| This week, we try to imagine how the coronavirus will usher in a “next normal,” and what that could look like. Plus, Africa’s infrastructure paradox, and reading picks from Dilip Wagle, a McKinsey senior partner. |
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| Pace yourself. Dealing with the coronavirus pandemic is not a sprint, it’s a marathon. How many times have you heard officials say that? How many times have you thought it yourself? |
| Things are changing continually and quickly, but one thing is clear: this could be the most abrupt shock to the global economy in modern history. Even in a relatively optimistic scenario, all countries would experience sharp GDP declines in the second quarter, most of which would be unprecedented for people living today. Consumer discretionary spending could tank, especially in areas subject to shutdowns. |
| Expect a rocky second quarter. While increased government spending can help offset some of the economic impact—and a centralized response system can help governments manage this crisis—it is unlikely to offset the effects rapidly enough. China’s annual GDP growth could end up roughly flat, wiping out the 6 percent growth we expected just three months ago. And the world economy overall could see a decline in GDP at an annualized pace of 25 to 30 percent in the second quarter. |
| Looking ahead. In the near future, we will see the beginning of discussion and debate about what “the next normal” could look like after this crisis ends. A shock of this scale will create a shift in the preferences and expectations of individuals as citizens, as employees, and as consumers. These shifts and their impact on how we live, how we work, and how we use technology will emerge more clearly over the coming weeks and months. |
| Returning businesses to operational health after a severe shutdown is extremely challenging. Most industries will need to reactivate their entire supply chain, even as the differential scale and timing of the impact of coronavirus mean that global supply chains face disruption in multiple geographies. The weakest point in the chain will determine the success or otherwise of a return to rehiring, training, and attaining previous levels of workforce productivity. Leaders must therefore reassess their entire business system and plan for contingent actions to return their organization to effective production at pace and at scale. |
| The aftermath of the pandemic will also provide an opportunity to learn from social innovations and experiments, ranging from working from home to large-scale surveillance. With this will come an understanding of which innovations, if adopted permanently, might provide substantial uplift to economic and social welfare—and which would ultimately inhibit the broader betterment of society, even if helpful in halting or limiting the spread of the virus. |
| For more on leading through the coronavirus crisis, go here. |
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| OFF THE CHARTS |
| Africa’s infrastructure paradox |
| Africa has huge unmet needs for infrastructure: nearly 600 million people in sub-Saharan Africa lack access to grid electricity—accounting for more than two-thirds of the global population without power. Yet the funding is available to build the infrastructure its people and businesses need—it’s more a matter of spending it where it’s needed most. |
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| NTERVIEW |
| Seasoned leaders on crisis lessons learned |
| The first Gulf War, the SARS outbreak of 2002–03, the financial and swine-flu crises of 2008–09, the Ebola crisis of 2015–16. There are managers out there whose stories and experiences of leadership in moments of disruption and upheaval are instructive for the current pandemic crisis. To learn more, we spoke with three senior advisers to McKinsey with just such experience. |
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| MORE ON MCKINSEY.COM |
| Bias busters: The case for a momentum case | Complacency can wreak all kinds of havoc on companies’ strategies. Unlike a base case, a momentum case can reveal potential negative consequences if the company takes only limited or no strategic action. |
| Value creation in apparel, fashion, and luxury | Performance in the fashion and luxury industries has waned, but leading companies haven’t been deterred. Here’s what they’re doing. |
| Building a better forecast | To improve the accuracy of corporate forecasts, build in the physical parameters from company operations. |
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| WHAT WE’RE READING
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| Dilip Wagle |
| Dilip Wagle, a senior partner in Seattle, helps high-tech companies and media firms refine their strategies and undertake organization-development initiatives. He has also written about the problem of homelessness in Seattle and King County.
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| This may come as a surprise to aficionados of business books, but I rarely read them. I feel most can be compressed into 20 or so pages. That said, I am a big reader. Here’s a rapid-fire list of some of the titles I’ve read over the past year or two. They may not be the most upbeat titles, but several delve into important issues that the United States, and many other societies, are facing. |
| These Truths: A History of the United States by Jill Lepore is a wonderful fly-by of American history, which, despite its 900+ pages, I felt was too short. The truths, as Thomas Jefferson termed them, are political equality, natural rights, and the sovereignty of the people. They are the foundation of self-government, and Lepore’s central question is whether the United States has lived up to them. You’ll have to read it to discover her answer. |
| The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay by Emmanuel Saez and Gabriel Zucman focuses on the retrogressive tax structure in the United States today. These economists argue that billionaires now pay lower tax rates than their assistants. This data-rich view of tax inequity is a worthy read regardless of your feelings on the issue. |
| Hisham Matar’s The Return: Fathers, Sons and the Land in Between is the heart-wrenching story of his journey to understand why his father disappeared. Matar was a university student in England when his father went missing in Libya. More than 20 years later, he returns to Libya to find out the truth. |
| Because I am interested in the problem of homelessness, I recommend Evicted: Poverty and Profit in the American City by Matthew Desmond, on the multigenerational sorrows of eviction. Desmond, a Princeton sociologist, writes about how eviction tests eight families in the poorest areas of Milwaukee. |
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Share Wagle’s reading picks
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| BACKTALK |
| Have feedback or other ideas? We’d love to hear from you. |
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