This week, what to stop, what to start, and what to accelerate when thinking about reopening. Plus, why this crisis is different for the oil and gas industry, and McKinsey partner Sarah Kleinman on the successful responses she’s seen. |
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The past months have been grueling, destabilizing, often deadly. Now, as governments and businesses try to find their feet amid the pandemic, there’s room for hope, tempered with caution. |
Still so many questions. How can companies navigate this difficult environment, especially in the next few weeks, as restrictions are loosened in many countries? What is the financial health—and state of mind—of suppliers and consumers? How can employees be motivated to return to work and be reassured about their safety? How quickly will demand return? |
Based on our research and conversations with leaders of large companies, from all sectors, we believe eight actions are essential. In addition to safeguarding their employees, companies should provide customers with safety guarantees that restore trust, revive demand, and reboot operations and supply chains. |
To start, create a detailed relaunch map. Go country by country, site by site, segment by segment, customer by customer, and product by product to prioritize recovery opportunities. This map will guide production, supply-chain, and marketing and sales efforts, and help determine a recovery timeline for each site. It may be appropriate to freeze some planned or ongoing projects until the company has the capacity to reassess them. |
What about governments? For weeks, most governments focused on controlling the spread of the virus, many of them by implementing a full lockdown strategy. Now, many are moving to strike a better balance between “flattening the curve” and reviving the economy. But uncertainty is rampant. In an April article on restarting national economies, we outlined a selective lockdown strategy in which certain regions and sectors can gradually return to work. Such a strategy makes it possible to define the optimal number of people allowed on the streets, making sure that lives are protected while also minimizing the cost on livelihoods. |
Yes, but. The toughest leadership test still looms: how to bring organizations back, full force, in an environment in which a vaccine has yet to be found and economies are still reeling. Imagination and on-the-field execution will be paramount as leaders consider how to navigate the restart. Business as usual will not be nearly enough; the game has changed too much. But by reimagining how they operate, organize, and use technology, even as they return to work, leaders can set the foundations for enduring success. |
Let’s end on an optimistic note. It’s said that the worst of times brings out the best in people; as it happens, this is true of organizations as well. Almost every leader we speak with has an inspiring story of radical, positive change in how work gets done and what their employees can—and did—accomplish. Amid the fear and uncertainty, people are energized as companies make good on their purpose statements and find new ways to serve their customers and communities. Let’s hope this continues well beyond the pandemic. |
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OFF THE CHARTS |
Oil and gas dig deep amid disruption |
The oil and gas industry is experiencing its third price collapse in 12 years. After the first two shocks, the industry rebounded, and business as usual continued. This time is different: the current context combines a supply shock with an unprecedented drop in demand and a global humanitarian crisis. On top of that, the sector’s financial and structural health is worse than in previous crises (the industry has underperformed against the S&P 500 over the past 15 years, as we show below). To respond, the industry will have to tap its history of bold structural moves, innovation, and safe and profitable operations in the toughest conditions. |
Also, check out our new chart-of-the-day page. |
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PODCAST |
Are you a great CEO, or just a good one? |
Most people would agree that great CEOs have the following traits: resilience, decisiveness, and being a relationship builder. But in this Inside the Strategy Room podcast, McKinsey senior partners Carolyn Dewar and Scott Keller note that while these attributes help explain why people become CEOs, they do not necessarily translate into excellence in the role. What does matter? A laser-like focus on beating the odds and putting dynamics ahead of mechanics. |
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MORE ON MCKINSEY.COM |
Beauty and the COVID-19 beast | The $500 billion global beauty industry has been roiled by the pandemic, with weak sales and widespread store closures. We look at how the crisis could change the industry—and how retailers, strategic players, and investors can adapt. |
How do we manage the change journey? | When a team takes the field, it has a game plan, but once the whistle blows, points rarely come from well-rehearsed plays. The ability to improvise within the game plan usually makes the difference between winning and losing. |
Contact tracing as lockdowns lift | Talk has turned to whether and how to track those infected with COVID-19, as well as those they might have had contact with prior to testing positive. Here’s how contact tracing works—and some of its benefits and limitations. |
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THREE QUESTIONS FOR |
Sarah Kleinman |
Sarah Kleinman, a partner in McKinsey’s Washington, DC, office, designs and manages large-scale organizational transformations, ensuring that structures, processes, and people are all working to support organizations’ strategies. She has a PhD from Oxford University, where she studied as a Rhodes Scholar.
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What types of successful organizational responses to the pandemic have you seen over the past several months? |
This is a rapidly changing environment, so your people need to respond with urgency, without senior executives and traditional governance slowing things down. Waiting to decide, or even waiting for approval, is the worst thing they can do. Yet some level of coordination across teams and activities is crucial for any response to be effective. |
One answer is to create a robust network of teams that is empowered to operate outside the current hierarchy and bureaucratic structures of the organization. This group gathers information, devises solutions, puts them into practice, and refines outcomes—and does it all fast. We’ve seen organizations of all shapes and sizes move in this direction to respond to the coronavirus. |
Many organizations are also building more dynamism and flexibility into their operating models, which will endure well beyond the current crisis and disruption. They are moving to more agile models like “the helix,” and thinking about other ways to reimagine the post-pandemic organization. |
Are companies having to go from zero to 60 to craft a rapid-response team, or was the mindset shifting anyway? |
Executives were already under pressure to respond more quickly to rapidly changing circumstances, adopting a rolling strategic plan that they update as needed rather than a traditional three-to-five-year plan. Responding to the pandemic has made that rapid-response reflex more urgent. |
But it’s worth remembering that change at that pace can create a disconnect between a company’s strategy and its operating model—aggravating existing problems, creating arbitrary or disconnected reactions, and breeding organizational confusion. |
In a crisis situation that is likely to go on for a while, it is critical for managers to link a company’s strategy to its operating model. Answering four questions will identify the capabilities and accountabilities required to enable a company’s operating model and unlock its strategy: What do we need to be able to do to create value? What distinctive capabilities do we need to create this value? Where do we have these capabilities today? And what are the implications for our operating-model design, especially on accountability and the corporate functions? |
You have worked with public-sector leaders to break down silos and shift workplace cultures. Is their response to the pandemic different? How do you create a rapid response in a public organization? |
Government agencies are used to navigating crises—and they already have the muscle built in to shift gears away from status quo business and toward a new way of working when it’s needed. The private sector could learn a lot from government agencies in terms of how to stand up task forces quickly, redeploy the best people to tackle associated challenges, and focus leadership attention on making decisions. |
The challenge for government agencies is actually how they can remain agile beyond times of crisis. Public-sector institutions have shown they can be nimble during public emergencies, but they need to build more flexibility and agility into their normal operating rhythm to keep pace with changing needs beyond times of crisis. |
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BACKTALK |
Have feedback or other ideas? We’d love to hear from you. |
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