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The growth imperative

Growth is crucial for companies to create profitable, sustainable value. How can organizations reach their growth goals and ensure their longevity—even in turbulent times?

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by "McKinsey Quarterly Five Fifty" <publishing@email.mckinsey.com> - 04:44 - 21 May 2025

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Your corporate culture can’t be an accident

Re:think

FRESH TAKES ON BIG IDEAS

PEOPLE AND ORGANIZATIONAL PERFORMANCE

Building a culture—on purpose

Alex Camp

Often when I’m speaking with Fortune 500 leaders—regardless of industry, type of business, size, or location—the conversation turns to culture. When I push a bit, “culture” is typically articulated as an amalgamation of things. It’s the result of M&A, previous leaders with strong perspectives and styles, enduring employee values and norms, or even just regional character.

Ultimately, the message I get is, “Our culture comes from a bunch of things, and this is where we ended up today,” rather than, “This is the culture that we need so that we can perform the most effectively, and we’ve made clear choices about what to do and not to do so that we can sustain it.” That’s the thing about building and maintaining an organization’s culture: If leaders aren’t intentional about it, they’re probably doing it wrong.

At McKinsey, we define “culture” as the behaviors, beliefs, and working norms that enable a company to deliver the value that it’s distinctively suited to deliver. Traditionally, leaders have been able to rely mostly on the informal transfer of culture among employees—many of whom were, in the past, probably working in the same place doing similar tasks, all with the same objectives. These days, however, changes in the ways that people work, the technologies that they use, and the world in which they compete have made this kind of organic approach to culture transfer less effective.

The first step toward building a company’s culture intentionally is to pay more attention to organizational health. By “organizational health,” we mean the foundational and measurable practices and behaviors that allow companies to manage through turns and navigate the world as it exists, regardless of shifts in the business, technology, or society. We’ve identified three dimensions of high performance that are most closely associated with organizational health: a sense of alignment, the ability to execute effectively, and recognition of the need for renewal and adaptation.

Leaders who routinely monitor how they’re faring along these dimensions will have the data and drive to mindfully build and sustain healthy cultures over time. The result can be more-engaged, more-productive employees. In addition, the research demonstrates that healthy organizations are more likely than peer companies to show improvements in CAGR, EBITDA, and M&A performance.

“Culture can be a true competitive advantage when it’s intentional—and a significant drag on performance when it’s not.”

The second step is for leaders to be clearer about what they want from their culture—and what they don’t want. This latter point is critical and frequently overlooked. Leaders often say that they want a culture of accountability, inclusivity, or connectivity, but then they focus on the outcomes rather than the behaviors required to achieve those states. They’ve framed up the results but not the culture itself.

Instead, the focus should be on the trade-offs associated with establishing and maintaining a strong culture. Leaders should make deliberate choices about how to spend the organization’s time, energy, and resources. How exactly does the culture allow them to deliver on their distinct value proposition? Where might they be willing to accept inefficiencies in how they run the place to achieve and maintain the culture? What are the specific behaviors that would tell them that the organization is living its culture? With this level of understanding, leaders will be more likely to notice when people and processes get diverted. They’ll be better able to correct course and stop any behaviors that aren’t in line with the culture.

This process will look different for every company. Healthy cultures may look quite different at a big retailer, a not-for-profit, a healthcare organization, and a financial institution. Each will have its own methods for motivation, norms for convening meetings and making critical business decisions, and paths for employee development and promotion.

Take two different types of big retailers, for example. They may both stock the same brand of shampoo, but one may emphasize high-volume and low-cost plays and the other the customer-shopping experience. Shoppers find their shampoo at the first retailer, usually at a good price. The second retailer may be out of that shampoo but offer lots of other brands, so customers might be prompted to try something new. In both cases, leaders in those stores have built up their cultures to reflect different value propositions. The behaviors and metrics that they prioritize—who they hire, who they train, how they train, how they set up work schedules, and what matters for leaders—are aimed at delivering the value that only their organizations can.

Without such intentionality, leaders run the risk of losing or degrading elements of their culture—the secret sauce that differentiates them from competitors—every time there is some kind of internal or external shock to the system. The key question in all this for leaders is, “What really matters?” Because culture can be a true competitive advantage when it’s intentional—and a significant drag on performance when it’s not.

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ABOUT THIS AUTHOR

Alex Camp is a partner in McKinsey’s Boston office.

MORE FROM THIS AUTHOR

Organizational health is (still) the key to long-term performance

McKinsey’s latest findings on organizational health demonstrate that it remains the best predictor of value creation and a sustainable source of competitive advantage in today’s global marketplace.

More

Six ‘power practices’ to retain nonprofit talent

Organizational health provides a clear path to developing and retaining talent, helping nonprofits advance their missions and sustain impact for the communities they serve.

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UP NEXT

Hannah Mayer on consumer innovation

Established retail and consumer-packaged-goods brands can be AI first movers. But true digital transformation requires prioritizing customers’ needs.

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Bridger’s personal brand playbook was 🔥

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The changing face of wealth: A multi-trillion-dollar opportunity

On McKinsey Perspectives

DELIVERING ACTIONABLE INSIGHTS ON THE DAY’S NEWS

Brought to you by Alex Panas, global leader of industries, & Axel Karlsson, global leader of functional practices and growth platforms

Welcome to the latest edition of Only McKinsey Perspectives. We hope you find our insights useful. Let us know what you think at Alex_Panas@McKinsey.com and Axel_Karlsson@McKinsey.com.

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Women and wealth management

In the news

•

The great wealth transfer. Women are expected to inherit up to $105 trillion over the next 20 years, and many will be making independent financial decisions for their households after becoming widows, Fortune reports. But not all of them feel prepared for these changes. A UBS study found that substantial shares of women with inheritances have encountered problems, such as uncertainty about the existence of a will. If family members are reluctant to talk about estate planning, one wealth advisor suggests that it can help to ask about their values and vision for their legacy. [Fortune]

•

Patient and disciplined investors. Female investors in the US are confident in their investment decisions, with 90% saying that they are on track to achieve long-term goals. That’s according to a survey of 1,200 women investors, in which—as The Business Journals highlights—61% of surveyed investors say they feel comfortable taking risks with their investments. With greater access to financial resources and learning, women are increasingly engaged as investors, a banking leader said. [The Business Journals]

Bringing the share of managed assets among women to the level of their male counterparts represents an opportunity of about $10 trillion by 2030.

On McKinsey.com

•

Unmanaged funds. Women are increasingly recognized as the new face of wealth. Yet despite their growing affluence and financial confidence, women remain less likely than men to work with wealth managers—resulting in a vast and growing pool of unmanaged assets. As female-controlled wealth continues to surge, financial advisors who can best understand female investors will be poised to access a multi-trillion-dollar opportunity, McKinsey Senior Partners Cristina Catania and Jill Zucker and their coauthors explain.

•

Rising share of wealth. Women currently control about one-third of all retail financial assets in the European Union and the United States. By 2030, this share is expected to rise to up to 45%. Despite this trend, the wealth management industry has yet to recognize the unique goals and preferences of female investors, such as their desire for in-person financial advice. Discover six types of female investors—including young, engaged investors who prefer online services—and suggestions for how to better connect with female clients.

Learn what female investors want

—Edited by Belinda Yu, editor, Atlanta

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2025 SAP Sapphire Innovation Guide: AI Innovation Unveiled!

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How Facebook Live Scaled to a Billion Users

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How Facebook Live Scaled to a Billion Users

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Disclaimer: The details in this post have been derived from the articles/videos shared online by the Facebook/Meta engineering team. All credit for the technical details goes to the Facebook/Meta Engineering Team. The links to the original articles and videos are present in the references section at the end of the post. We’ve attempted to analyze the details and provide our input about them. If you find any inaccuracies or omissions, please leave a comment, and we will do our best to fix them.

Facebook didn’t set out to dominate live video overnight. The platform’s live streaming capability began as a hackathon project with the modest goal of seeing how fast they could push video through a prototype backend. It gave the team a way to measure end-to-end latency under real conditions. That test shaped everything that followed.

Facebook Live moved fast by necessity. From that rooftop prototype, it took just four months to launch an MVP through the Mentions app, aimed at public figures like Dwayne Johnson. Within eight months, the platform rolled out to the entire user base, consisting of billions of users.

The video infrastructure team at Facebook owns the end-to-end path of every video. That includes uploads from mobile phones, distributed encoding in data centers, and real-time playback across the globe. They build for scale by default, not because it sounds good in a deck, but because scale is a constraint. When 1.2 billion users might press play, bad architecture can lead to issues.

The infrastructure needed to make that happen relied on foundational principles: composable systems, predictable patterns, and sharp handling of chaos. Every stream, whether it came from a celebrity or a teenager’s backyard, needed the same guarantees: low latency, high availability, and smooth playback. And every bug, every outage, every unexpected spike forced the team to build smarter, not bigger.

In this article, we’ll look at how Facebook Live was built and the kind of challenges they faced.

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Core Components Behind Facebook Video

At the heart of Facebook’s video strategy lies a sprawling infrastructure. Each component serves a specific role in making sure video content flows smoothly from creators to viewers, no matter where they are or what device they’re using.

See the diagram below that shows a high-level view of this infrastructure:

Fast, Fail-Tolerant Uploads

The upload pipeline is where the video journey begins.

It handles everything from a celebrity’s studio-grade stream to a shaky phone video in a moving car. Uploads must be fast, but more importantly, they must be resilient. Network drops, flaky connections, or device quirks shouldn’t stall the system.

Uploads are chunked to support resumability and reduce retry cost.
Redundant paths and retries protect against partial failures.
Metadata extraction starts during upload, enabling early classification and processing.

Beyond reliability, the system clusters similar videos. This feeds recommendation engines that suggest related content to the users. The grouping happens based on visual and audio similarity, not just titles or tags. That helps surface videos that feel naturally connected, even if their metadata disagrees.

Encoding at Scale

Encoding is a computationally heavy bottleneck if done naively. Facebook splits incoming videos into chunks, encodes them in parallel, and stitches them back together.

This massively reduces latency and allows the system to scale horizontally. Some features are as follows:

Each chunk is independently transcoded across a fleet of servers.
Bitrate ladders are generated dynamically to support adaptive playback.
Reassembly happens quickly without degrading quality or syncing.

This platform prepares content for consumption across every device class and network condition. Mobile users in rural zones, desktop viewers on fiber, everyone gets a version that fits their bandwidth and screen.

Live Video as a First-Class Citizen

Live streams add a layer of complexity. Unlike uploaded videos, live content arrives raw, gets processed on the fly, and must reach viewers with minimal delay. The architecture must absorb the chaos of real-time creation while keeping delivery tight and stable.

Broadcast clients (phones, encoders) connect via secure RTMP to entry points called POPs (Points of Presence).
Streams get routed through data centers, transcoded in real time, and dispatched globally.
Viewers watch through mobile apps, desktop browsers, or APIs.

This is like a two-way street. Comments, reactions, and viewer engagement flow back to the broadcaster, making live content deeply interactive. Building that loop demands real-time coordination across networks, services, and user devices.

Scalability Requirements

Scaling Facebook Live is about building for a reality where “peak traffic” is the norm. With over 1.23 billion people logging in daily, the infrastructure must assume high load as the baseline, not the exception.

Some scaling requirements were as follows:

Scale Is the Starting Point

This wasn’t a typical SaaS model growing linearly. When a product like Facebook Live goes global, it lands in every timezone, device, and network condition simultaneously.

The system must perform across the globe in varying conditions, from rural to urban. And every day, it gets pushed by new users, new behaviors, and new demands. Almost 1.23 billion daily active users formed the base load. Traffic patterns should follow cultural, regional, and global events.

Distributed Presence: POPs and DCs

To keep latency low and reliability high, Facebook uses a combination of Points of Presence (POPs) and Data Centers (DCs).

POPs act as the first line of connection, handling ingestion and local caching. They sit closer to users and reduce the hop count.
DCs handle the heavy lifting: encoding, storing, and dispatching live streams to other POPs and clients.

Source: Facebook Engineering Presentation

This architecture allows for regional isolation and graceful degradation. If one POP goes down, others can pick up the slack without a central failure.

Scaling Challenges That Break Things

Here are some key scaling challenges Facebook faced that potentially created issues:

Concurrent Stream Ingestion: Handling thousands of concurrent broadcasters at once is not trivial. Ingesting and encoding live streams requires real-time CPU allocation, predictable bandwidth, and a flexible routing system that avoids bottlenecks.
Unpredictable Viewer Surges: Streams rarely follow a uniform pattern. One moment, a stream has minimal viewers. Next, it's viral with 12 million. Predicting this spike is nearly impossible, and that unpredictability wrecks static provisioning strategies. Bandwidth consumption doesn’t scale linearly. Load balancers, caches, and encoders must adapt in seconds, not minutes.
Hot Streams and Viral Behavior: Some streams, such as political events, breaking news, can go global without warning. These events impact the caching and delivery layers. One stream might suddenly account for 50% of all viewer traffic. The system must replicate stream segments rapidly across POPs and dynamically allocate cache layers based on viewer geography.

Live Video Architecture

Streaming video live is about managing flow across an unpredictable, global network. Every live session kicks off a chain reaction across infrastructure components built to handle speed, scale, and chaos. Facebook Live’s architecture reflects this need for real-time resilience.

Live streams originate from a broad set of sources:

Phones with shaky LTE
Desktops with high-definition cameras
Professional setups using the Live API and hardware encoders

These clients create RTMPS (Real-Time Messaging Protocol Secure) streams. RTMPS carries the video payload with low latency and encryption, making it viable for casual streamers and production-level events.

Points of Presence (POPs)

POPs act as the first entry point into Facebook’s video pipeline. They’re regional clusters of servers optimized for:

Terminating RTMPS connections close to the source
Minimizing round-trip latency for the broadcaster
Forwarding streams securely to the appropriate data center

Each POP is tuned to handle a high volume of simultaneous connections and quickly routes streams using consistent hashing to distribute load evenly.

See the diagram below:

Data Centers

Once a POP forwards a stream, the heavy lifting happens in a Facebook data center. This is where the encoding hosts:

Authenticate incoming streams using stream tokens
Claim ownership of each stream to ensure a single source of truth
Transcode video into multiple bitrates and resolutions
Generate playback formats like DASH and HLS
Archive the stream for replay or on-demand viewing

Each data center operates like a mini CDN node, tailored to Facebook’s specific needs and traffic patterns.

Caching and Distribution

Live video puts pressure on distribution in ways that on-demand video doesn’t.

With pre-recorded content, everything is cacheable ahead of time. But in a live stream, the content is being created while it's being consumed. That shifts the burden from storage to coordination. Facebook’s answer was to design a caching strategy that can support this.

The architecture uses a two-tier caching model:

POPs (Points of Presence): Act as local cache layers near users. They hold recently fetched stream segments and manifest files, keeping viewers out of the data center as much as possible.
DCs (Data Centers): Act as origin caches. If a POP misses, it falls back to a DC to retrieve the segment or manifest. This keeps encoding hosts from being overwhelmed by repeated requests.

This separation allows independent scaling and regional flexibility. As more viewers connect from a region, the corresponding POP scales up, caching hot content locally and shielding central systems.

Managing the Thundering Herd

The first time a stream goes viral, hundreds or thousands of clients might request the same manifest or segment at once. If all those hit the data center directly, the system gets into trouble.

To prevent that, Facebook uses cache-blocking timeouts:

When a POP doesn’t have the requested content, it sends a fetch upstream.
All other requests for that content are held back.
If the first request succeeds, the result populates the cache, and everyone gets a hit.
If it times out, everyone floods the DC, causing a thundering herd.

The balance is tricky:

If the timeout is too short, the herd gets unleashed too often.
If the timeout is too long, viewers start experiencing lag or jitter.

Keeping Manifests Fresh

Live streams rely on manifests: a table of contents that lists available segments. Keeping these up-to-date is crucial for smooth playback.

Facebook uses two techniques:

TTL (Time to Live): Each manifest has a short expiry window, usually a few seconds. Clients re-fetch the manifest when it expires.
HTTP Push: A more advanced option, where updates get pushed to POPs in near real-time. This reduces stale reads and speeds up segment availability.

HTTP Push is preferable when tight latency matters, especially for streams with high interaction or fast-paced content. TTL is simpler but comes with trade-offs in freshness and efficiency.

Live Video Playback

Live playback is about consistency, speed, and adaptability across networks that don’t care about user experience.

Facebook’s live playback pipeline turns a firehose of real-time video into a sequence of reliable HTTP requests, and DASH is the backbone that makes that work.

DASH (Dynamic Adaptive Streaming over HTTP)

DASH breaks live video into two components:

A manifest file that acts like a table of contents.
A sequence of media files, each representing a short segment of video (usually 1 second).

The manifest evolves as the stream continues. New entries are appended, old ones fall off, and clients keep polling to see what’s next. This creates a rolling window, typically a few minutes long, that defines what’s currently watchable.

Clients issue HTTP GET requests for the manifest.
When new entries appear, they fetch the corresponding segments.
Segment quality is chosen based on available bandwidth, avoiding buffering or quality drops.

This model works because it’s simple, stateless, and cache-friendly. And when done right, it delivers video with sub-second delay and high reliability.

Where POPs Come In

Playback clients don’t talk to data centers directly. Instead, they go through POPs: edge servers deployed around the world.

POPs serve cached manifests and segments to minimize latency.
If a client requests something new, the POP fetches it from the nearest data center, caches it, and then returns it.
Repeat requests from nearby users hit the POP cache instead of hammering the DC.

This two-tier caching model (POPs and DCs) keeps things fast and scalable:

It reduces the load on encoding hosts, which are expensive to scale.
It localizes traffic, meaning regional outages or spikes don’t propagate upstream.
It handles unpredictable viral traffic with grace, not panic.

Conclusion

Facebook Live didn’t reach a billion users by accident. It got there through deliberate, pragmatic engineering. The architecture was designed to survive chaos in production.

The story begins with a clock stream on a rooftop, but it quickly shifts to decisions under pressure: picking RTMP because it worked, chunking uploads to survive flaky networks, and caching manifests to sidestep thundering herds.

A few lessons cut through all the technical layers:

Start small, iterate fast: The first version of Live aimed to be shippable. That decision accelerated learning and forced architectural clarity early.
Design for scale from day one: Systems built without scale in mind often need to be rebuilt. Live was architected to handle billions, even before the first billion arrived.
Bake reliability into architecture: Redundancy, caching, failover had to be part of the core system. Bolting them on later wouldn’t have worked.
Plan for flexibility in features: From celebrity streams to 360° video, the infrastructure had to adapt quickly. Static systems would’ve blocked product innovation.
Expect the unexpected: Viral content, celebrity spikes, and global outages aren’t edge cases but inevitable. Systems that can’t handle unpredictability don’t last long.

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How can businesses navigate tariff-related uncertainty?

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Business in a time of tariffs

In the news

•

Unpredictable profits. Executives at a host of US businesses—including major air carriers and auto brands—say it’s not possible to estimate their future earnings, The New York Times reports. “Given material tariff-related near-term risks and the potential range of outcomes, we are suspending guidance for full year 2025,” one CFO stated in May. Against a backdrop of potential disruption to supply chains, the risk of retaliatory tariffs, and ambiguity in emissions and tax regulations, CEOs used the word “uncertainty” in almost 90% of earnings calls for the first quarter of 2025. [NYT]

•

Gloomy CEOs. The confidence that US corporate leaders felt in early 2025 has largely disappeared, Bloomberg states. After the announcements in April of global tariffs, the prospect of higher costs dampened business confidence as expectations for an economic boom declined. This changing sentiment will likely have a direct influence on companies’ hiring and investments, according to a recent report. In one April survey of about 330 US CEOs, roughly six in ten said they now anticipate an economic slowdown or a recession. [Bloomberg]

The short-term future of trade policy is uncertain in all three of the world’s largest exporters—China, Germany, and the US—which collectively account for $7 trillion of exports.

On McKinsey.com

•

Plan for uncertainty. Tariffs are nothing new, of course; the Roman Empire once taxed imports of foreign goods at a rate 25 times higher than domestic trade. Today’s rapid trade policy changes have made tariffs top of mind for executives, and those who understand tariffs will be better positioned than others to navigate the ambiguities of 2025 and beyond. Yet despite their widespread concern, few leaders have developed robust plans to steer their businesses through possible tariff scenarios, McKinsey Senior Partners Cindy Levy and Shubham Singhal and their coauthors say.

•

Developing a strategic response. For global business leaders, geopolitical shifts are occurring rapidly. But even in ambiguous situations, leaders can still develop strategic responses and seize potential business opportunities. For example, executives can map goods’ countries of origin and assess their suppliers’ exposure to potential tariffs and retaliatory measures. See more steps that companies can take to understand the business implications of tariffs, and register for “Tariffs and global trade: Navigating the impact on business ,” a McKinsey Live virtual event on Thursday, May 22, with McKinsey experts Cindy Levy and Shubham Singhal .

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Archives

in

PEOPLE AND ORGANIZATIONAL PERFORMANCEBuilding a culture—on purpose

“Culture can be a true competitive advantage when it’s intentional—and a significant drag on performance when it’s not.”

Hannah Mayer on consumer innovation

Established retail and consumer-packaged-goods brands can be AI first movers. But true digital transformation requires prioritizing customers’ needs.

Core Components Behind Facebook Video

Fast, Fail-Tolerant Uploads

Encoding at Scale

Live Video as a First-Class Citizen

Scalability Requirements

Scale Is the Starting Point

Distributed Presence: POPs and DCs

Scaling Challenges That Break Things

Live Video Architecture

Points of Presence (POPs)

Data Centers

Caching and Distribution

Managing the Thundering Herd

Keeping Manifests Fresh

Live Video Playback

DASH (Dynamic Adaptive Streaming over HTTP)

Where POPs Come In

Conclusion

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PEOPLE AND ORGANIZATIONAL PERFORMANCE

Building a culture—on purpose