COVID-19 and the great reset: Briefing note #23, September 16, 2020

Companies return to work after an unusual summer—and grapple with an uncertain future.

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What now? Over the past six months, business leaders have reorganized supply chains, set up remote operations, and made tough financial decisions. The world anxiously awaits an effective COVID-19 vaccine that can be readily distributed. Until then, the priority is to reenergize organizations—to act rather than react. Even as the uncertainties of the COVID-19 crisis multiply, the goal must be to rebuild for the longer term. There are many ways to lead, but regardless of the type of business or geography, ten actions can form a path to emerge stronger from the crisis.

We start with an idea—that returning is a muscle that needs to be exercised, not a plan to be executed once or a date to be achieved. We go on to more specific considerations, such as the need to make big moves fast and to be willing to rethink entire portfolios, including where work gets done.

Those are four of the ten actions, and they make for a good starting point. But companies must adjust for the particulars of their industry. Healthcare companies might want to pay strict heed to six trends that are affecting their business. Most were under way before the crisis. But a crisis has a way of bringing things to a head: the coming months might be the best opportunity in memory for healthcare companies to pursue exponential innovation, which could create an additional $400 billion in value by 2025. And now is the time to claim the hundreds of billions of dollars that could be saved through productivity gains.

McKinsey’s healthcare researchers also took a close look at the US blood supply, which was fragile before the pandemic and is now critical. Businesses have a big role to play in the solution. Blood donors frequently cite convenience and social pressure as prompts. Virtual campaigns for blood drives can help blood centers quickly reach large audiences and steer them to the locations most convenient for them.

CFOs have a critical task too: for many, it’s budgeting season. Our new research finds that the financial-planning process for 2021 presents an opportunity to turn hard-earned lessons from the COVID-19 pandemic into an enduring exercise in linking strategy to value. And leaders across organizations need to consider the problems of unresolved grief—another issue that the pandemic has dragged into the spotlight.

Our industry research this week looked at fintech, where the news is not altogether bad, though fintech companies may have to find a detour on the road to profitability. We also considered M&A in pharma, a long-running trend that should continue. Companies are advised to make sure that three capabilities—competitive advantage, capacity, and conviction—are up to snuff before pursuing COVID-19-era mergers.

Finally, the pandemic has forced a reckoning for many between the profit motive and a company’s social purpose. A team of McKinsey editors recaps how we got from there to here, and suggests where we might go next.

As summer turns to fall in the Northern Hemisphere, executives are thinking through the contours of the next normal. Consider our special collection, “The next normal: The recovery will be digital,” featuring a 172-page curated volume that you can download—the first of five edited collections that accompany “Our New Future,” a multimedia series we created with CNBC.

You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 coronavirus articles, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Mark Staples, an executive editor in the New York office.

For the full set of our latest perspectives on COVID-19, download our briefing note and full briefing materials

COVID-19 and the great reset: Briefing note #22, September 10, 2020

McKinsey research focuses on the postpandemic future of developing Asia.

No nation has escaped widespread disruption from the COVID-19 pandemic, but some have fared better than others. This week, McKinsey researchers examined the state of the recovery in some of the emerging Association of Southeast Asian Nations (ASEAN) countries—Indonesia, Malaysia, Philippines, Thailand, and Vietnam—that began the crisis at a disadvantage and have suffered disproportionate effects. Our new report explores a series of trends that the pandemic has caused or accelerated. Within each is a seed of recovery, but stakeholders must be prepared to reimagine their country’s economy in five areas: manufacturing hubs, green infrastructure, investments in digital, talent reskilling, and high-value food industries.

We also looked in detail at developments in two ASEAN countries. In Indonesia, the pandemic is still raging; case counts and fatalities are rising sharply. The first priority is to mitigate and contain the outbreak. But even amid the current hardship and profound uncertainty, Indonesia can reimagine and reform itself by increasing national resilience, accelerating economic transition, rebuilding the tourist sector, and enabling genuine change.

Vietnam, too, is contending with short-term challenges as it emerges from the pandemic, especially in tourism and manufacturing, two of the country’s strengths. For the long haul, our new report argues that one essential element of growth is renewable energy. As a country likely to be heavily affected by climate change, Vietnam could accelerate its journey toward a less carbon-intensive future. A new national energy plan is a good sign; now, the challenge is to execute it. (For Vietnam and many other countries, education is another important cog in the engine of growth. This week, we published a comprehensive report on a more equitable and resilient education system.)

Elsewhere in the region, our latest CEO interview, with Peter Harmer of Insurance Australia Group, reveals new insights into “the CEO moment” afforded by the crisis. Asked about crisis resilience, Harmer says, “You have to tether resilience to real beliefs. We have a deep commitment to our purpose, which is to make your world a safer place. Our purpose is the framework through which all our decisions are made.”

Also this week, a new McKinsey survey tapped the wisdom of hundreds of executives across a swath of industries on the need for speed (exhibit). Most expect significant change across ten of 12 dimensions; surprisingly, only a few expect change in their corporate purpose. (Perhaps they have already embraced Peter Harmer’s view.) And our industry researchers looked at the promise of digital services at B2B service companies and contemplated the troubled present—and potential future—for downstream oil and gas in North America.

Exhibit

Summer may be over in the Northern Hemisphere, but great reading knows no season. It’s not too late to catch our annual summer reading list and our special collection, “The next normal: The recovery will be digital,” featuring a 172-page curated volume that you can download—the first of five edited collections that accompany “Our New Future,” a multimedia series we created with CNBC.

You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 coronavirus articles, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Mark Staples, an executive editor in the New York office.

We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: McKinsey_Website_Accessibility@mckinsey.com

Preventing future waves of COVID-19: Briefing note #21, August 31, 2020

After seven months of responding to the pandemic, we have learned some things. Here are some of the key lessons and how to apply them.

By Sarun Charumilind, Matt Craven, Jessica Lamb, and Matt Wilson

When history books one day recount the COVID-19 pandemic of 2020, it may well be a tale of human ingenuity and adaptiveness. Although the novel coronavirus (SARS-CoV-2), the virus that causes COVID-19, has infected more than 24 million people and left more than 800,000 dead as of this writing, the early projections of mortality were much worse.

Fears of millions of deaths by June 2020 have proven wrong—not because the disease is less lethal than anticipated, but because those fears ignored the ability of people to learn and change behaviors. Pockets of resistance against wearing masks and complying with other measures notwithstanding, the global public-health response has saved millions of lives. Increasingly, countries are restarting more aspects of normal life while keeping case numbers tenuously in check.

Pockets of resistance against wearing masks and complying with other measures notwithstanding, the global public health response has saved millions of lives.

Yet the threat to lives and livelihoods persists. A COVID-19 vaccine may yet “save the world.” But even if one proves effective, it will be many months before we will have the capacity to vaccinate everyone—and there are new concerns about reinfection. Therapeutics such as dexamethasone and remdesivir appear to provide important benefits for those with severe cases but are not alone sufficient to stop deaths from COVID-19.

New therapies are possible but by no means guaranteed. Countries will very likely need to plan for almost another year during which public-health measures are their primary tools for saving lives. In the meantime, the world cannot be idle. Societies have been upended, causing unprecedented disruption to economies, education systems, and the day-to-day lives of people everywhere. And as we and others have argued, saving lives and opening societies is a false trade-off.

In that area, too, our ability to learn and adapt is proving dispositive. Countries that have successfully reduced their number of COVID-19 cases have generally been more successful at reopening their economies. For them, controlling the virus ultimately has come down to two things: understanding what to do and executing well. Both have been challenging at various points. For example, the evidence base for the population-wide use of masks only became compelling a few months into the pandemic response. In contrast, the importance of testing has been clear from the earliest days, but many countries have faced operational challenges in ramping up their capacity.

While there is much more to learn, this article summarizes what response leaders have discovered so far about what to do and how to do it. Every jurisdiction is doing some of these things; none of them are new for experts in infectious diseases. But we have tried to describe specific considerations for practitioners looking to adopt and adapt best practices to their management of the COVID-19 pandemic. Given the outsize role that businesses are taking in the crisis response in numerous countries, many of the ideas are as relevant to private-sector leaders as to those in the public sector. Interventions are divided into three categories—detecting disease, reducing the number of new cases, and limiting mortality—and can be tailored for specific populations and settings (Exhibit 1).

Exhibit 1 We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: McKinsey_Website_Accessibility@mckinsey.com

Detecting disease

The ability to detect cases of COVID-19 is a critical prerequisite for effective public-health programs. A comprehensive program might include traditional disease surveillance, cluster analysis to understand local patterns of transmission, and wastewater surveillance for early warning of disease hot spots.

Disease surveillance

An ability to collect, analyze, and interpret data is fundamental to the management of infectious diseases. While many people have grown familiar with epidemiological metrics such as test-positivity rates and case-fatality ratios, many countries and regions still rely on 20th-century surveillance systems. The biggest gaps are in data collection and integration: there is no shortage of data-crunching horsepower in the world, but everyone is forced to work from the same imperfect data sets. Even seven months into the COVID-19-pandemic response, there is a surprising level of disagreement about questions as basic as the true number of people who have been infected with SARS-CoV-2 and the number of deaths attributable to it. Continuing to expand testing, as described later in this article, is a big part of improving surveillance.

The best surveillance systems seamlessly combine data from traditional sources with newer data sets, such as anonymized mobility tracking—and do so in near real time. They provide a high level of detail and transparency around the characteristics and location of those infected while protecting individual privacy. And they improve over time as a design principle, incorporating new sources of data and improving quality to reduce friction in the response.

The best surveillance systems seamlessly combine data from traditional sources with newer data sets, such as anonymized mobility tracking—and do so in near real time.

Cluster analysis

The medical community has learned much about how COVID-19 is passed from person to person and therefore how to prevent transmission. But there is more to learn about the specific nature of transmission in particular geographies. The examination of chains of infectious-disease transmission, or cluster analysis, helps medical professionals understand how, when, where, and between whom transmission occurs.

Locally relevant information can focus public-health measures on steps that will make a difference and deemphasize those that won’t. A study of more than 3,000 cases across 61 clusters in Japan, for example, identified healthcare facilities and retirement centers as among the most important centers of transmission. Similarly, clusters in the United Kingdom have been identified around retirement homes, in hospitals, and in meatpacking factories—the latter also being a source of clusters in Germany.

Cluster analysis has revealed the importance and characteristics of so-called superspreaders (infected individuals who pass the disease to many others). A deeper understanding of transmission dynamics may allow some regions to move from broad-based interventions to targeted ones. It can also allow for more nuanced risk assessments, for example, to determine who can safely access senior-care facilities.

Wastewater surveillance

An important advance in surveillance capabilities came with the discovery that SARS-CoV-2 is present in the stool of infected people and is detectable even in highly diluted samples, such as municipal wastewater. Wastewater sampling, used for decades to monitor for polio, appears to detect viral increases of COVID-19 up to six days earlier than diagnostic tests of individuals do. While a number of locations, including Queensland in Australia, Ashkelon in Israel, and Boise in the United States, are piloting or using this approach to monitor for COVID-19, wastewater remains an underutilized tool globally.

The wastewater-surveillance approach is most applicable in low-prevalence settings where an increase in cases is more noticeable and testing of individuals might otherwise be limited. Ideally, public-health leaders would have the ability to work upstream when increases in viral concentration are detected—for example, from testing town sewers to determining which neighborhoods are the source of the virus.

Reducing the number of new cases

Preventing new cases of COVID-19 ultimately requires reducing the opportunity for infected individuals to pass the disease to others. That can be done by identifying and isolating those who have been infected or are at high risk, ensuring physical distance and airflow management, reducing the risk of the encounters that do happen, and reducing case migration from higher-prevalence areas. The basic tool kit for the reduction of new cases is well understood by experts and nonexperts alike. It includes canceling mass events, restricting capacity in social settings (particularly indoors or with large numbers of people), implementing confinement measures, and restricting internal movement (Exhibit 2). Those measures can be reinforced through effective behavior-change communication and focused implementation for high-risk groups or specific geographies. And since COVID-19 vaccines are likely to be approved eventually, leaders may want to start now in preparing to deploy one effectively. In this section, we highlight some second-order or less appreciated lessons from the pandemic response so far.

Exhibit 2 We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: McKinsey_Website_Accessibility@mckinsey.com

Identifying and isolating those infected

Widespread, accurate, efficiently managed testing and contact-tracing programs allow countries to isolate those who have or are at high risk of contracting COVID-19. Testing and tracing have played major roles in the successful response to various phases of the pandemic in a number of countries, including Austria, Iceland, New Zealand, and South Korea.

Despite the apparent simplicity of testing and tracing, practitioners learned the hard way through early missteps. Among their many lessons are the following:

Communicate clearly with the public about the appropriate uses and limitations of different types of tests, including antigen, molecular, and antibody testing.

Address supply-chain and logistical challenges to keep expanding testing access until most cases are being detected. Test-positivity rates above 5 percent suggest that too many cases are being missed.

Make use of pooled testing to boost capacity where needed, especially in low-prevalence settings. Combine testing for surveillance with testing for positive-case identification.

Accelerate testing turnaround time by ensuring that those performing tests are compensated based on speed and accuracy, not just volume. Accelerate the application of test results by integrating data platforms for testing with those for contact tracing, shortening the time to quarantine.

Staff enough personnel, as the core of contact-tracing programs is human-to-human conversation. Overinvest in community sensitization to the value of tracing and importance of contact quarantine. Digital contact-tracing tools with high adoption can also accelerate contact identification and shorten the time to quarantine.

Don’t expect contact tracing to work perfectly initially; take a data-centric approach to improving operations and effectiveness over time.

Recognize that isolating for ten to 14 days is onerous, especially for low-income individuals. Social services and options for out-of-home isolation, such as in converted hotels, can improve the effectiveness of quarantine and make it more tolerable.

Managing risk in encounters between people

COVID-19 is spread primarily from person to person, including from those not showing symptoms, through the air (either on droplets or by truly being airborne). Close proximity and poor airflow increase the risk of transmission, while the use of facial coverings decreases it. Specific considerations for risk reduction vary depending on risk, context, and other conditions.

Limited evidence from US states suggests that mask mandates are correlated with greater reductions in new cases than mask recommendations are. Different masks offer varying levels of protection. N95 respirators fitted to users provide the greatest protection, protecting both the wearer and those around them. Supply constraints, cost, and user comfort mean that universal N95 use is not practical in many settings. Three-layer surgical masks provide the next greatest protection. Goggles and other eye protection may provide incremental protection to the wearer relative to a mask alone.

Frequent hand washing and environmental cleaning reduce the transmission of COVID-19. However, the relative emphasis on environmental cleaning has decreased, as evidence suggests that transmission primarily occurs from person to person rather than via objects in the environment.

Reducing case migration

Across the world, countries are taking different approaches to restricting importation of COVID-19 cases. They range from complete bans on international travel to targeted bans on travel from locations with high caseloads to screening and quarantine requirements for arriving travelers. In some countries, including Australia and the United States, some of those measures also apply for travel within countries. In many cases, companies and other institutions are implementing their own policies beyond those required by governments. Measures that are based on consistent, easily understood criteria are more likely to maintain high levels of public buy-in and participation.

Changing behaviors

A successful response to the COVID-19 pandemic requires convincing large numbers of people to change their behaviors. Some countries have seen significant resistance to such changes, particularly those around physical-distancing measures and facial-covering mandates. A lack of trust in governments, information overload, and inconsistent messaging over time have all contributed to that opposition. Effective public-health communication can accelerate the adoption of new behaviors.

Effective communication includes segmenting populations based on the combination of channels, influencers, and messages most likely to resonate with individual groups. While there are positive examples from the response to the COVID-19 pandemic, the public-health community could learn more from experts in targeting and tailoring political and consumer-marketing messages. The influence model can help. It suggests that people are most likely to change behaviors when four elements are in place:

Understanding and conviction in what is being asked. “I believe that wearing a face mask will help protect me and my community from COVID-19.”

Reinforcement with formal mechanisms, which may include both ‘carrots’ and ‘sticks.’ “The grocery store has both a sign, which I can see as I approach, saying that masks are required and a greeter handing them out.”

Confidence and skill building in the new behavior. “I’ve worn a mask enough times that I’ve stopped worrying about looking silly.”

Role modeling the new behavior. “The mayor of my town and almost everyone around me are wearing masks. Those not doing so look like the exceptions.”

Applying insights from the influence model to COVID-19-related communications is an area in which collaboration might help. Many jurisdictions are enlisting the help of partners, celebrities, and influencers to amplify their messages. For example, in the United States, basketball star Stephen Curry asked questions of infectious-disease expert Anthony Fauci live on Instagram. That served to bring evidence-based public-health information to audiences less likely to access official sources.

Protecting vulnerable populations

The COVID-19 pandemic has a disproportionate impact on a number of vulnerable populations. Such groups include people whose age or health puts them at increased risk and those at greater risk because of socioeconomic factors (Exhibit 3). Communities with severe housing problems, unemployment rates, incarceration rates, poverty levels, and food insecurity suffer 1.4 to 4.0 times as many COVID-19-related deaths as other communities. Vulnerable populations are less likely to have access to healthcare in most countries and are more likely to have underlying health conditions.

Exhibit 3 We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: McKinsey_Website_Accessibility@mckinsey.com

In addition to measuring and tracking the impact of the COVID-19 pandemic on vulnerable populations, designing protective interventions requires identifying what makes those groups more vulnerable to infection. Approaches might include prioritizing access to testing, targeting communications, and providing additional support for quarantine and isolation. Interventions will likely need to be multipronged, since the most vulnerable communities are often vulnerable for multiple reasons. Furthermore, the stakeholders best positioned to implement interventions effectively will need resources, which would ideally be allocated proportionately to the outsize impact of COVID-19 infection on vulnerable communities.

Planning for a vaccine

It is reasonable to hope that Emergency Use Authorization (or its equivalent) may be granted to one or more COVID-19-vaccine candidates before the end of 2020. While vaccines will be valuable new tools, their approval will bring a whole new set of questions for leaders.

Planning now will increase the chance of a successful vaccine rollout. Those on point will need to monitor closely the technical characteristics of the most promising vaccine candidates. Such monitoring includes understanding the likely dosing regimen, potential efficacy, and side effects. From there, they will need to develop a clear, scenario-based strategy for prioritizing vaccine access, recognizing the range of potential vaccine outcomes and combinations available.

Every jurisdiction is likely to be vaccine-supply constrained in the short term, so agreeing on grounding principles in advance will make allocation decisions easier down the road. So will designing the end-to-end supply and delivery systems that will be needed. The plan should include systems for ensuring series completion in the case of a multidose vaccine and data systems for tracking those who have been vaccinated. It may include temporarily expanding the roles of medical practitioners—for example, by allowing those with lower levels of qualification to administer vaccines, after training, in uncomplicated cases.

Finally, planners may need to overinvest in addressing vaccine hesitancy in areas where surveys suggest it is a significant concern. Communications around vaccines will be both challenging and important given the likely complexity of information around efficacy, safety, and dosing across multiple vaccine candidates.

Limiting mortality

In addition to limiting case numbers, reducing the mortality associated with COVID-19 is a key element of the fight against the disease. Clinicians and health-system leaders have learned much about both the specific clinical management of COVID-19 and how to prepare health systems to manage surges in cases while maintaining essential services.

Health-system preparedness

In the early days of the COVID-19 pandemic, the world anxiously witnessed many countries’ health systems strain under the exponential onslaught of cases. Critical-care capacity was a bottleneck, given that one in five patients, initially, were dependent on ventilators. Healthcare supply chains, especially for personal protective equipment, were overwhelmed.

To create surge capacity, health systems and consumers ceased elective care—seemingly overnight. That resulted in an imbalance of capacity, with overloaded health systems in COVID-19 epicenters transformed into disaster-response hubs. In areas where the disease had not yet spread, care centers sat empty, waiting for an outbreak they were unsure would ever arrive.

We know now that health systems in any developed country should be able to anticipate, plan for, manage, and successfully navigate the pandemic adequately both for patients with COVID-19 and for patients with other diseases. Some require focused action, especially surge capacity, supply availability, workforce readiness, clinical-operations processes, structure for COVID-19-case governance, and financial resiliency.

Use of therapeutics and clinical management

The search for effective therapies for COVID-19 has yielded two important advances, so far, but no breakthrough transformative enough to obviate the need to limit cases. Dexamethasone, an injected corticosteroid, was shown to reduce mortality by 35 percent in patients requiring mechanical ventilation and by 18 percent in those requiring oxygen only. Remdesivir has been shown to reduce recovery time by an average of four days.

Both drugs emerged from the medical community’s initial focus on repurposing drugs that were already approved or in late-stage development for the treatment of other diseases. The focus is now shifting to new R&D. In the months ahead, additional evidence may support therapies based on other antivirals and monoclonal antibodies. In addition to specific therapeutics for COVID-19, there have been advances in the nonpharmaceutical management of the disease. For example, there is some evidence to support the use of “proning”—placing patients face down—to reduce the need for mechanical ventilation.

Policy makers can continue to keep a close eye on both the evidence for new therapeutics and the standards of clinical practice. Over time and with further advances, strong health systems may succeed in reducing COVID-19-related mortality to the point at which the disease is far less feared.

Public-health measures to control the COVID-19 pandemic will be relevant for as long as its risk continues. Many countries and regions have risen to the challenge by combining multiple public-health measures that work for them, although almost all have some room to improve. As we consider what it will take to respond to current and future waves of COVID-19, we can take some comfort from the fact that far more is known about controlling SARS-CoV-2 than was understood seven months ago. It is up to all of us to learn, adapt, and apply those lessons effectively.

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About the authors

Sarun Charumilind is a partner in McKinsey’s Philadelphia office, where Jessica Lamb is a partner; Matt Craven is a partner in the Silicon Valley office; and Matt Wilson is a senior partner in the New York office.

The authors wish to thank Damien Bruce, Penny Dash, Pooja Kumar, and Taylor Ray for their contributions to this article.

This article was edited by Dennis Swinford, a senior editor in the Seattle office.

COVID-19 and the great reset: Briefing note #20, August 27, 2020

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.

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.

Exhibit We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: McKinsey_Website_Accessibility@mckinsey.com

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.

Download the full briefing materials.

Download the article.

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.

Speaking of reading, our special collection, “The next normal: The recovery will be digital” has a 172-page curated volume that you can download—the first of five edited collections produced to accompany “Our New Future,” a multimedia series we created with CNBC.

You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 coronavirus articles, our suite of tools to help leaders respond to the pandemic, and a look at how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Mark Staples, an executive editor in the New York office.

COVID-19 and the great reset: Briefing note #19, August 20, 2020

McKinsey’s latest research looks at restoring economic activity, today and tomorrow.

This week, we returned to the overarching story of the pandemic: the twin imperatives of saving lives and livelihoods. Our latest research builds on reports we published in April and May 2020, and on recent academic findings that the stringency of national lockdowns is not well correlated with changes in GDP. In our new report, we find that successful control of the virus is the key to unlocking the economy, by restoring the confidence consumers need to reengage in economic activity. In countries that have successfully controlled the coronavirus (“near zero” countries), economic activity (in the form of discretionary mobility) has returned to normal; in those that have not (“balancing act”), it is still about 40 percent lower than before the pandemic (exhibit).

Exhibit We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: McKinsey_Website_Accessibility@mckinsey.com

It seems that controlling the virus can get countries back to where they were at the start of the year. But where do we go from there? A companion report outlines the future of economic growth in the United States, by looking back at what worked well in the years after the 2008–09 recession. Federal, state, and local governments can take a range of actions to both improve productivity and stimulate demand. Among the most powerful is investment in inclusive growth and unlocking the maximum productive potential of all people in communities. For example, achieving gender equality could add $4 trillion to the US economy, and closing the Black–white wealth gap could add a further $1.5 trillion.

Businesses, too, are eager to boost productivity and demand. Consumer companies may feel these needs more acutely than most, as two reports published this week demonstrate. McKinsey experts outlined the five bold moves that consumer companies should make to adapt their organizations to the exigencies of the crisis. Another requirement is to meet the next-normal consumer. Seemingly every consumer behavior has been altered by the crisis; companies need to adapt to big changes in how people get their information, what and where they buy, and how they experience shopping.

This week, we also surveyed executives at cell and gene therapy companies about the effects of the pandemic; reviewed the challenges of securing digitally savvy talent at aerospace and defense companies; calculated the significant impact of COVID-19 on mining operations; considered the prospects of upstream oil and gas operations; and surveyed liquefied natural gas buyers on their changing preferences.

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.

Speaking of reading, our special collection, “The next normal: The recovery will be digital” has a 172-page curated volume that you can download—the first of five edited collections produced to accompany “Our New Future,” a multimedia series we created with CNBC.

You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 coronavirus articles, our suite of tools to help leaders respond to the pandemic, and a look at how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Mark Staples, an executive editor in the New York office.

COVID-19 and the great reset: Briefing note #18, August 13, 2020

As consumer needs change with the ups and downs of the pandemic, and companies look for signs of recovery, McKinsey continues to explore ways to approach the next normal from leadership and operational perspectives.

The abrupt halt of global travel during the COVID-19 crisis, aside from delaying personal trips and vacations, has had a major impact on businesses across sectors. Companies with workforces used to frequent travel—along with the airlines and hotels that depend on revenue from that travel—have been particularly affected. As companies continue to enforce travel restrictions and workers resort to virtual meetings, travel-industry players are looking to rebound from the crisis, but it may be a years-long road to recovery. Our latest research shows that, historically, business travel rebounds from crises at a slower pace than leisure travel (exhibit). As outbreaks in some regions stabilize and travel resumes, travel providers can work to accommodate changing needs and, in turn, boost customer confidence.

Exhibit We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: McKinsey_Website_Accessibility@mckinsey.com

Our research this week explores how business operations may change as the travel industry and other sectors reimagine the next normal in a world of physical distancing and evolving consumer behaviors. For operationally intensive sectors, our analysis suggests that the COVID-19 crisis has accelerated automation and digitization. Upskilling and reskilling the workforce will become even more of a priority. For consumer-goods leaders, reshaping the sales function and fostering collaboration between retailers and manufacturers will be critical.

More broadly, our conversations with executives this week demonstrate that successfully weathering the pandemic will also require a people-centered approach to internal and remote leadership. Our interview with Steve Collis, CEO of AmerisourceBergen, considers how a daily executive meeting can be used not only for decision making but also as an opportunity to extend empathy to colleagues. Mike Henry, CEO of BHP, similarly tells us that prioritizing people and building strong relationships has boosted the company’s resilience. He says, “Against the backdrop of COVID-19, there’s a premium on getting out, demonstrating empathy, and engaging with people to understand what their concerns are.”

This week we also analyzed how companies can mitigate risks in industrial supply chains and utilize their procurement functions and spend analytics to bolster resilience; explored ways behavioral-health leaders can build on the current momentum for change in the industry; and looked at how Australia can gauge the scope of the pandemic’s effects on different industries and workforces and address cautious consumers.

Also this week: we’ve added a special collection, The next normal: The recovery will be digital. This 172-page volume is the first of five edited collections produced to accompany “Our New Future,” a multimedia series we created with CNBC. You can download it here.

We’ve now reached 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.

You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 coronavirus articles, our suite of tools to help leaders respond to the pandemic, and a look at how our editors choose images that help readers visualize the impact of an invisible threat.

We continue to track economic and epidemiological developments around the world. For an overview, read our latest briefing materials (July 6, 2020). In 54 pages, we document the current situation, the economic outlook, the forces shaping the next normal, and the new organizational structures that can help companies keep pace sustainably.

This briefing note was edited by Dana Sand, an assistant managing editor in the Atlanta office.

COVID-19 and the great reset: Briefing note #17, August 6, 2020

Banks are using new techniques to find out who’s ‘swimming naked.’ And new MGI research looks at the cost of disruption in global supply chains.

Millions of employees have lost their jobs and cannot pay their credit cards. Restaurants and shops are only slowly reopening; many cannot pay their rent. Industrial companies can’t make payments on their equipment leases. Landlords have less income and cannot keep up with their mortgages. Suddenly, the world is awash in credit risk. Our new research shows how banks are tending to a radical surge in demand for one of their most ancient practices: measuring and monitoring credit risk. Leading banks are deploying a new configuration of sector analysis, borrower resilience, and high-frequency analytics. They are moving past sectoral analysis to take subsector views of the probability of default (exhibit). Some are going even deeper, to understand what’s happening in the financial life of their borrowers.

Exhibit We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: McKinsey_Website_Accessibility@mckinsey.com

Like credit risk, supply chains have experienced intense disruption. This week, the McKinsey Global Institute looked at the effects not only of COVID-19 but of all manner of disruptions, including natural disasters, geopolitical uncertainty, climate risk, cyberattacks, and more. A key finding: over the course of a decade, companies can expect disruptions to erase half a year’s worth of profits.

This week, McKinsey also had the privilege of speaking with three CEOs about what is shaping up to be the defining moment in their careers. Alain Bejjani, CEO of Majid Al Futtaim, told us about the resilience needed to keep this Dubai-based operator of shopping malls and other consumer real-estate businesses vital and relevant during the crisis. Lance Fritz, CEO of Union Pacific Railroad, talked with us about tactics to stay present in video calls and keep the board informed. Kristin Peck, the brand-new CEO of animal-health company Zoetis, reflected on the core beliefs that have kept her company on track through the crisis.

Also this week: a new report documents the disproportionate effect of the pandemic on Asian-American communities. And McKinsey’s industry research examined the potential for greater collaboration with government in global tourism, outlined the moves that European restaurants are taking to thrive in the next normal, considered how life insurers can use artificial intelligence to better underwrite risk, and reviewed the nascent Tech for Good movement in the United Kingdom.

McKinsey continues to track economic and epidemiological developments around the world. For an overview, read our latest briefing materials (July 6, 2020). In 54 pages, we document the current situation, the economic outlook, the forces shaping the next normal, and the new organizational structures that can help companies keep pace sustainably. You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 coronavirus articles, our suite of tools to help leaders respond to the pandemic, and a look at how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Mark Staples, an executive editor in the New York office.

COVID-19 and the great reset: Briefing note #16, July 30, 2020

Our latest executive survey reveals a darkening outlook. But our review of vaccine research provides a ray of hope. This week, McKinsey covers the yin and yang of the pandemic.

In North America and in developing markets, executives have become less hopeful about their countries’ economies and more cautious in their views on potential scenarios for COVID-19 recovery. That’s a key finding from our latest poll of more than 2,000 global executives. Leaders in China and India, on the other hand, are growing more upbeat (exhibit).

Exhibit We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: McKinsey_Website_Accessibility@mckinsey.com

One thing that will certainly improve expectations in every country is news of a safe and broadly available vaccine. Our latest research looks at global vaccine development and finds that early data on safety and immunogenicity in Phase I and II trials are promising, though limited. Our review of historical attrition rates suggests that the current pipeline may yield more than seven approved products over the next few years, with some available for emergency use late this year or early in the next. A new interview with Microsoft’s chief technology officer explains how artificial intelligence is aiding vaccine development. After development, it’s on to production, where we argue that tech transfer may be critical to beating the disease.

Our new research on leadership in the crisis turned up several intriguing developments this week, starting with the idea of creating a “to be” list. Our interview with the CEO of Cincinnati Children’s Hospital talks about how leaders can choose to be generous and genuine with some colleagues, and collaborative and catalytic with others. Leaders can also acquaint their teams with lessons from the past. We looked at the post–World War II era, when countries rebuilt from the ashes, to extrapolate ideas that are just as relevant now. Finally, we identified the ways that leaders can shift mindsets and behaviors to reopen safely.

In the COVID-19 crisis, many companies are finding new leaders in unexpected places, well down the org chart. Some young middle managers are defying the problems and frustrations of this difficult period to achieve far more than others. Leading companies are capitalizing on this by installing four talent-management practices to thrive beyond the pandemic. These companies are also revisiting the playbook of chief HR officers, to understand how the crisis has changed the game.

McKinsey’s industry-research teams were active this week, publishing new reports on the resiliency of national banking systems; the future of US freight and logistics; the lessons of past crises for mining companies; the recovery of Germany’s travel industry; and the next normal for European bancassurance. Readers interested in banking should also see our interview with the chairman of the State Bank of India, India’s largest lender and the world’s largest digital bank. And bankers, retailers, and others should consult our must-see guide on how to understand and shape consumer behavior.

McKinsey continues to track economic and epidemiological developments around the world. For an overview, read our latest briefing materials (July 6, 2020). In 54 pages, we document the current situation, the economic outlook, the forces shaping the next normal, and the new organizational structures that can help companies keep pace sustainably. You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 coronavirus articles, our suite of tools to help leaders respond to the pandemic, and a look at how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Mark Staples, an executive editor in the New York office.

COVID-19 and the great reset: Briefing note #15, July 23, 2020

Economic recovery depends on the return of the consumer—but shopping will never be the same. New McKinsey research considers the possibilities.

McKinsey continues to track economic and epidemiological developments around the world. For an overview, read our latest briefing materials (July 6, 2020). In 51 pages, we document the current situation, the economic outlook, the forces shaping the next normal, and the new organizational structures that can help companies keep pace sustainably.

The ubiquitous face mask does more than protect against viral spread; it also changes the way we look at one another—and thus symbolizes the mystery of customer behavior in the pandemic. Several new McKinsey research efforts analyze the changes taking place in the homes of consumers, on their phones, and in stores. “Reimagining marketing in the next normal,” for example, documents six of the biggest shifts emerging from COVID-19. One of the most intriguing is the rising importance of neighborhoods: with travel largely shut down, marketers must figure out how to localize their outreach.

Another momentous shift: customers care more about sustainability: our survey finds that European consumers want fashion firms to act responsibly by considering their social and environmental impact. This survey is part of McKinsey’s comprehensive effort to document customer sentiment across dozens of countries throughout the pandemic.

Both consumer-goods makers and retailers have everything at stake in understanding these shifts. For consumer companies, the future is about three things: getting better at predicting demand, being alive to all the ways they might increase their sales, and using agile techniques to sustain the hard-won momentum. For retailers—particularly grocers, apparel companies, and restaurants—the way forward starts with new ideas about revenue management (a fundamental rethink of products, pricing, and promotions might be in order) and about operating models (especially store footprints, which will depend on how soon cities reopen). Such operational issues are paramount in Africa and Asia; our latest research collects useful innovations from those regions and around the world.

B2B customers too are changing, and their providers must adapt. Our latest insights, based on a detailed survey, suggest that B2B companies may be too focused on the here and now. In times like these, first movers do better than the competition by finding new pockets of growth and reshaping go-to-market approaches to serve them.

Chief executives can help their marketing chiefs meet these goals, and much more besides. As some of our most senior colleagues argue, this may be the CEO moment of our times. Companies can reset themselves and their potential by embracing four shifts: unlocking bolder (“10x”) aspirations, making their “to be” lists just as important as their “to do” lists, fully embracing stakeholder capitalism, and harnessing the full power of CEO peer networks.

This week, McKinsey researchers also considered the future of mobility in India, reviewed the changes underway in Europe’s private banks, surveyed physicians about their employment prospects, looked at the reset that supply chains need, and explored two hot topics in tech: how to get value from cloud computing and the shifting priorities of cybersecurity.

You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 coronavirus articles, our suite of tools to help leaders respond to the pandemic, and a look at how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Mark Staples, an executive editor in the New York office.

COVID-19 and the great reset: Briefing note #14, July 16, 2020

As many countries struggle to control the pandemic, McKinsey remains tightly focused on the global healthcare response to it.

McKinsey continues to track economic and epidemiological developments around the world. For an overview, read our latest briefing materials (July 6, 2020). In 51 pages, we document the current situation, the economic outlook, the forces shaping the next normal, and the new organizational structures that can help companies keep pace sustainably.

This week, we reviewed the potential for South Africa’s small businesses to survive during the pandemic and to thrive after it, considered the case for more M&A as corporate India seeks to recover from the crisis, looked at the ways shared mobility might come back after it ends, offered recommendations on pricing for property and casualty insurers, and pondered the future of packaging design (including an interview with the CEO of Sealed Air).

But we focused mainly on healthcare systems. Testing is critical for containing COVID-19, yet many countries still struggle with shortages of the necessary materials. Our new article looks at five parts of the testing process and examines the bottlenecks in each. Some US laboratories, for example, have reported unused capacity to conduct tests, even as patients and healthcare workers report difficulty securing them. Similar mismatches have arisen in the United Kingdom, and they are also showing up in supplies of reagents, test kits, and other consumables. To fix the problems, countries will have to make capacity more visible by establishing information nerve centers.

Another focus of research is airborne transmission of the coronavirus. World Health Organization guidelines now state that it may be possible indoors, especially for people who spend significant amounts of time in crowded, poorly ventilated rooms. Our new article not only offers a primer on air purification, air filtration, and airflow management but also examines the steps that building managers, safety experts, and others might take to optimize airflows and ventilation indoors and to limit the spread of the virus.

This week also saw news about a successful vaccine trial. Thanks to that, the world may be able to look ahead to the pandemic’s end. But as a McKinsey team writes, this is not the last pandemic. To correct deficiencies in the surveillance of and response to infectious diseases, governments will have to make substantial investments—but they will be well worth the money (exhibit). Our research outlines the shifts needed in healthcare systems.

Exhibit We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: McKinsey_Website_Accessibility@mckinsey.com

Ara Darzi, director of the United Kingdom’s Institute of Global Health Innovation, has similar aspirations: he is simultaneously focusing on new ideas that can help tame COVID-19 and on the longer term beyond it. In an interview with McKinsey’s Rodney Zemmel, Lord Darzi explains how healthcare can transition from a “sickness service” to a “health and well-being service.” One critical step is to recognize that “we have many pandemics—only we don’t call them pandemics. We have the pandemics of obesity, cardiovascular disease, and diabetes.” McKinsey Global Institute covered the substantial upside of addressing these chronic conditions in a new report published last week.

You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 coronavirus articles, our suite of tools to help leaders respond to the pandemic, and a look at how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Mark Staples, an executive editor in the New York office.

COVID-19 and the great reset: Briefing note #13, July 9, 2020

As lockdowns lift, businesses are thinking about their next moves. McKinsey research offers insights into the near future.

McKinsey continues to track economic and epidemiological developments around the world. For an overview, read our latest briefing materials (July 6, 2020). In 51 pages, we document the current situation, the economic outlook, the forces shaping the next normal, and the new organizational structures that can help companies sustainably keep pace. You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 coronavirus articles, our suite of tools to help leaders respond to the pandemic, and a look at how our editors choose images that help readers visualize the impact of an invisible threat.

Around the world, economies are cautiously reopening. Businesses are keeping one eye firmly on the here and now but also tentatively looking ahead to what’s shaping up as a great reset. Our new research this week offers several takes on this theme.

Start with the global pandemic’s front line: the healthcare sector. This week, the McKinsey Global Institute published a new report, Prioritizing health: A prescription for prosperity, which measures the potential of proven interventions to reduce the global burden of disease. Taking advantage of them would not only alleviate a problem exposed by COVID-19—people with diabetes, hypertension, chronic obstructive pulmonary disorder, and obesity have been hit hardest—but also add, in our estimate, $12 trillion to global GDP in 2040.

Reimagining the workforce is another pressing task. Executives everywhere wonder how to bring people back to the workplace and how they will do their jobs. Our new research takes a look at the challenges of creating a sense of belonging, common purpose, and shared identity when some people work in their homes and some in offices and factories. Another article considers the great reset’s tactical challenges, such as guarding against cyberattacks on remote workers.

Small businesses confront some of these problems. But much as Ginger Rogers danced the same steps as Fred Astaire—only backward and wearing high heels—small businesses must make the necessary changes at a greater relative cost and with less working capital. Our new research examines the struggles of US small businesses in three sectors (restaurants, manufacturing, and retailing) that could be facing a long, hard recovery (exhibit).

Exhibit We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: McKinsey_Website_Accessibility@mckinsey.com

Another sector thinking hard about its future is infrastructure. In the United States, two scenarios are possible: a boom spurred by a government stimulus or a bust as tax revenues and user fees dry up. Agencies and investors alike must prepare for both outcomes. One key to generating a rapid impact from infrastructure spending is to repair existing assets.

This week we also look at global freight flows (down 13 to 22 percent this year) and the varied potential for recovery, reviewed the implications of COVID-19 for the US food supply chain, and considered the challenges of pricing in a pandemic.

This briefing note was edited by Mark Staples, an executive editor in the New York office.

COVID-19: Briefing note #12: July 2, 2020

One step forward, two steps back: the pandemic is giving new depth of meaning to that well-worn expression. Our new research explores both parts of it.

McKinsey continues to track economic and epidemiological developments around the world. For an overview, read our latest briefing materials. In 94 pages, we document the situation, show how countries and companies can transition toward the next normal, and offer planning advice across multiple horizons. You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 coronavirus articles, and our suite of tools to help leaders respond to the pandemic. New this week: a look at how our editors choose images that help readers visualize the impact of an invisible threat.

In a week when the global pandemic seemed to gather strength, our new research both shows the grim economic news and reveals a streak of optimism that many are starting to feel. Our monthly global economic conditions snapshot indicates that 52 percent of executives now say that their national economies are doing substantially worse, up from 10 percent in March 2020. Yet the proportion of executives who expect profits to rise within six months rose by four percentage points, and leaders in retail, high tech, and telecom are increasingly optimistic about the return of customer demand. In June, many more executives around the world said that the economies of their home countries would soon be doing better than had said so in May.

Another new global survey examined sentiment among people who make financial decisions for their households. Across the globe, they are reporting lower income, savings, and spending. In most countries, 20 to 60 percent of these decision makers say they fear for their own jobs. Roughly half have no more than four months of savings.

These grim statistics present a challenge for banks and other consumer-facing businesses, such as telecom companies, retailers, health systems, and utilities. A delicate balancing act awaits these organizations as they work to ensure that customers receive the necessary support—and that lenders can continue to cultivate relationships with their borrowers—while preserving shareholder value in the longer term. A detailed perspective on utilities considers this and other conundrums. So does a new look at African banks.

The virus’s spread is accelerating, but businesses everywhere are both coping with their urgent needs and looking ahead to the time when their employees can safely return to work. As that moment comes closer—let us hope—three new research efforts show, first, how leaders can seize the moment to support their employees by building on the trust their early efforts have engendered and, second, how they can engage employees through clear and inspiring communication. And our survey of US companies shows that same insistent streak of optimism: respondents expect most employees to be working onsite by December.

One lesson of the crisis is the need for speed: the pandemic obeys no speed limits, so businesses have had to adapt through quick fixes and workarounds. How can they keep these successful innovations going over the long term? Our new research suggests nine ways to reinvent the organization for speed.

This week, we also looked at how companies can reset their capital spending, demystified the role of quantitative models, and talked with two McKinsey experts about how to choose the right path to unlock the economy.

This briefing note was edited by Mark Staples, an executive editor in the New York office.

COVID-19: Briefing note #11: June 25, 2020

Every industry is adapting to life during a pandemic. New McKinsey research examines the implications for six sectors.

McKinsey continues to track economic and epidemiological developments in Europe and around the world. For an overview, read our latest briefing materials. In 94 pages, we document the current situation and show how countries and companies can transition toward the next normal and plan across multiple horizons. You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 coronavirus articles, and our suite of tools to help leaders respond to the pandemic.

This week we zeroed in on critical developments in six major industries, starting with consumer goods. Research we published last year (here and here) documented the recent trends in consumer M&A and the ways that successful companies used acquisitions to accelerate revenues and profits at a time when growth was elusive. Our latest research reveals that COVID-19 has accelerated some of these trends and created new realities. One critical finding: consumers are returning to big brands they know and trust. While these companies accounted for only 16 percent of the industry’s growth in 2015–18, that figure rose to 39 percent in 2018–19—and reached 55 percent in the first three weeks of April 2020.

In times of crisis, all eyes focus on the insurance sector. This week, we surveyed insurance agents in China, the first country to reopen. The outlook there is complex: some lines, such as health insurance, fared well, while others, such as property and casualty, suffered significant declines and are just now recovering.

At semiconductors companies, the pandemic has posed questions for every aspect of the business model. Our April 2020 research outlined the potential shifts in demand. This week’s update offers scenarios in which demand might revive, and the ways that companies can adapt while also preparing the enterprise to emerge stronger in the next normal.

Software makers are also in the midst of (yet another) disruption. For the past ten years, the rise of software as a service (SaaS) has reshaped the enterprise-software industry. Growth accelerated, but industry profitability tumbled. Our research finds that the next ten years will be just as tumultuous. SaaS companies are at a crossroads: COVID-19 will accelerate the footprint of SaaS, given the growth of remote working, the rapid deployment of digital solutions, and the lower up-front costs.

Like many other industries, engineering and construction has had to reimagine how work gets done. This week, we spoke with an industry leader, who revealed the ways that his company has adapted.

Finally, while small business might not be an industry, it is a mighty economic sector that employs tens of millions of people in the United States. Our new research finds that between 1.4 million and 2.1 million US small businesses could close permanently as a result of the first four months of the pandemic. Certain sectors are particularly at risk (exhibit).

Exhibit We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: McKinsey_Website_Accessibility@mckinsey.com

This week, we also examined the priorities for companies in India to thrive in the next normal; reviewed the early returns on post-COVID-19 discretionary spending in China, India, and Indonesia; and considered the lessons of the past that might prove helpful as policy makers seek to revive the US economy. Finally, we were privileged to speak with two remarkable leaders, Mellody Hobson of Ariel Investments and Hubert Joly of Best Buy, about the challenges of leadership in extraordinary times.

This briefing note was edited by Mark Staples, an executive editor in the New York office.

COVID-19: Briefing note #10: June 18, 2020

Our latest research focuses on recovery in Europe.

Governments worldwide have already allocated more than $13 trillion to stabilize economies in freefall and restart growth. These measures, written and delivered at speed, have succeeded in many ways. But as the crisis drags on, new questions are arising. Is the money directed in the best possible way? And is more needed?

This week, McKinsey researchers looked at ways to fill the gaps that COVID-19 has created in US state budgets. Worldwide, we estimate that government deficits could reach $30 trillion by 2023. That’s a sobering figure. But we believe that if governments and the private sector work together as never before, they can avoid the disastrous consequences of massive deficits, lay the foundations for a new social contract, and begin to shape a postcrisis era of shared, sustainable prosperity.

Our new research on Europe suggests that governments can start by distinguishing between sectors that can navigate the crisis safely, and others, such as those that were already in decline and were then badly hit by the crisis, that may need structural change. In Germany, for example, you will find both types of sectors in abundance (exhibit).

Exhibit We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: McKinsey_Website_Accessibility@mckinsey.com

McKinsey continues to track economic and epidemiological developments in Europe and around the world. For an overview, read our latest briefing materials. In 94 pages, we document the current situation and show how countries and companies can transition toward the next normal and plan across multiple horizons. You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 coronavirus articles, and our suite of tools to help leaders respond to the pandemic.

This week we documented many of the COVID-19-related shifts taking place in Europe. A critical issue now coming to a head concerns privacy: How do companies comply with the European General Data Protection Regulation and also support contact tracing and testing measures? Another is mobility: transportation systems may be permanently altered in the crisis. Our new research on the United Kingdom outlines the implications.

Some of those concern the many UK start-ups offering novel transport solutions. This week, our new research found that small and medium-size businesses in the United Kingdom face dire prospects: one in five may not survive past August 2020. In the recovery, European governments cannot do all the heavy lifting; our analysis suggests that European foundations have a window of opportunity to step up their actions and play an essential role in national rebuilding and recovery efforts. And we interviewed a leading UK dealmaker on the potential to restart major capital projects through standby agreements and other moves that keep projects on track.

This week, we also presented ideas for retailers to redefine value and affordability for newly strapped consumers, addressed big shifts in physicians’ behavior, explained why insurers need to revamp their distribution models, and considered a safer, better future for travel.

This briefing note was edited by Mark Staples, an executive editor in the New York office.

COVID-19: Briefing note #9: June 11, 2020

Our latest research examines the social risks of COVID-19.

Even as societies and businesses race to reopen, the global pandemic still poses significant problems. This week, we documented an accelerating one: loneliness. In many parts of the world, the social fabric was already fraying before the pandemic. Now, as former US surgeon general Vivek H. Murthy, MD, points out, COVID-19 is disconnecting us further from our human relationships. That might cause a “social recession, with profound consequences for our health, for our productivity in the workplace, for how our kids do in school.”

McKinsey is tracking developments on all these fronts. For an overview, read our latest briefing materials. In 94 pages, we document the current economic and epidemiological situation and show how to transition toward the next normal and to plan across multiple horizons. You can also see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 coronavirus articles, and our suite of tools to help leaders respond to the pandemic.

This week, we investigated loneliness and other effects of the lockdown and physical distancing in Europe. Across the Continent, the proportion of people who say that they feel lonely “most or all of the time” has nearly tripled. Loneliness is higher in countries, such as Bulgaria and Greece, where trust and satisfaction with relationships were already at low levels in 2018.

For many, the cure for loneliness might be a return to the office, the subject of some of our latest research. Many people say they are happy working from home. But could their happiness be running on fumes of the social capital built up through years of water-cooler conversations, meetings, and social engagements? Has working from home succeeded only because it is viewed as temporary, not permanent? Hundreds of billions in real-estate investment are riding on these questions.

Most industries are engaged in similarly momentous discussions. This week we published new perspectives on the fashion, hospitality, infrastructure, institutional-investing, nursing, and public-transport sectors. We also reviewed developments in Spain and Africa (payments and food supplies), as well as trillion-dollar ideas for governments around the world.

Although the news is bleak, Vivek Murthy sees cause for optimism: “I think that this could be an extraordinary opportunity for us to step back and ask ourselves if we’re leading the kind of lives that we really want to lead. This is our chance to ask ourselves where people fit in our priority list and whether there’s a gap between our stated priorities and our lived priorities.”

This briefing note was edited by Mark Staples, an executive editor in the New York office.

COVID-19: Briefing note #8: June 4, 2020

This has been an extremely painful time for communities across the United States and beyond, even as the pandemic continues to take its toll. We are amplifying our commitment to do our part to ensure that black lives are spoken for and valued, both inside our firm and beyond. Our ongoing research on the US racial-wealth gap and on diversity and inclusion is intended to clarify some of the underlying issues and potential paths forward.

Research we published in April called out the disproportionate effects of COVID-19 on black Americans, who are almost twice as likely to live in the counties where the risk to health and economic activity is highest if and when contagion strikes (exhibit). Many of these places were the scene of this week’s anguished protests.

Exhibit We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: McKinsey_Website_Accessibility@mckinsey.com

Our newest research looks at the pandemic’s effects on US minority-owned small businesses. Vulnerable even before the pandemic, it has struck them disproportionately hard. Many of them are in the industries most susceptible to health and economic problems, such as accommodations and food services, retail, and healthcare. Owners are innovating and staying flexible, helping their communities to cope with the crisis. But these businesses are highly vulnerable; they need help from the private, public, and social sectors.

Similar dynamics afflict US minority students. Previous McKinsey research has demonstrated the costs of a sizable achievement gap between white students and black and Hispanic ones. Our latest research, published this week, finds that the pandemic not only threatens to widen the achievement gap but also poses problems for all learners. The hurt could last a lifetime.

People of color are vulnerable to yet another effect of the COVID-19 crisis as it affects large companies. Previous crises show there is a very real risk that as companies adapt to new ways of working, inclusion and diversity may unintentionally recede as strategic priorities. Yet as our latest report on inclusion and diversity argues, that would place companies at a disadvantage: they could not only face a backlash from customers and talent now but also, down the line, fail to better position themselves for growth and renewal.

McKinsey continues to research many aspects of leadership through the crisis. This week, we reported on dozens of our new research efforts, including the emerging themes dominating boardrooms; the post-COVID-19 future for US rail and trucking companies; the lessons learned from Asia’s manufacturing and supply chains; a new approach to tracking demand for travel; the potential for telehealth; and the safety protocols that hospitals, grocery stores, and others have used to stay open.

Our latest briefing pack details, across 94 pages, the current economic and epidemiological situation, how to transition to the next normal, and planning across multiple horizons. Please also see the full collection of content, visual insights from our “chart of the day,” a curated collection of our first 100 coronavirus articles, and our suite of tools to help leaders respond to the pandemic.

This briefing note was edited by Mark Staples, an executive editor in the New York office.

COVID-19: Briefing note #7, May 27, 2020

New insights on consumer sentiment and the return to work.

The Memorial Day weekend in the United States, always a somber occasion and never more so than this year, seemed to mark a turning point in the COVID-19 crisis. As spring turned to summer, many US regions started to reopen, as did others in Europe, Latin America, and Asia. Despite ongoing public-health concerns, the desire to spend and shop is palpable. This week, McKinsey published new surveys of consumers in Argentina, Australia, Brazil, Central America, and the United States, detailing the strength of the consumer urge in each country. The outlook is brighter. Consumers are less anxious and depressed about health concerns. Business executives are a bit more optimistic this month than last. And our new surveys of global B2B buyers and those in Asia and Europe suggest that confidence is holding firm.

That said, the picture these surveys paint is complex. In a sense, the world is turning from “resilience” to “return”—the third of the five pandemic elements we sketched out in late March. To get back to business, many companies are running spreadsheets to see how many people spaced six feet apart will fit in an office, planning one-way paths through the workplace, and figuring out adaptations to restrooms, lunchrooms, and entrances. All of those are critical tasks, but they are not enough. What’s needed is a return “muscle”: an enterprise-wide ability to absorb uncertainty and incorporate lessons into the operating model quickly.

One of the skills that will help with that urgent need is surely analytics, widely recognized for its problem-solving and predictive prowess, which is becoming a modern-day sextant to navigate the COVID-19 crisis. Analytics can help tackle numerous urgent tasks facing businesses today: forecasting demand, identifying potential supply-chain disruptions, targeting support services to at-risk workers, and determining the effectiveness of crisis-intervention strategies, to name a few.

Also on that list: improving the experience of customers, many of them frightened, some jobless, and all of them deeply uncertain about the next normal. To renew and refresh their connections to the people they serve, companies need to recognize what’s happening now, and respond in three ways: digital excellence, safe and contactless engagement, and dynamic customer insights.

These are just a few of the issues McKinsey has researched and written about in recent days to help companies and countries lead through the crisis. Please see the full collection of content, visual insights from our “chart of the day,” a curated collection of our first 100 coronavirus articles, and our suite of tools to help leaders respond to the coronavirus outbreak.

This briefing note was edited by Mark Staples, an executive editor in the New York office.

COVID-19: Briefing note #6, May 13, 2020

Emerging evidence provides some tantalizing glimpses into the epidemiology of the global pandemic.

By Matt Craven, Mihir Mysore, and Matthew Wilson

As the reopening of economies continues across much of Europe and North America, it’s worth taking stock of the epidemiological situation and trends that will define the months ahead. At the time of this writing, the official counts of cases and deaths from COVID-19 have passed four million and 280,000, respectively. Recent studies have made increasingly clear that each of these figures is a significant underestimate. Population antibody surveys suggest that official counts are underestimating the true number of cases by a factor of five or more (although in several cases the methodology has been called into question) (Exhibit 1).

Exhibit 1 We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: McKinsey_Website_Accessibility@mckinsey.com

Comparisons of 2020 and 2019 mortality rates show that substantially more people are dying this year, although we don’t know how much of this is due to missed deaths from COVID-19 rather than excess mortality from other causes (Exhibit 2).

Exhibit 2 We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: McKinsey_Website_Accessibility@mckinsey.com

The pandemic and public health—five trends to watch

With lives at stake, a thoughtful approach is paramount. Here are the five emerging trends that private-sector leaders need to monitor.

There are still many places where the epidemic is getting worse

While much of the media narrative is about reopening, many countries, including several of the largest emerging economies, are still on the “upslope” of the epidemic, with daily case counts increasing (Exhibit 3). While an increasing number of countries and regions have proven that they can use lockdowns to drive a reduction in cases, to date, we have few examples of success outside higher-income countries. The next few weeks will be critical tests of our ability to “bend the curve” in more countries with varying contexts and healthcare capacity. In some of these countries, the absolute number of deaths is relatively low; interventions against COVID-19 will need to be viewed through the lens of both lives and livelihoods.

Exhibit 3 We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: McKinsey_Website_Accessibility@mckinsey.com

Reopening is a massive natural experiment—make sure you learn from it

We have never before attempted to shut down the modern global economy, much less reopen it in the setting of an ongoing pandemic. We have a few examples of strategies that seem to work better, or worse, but none of us know with any certainty the best actions. Even places with strong initial responses like Hong Kong and Singapore have faced challenges as they reopen. China has also seen an increase in cases in the past few days.

In the United States, there is only a loose correlation between disease prevalence and plans for reopening. States with more cases generally plan to reopen later, but there are exceptions.

A similar point can be made about businesses’ plans to reopen. Companies are planning different approaches, even based on the same underlying fact base. This implies that leaders across the public and private sectors should build learning and adaptation into their reopening plans from the start. Relevant lessons might come from other geographies, other sectors, or from peers and competitors. Leaders should be prepared to incorporate new information and alter their approaches, either incrementally or radically, as new information becomes available.

Resurgence seems to be not a question of if but when, where, and how bad. Many experts are focused on a potential second wave of COVID-19 in the northern hemisphere this autumn. This is certainly possible. But focusing on the risks of autumn and winter causes us to look past the summer, which is risky because it is sooner and because it is when many jurisdictions will be reopening and testing.

R is important, but so is the absolute number of new cases

Over the past few months, many have become more familiar with epidemiological concepts like the reproduction number (R) of a virus. R defines the transmissibility of a pathogen, as measured by the average number of people to whom each infected person transmits. R is a measure of change; it tells us how fast the epidemic will expand or shrink. Values greater than one define a growing epidemic, while those less than one define a shrinking one.

R has been getting a lot of attention, for example, in defining the packages of interventions that can yield R<1 in a given setting. But the absolute number of cases is also important. Imagine two cities, each with an R of 0.9, implying a slightly declining epidemic. But one of the cities has 1,000 new cases per day and the other has ten. The former faces a far higher risk in reopening than the latter.

In practice, we are seeing countries and regions take divergent approaches to this question (Exhibit 4). Hubei Province in China waited until reported cases were near zero to reopen, whereas Italy and Spain took the first steps to reopening with daily case counts at more than 1,000. Every location needs to balance public-health and economic imperatives; we can’t say which approach is better, but we are likely to learn more about what works in the weeks and months ahead.

Exhibit 4 We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: McKinsey_Website_Accessibility@mckinsey.com

It’s (still) all about testing, tracing, and targeted quarantine

Significant resources are required to run a program of testing, contact tracing, isolation, and quarantine at the required scale, but relative to the economics of lockdowns or global recession, these costs are trivial. Many countries are still far short of where they need to be on testing, and contact-tracing programs remain a patchwork. Our recent article provides more details on contact tracing. Strengthening these programs remains an urgent priority for many geographies. This point is no less important for having been made frequently.

In any country, here are the four metrics to watch in assessing the strength of test, trace, and quarantine efforts:

Test positivity rate, which measures (imperfectly) the extent to which testing systems are capturing all cases. The World Health Organization recommends a target of less than 10 percent positivity.

Tests per million population, a measure of the depth of testing.

Average number of contacts identified per case, which measures how effective contact-tracing systems are at identifying and isolating the likely next generation of cases. The figure will tend to be lower in lockdown settings than when people are moving and interacting freely.

Fraction of cases arising from contact lists, a measure of the portion of cases arising from known sources versus undetected community transmission.

An element of transmission dynamics now beginning to receive more attention is transmission within households. We may need to rethink the current model of home isolation and develop modified strategies for mild and asymptomatic cases given that isolation can prove difficult for many. Any new model should of course ensure a comfortable experience for those who test positive, so that they’re strongly inclined to follow the recommended approach.

Innovation—and clinical evidence—leads to hope

The speed and scale of the R&D response to the COVID-19 outbreak is unprecedented in human history, with billions of dollars being spent and committed in pursuit of drugs, vaccines, and diagnostics for the virus. Today, there are more than 150 vaccines in the pipeline, and 200 drug candidates. On diagnostics, beyond the RT-PCR and classic lateral-flow immunoassays already in use for many viral and antibody tests, new technologies such as CRISPR have already been granted emergency-use authorization by the US Food and Drug Administration.

The past few months have seen the launch of numerous trials in an effort to find therapies and vaccines—with some challenges from studies that are too small in size, or not randomized or controlled. As of early May, more than 1,700 trials are in progress targeting COVID-19 and related complications. More of these are randomized and controlled clinical studies—and some are starting read out results, providing evidence to support new approaches to prevent and manage COVID-19 infection and associated complications. The expert consensus is that enhanced treatments for COVID-19 will likely be available by the end of 2020; and only 12 to 18 months will likely be needed to bring a vaccine to market at sufficient scale for widespread immunization, compared with the typical five or more years. Some developers have even indicated a vaccine may be available sooner for limited use, with an emergency-use authorization for health workers issued as early as this fall.

Here are five areas to watch:

The great vaccine-platform race. At the time of writing, 13 vaccines are already in clinical trials, and the full pipeline spans a massive range of platforms, including RNA, DNA, inactivated viruses, protein subunits, and virus-like particles (VLPs). The virus and viral-vector approaches are traditional; others are nascent. Each platform will start to produce data in the months ahead, starting with evidence of vaccine safety and then potentially demonstrations of immunogenicity (and even efficacy) toward the end of the year, though we still need to better understand the link between immunogenicity and correlates of protection. While having multiple platforms in development increases the likelihood of a successful vaccine, each platform has different competitors, ranging from smaller biotech companies to multinationals, as well as distinct manufacturing requirements, with implications for the scale-up of capacity.

A more nuanced understanding of the uses of different therapeutics. The initial discussion on drugs has focused almost exclusively on repurposed antivirals and antimalarials for treatment. The 200-plus candidates currently in development cover a broad range of use cases—from postexposure to prophylaxis, and from mild and moderate to severe cases. The more than 1,700 active trials are expanding the focus from drugs that directly attack the virus to those that confer immunity and to those that target complications of COVID-19 such as cytokine-release syndrome (CRS) and, more recently, acute respiratory distress syndrome (ARDS). Labs are deploying a wide array of platforms, from repurposed antivirals (as mentioned above) to monoclonal and polyclonal antibodies to neutralize the virus to immune modulators for ARDS/cytokine storms, and even cell-therapy approaches for late-stage disease. The emergency-use authorization for remdesivir is an important milestone for COVID-19 drug development as well. In the coming months, we anticipate that a more nuanced understanding of the different use cases and the types of approaches being tested will help reduce the mortality rate of COVID-19 and also change the standard of care.

A new normal and unrealized opportunity for data sharing. Unlike the experience with prior epidemics (including Ebola), COVID-19 has been characterized by unprecedented sharing of prepublication data, analyses, and results via medRxiv, a collaborative platform. This proliferation of information can support innovation and has been rapidly integrated into both the media and policy discussions—sometimes, however, to unfortunate effect. Looking forward, as the scientific community seeks to make meaningful interpretations of the thousands of running studies, we need to bring together the patient-level data from the hundreds of small, undersize, not-well-controlled, compassionate-use, and observational studies, in a responsible way. Meta-analyses of such studies will help us know if therapies actually work, at what dosing and clinical regimen. There are efforts underway in the ecosystem to address this—and hopefully a collaborative model emerges that could remain with us postpandemic.

The impact of novel R&D models. Competitors are collaborating in ways never expected. Companies are banding together in multilateral collaborations, some formal and some informal, to advance innovation. For example, leading plasma manufacturers are partnering in novel ways to produce a single unbranded immunoglobulin product; more than 15 pharmacos are collaborating in a COVID-19 R&D forum to advance, individually and collectively, the most promising drugs and vaccines; and decades-long competitors Sanofi and GSK are partnering on COVID-19 vaccine development. Novel master protocols, often with inspired names (such as Solidarity, Recovery, and ACTT), are being used to simultaneously test multiple drugs. Innovators are deploying novel development plans and trial designs as well; for example, Pfizer and BioNTech are simultaneously testing four vaccines in their combined Phase I/II study. These approaches are not without risk given the parallel work in traditionally sequential stage-gated processes.

Companies are banding together in multilateral collaborations, some formal and some informal, to advance innovation. For example, leading plasma manufacturers are partnering in novel ways to produce a single unbranded immunoglobulin product; more than 15 pharmacos are collaborating in a COVID-19 R&D forum to advance, individually and collectively, the most promising drugs and vaccines; and decades-long competitors Sanofi and GSK are partnering on COVID-19 vaccine development. Novel master protocols, often with inspired names (such as Solidarity, Recovery, and ACTT), are being used to simultaneously test multiple drugs. Innovators are deploying novel development plans and trial designs as well; for example, Pfizer and BioNTech are simultaneously testing four vaccines in their combined Phase I/II study. These approaches are not without risk given the parallel work in traditionally sequential stage-gated processes. The challenge of separating the signal from the noise. With Ebola, a substantial R&D mobilization ran into difficulties recruiting patients to test all of the approaches being considered. Some of these same challenges are happening with COVID-19. Ensuring that studies are well controlled and appropriately powered will be critical to understanding what actually works. Further, data sharing will hold the key to advance our understanding and interrogation of the benefit/risk trade-off. Multiple prioritization efforts are attempting to do this but are still in the early stages. In some ways, the scale of the mobilization may be the biggest challenge.

About the authors

Matt Craven, MD, is a partner in McKinsey’s Silicon Valley office. Mihir Mysore is a partner in the Houston office. Matt Wilson is a senior partner in the New York office.

This article was edited by Mark Staples, an executive editor in the New York office.

COVID-19: Briefing note #5, April 13, 2020

Our latest perspectives on the coronavirus pandemic.

By Matt Craven, Mihir Mysore, Shubham Singhal, and Matt Wilson

In this note, we offer some of our latest insights on the COVID-19 pandemic, starting with a survey of the current epidemiology and the five dynamics leaders need to watch: the efficacy of the surge in critical care, the expansion of testing and other traditional approaches, the development of antibody testing, the unknown nature of immunity, and a wave of innovation that might produce treatments and vaccines.

We then highlight four of our many recently published articles, each designed to help senior executives think through the challenges of restarting economies.These and many more articles are available in our collection of coronavirus thinking.

The outbreak is moving quickly, and some perspectives here may soon be out of date. This article reflects our perspective as of April 13, 2020. We will update it regularly as the crisis evolves.

COVID-19: Where we are, and where we might be heading

COVID-19 continues to spread rapidly around the world. Almost every country has reported cases, but the burden is asymmetrically distributed. In the past seven days (April 6–12), 46 percent of new confirmed cases have been reported in Europe and 39 percent in the United States. To an extent, that’s because countries are at different stages of the pandemic. Some that were effective at initial containment, such as Singapore and Hong Kong, have seen resurgence and are implementing additional measures to address it. Othe