (especially in the connected home); hospital, acute-care, and residential-care settings; and factories, cities, and work sites. Integrating IoT is often easier in greenfield settings but harder to integrate into legacy environments.
  • Of 346 large M&A deals announced between 2013 and 2020, 47 were canceled for antitrust or regulatory reasons. While executing remedy separations, it is vital to adhere to the perimeter set by regulators, move fast in identifying potential buyers, and ensure a close integration between the remedy separation process and the overall transaction and integration process.

In this edition of Author Talks, Deepa Purushothaman talks about her new book, The First, the Few, the Only: How Women of Color Can Redefine Power in Corporate America (Harper Collins, March 2022). Drawing on more than 500 original interviews, Purushothaman examines work life for women of color and what needs to change to improve their experiences.

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

COVID-19: Briefing note #94, March 3, 2022

The COVID-19 pandemic may finally be ending.

A new variant may yet trigger another chapter in the COVID-19 pandemic, and societies must be prepared to respond if and when that happens. But for now, the pandemic phase looks to be ending. With a possible conclusion in sight, this week McKinsey focused on how postpandemic workforces can be supported with expanded opportunity, digital tools, more equitable promotions, and better office design.

In the latest edition of our “When will the COVID-19 pandemic end?” series, McKinsey examined scenarios that would lead to either reigniting a pandemic-level crisis or further steps toward endemicity. As long as Omicron remains the dominant variant, there is reason for relative optimism; in the United States, for example, hospitalizations would remain low (exhibit). By and large, the six-month outlook in many countries is brighter than at any time in the past two years. The main risk to the transition to endemicity is a significantly different and more severe new variant that replaces Omicron as the dominant strain.

If Omicron remains the dominant variant, US hospitalizations will likely stay low throughout 2022

The latest episode of the McKinsey Global Institute’s Forward Thinking podcast features David Autor, the Ford Professor of Economics at the Massachusetts Institute of Technology. Autor identifies pandemic paradoxes, which include that many thought US poverty and joblessness would skyrocket, but the opposite occurred when poverty rates plummeted to unprecedented lows and the United States ended up with a labor shortage. Leaders should think about ways to expand opportunities, including by being honest with themselves and the labor market about which jobs truly require a college degree.

On McKinsey Talks Talent, HR expert David Green speaks with McKinsey talent experts Bryan Hancock and Bill Schaninger. HR leaders can use people analytics to identify big-picture attrition patterns, illuminate how office space is being used, and automate parts of the recruiting process, including finding diverse candidates.

In technical roles, only 52 women are promoted to manager for every 100 men, according to McKinsey’s Women in the Workplace 2021 report, coauthored with LeanIn.Org. Companies can improve women’s promotion rates by providing equitable access to skill building, implementing a structured promotion process that seeks to remove bias, and building a strong culture of support for women via mentors and sponsors.

Diane Hoskins, co-CEO of Gensler, a global design and architecture firm, has been thinking about effective workplaces for decades and is now helping her clients navigate the next normal. In a conversation with McKinsey Real Estate Practice leader Aditya Sanghvi, Hoskins discusses how COVID-19 made it even more essential to design offices around organizational strategies, leadership models, operational frameworks, and potential outcomes of a company.

Here are other key findings from our research this week:

  • The Consumer Price Index rose faster in January than at any time in the prior 40 years. Businesses facing inflation are caught between the need to reprice and sustain margins and the damage this can do to customer relationships and sales. McKinsey’s suggested approach can help companies establish sales-led pricing for inflation while maintaining long-term value for the business and its customers.
  • Banks can learn to manage nonfinancial risks by observing the effective approaches corporates have developed. These include embedding risk into strategy and improving overall resilience.
  • Our analysis suggests that in 2030, demand for green steel in Europe could be twice as great as the available supply, and there may be global shortages of recycled aluminum and recycled plastic. By planning green-materials sourcing strategies, companies can achieve immediate emissions reductions and sustain progress toward longer-term goals.
  • COVID-19 accelerated the sophistication of China’s logistics industry, a crucial node in the global supply chain. Greater consolidation and integration are likely in some subsectors—such as third-party logistics and express-delivery carriers—and expect growth in other areas, such as warehouse automation and air cargo.
  • On the McKinsey on Government podcast, McKinsey senior partner Scott Blackburn and partner Brooke Weddle discuss how the US government’s leaders can implement an effective transformation.

In this edition of Author Talks, Whitney Johnson, the CEO of tech-enabled talent agency Disruption Advisors, talks about her new book, Smart Growth: How to Grow Your People to Grow Your Company (Harvard Business Review Press, January 2022). Mastering new skills follows an S-curve, where there’s a difficult introductory phase, a “sweet spot” where you’re enjoying applying new knowledge, and an end part of the curve where boredom can set in. Leaders need to understand where their teams are to create the right supports for each phase, Johnson says.

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

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.

To build a better future, the emphasis must now shift from defensive measures and short-term goals to a sustainable, inclusive growth agenda.

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.

It is not a light switch event to get to an endemic phase, because it is as much about the behavior and psychology that we all exhibit as it is about the epidemiology of the virus itself.

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.

Physical and transition risks have direct and indirect implications for revenue, operating and capital costs, and capitalization rate.

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.

Across a broad range of metrics, machine-intelligence leaders achieve triple the improvement of other companies.

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:

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).

The NGFS Net Zero 2050 scenario would entail around $25 trillion more in cumulative investments over 30 years than the Current Policies scenario.

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.

Whether an input-cost increase is reasonable depends on a detailed review of its price history

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.

With Fourth Industrial Revolution technologies in the hands of a workforce empowered with the skills needed to use them, an organization’s digital-transformation journey can move from aspiration to reality.

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:

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.

Parents are more likely than nonparents to report missing days of work due to burnout.

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:

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.

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