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A leader’s guide to spotting and preparing for change

Harmony Internal - McKinsey

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ESSENTIALS FOR LEADERS AND THOSE THEY LEAD

Edited by Rama Ramaswami
Senior Editor, New York

When 19th-century pioneers set out for the American West, they made extreme preparations. They not only planned for obvious needs, such as food, clothing, and shelter, but also tried to forestall every possible contingency, taking along enough supplies to last them years if not the rest of their lives. Today’s technologies have removed much of that kind of guesswork, enabling us to model any number of what-if scenarios, but business success still depends on a leader’s own innate sense of where change is most likely to occur and how quickly the ground may shift. Here are some areas to keep an eye on.

AN IDEA

Image of a flower embedded in a square rock

Monitor changes in five domains

The business environment has always been subject to shifting cycles—typically, periods of turbulence are followed by eras of relative stability and progress. But today’s profound economic and political upheavals are directly challenging long-held beliefs about how the world works, according to a new report from experts at the McKinsey Global Institute . What the coming era will look like is uncertain, but leaders should watch for major changes across five domains: the world order, technology platforms, demographic forces, resource and energy systems, and capitalization. Each domain presents difficult questions, such as how to make energy systems resilient, feasible, and affordable, or where to find the next productivity engine to propel growth. “If we are indeed in the early throes of a seismic shift—as the evidence appears to suggest—leaders must both prepare for the possibility of a new era and position themselves to shape it,” the report’s authors suggest.

A BIG NUMBER

$1.7 billion

That’s the estimated amount of investments made in quantum-computing start-ups in 2021, more than double the amount raised in 2020. Don’t let that relatively modest sum fool you—as the powerful technology becomes commercially viable, the business value at stake for all industries could skyrocket; the pharmaceutical, finance, chemical, and automotive sectors alone could benefit to the tune of $700 billion. With several companies expecting to launch usable quantum systems as early as 2030, what can you do right now to be ready? Important first steps include figuring out potential partnerships, rounding up in-house talent, and building digital infrastructure that can meet the basic operating demands of quantum computing.

A QUOTE

“Acceleration in innovation will mean that companies can expect more disruptions from more sources.”

That’s McKinsey senior partner Steve Van Kuiken on the power of new technologies to enable faster and more far-reaching innovations. The sheer magnitude of the changes—in computing power, bandwidth, and analytical sophistication—now shaping the tech market may overwhelm organizations if they don’t take steps to adapt in the next three to five years. For example, leaders need to prepare for a shift from periodic to perpetual learning, which delivers varying skills across the entire organization. “In practice, that will mean orienting employee development around delivering skills,” Van Kuiken says. “This requires breaking down a capability into its smallest sets of composite skills.” Leaders could start by asking themselves what skills their organizations’ data managers and advanced users of analytics need to develop, and the levels of learning required for them to do so.

A SPOTLIGHT INTERVIEW

“Most business school courses don’t have a segment on prepared leadership,” says Simmons University President Lynn Perry Wooten in this conversation with McKinsey on how leaders can stay ahead of the next crisis. Prepared leadership is what Wooten calls the fourth “p,” a new pillar that complements the traditional lynchpins of profits, planet, and people. Many leaders tend to manage crises as individual occurrences and often don’t have a formula or recipe to follow the next time a disaster occurs . Developing a “resiliency muscle” can help to create such a recipe. One way for leaders to strengthen their resiliency is to scan the outside world regularly to make sense of events; another is to “ask how they are going to get out of the crisis and what their theories of change are,” says Wooten. “That might include learning about scenario planning, dialogue, or case studies. When we can combine growth and learning with a plan of action, this is that resiliency muscle.”

WONDERLAND

Illustration of a fairytale castle in the sky

It might just take a sorcerer’s spell to lure reluctant workers back to office buildings. As remote work becomes widespread, what to do with the vast expanses of empty office space will become a pressing problem. One solution may be to make offices into “places of magic,” in the view of McKinsey senior partners Rob Palter , Aditya Sanghvi , and colleagues. “Many questions are swirling in the minds of office occupiers about how work should be done in the next normal, how to think about talent, what the role of the workplace should be, and how much real estate companies need,” they say. “A food-and-beverage ecosystem of restaurants, lounges, cafeterias, pantries, all digitally accessible, has to emerge.”

Lead by preparing.

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by "McKinsey Leading Off" <publishing@email.mckinsey.com> - 02:24 - 31 Oct 2022

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