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2021 opportunities & threats: inequality, mental health, environment
Kevin Sneader, Global Managing Partner at McKinsey & Company, provides perspective on what corporate business leaders are thinking during the global coronavirus crisis:
What are the opportunities and threats on the horizon for 2021?
Now, given the pandemic is still raging, it's hard to narrow the threats and opportunities down, but here are three threats and three opportunities. One, a growing likelihood of increased inequality on several fronts. Gender, since a quarter of women in work we recently did with LeanIn.org were either contemplating leaving or taking time out of the workforce. This reached 40% for those with young children. Race, since Black Americans have seen their jobs disappear at a far greater rate than their white counterparts. And income, since COVID deaths are 4 to 5 times higher among the unemployed and are concentrated in jobs that have been hardest hit. The second threat, mental health. The signs are increasing that this is the other side of the health threat that the virus poses. And three, the environment. They need to ensure a green rather than brown recovery at a time when money is tight.
On the opportunities, first off, flexibility in working through remote and other forms of working that are now happening. Secondly, innovation; we've seen more startups this year being started than in any year before. And lastly, the environment; for all that I said there is a risk of a brown recovery, policy makers and businesses alike in much of the world assuring they're prepared to invest behind the business case for a green recovery.
Balancing long-term business strategy with short-term needs
Kevin Sneader, global managing partner for McKinsey & Company, provides perspective on how corporate business leaders think in response to the coronavirus crisis:
Why is managing for the long term difficult?
Well, we know from earlier research that companies that are oriented towards long-term performance, rather than short-term targets, generate more shareholder value, create more jobs, and contribute more economic growth. But we are seeing short-term behaviors, like cutting costs to boost quarterly earnings, have become more common in the past few years. Executives say they face heavy pressure from investors, and even fellow directors, to meet quarterly targets. And recently, disruptions from COVID-19 give executives more short-term issues to deal with. Now let me be clear, short-term results do matter. They're needed to stay credible. However, trouble happens when short-termism ensures focus in quarterly earnings, which have little to do with long-term value creation. It's far more important to pursue steady improvements, and fundamentals like growth, and return on invested capital.
How has the pandemic influenced climate action?
Kevin Sneader, global managing partner for McKinsey & Company, provides perspective on how the pandemic has influenced climate action:
Has the pandemic helped or harmed efforts to tackle climate change?
My answer, the coronavirus holds profound lessons that can help us address climate if we make greater economic and environmental resiliency core to the recovery. It's easy to forget that before the pandemic swept the world, climate was rising on the agenda of many public and private sector leaders. Not only does climate action remains critical now and over the next decade, but investments in climate-resilient infrastructure and the transition to a lower-carbon future can drive near term job creation while increasing economic and environmental resiliency. The current pandemic provides a foretaste of what could happen in the event of a full-fledged climate crisis, with simultaneous shocks to supply and demand and disruption of supply chains. The global economy has 10 to 25 years of carbon capacity left. Moving towards a lower carbon economy presents a daunting challenge. If we choose to ignore the issue for a year or two the math becomes even more daunting. We do need to act now.
Three steps to get remote & hybrid learning right
Kevin Sneader, global managing partner for McKinsey & Company, provides perspective on how corporate business leaders think in response to the coronavirus crisis:
How do we get remote and hybrid learning right?
For many, this is the back to school season. But this year's preparations are fraught with added anxiety as educators, public health officials, and parents try to balance the need to reduce the spread of the virus with a desire to get students into more productive learning environments. For many students, a full time return to the classroom will not be safe for some time. It's important to understand three lessons in order to get remote and hybrid learning right.
The first lesson, differentiate by the level of need and capabilities. Educators have long understood the value of tailoring curriculums and environments to the needs of different groups. Well, that's particularly important these days. The key is to ensure, therefore, that resources are focused on students who experience the greatest challenges, such as learning disabilities, economic hardship, or an unstable home environment.
Lesson two, design systems specifically for remote and hybrid environments. Remote and hybrid learning are more than just digital versions of the classroom. When the coronavirus first hit, we didn't really have the time to redesign better solutions, solutions that improve the way that teachers interact with students and reflect the need to shift under different conditions. Now we can.
Lesson three, relationships are the foundation of learning. Schools are more than places for learning alone. They are the center of their communities. So now, as students return to the classroom and to hybrid learning, it is important to take stock of academic status, but also to reflect on ways to rebuild the role of the school in the community.
How should business leaders manage the return to work?
As workplaces reopen, how should leaders manage the return to work?
Well, let me start by saying that first, return is not a date, it's a muscle. We've seen cities with the tightest of rules and disciplines experience a second or third wave of the coronavirus. Indeed, Melbourne and Hong Kong bring this life today, for all of us. Therefore, it's not a question of announcing a date for return and saying everything is done. Instead, it's about a process, one that will have a series of ups and downs. In fact, two steps forward, one step or more back, maybe the story of our times. We need to be able to live with disruption as usual and respond with a tailored, relevant set of actions.
As one CEO said to me, "it's really a combination of fast twitch and slow twitch." Fast twitch characteristics include the willingness to change plans and adjust based on refreshed data and insights. Slow twitch features include managing fundamental shifts that must impact the long term thinking of any business. And indeed, this will be the true test of leadership. After all, for many, this has been the real leadership moment for business leaders everywhere.
How to reimagine a business after COVID-19
What does it take to reimagine a business and bring it back successfully in this next normal?
Well, I think it's important to understand this is not just about returning a business to what it was. It's about reimagining what it should be given the changes that this current pandemic has created. And I think there are four essential steps.
The first is to rapidly focus on revenue recovery. And that really means understanding your customers, looking hard at how they've been impacted, segmenting the customer base, and then focusing in on the segments where you have something to offer that is distinctive, because that's going to be especially required in this next normal.
Secondly, rebuild operations. You can't just go back to restoring the supply chain that you had or the manufacturing process that used to exist. It's vital to understand how those need to change and evolve. And we've already seen people start to do that. For example, one retailer I knew had taken 18 months to study the possibilities of curbside pickup. Well, of course, in this pandemic, that's become the norm. And in three weeks, they were able to put into action something that had taken 18 months to study.
Thirdly, the organization. It's got to be agile. It's got to find a way to take up the mantle of the quick decision making that has already been happening in this pandemic and make that something that is lasting, and the way business is done in the future. Many examples of that, I'm sure in your own businesses, where you've seen decisions taken with less data but more rapidly with greater sources of feedback than ever before. And we've seen that across countless businesses. That's the kind of pace and speed which makes normal demands.
And fourth, digital. Digital adoption. Finding ways to operate more rapidly, using digital commerce, but also digitizing internal processes. We've seen a lot of companies take their digital handbooks that they've been wrestling with and thinking about for a long time and put them to action. It's why we're seeing telemedicine, automation and other features grow much more rapidly than in the past. And that's going to be required in the future. So, it's not just about return. It's about reimagining, as you return.