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Leading Off
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Growth is good, every businessperson knows, and necessary for survival, and woe to the leader who neglects it. For a very long time, the pursuit of growth was singular, monochromatic work—valuable for its own sake and sufficient to justify any leader’s standing and actions. As the pandemic’s worst economic and human shocks slowly fade, however, much subtler and varied hues color the future and often bleed into one another. A new frame of reference is taking hold—on lives and livelihoods, the fragility of a warming planet, and a heightened sense of social justice. This new era will challenge leaders to define success in new ways and balance the trade-offs necessary to do it. Is it possible to achieve growth that is sustainable and inclusive, and what might that look like? This week, let’s explore a mental model to help you ask the right questions and make the best choices.
3 intersecting circles
Growth, sustainability, and inclusion reinforce and counteract one another
Good strategy begins with asking the right questions, so let’s face facts: framing—much less hastening—a future in which growth, sustainability, and inclusion coexist and reinforce one another is undeniably difficult. The first step for leaders is to understand and define what these terms mean in company and country contexts. From there, it’s possible to frame the debate about achieving sustainable and inclusive growth and mitigating the ways in which each element counteracts the other. This article not only lays out the aspiration but also poses the tough questions facing leaders who aim to achieve a self-reinforcing dynamic of sustainable, inclusive growth.
40 trillion
That’s the revenue, in US dollars, that a subset of about 5,000 large companies from OECD countries generated in one year. In the business press, the steady flow of staggeringly large revenue numbers from corporations often overwhelms the discourse on a fundamental question: How do the activities of companies really affect the economy and society, and what are these companies’ responsibilities to stakeholders and society at large? In this discussion paper from the McKinsey Global Institute (MGI), the authors connect the dots on how the economic value that companies create flows to households and how those flows have shifted over the past 25 years. MGI clustered companies into eight archetypes, based on what they do and their impact on society. These archetypes transcend traditional sectoral views and illuminate the ways companies affect households—an essential component for understanding the new social contract and how to balance issues of growth with inclusion and gender equality.
“We accepted the challenge and built our first farm in a supermarket.”
That’s Erez Galonska, CEO of Infarm, reflecting on the moment when the CEO of a large European food wholesaler agreed to sign a deal with Infarm’s then-experimental urban vertical farming laboratory if Infarm could build a farm in a retail location. Today, Infarm’s “cloud connected” farming network, which grows produce where it is consumed, can be found in half of the world’s largest food retailers. For Galonska, the future of farming lies in software and analytics that can tap into consumer preferences, which urban farms can then satisfy. For leaders everywhere, such technological innovation at the intersection of sustainability and growth provides lessons that carry over from farming to food to the massive opportunity in applying tech tools in the fight against global warming.
person wearing headphones
Nowhere does the link between growth and inclusion play out as dramatically and humanly as in a company’s efforts to improve its workforce’s skills. The pandemic has proved the critical role of skill building to be a pillar of corporate resilience in uncertain times. But astute leaders are preparing for a future that calls for higher-level digital, cognitive, emotional, and social skills to stay ahead. In these interviews from McKinsey’s The Next Normal series, experts break down the methods for engaging employees in skill building, the importance of reinforcing and applying new behaviors, and the critical link between investment in skill building and value creation.
Twinkle, twinkle
How do you solve a problem for which there is not yet an answer, but only questions? The concern is real that today’s global economic system is shortchanging the future through uncorralled climate change and income inequality. Amid such complexity, if there is such a thing as a North Star to guide leaders to a future that balances growth, sustainability, and inclusion, it’s this: when choices are difficult, and when there are trade-offs to be made, prioritize long-term value creation, given the advantages it holds for resource allocation and economic health. Rejecting the demands of short-term financial returns and investing instead for sustainable growth should and often does result in strong economies, higher living standards, and more opportunities for individuals.
Lead well.
— Edited by Bill Javetski, an executive editor in McKinsey’s New Jersey office
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