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July 20, 2018 |
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| Weekly need-to-know content |
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| Welcome to the Shortlist: new ideas on timely topics, plus a few insights into our people. Subscribe to get it in your inbox every Friday. This week, scroll down to see what Tony Hansen, of McKinsey’s Global Infrastructure Initiative, is reading. |
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| Bitcoin and other virtual currencies are grabbing headlines lately, and not just for their volatility. The parent company of the New York Stock Exchange is looking into building a Bitcoin exchange; Goldman Sachs is starting a desk to trade cryptocurrencies (New York Times paywall). But Warren Buffett has said virtual currencies have no intrinsic value, and the Nobel laureate Robert J. Shiller wrote recently that despite the “aura of exclusivity” surrounding cryptocurrencies, no one “outside computer science departments” can explain how they work. Add to that the fact that several existing cryptocurrency exchanges have been hacked since 2014 and, well, ouch. |
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As that battle rages, managers shouldn’t lose sight of a potentially bigger game-changer that has made cryptocurrencies possible. That’s blockchain, the shared online ledgers that provide a record and history of ownership of a cryptocurrency—or, for that matter, a utility’s value chain (though the industries that may gain most are finance, government, and healthcare). In fact, 90 percent of major Australian, European, and North American banks are already experimenting with or investing in blockchain. |
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Don Tapscott, co-author of Blockchain Revolution, thinks of blockchain’s future as a “global distributed ledger or database where anything of value, from money to music to votes, could be managed, transacted, and exchanged in a private and secure way.” Tapscott, a blockchain-will-change-the-world guy, told McKinsey that “the Internet of everything needs a ledger of everything for it to work.” |
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While everyone loves an optimist, recent analysis suggests that 70 percent of the value blockchain can offer in the short term will derive from reducing costs and driving operational efficiencies, and that it is still three to five years away from feasibility at scale, in part because of the difficulty of establishing common standards. |
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In light of security and other concerns, we expect that most companies developing commercial applications of blockchain in the next few years will do so on private networks that control access and editing rights, until the conditions are in place to scale up to public platforms like Bitcoin’s. The good news is that the same analysis identified more than 90 use cases already in play at varying levels of maturity across major industries. |
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How can companies determine if blockchain has strategic value that justifies major investments at this point? To start, they should focus on their ability to shape an ecosystem, establish standards, and address regulatory barriers. Now’s the time to get cracking. A World Economic Forum survey suggested that 10 percent of global GDP will be stored on blockchain by 2027.
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| SPOTLIGHT ON |
| The glass runway |
| Why isn’t fashion filled with female designers and executives (New York Times paywall)? After all, the industry caters to women, who spend three times what men do on clothing. Women are well represented in designer showrooms and studios. Yet only 14 percent of major brands are run by a female CEO, according to an industry report. What’s holding women back? |
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We teamed up with Glamour magazine and the Council of Fashion Designers of America to survey more than 500 professionals throughout the industry about their ambitions, opportunities, and setbacks. One remarkable finding: 100 percent of women said that gender inequality is a problem in the industry, compared with less than 50 percent of men. |
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The language often used to describe designers and their work also reveals bias. Men’s designs tend to be praised as innovative and groundbreaking; women’s, practical and wearable. That said, the news is not all bleak. Companies that manage to be diverse and inclusive are some of the brightest success stories in fashion and retail right now. Read more about the survey here.
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| MORE ON MCKINSEY.COM |
| With AI, it’s déjà vu all over again | Bill Ready, the COO of PayPal, told McKinsey that this period in artificial intelligence feels similar to the early days of mobile or smartphones. To assert, as he did then, that people would soon buy everything on tiny screens sounded “outlandish and crazy.” Not anymore. |
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Agile with a capital ‘A’ | Two McKinsey partners talk about why agile isn’t just for software nerds. If done correctly, it can help people work more efficiently, delivering successful products and creating more value. |
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Microsoft’s next act | “At some point, the concept or the idea that made you successful is going to run out of gas,” CEO Satya Nadella says. “So, you need new capability to go after new concepts.” |
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| WHAT WE’RE READING | Tony Hansen |
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| Tony Hansen is the global director of McKinsey’s Global Infrastructure Initiative. A conservationist, he was recently involved in an economic-development project with the Chilean government and Tompkins Conservation to expand Chile’s parklands by about ten million acres. |
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| Humans started as primitive hunter-gatherers, and now we’re a connected species of more than seven billion people, most of us living in congested cities. In Sapiens: A Brief History of Humankind, Yuval Noah Harari walks us through the three revolutions that have brought about our “success”—and predicts where this might lead us in the future. |
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Following this theme forward, The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It, by Scott Patterson, sounds a warning bell on how a few powerful people can misuse technology with a disastrous collective outcome. On the lighter side, I recently revisited one of my favorite books, Jitterbug Perfume by Tom Robbins, a hilarious fictional account of King Alobar’s epic journey to immortality.
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| BACKTALK |
| Have feedback or ideas? We want to hear from you. |
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