Emergence of the new normal in the aftermath of the Covid-19 crisis has reset several old norms, especially for businesses. Globally, companies are faced with new challenges and they must rise to the occasion with novel business plans and strategies that efficiently balance good business and good purpose to flourish in the new normal and seize new opportunities.
Four top McKinsey executives examine these opportunities and expound on how smart enterprises can leverage them. Here’s an edited version of their views revealing the new business priorities.
Building an economy that is more inclusive
For Liz Hilton Segel, McKinsey’s Managing Partner for North America, an inclusive economy denotes a business environment that offers resilient and well-paying jobs, takes care of the workers’ mental health needs and creates opportunities for the deprived.
Liz explained that the pandemic has largely accelerated AI and automation dominated businesses transformation, which might have an adverse effect on a section of employees. Businesses must identify new opportunities for such workers in their recovery models and then reskill them to fit in new roles. She recommends empathy training for people in leadership positions so that they are better equipped to support coworkers who need it. To counter systemic inequality at work, companies must consciously induct a diverse employee base, ensure them equal chance of growth and tackle workplace aggression fairly.
Thriving in 21st century
Working at global economic and technology trends front, James Manyika, Chairman and Director of McKinsey Global Institute is at an excellent position to identify traits that will enable businesses to thrive in the new normal. James explained that the pandemic accelerated multiple trends pertaining to the future of work. Examining large scale experiments with work from home module, James underlined that only one-third of jobs can be done remotely. As a result, job-loss and pay reductions might become a reality for many workers. Further jobs might be lost due to companies’ digital transformation drives.
James opines that the 21st century has witnessed massive volumes of job creation, but the wages have been meagre for many. Although consumer goods have become affordable, other basic necessities like medical care, education and housing have become very expensive. The 21st century social contract, James finds, favors a few but deprives the majority whose wants are not met adequately.
While leveraging innovation and digitization for generating higher profits, businesses must not forget the issues of growing inequality, racism, and climate change as people all over the world are expecting business enterprises to collaborate and work out the solutions.
McKinsey’s Marco Piccito advises leading financial and industrial institutions based in Europe on wide range of issues including business strategy risk-management and transformations. Marco revealed that ESG and sustainable financial products have demonstrated better resiliency during the pandemic. While non-ESG equity dropped by about 50% or more during the crisis, ESG equity shrunk by about just 12%.
Marco further explained that the new age customers by about 25% favor purchasing products from companies that practice sustainability or are committed to larger purpose. Resonating James’ views, Marco too expounded that globally citizens see businesses driving positive change in society and do more than just earn profit.
The climate and environment imperative
Dickon Pinner, the global leader of McKinsey’s Sustainability Practice, opined that in capital markets climate change has become a clear business priority. Investors’ increased demand for transparency around risk awareness has changed the risk/reward equation – fossil fuels that were once perceived as safe investments have now become risky bets, while sustainable technology that were earlier seen as an uncertain investment are now deemed as safer.