McKinsey

February 22, 2019

Our best ideas, quick and curated

Before Mobile World Congress begins Monday in Barcelona, we look at what’s ahead for 5G, the next-gen wireless technology. Plus, a good jobs number for the eurozone, and three questions for Bill Schaninger, a senior partner and expert on talent.

If you listened mostly to gearheads hyping the next-gen wireless technology 5G, you’d probably expect telecom leaders to be ecstatic about it as they descend on MWC (Mobile World Congress) Monday in Barcelona. Demand for mobile services has never been higher and is expected to keep growing, in large part because 5G promises unprecedented capacity, speed, low latency, and life-altering new apps.

After a tough decade of new competition and declining profitability in some regions, many industry folk view 5G as a possible savior, offering renewed revenue growth for traditional telcos. And there will doubtless be much animated discussion at MWC about 5G, including the exciting prospects of connected cars, the Internet of Things (IoT), smart cities, fixed wireless access, and many other innovations the technology can enable.

Yet for all its much-touted potential as the foundation for the digital future, 5G may have as many skeptics as true believers. The cost and complexity of building the sophisticated infrastructure is considerable, and the actual return on investment is not yet clear.

A new McKinsey survey of 46 chief technology officers from telcos around the globe reflects that uncertainty. Confidence in the technology is high, but less clear is whether and how soon it can fuel new products and services that customers are willing to pay for. The survey also found that despite some progress, few have moved beyond the early stages of developing their business cases and commercial plans; most don’t expect large-scale deployment until 2022.

At whatever stage they find themselves, operators will have to follow several key principles as they navigate the uncharted 5G terrain, including working closer than ever with vendors and competitors, and preparing as much for running such an advanced network as they have building it.

The unproven economics of 5G are daunting enough, but the more serious challenge traditional telcos face lies inside their organizations. Unless they radically reinvent how they operate, they risk having little to show for massive 5G capital investments, with more dynamic digital rivals continuing to capture the benefits.

Most haven’t been bold enough in incorporating digital and analytics or fundamentally changing how they work. To keep up with customers’ increasing demands, they’ll need to be constantly making data-driven decisions, using agile methods to shorten time to market from months to weeks or even days, and attracting (and retaining) talent to build the tools and technology needed to turn 5G into a source of innovation and differentiation.

Only via that kind of transformation can the industry hope to overcome one of its biggest obstacles to success: a lack of customer focus, and a corresponding lack of customer satisfaction and trust. 5G alone can’t change that. But if telcos achieve this level of organizational change, they’ll be much better positioned to solve other challenges, including 5G’s economics. And if that were to happen, well then, the industry (and its customers) would really have reason to celebrate.

OFF THE CHARTS

A brighter jobs picture for the eurozone

The euro-area unemployment rate dropped to 7.9 percent in November 2018, its lowest level since 2008, according to McKinsey’s latest Global Economics Intelligence report. (The seasonally adjusted index held steady in December.) That’s good news for Europe, which faces challenges including Brexit uncertainty, declining overall demand from China, disruption in the German auto sector, and economic unrest in France.

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THREE QUESTIONS FOR | Bill Schaninger

Bill Schaninger, a senior partner in Philadelphia, is an expert on organizational culture, values, and leadership. He is responsible for shaping the global knowledge agenda for McKinsey’s Organization Practice.

How should companies shift from a focus on talent in their senior roles to populating their entire organization with top talent?

An organization’s critical roles are less often found within the “top team” than three or four layers down. These are the jobs that make or break an organization. Yet too much of executives’ time is devoted to talent activities that check boxes instead of driving real value. As a result, companies can trap some of their best people on projects that matter less to overall strategy.

How do we fix this? By closely linking top talent to creating strategic value. Use data and analytics to identify the most critical roles across the whole organization, not just top management positions—whether in HR, manufacturing, engineering, design, supply chain, or any other discipline. Once you’ve identified these critical jobs, ensure they’re filled with top performers with the right skills and experience. And put robust performance and succession plans in place for each role.

How can corporate presentations on unconscious bias translate into overall organizational diversity?

Combating unconscious bias requires three elements: (1) building awareness; (2) understanding how key decision moments are embedded in business processes; and (3) launching a clear set of responses. Corporate presentations do a great job of shifting mind-sets, but they often address only the first element—not enough to drive change on the ground.

The second element makes combating biases more tactical. For example, a company looking to remove biases in recruiting should examine each step in its hiring process—the initial résumé review that results in certain candidates getting an interview, and the interview itself that results in a job offer. Then it should measure the results of each decision; for example, the percentage of female candidates interviewed, and the percentage of those offered a job.

Once problems are identified, companies can create interview metrics based on objective criteria rather than intuition. Continuing to track and review results also creates a sense of awareness for decision makers. After all, it’s one thing to watch a corporate presentation on bias, but it’s another to have the data to work to eliminate them.

We often hear the term “reskilling,” or reorienting employees for future ways of work. What’s the difference between reskilling and upskilling?

Reskilling involves teaching employees new skills to move them from one job family to another. This usually happens because of reduced demand for their current skills and increased demand for the ones they’re learning. Other reasons include moving people from lower- to higher-paying jobs and opening career pathways.

Upskilling builds on the skills and capabilities employees currently use, to keep them up to date with the latest advances, practices, and technical competencies in their field. It does not seek to move employees out of their current job family but rather to move them up within the family or to keep them on par with new hires entering their field.

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