This week, how asset-heavy industries are moving toward agile ways of working. Plus, four principles for creating power partnerships in retail, and reading picks from senior partner Jessica Moulton. |
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How agile do you have to be in this disruptive technological era? It’s a central question for companies across industries. This week we look at how asset-heavy industries like energy, chemicals, and metals and mining are answering it. They’re still at an early stage compared with many other industries that are already implementing agile operating models at scale. |
This isn’t from disinterest in agile principles—flexible, less hierarchical teams working across functions and making decisions quickly—but rather out of concern for compromising safety, technical quality, and risk management. And that makes sense: while a coding error at a software company may raise costs or delay development, an oil spill or a mine collapse would make any leader wary of extensive operating-model innovations. |
Nevertheless, many asset-heavy companies are already getting real value from agile pilots in their core businesses. Let’s run through a few examples: agile teams at a metal company used advanced analytics and digital technologies to improve throughput, yield, costs, and quality, contributing to an expected $100 million improvement in EBITDA. An oil and gas company brought completions, drilling, and petroleum engineers together with supply-chain and commercial specialists in one full-time team at a single location, managing to halve the time needed to design new wells. |
One metal refinery is now considering shifting from a traditional, functional organization into an agile one. Instead of putting production, mechanical maintenance, electrical maintenance, maintenance planning, and different kinds of engineers in functional silos, they are setting up cross-functional teams for each part of the refinery—milling, leaching, reduction, and so on. |
As for risk, there is no inherent conflict between agile operations and safe and reliable ones. On the contrary, agile models, when correctly implemented, can reduce risk and improve safety. An oil company, for example, found that miscommunication during handovers between functions was the root cause of many quality issues and near misses. Bringing together people from throughout the work flow eliminated associated risks. |
Looking ahead, agile may well determine the winners and losers in asset-heavy industries as they embrace digitization and develop climate-neutral technologies. Much as agile teams have fueled innovation in Silicon Valley, they may take on similar roles in other industries. |
And speaking of the tech industry, agile ways of working have tremendous potential to improve the employee experience. Asset-heavy industries are no longer top of mind for young talent. When graduates from the best universities flock to tech companies and start-ups, they are inspired not only by software technology but also by new ways of working. That’s yet another reason for traditional industries to get agile. |
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OFF THE CHARTS |
Power partnerships, retail-style |
When consumer-goods manufacturers collaborate more closely with retailers, they outperform their competitors. McKinsey’s latest research shows that winning companies are more likely to involve their consumer- and shopper-insight teams in discussions with retailers. |
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INTERVIEW |
In Colombia, ‘We stuck to our goals’ |
Over the course of her eight-year tenure as Colombia’s minister of education, Cecilia María Vélez White overhauled the country’s approach to student enrollment and achievement, scoring clear successes in both areas. The secret, she says, was patience. “People often want transformation to happen in a year or in the first few years of the government, but that is almost impossible,” she said in an interview. “We succeeded because we stuck to our goals.” |
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MORE ON MCKINSEY.COM |
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When the content consumer is king | As media companies and brands seek productive growth in an uncertain and changing landscape, the next stage for the industry will be a focus on direct-to-consumer engagement. Check out our new Global Media Report. |
The next wave of vaccine innovation | Vaccine development has slowed over the past five years, but changes to investment strategies could reinvigorate efforts. |
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WHAT WE’RE READING
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Jessica Moulton |
Jessica Moulton, a senior partner in London, helps multinational consumer-packaged-goods, retail, and food-service companies pursue strategic growth opportunities and strengthen their operating models, with a focus on responses to digital disruption.
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Factfulness: Ten Reasons We’re Wrong About the World–And Why Things Are Better Than You Think by Hans Rosling may not be the most original choice, especially after President Obama named it as a top pick on his summer reading list last year. But it is certainly one of the best books I’ve read so far this year. The big picture of human progress is much brighter than we tell ourselves today, Rosling writes. |
My favorite podcast is Conversations with Tyler, in which the economist Tyler Cowen interviews a diverse group of leaders. His guests have included Margaret Atwood, Kareem Abdul-Jabbar, Garry Kasparov, and Jhumpa Lahiri. Two of my favorite episodes were with Daniel Kahneman, the expert in behavioral economics and Nobel laureate, and the Google/Alphabet executive Eric Schmidt. The Kahneman conversation ranged from bias and happiness to memory and the value of intuition. The Schmidt interview talked about underused management strategies to get a lot of people to row in the same direction. Cowen concludes each interview by asking the person what the keys are to his or her “production function”—always interesting. |
How Britain Really Works: Understanding the Ideas and Institutions of a Nation by Stig Abell is helping me fill in the gaps and consolidate my understanding of my adopted country, ten years into living here.
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For staying in the daily flow of news, I like Axios newsletters and podcasts, which give a quick overview of what’s going on in the world. In my field, I read No Mercy/No Malice, an insightful newsletter written by Scott Galloway, a New York University business professor and the author of The Four: the Hidden DNA of Amazon, Apple, Facebook, and Google. (Galloway has a brand-new book out, The Algebra of Happiness: Notes on the Pursuit of Success, Love, and Meaning.) |
I’m also reading Chris Colfer’s new Land of Stories series with my daughter. Brother-and-sister twins enter a magical world of epic power struggles between well-known fairy-tale characters. It’s a joy to discuss with an eight-year-old. You will never think of Little Bo Peep the same way again. |
I think it’s very important to end the day with fiction (we know the brain processes overnight), but when I don’t have time to read a novel, a poem will do instead. My sister turned me on to Billy Collins a few months ago and I’ve been enjoying his The Rain in Portugal: Poems. |
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BACKTALK |
Have feedback or other ideas? We’d love to hear from you. |
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