COVID-19: Implications for business

McKinsey’s latest perspectives on the coronavirus outbreak, the twin threats to lives and livelihoods, and how organizations can prepare for the next normal.

The subject headings below discusses the problems arose from the Covid-19 outbreak and the recommendations for the companies, sectors and people can benefit from.

With enough data and insight, can we get a peek at the future?

“Rollercoaster” is one term that’s been used to describe the performance of capital markets during the pandemic.

On the Inside the Strategy Room podcast, Sneader discusses the eight trends that will shape the post-COVID-19 economy. He predicts that e-grocery and telemedicine will stick and that “revenge travel,” where people vacation after being cooped up, will kick in. Companies will likely focus on developing more resilient supply chains and attempting to recover in ways that meet their sustainability targets. More than anything, pandemic-era innovations will reshape life for a long time to come.

How can companies future-proof themselves, making themselves more able to handle disruptions like the one they just went through? Leaders should examine their company’s value agenda as though they were a private-equity firm scrutinizing a potential deal. Being clear about what everyone is trying to accomplish helps leaders choose the right talent, create a project-oriented organization, and build up speed.

Some companies are using their plans for a COVID-19 as the basis for complete strategy overhauls. But not every company wants or needs to do that. Instead, they can use strategy inserts or short interventions. In particular, companies should examine opportunities to allocate resources to growth pockets, get ahead of climate risks, and adopt new technologies.

Life beyond the COVID-19 pandemic holds much promise

In the postpandemic era, much is possible. Just with the technology that is currently available—no unheard-of breakthrough required—it’s possible to achieve 3 to 4 percent global economic growth each year for a decade. Leaders won’t need to make a hard choice between sustained and inclusive growth. Instead, growth can be better overall if it’s more equitable. The pandemic experience provoked what could become a renaissance in public-health innovation and delivery.

Problems were to be expected, but not these problems

The pandemic has left businesses and governments to grapple with a perplexing collection of supply-chain and logistical disruptions. Over a year ago, we knew we were facing upheavals in health, education, and workplace systems. Ramifications such as the semiconductor shortage, however, were harder to predict.

The global semiconductor shortage threatens economic recoveries and poses an urgent problem for carmakers, which have already announced production rollbacks—and billions of dollars in expected revenue losses—as a result. McKinsey experts examined the causes of the shortage, including a drop in consumer demand for vehicles at the onset of the pandemic, which prompted semiconductor suppliers to shift production to other products.

Grocery is another industry that has been turned upside down by the pandemic, not once but multiple times as consumers respond to the evolving situation. At Tesco, online sales doubled in the United Kingdom, where the company has a strong online business, and in Central Europe, where growth is coming off a low base, said Matthew Simister, Tesco’s Central Europe CEO, in an interview. Growing e-grocery leads to the question of whether brick-and-mortar grocers will survive in Europe, and if so, which formats are best positioned for success? McKinsey identified amply stocked “soft discounters” and moderately sized, centrally located “hypermarkets light” as winning models. Leading players are participating in the automated warehouse revolution that is lowering labor costs and supporting e-grocery. Another crucial tactic: convincing shoppers that a grocer offers the best value by strategically discounting, improving private-label lines, and offering a large variety of cheap products.

Making the most of the great reset

After a long pandemic pause, some parts of the world are finally contemplating a restart. Where the virus is subsiding, people can begin assembling an approach to life and business that combines what they miss about the time before COVID-19 and what they discovered during the pandemic. That future must include a plan for those, such as the unemployed, who are still stuck on pause.

A McKinsey survey found that 90 percent envision a future with some combination of remote and on-site work, but most (68 percent) have no detailed plan for how it will work. The surveyed executives, from a wide range of industries, have good reason to desire a future with remote options: large numbers say it has led to increases in productivity and customer satisfaction.

To help companies design their strategies, hybrid approaches are suggested for general and administrative functions, categorizing them with varying needs for interaction. Office versus home is not the only paradigm; options include teams that work mostly remotely but come together for periods of intense collaboration, or hub-and-spoke systems where remote workers can come into satellite or coworking spaces as desired.

Don’t let the pandemic whittle away at the workforce

The pandemic has hit everyone hard, but some groups have suffered in unique ways. Working mothers, Asian Americans, and nurses are among those whose difficulties at work and at home—which for many is now the same stressful place—could result in a retreat from their careers. As employers prepare to emerge from the crisis, they must find creative ways to support the hardest-hit communities, which can require rethinking long-held beliefs.

The pandemic has been brutal for working mothers, a third of whom say they are considering leaving the workforce or downshifting their careers. One of the culprits is the double shift, the eternal burden of working mothers that has gotten worse during the COVID-19 crisis and is even more troubling for women of color. Companies can help by providing emergency childcare and tutoring services, offering to continue remote work for those who want it, and revising hiring standards to eliminate the bias against gaps in employment.

How can we prepare the workforce for the postpandemic world?

During the pandemic, we learned to cope; in the postpandemic world, we need to learn to thrive. Companies emerging from the crisis are realizing that workforces require new capabilities to face the digital and environmental future.

To flourish during and after the pandemic, companies need a new set of skills, including social and emotional, advanced cognitive, and digital capabilities. In a recent McKinsey Survey, 69 percent of respondents said that building the skills of existing staff is more important than any other method of talent building, including hiring. It’s time for companies to strategize talent development and identify the most effective options, including digital learning and in-person workshops.

 

About the Authors

Matt Craven  Matt is a leader of McKinsey’s work in infectious diseases and public health within their Social, Healthcare and Public Sector Practice. He is currently a leader of McKinsey’s public health response to COVID-19.

Linda Liu  She is a partner in the New York office of McKinsey, an expert in crisis preparation and risk management.

Matt Wilson Matthew Wilson is a senior partner in McKinsey’s New York office, he leads McKinsey’s work in public health.

Mihir Mysore Leads McKinsey Crisis Response globally, covering crisis preparedness and response and lead author for McKinsey’s core crisis response and preparedness approach.

Source This article is based on the COVID-19: Implications for business article. Each of the headings are briefing notes discussed from the beginning of this year.

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