COVID-19 and the Great Reset

McKinsey & Co. Briefing Note

Amid one of the greatest bull markets ever for technology, semiconductor fabs must find ways to keep up. And all advanced-industry companies should organize for speed to sustain their current pace.  A new McKinsey report lays out what it will mean for companies to switch from running on adrenaline to making organizational speed a permanent part of their cultures.

This week, McKinsey healthcare researchers documented the shortage of medical oxygen in developing countries, a long-standing problem made worse by COVID-19. New ideas can help these regions meet short-term needs and set the foundation for a better long-term future. Our industry research focused on semiconductors and the industries that make and use advanced electronics. Chips control everything from toys and smartphones to laptops and thermostats. In the pandemic, demand has soared for many of these products—even as supply chains have faltered and geopolitical tensions have risen. But will the boom last? Such questions have semiconductor companies thinking about their manufacturing plants. In a winner-take-all industry, even a slight edge in manufacturing can help a company capture an outsize portion of revenues (exhibit). Our new report outlines the essential ingredients of tomorrow’s successful fab.

Chipmakers and other advanced manufacturers have been running hot for six months now, with some notable notches in their belts. One factory recently ran at more than 90 percent capacity with only about 40 percent of the typical workforce. But few leaders think the pace is sustainable. Our new report lays out what it will mean for companies to switch from running on adrenaline to making organizational speed a permanent part of their cultures. The pace is unlikely to slacken soon. As our new global survey suggests, the appetite for automation has not dimmed. Instead, the factors for success are shifting. More and more, successful organizations are finding ways for people to work in concert with new technologies. In fact, automation is among the key themes that can lift India to prosperity. That’s the conclusion of a new report from McKinsey Global Institute published this week. The pandemic has sounded a clarion call for India to accelerate growth. Our analysis suggests that a program of targeted reforms, including greater productivity in several sectors, can help the country produce the 90 million nonfarm jobs it needs to create by 2030. This week, McKinsey researchers also examined cash management at privately owned companies and reviewed lessons from the past for US governors and mayors planning a second term. We are in the thick of August, the time of year when many people take a break, or at least slow down— even in a pandemic. With that in mind, McKinsey broadened its annual summer reading list and asked 60 diverse leaders to share books that have inspired them, that have provided a much-needed respite, or that they look forward to reading. We hope you draw some inspiration from this list and find ways to restore yourself during these unusual times.

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