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Leading Off
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Most of us know that the metaverse is a virtual world, but we may not have imagined the extent of its possibilities. As tech leaders envision it, the metaverse is an immersive, shared, and secure 3-D digital space where your avatar—a digital representation of yourself—can shop, play, learn, work out, attend virtual business meetings, trade digital currencies, and conduct other activities just as you would in real life. Moving beyond its origins in gaming, the metaverse has already captured the interest of sectors such as fashion, art, and music and is projected to generate up to $5 trillion in value by 2030. Given its potential, leaders can’t ignore the metaverse, but they may be challenged to understand its impact on their organizations and what strategies—if any—they should adopt to capitalize on it. This week, let’s explore some actions to take and trends to keep an eye on.
Illustration of Cathy Hackl
Distinguish between hype and reality
“We definitely have to admit that there is hype,” says tech futurist Cathy Hackl in this McKinsey podcast on what the metaverse means for business. But the metaverse has many genuine business applications as well: for example, two of its underlying technologies, virtual reality (VR) and augmented reality (AR), serve as valuable tools for skills development in sectors such as healthcare and manufacturing. In the coming years, immersive workplaces will transform the way we work, lead, and collaborate—you could, for instance, send your avatar to a virtual meeting instead of attending it yourself. This will require companies that have just a marginal presence in the metaverse to consider a more holistic approach. A critical first step is to invest in the right talent. Leaders may want to begin by building teams with experience in technologies such as VR and AR. “If you think we currently have a talent war, just wait,” Hackl cautions. “It’s about to get a lot harder.”
That’s the average number of hours American consumers expect to spend in the metaverse every day within the next five years, countering the myth that the metaverse is a fad. Brands can prepare for this by creating a metaverse strategy based on their perceptions of the level of adoption, opportunity, and investment required. For example, a “waiter” might hold off until the technology investment seemed worthwhile; a “fast mover” would begin investing in creators, technical experts, and partnerships; and a “shaper” would bet on a heavy investment to yield new business models and growth opportunities.
“Within the next two or three years, I predict most virtual meetings will move from 2-D camera image grids—which I call the Hollywood Squares model, although I know that probably dates me—to the metaverse, a 3-D space with digital avatars.”
That’s Bill Gates in his 2021 year-end blog, in which the former Microsoft leader describes a metaverse-based workplace as one that captures the feel of the real world. Avatars would meet in a virtual space and interact by using technologies such as VR goggles and motion-capture gloves that could capture facial expressions, voice quality, and body language. And spatial audio technology, which creates a surround-sound environment, would enable speech to sound as if it were coming from the direction of the person talking rather than from a computer’s speaker. “We’re approaching a threshold where the technology begins to truly replicate the experience of being together in the office,” says Gates.
Illustration of Matthew Ball
As the metaverse begins to transform the global economy, it will inevitably raise issues of privacy, ethics, security, and governance. A virtual system based on the collaborative model of global trade may help resolve some of these challenges, says metaverse expert and author Matthew Ball in this McKinsey podcast on how organizations and people can shape the metaverse responsibly. But a proliferation of 3-D digital spaces—with their ability to simulate real-life situations—can also accelerate “abuse, harassment, radicalization, and misinformation,” warns Ball. “I don’t think we’re very far in solving those problems. . . . It’s going to get a lot harder and scarier, frankly.”
Illustration of a digital shopping center
Whether or not you like games, playing them is the best way to experience what living and working in the metaverse might feel like and to make informed decisions about potential opportunities for your organization. Consider exploring Roblox, Fortnite, Minecraft, Decentraland, or similar gaming platforms, and try out VR and AR headsets if possible. Also check out Second Life, a virtual world launched nearly 20 years ago but perhaps coming closest to today’s concept of the metaverse: in this 3-D digital space, user-created avatars conduct real-life activities such as traveling, buying clothes and property, watching movies, or even having weddings. Not surprisingly, Second Life is making a comeback as the world that it pioneered gains momentum.
Lead digitally.
— Edited by Rama Ramaswami, a senior editor in McKinsey’s Stamford, Connecticut, office
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