The Shortlist is turning two! Thanks to all our readers for your support—and keep the comments coming. This week, why focusing on innovation now will pay off after the crisis. Plus, retail’s new value proposition, and McKinsey’s archivist on a senior partner’s ice-breaking trip to the South Pole in 1968. |
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A stunning number. In our recent survey of more than 200 organizations across industries, more than 90 percent of executives said they expect the fallout from COVID-19 to fundamentally change the way they do business over the next five years, with almost as many saying the crisis will have a lasting impact on their customers’ needs. At the same time, more than three-quarters said the crisis will create significant new opportunities for growth. |
Yes, but … Fewer than 30 percent of these same executives feel prepared to address the changes they see coming. Leaders remain largely focused on maintaining business continuity, which means investments in innovation are suffering until the path forward is clearer. |
Our research suggests that playing it safe may be shortsighted. As businesses adapt to new market realities, the core capabilities that made an organization distinctive may suddenly be less differentiating. In just one example, virtual technology now allows companies to do things that were nearly impossible before, such as assembling the “perfect team” of experts for every sales pitch. |
Plus, past crises show that innovation-led growth is often lasting. The sharing economy rose out of the 2009 financial crisis. The SARS epidemic in Asia in 2002 was the impetus for widespread adoption of e-commerce in that region. And the more recent focus on climate change has driven significant growth in solar equipment and electric cars, as well as more “earth friendly” foods such as plant-based meat substitutes. |
In earlier research, we introduced the Eight Essentials of Innovation—the critical practices that drive innovation success. Of those eight factors, “Evolve” is one of the most applicable today. If a company derived an advantage from brick-and-mortar storefronts that now have reduced foot traffic, it may need to pivot to a digital approach. |
Flex your muscles. The ability to develop, deliver, and scale new products, services, processes, and business models rapidly is a muscle that virtually every organization needs to strengthen. Leaders must start with a commitment to making innovation an essential part of their organization’s growth model and future success—not a vague hope, fallback option, or happy accident. |
Inspire your team. As companies come out of the crisis and prepare to return to growth, the immediate challenge is to motivate teams to bring intense focus, speed, and agility to delivering new sources of value. Crises are like adrenaline for innovation, causing seemingly immovable barriers to evaporate in a matter of days. For innovators, entrenched orthodoxies on “the way things are done” are replaced with “the new way we do things” almost overnight. |
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OFF THE CHARTS |
Retail’s new value proposition |
Worried about the economy, most US consumers are consolidating shopping trips and shifting their retailer and brand loyalties. Mass retailers, grocers, and drugstore chains will need to carefully refine their value strategies as consumer perceptions shift. |
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INTERVIEW |
Your people = your purpose |
Hubert Joly, Best Buy’s former chairman and CEO, reflects on a business’s reason for being and suggests that leaders should define it according to purpose and humanity, to competitive advantage, and to managing shareholders and stakeholders during a crisis and beyond. “At the end of the day, a company is a human organization made of individuals working together in pursuit of a goal,” he told McKinsey. “These individuals produce value for all stakeholders. They are the source, not simply a resource.” |
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MORE ON MCKINSEY.COM |
Decoding the value and performance of corporate Asia | Corporations in Asia have grown in scale but lag behind the global average on profits, and the COVID-19 crisis poses new challenges. We offer several ways that companies can expand their ability to sustain long-term growth. |
Preparing for private equity exits | Traditional PE exits have slowed significantly since mid-March of this year. Announced PE exits dropped almost 70 percent globally in May 2020 versus May 2019. Leading firms are taking advantage of the extra time. |
A strategic framework for European recovery | The pandemic has reinforced the pressure to reform. The stakes for how European governments allocate resources are huge—not just in euros and competitiveness but also in the well-being of individuals and societies. |
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FROM THE ARCHIVES |
The Polar Byrd 1 expedition |
In November 1968, the first commercial round-the-world flight took off for the South Pole, with the goal of crossing both poles and touching down on all continents. A McKinsey senior partner by the name of Bill Dennick was lucky enough to be on that flight. |
The Polar Byrd 1 expedition was organized by Edward C. Bursk, chairman of the Admiral Richard E. Byrd polar research center in Boston and editor of the Harvard Business Review. He sent a proposal letter to some 400 American business executives offering the chance to make history by joining this unique mission, to commemorate the 40th anniversary of Byrd’s own flyover of the South Pole. |
“Frankly, you will endure some discomfort and may even face some danger,” Bursk wrote in the letter. “On the other hand you will have the rare privilege of taking part in a mission of great significance for the United States and the entire world. A mission, incidentally, which has never before been attempted by man.” |
The itinerary included stops in Greenland, the North Pole, Anchorage, Tokyo, Manila, Australia, Europe, and Antarctica and included the opportunity to meet several world leaders. With a Moscow stop as well, it offered the chance to be onboard the first American charter tourist flight to land in the USSR. |
Some 70 American businessmen—and yes, they were all men—took Bursk up on his offer. They paid $10,000 each, making the trip quite likely the most expensive tour package in the world at that time. Of course, having Dennick spend nearly a month in close quarters with some of America’s wealthiest businessmen was presumably a worthwhile investment. As a trusted leader and experienced world traveler, Dennick later led the firm’s expansion into Asia, including Japan and the Philippines. |
The group, led by Commander Fred “Dusty” Dustin—a veteran of six Antarctic expeditions, a fuel engineer for Byrd’s second Antarctic expedition (1933–35), and the namesake for Dustin Island—departed Boston on November 8, 1968. The plane, a Modern Air Convair 990A flown by a former Air Force One pilot, carried 70 passengers and ten crew. |
The highlight (and geographic low point) of the trip occurred on November 22, when the Polar Byrd 1 became the first and only commercial jetliner to land on and take off from the 10,000-foot ice runway at the McMurdo Station airfield at Williams Field, McMurdo Sound, in Antarctica. The flight then flew directly over the South Pole, with the milestone marked in proper pioneering fashion with a champagne toast. The expedition continued, landing nearly 12 hours later in Argentina, where it made more history as the first commercial flight to land in that country from a southern departure. |
After several stops in Europe, including the historic touchdown in Moscow, Dennick and the rest of the adventurers returned safely to Boston on December 3, weary but content with their roles in such a momentous journey. – Paul Lasewicz, McKinsey archivist |
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Share The Polar Byrd 1 expedition
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BACKTALK |
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