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The future of business: 2021 and beyond

As companies continue to navigate the health-related and economic difficulties of the COVID-19 crisis, leaders worldwide can expect eight key forces to shape business in the future.

Worldwide, 2020 has been a year like no other. The COVID-19 pandemic has exacted an almost unspeakable human and economic toll, destabilizing both lives and livelihoods and upending almost every aspect of the way we work and live. During McKinsey Live’s capstone 2020 webinar, global managing partner Kevin Sneader shared what leaders around the globe have learned in 2020—and what we can look forward to in the coming year. Condensed and edited excerpts from his December 9, 2020, conversation with global editorial director Lucia Rahilly follow.

Sneader acknowledged a shift in mood among leaders in response to the heartening initial results from vaccine trials and the onset of mass inoculation in the United Kingdom: “I think there’s a growing awareness that we are likely nearer to the end of the pandemic than the beginning.” By the spring, and certainly in the second or third quarter next year, we should see a growing improvement in general health conditions (lives) and a very different set of economic indicators (livelihoods).

Sneader also identified the following eight forces, which are expected to reshape the “next normal,” or post-pandemic business landscape, in 2021, and then took a closer look at a few of them:

  • acceleration of digitization and innovation
  • increased government action and engagement
  • recommitment to and reinvention of healthcare
  • greater balance between social and economic goals
  • push for a green economic recovery
  • redefinition of work and the role of cities
  • shifting geopolitics and international flows
  • movement toward greater resilience and efficiency

Lucia Rahilly: How do you see the role of government changing?
Kevin Sneader: Government leadership to mitigate the crisis and huge public expenditures to stimulate economies have expanded the role of government in 2020. Soon, governments will need to deal with unprecedented deficits, play an essential role in trade policy, and pursue health, social, and environmental goals.

Lucia Rahilly: How will the acceleration of digitization and innovation affect the future of work?
Kevin Sneader: Although the rapid digitization of business to consumer (B2C) is obvious, a lot of what is now going to happen is in the business-to-business (B2B) piece. The accelerating digitization and automation of B2B processes, manufacturing, and how business is conducted behind the scenes will profoundly change the very nature of work. Although, ultimately, digitization and innovation will generate more jobs, leaders should expect a bumpy transition to job growth because the pandemic has affected a lot of the jobs we thought could help in the automation transition (e.g., in services, leisure, and hospitality). Another point worth noting is that we’ve found that only 20 percent of jobs can be done in a more productive way remotely, so it’s important to recognize that the vast majority of digitization and innovation changes will still have to address in-person jobs.

Lucia Rahilly: How do you see businesses moving to rebalance social and economic goals, given the global protests in recent months about racial and social injustice and the growing importance of stakeholder capitalism?
Kevin Sneader: During this pandemic, business has been confronted by very real environmental, social, and governance (ESG) issues and has had to step up and play a role. This year has also shown that an authentic purpose embedded in the organization can be a source of resilience and competitive advantage. There is an increasing recognition that pursuing ESG goals, long considered a “good” thing for companies to do, is now an economic necessity. As companies rebuild, there’s an opportunity to make big improvements in the areas of diversity, inclusion, and equal treatment of their employees.

Lucia Rahilly: Do you think the pandemic will accelerate or decelerate a global climate response?
Kevin Sneader: Accelerate. The reason we need a green recovery is because we need a jobs recovery. For every $10 million spent in renewable energy, 75 jobs are created; for every $10 million spent in energy efficiency, 77 jobs are created; and for every $10 million spent in fossil fuel, only 27 jobs are created. That gulf is enormous, and the idea that a trade-off exists between business and the environment is false. In fact, a green recovery from the pandemic is essential for job growth.

Lucia Rahilly: What do you see as the leadership capabilities most required to lead into this seemingly uncharted territory in 2021?
Kevin Sneader: The most significant leadership shift in 2020 has been from the focus of leaders on what a business does to how a business does it. Leadership capabilities are going to continue to shift toward embracing empathy and demonstrating leadership in its full sense, as opposed to the academic, intellectual, and visionary leadership that perhaps was given greater emphasis in the past.

Lucia Rahilly: As a global leader yourself, what are you most inspired by as you move into 2021?
Kevin Sneader: I’m going to quote a head teacher who spoke at my daughter’s high school graduation this summer. She said, “You are from the class of 2020, and I’m from the class of 1968. 1968 is widely thought of as the worst year the world faced since the Second World War; Robert F. Kennedy was assassinated, Martin Luther King Jr. was murdered, there were riots in the streets of Paris, and the Vietnam War was at its peak. Then 1969 came along, and Concorde took to the air for the first time, as did the Boeing 747, the Beatles released Abbey Road with the iconic album cover, Woodstock happened, and of course Buzz Aldrin and Neil Armstrong walked on the moon. So what are you going to do to make sure that 2021 is to 2020 what 1969 was to 1968?” People and businesses have shown a lot of resilience, purpose, and bold innovation in 2020, and it leaves me with a sense of optimism that we can, and we will, be part of a bright future, even though there’s still quite some distance to get there.

For more on this topic, please watch the webinar recording and watch or read the transcript of Sneader’s conversation with senior partners Dame Vivian Hunt and Bob Sternfels, “Business in 2020 and beyond.”

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