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Contoh Style Strategic Consultant - COVID 19 McKinsey Facts and Insights April 3
Contoh Style Strategic Consultant - COVID 19 McKinsey Facts and Insights April 3
Briefing materials
Global health and crisis response
Updated: April 3, 2020
Reimagination Reform
Re-imagine the “next Be clear about how
How the situation may evolve normal”—what a discon- the environment in your
tinuous shift looks like, and industry (regulations,
There is a limited window for governments to drive adequate public-health implications for how the role of government)
responses and meet demand drawdowns with proportionate economic institution should reinvent could evolve
interventions. Without this, the possibility of a deeper effect on lives and
livelihoods is more likely.
Scaled-up testing will soon clarify the extent and distribution of spread in the
U.S., and Europe.
Learnings from other countries and recent innovations (strict social distancing Establishing a Nerve Center can ensure
rules, drive through testing, off-the-shelf drugs that can address mild cases, speed without sacrificing decision
telemedicine enabled home care) could provide basis for a restart. quality across these five dimensions.
transmission
Latest as of April 3, 2020 >200 >160 49
Countries or territories Countries or territories Countries or territories
with reported cases1 with evidence of local with more than 1000
transmission2 reported cases1
Sources: World Health Organization, John Hopkins University, CDC, news reports
Current as of April 3, 2020
Europe
Africa
300
United States
200 Dramatic rise in cases in the past
week have led the U.S. to exceed all
100 other countries (including China) in
total cases; incremental cases are
0 now above 10,000 per day with
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 01 02 highest concentrations in New York,
March Apr. New Jersey and California
1. U.S. data from Johns Hopkins University CSSE (observed at 1700PT); all other data from WHO Situation Reports
1. U.S. data from Johns Hopkins University CSSE; all other data from WHO Situation Reports
Sources: WHO situation reports; Johns Hopkins University, press search McKinsey & Company 8
Current as of April 2, 2020
US: Exponential growth in the past two weeks has made the US the
newest COVID-19 epicenter
Incremental cases and tests per day Number of tested persons cumulative New reported cases per day
Tests
Mar 20 – New York performed
20,000 800,000
15,000 600,000
10,000 400,000
5,000 200,000
0 0
01 31 01 02
March Apr.
Source: Johns Hopkins University, COVID Tracking Project, NY Times, press search McKinsey & Company 9
Current as of April 3, 2020
Italy: The number of new cases has trended slowly down over the
last 10-14 days
Incremental cases and tests per day Number of tested persons per day New reported cases per day
Feb 21 – Cluster of 16 Feb 26 – Testing criteria are Mar 8 – Lockdown extended Mar 20 – Italy testing at rate
cases identified in relaxed, allowing contacts of to all of Lombardy and 14 of ~3500 per million, amongst
northern Italy confirmed cases to be tested other northern provinces highest in western Europe
Tests
Feb 23 – performed
Officials lock
10,000 down 10 towns 42,000
9,000 in Lombardy Mar 6 – Authorities begin testing Mar 9 – Italy begins
8,000 after spike in all 3,300 residents of northern national lockdown; 35,000
cases town of Vò (new cases now zero) travel banned
7,000
28,000
6,000
5,000 21,000
4,000
3,000 14,000
2,000
7,000
1,000
0 0
19 29 01 31 01 02
February March Apr.
Source: WHO situation reports, CNN, New York Times, press search McKinsey & Company 10
Current as of April 3, 2020
Incremental cases per day and tests performed in South Korea Number of tests performed New reported cases per day
Tests
performed
Feb 20 – Daegu Mar 1 – Government
1,400 20,000
residents clear streets begins investigation
1,200 in response to outbreak of Daegu church
15,000
1,000
800
10,000
600
400
5,000
200
0 0
16 29 01 31 01 02
February March Apr.
Source: WHO situation reports, CNN, New York Times, Korean CDC, press search McKinsey & Company 11
Current as of April 3, 2020
Incremental cases per day and total reported cases in China Total reported cases New reported cases per day
Jan 23 – City of Feb 7 – All students Feb 21 – Government Mar 1 – 28 provinces (more
Wuhan is locked down asked not to return eases traffic restrictions, than 4/5ths of total) have
and travel from nearby to school following encourages work to resume resumed normal inter-provincial
cities is restricted Chinese New Year in less-affected areas passenger transport
Feb 3 – Hong Kong Feb 19 – China begins Feb 24 – 320,000 Mar 10 – Closure
closes all but 3 of 14 to sustain daily new case tests conducted to of last of 16 Total reported
cases
border control points reports below 2,000 date in Guangdong temporary hospitals
20,000 90,000
Jan 24 – All
tourist activity in
4,000
Hubei canceled
60,000
3,000
2,000
30,000
1,000
0 0
23 31 01 29 01 31 01 02
January February March Apr.
1. Changes in new case tracking and reporting methodology yield spike in reported cases
Source: WHO situation reports, New York Times, Chinese government official notices and reports, press search McKinsey & Company 12
Key considerations for disease progression
A B C D
Growing evidence on the Seasonality alone will not Promising testing Economic restarts in Asia
extent and role of be enough to curtail innovations may greatly reflect possibility to
asymptomatic cases and transmission, while it is expand disease restart limiting local
transmission like to have modest surveillance capabilities transmission however
Although the range is large for impact on extent of At home sampling and point-of- need for renewed travel
estimated share of total cases transmission: care diagnostics can improve restrictions
(~20-50% for percentage of prevailing outlook is that convenience and reduce experience from Hong Kong,
cases that are asymptomatic seasonality alone will not be processing times. Additionally, Singapore and Taiwan has
and ~10-60% for percentage of enough to curtail transmission, new antibody diagnostics under shown spike in cases following
transmission due to requiring ongoing public health development may facilitate return to in-person employment
asymptomatic cases) intervention even as weather testing for prior exposure, which and relaxation of travel
There is significantly higher may allow significant segments restrictions. While most cases
prevalence than confirmed of the population with immunity are categorized as imported,
cases, that could require to resume activity Hong Kong especially has also
continued strict social distancing seen renewed growth in local
for a while transmission. In response all
three economies have
reinstituted restrictions on travel
and in-person gatherings.
Source: WHO, US CDC, EU CDC, Korea CDC, Government of Iceland, Mizumoto et. al “Estimating the asymptomatic proportion of coronavirus disease 2019 (COVID-19) cases on board the Diamond McKinsey & Company 14
Princess cruise ship, Yokohama, Japan, 2020,” Ganyani et. al, “Estimating the generation interval for COVID-19 based on symptom onset data,” Du et. al, “Serial Interval of COVID-19 among Publicly
Reported Confirmed Cases”; https://www.npr.org/sections/health-shots/2020/03/31/824155179/cdc-director-on-models-for-the-months-to-come-this-virus-is-going-to-be-with-us
B: Seasonality is unlikely to be a major
contributor to stopping the spread of
COVID-19
3.1 average 10 average cases per day 46 average cases per day
mandated for most restrictions relative to other
incoming travelers
80 cases per day
public health measures
60
Mar 6 – Minister of Nat’l Dev. urges
As of April 2, strict
40 new focus on health and hygiene
travel restrictions are in
effect. Bars and
20 theaters are close,
3.0 gatherings larger than
0 10 are banned
Month Avg. 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 01 02
Source: Hong Kong Government Data Repository, Singapore Ministry of Health, Taiwan Center for Disease Control, press search McKinsey & Company 17
Contents
01 02 03 04
COVID-19: Scenarios and Sector-specific Planning and
The situation now path forward impact managing COVID-
19 responses
2 2a
2c
Source: McKinsey analysis, in partnership with Oxford Economics McKinsey & Company 19
Current as of April 3, 2020
Source: “Safeguarding our lives and our livelihoods: The imperative of our time,”; available online at https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/safeguarding-our- McKinsey & Company 20
lives-and-our-livelihoods-the-imperative-of-our-time; date of access: Mar 31st 2020
Current as of April 3, 2020
COVID-19 U.S. impact could exceed anything since the end of WWII
United States real GDP
%, total draw-down from previous peak
-5
-8% Scenario A3
-10
-13% Scenario A1
-15
-20
-25
-30
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
Pre-WW II Post-WW II
Source: Historical Statistics of the United States Vol 3, Bureau of economic analysis; McKinsey team analysis, in partnership with Oxford Economics McKinsey & Company 21
Current as of April 3, 2020
Virus Contained
110
China -3.5% -0.5% 2020 Q4
105
85
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Eurozone -10.1% -4.7% 2021 Q2
2019 2020 2021
Source: McKinsey analysis, in partnership with Oxford Economics McKinsey & Company 23
Current as of April 3, 2020
110
China -4.2% -2.3% 2021 Q2
105
85
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Eurozone -13.2% -10.6% 2024 Q4
2019 2020 2021
Source: McKinsey analysis, in partnership with Oxford Economics McKinsey & Company 25
Current as of April 3, 2020
• Time to implement social distancing after • Rate of change of cases • Effective integration of public health measures
community transmission confirmed • Evidence of virus seasonality with economic activity (e.g. rapid testing as
Epidemiological
• Availability of therapies
• Case fatality ratio vs. other countries
• Cuts in spending on durable goods (e.g., cars, • Late payments/credit defaults • Bounce-back in economic activity in countries
appliances) that were exposed early in pandemic
Economic
-5
-10
-15
-20
-25
-30
-35
-40
-45
-50
1. Data set includes global top 3000 companies by market cap in 2019, excluding some subsidiaries, holding companies, companies with very small free float and companies that have delisted since
Source: Corporate Performance Analytics, S&CF Insights, S&P Global McKinsey & Company 28
Current as of April 2, 2020
60
50
40
30
20
10
-10
-20
-30
-40
-50
-60
-70
-80
Advanced Electronics
Medical Technology
Consumer Durables
Consumer Services
Logistics & Trading
Healthcare Payors
Business Services
Pharmaceuticals
Conglomerates
Basic Materials
Air & Travel
Real Estate
High Tech
Insurance
Oil & Gas
Telecom
Defense
Banks
Media
Retail
1. Data set includes global top 3000 companies by market cap in 2019, excluding some subsidiaries, holding companies, companies with very small free float
and companies that have delisted since
Source: Corporate Performance Analytics, S&CF Insights, S&P Global McKinsey & Company 29
Current as of April 2, 2020
Commercial Air & Travel Oil & Gas Automotive Insurance Carriers
Aerospace
Commercial Aerospace Gross orders Cancelled orders Wide body aircraft Narrow body aircraft Years: Wide body Years: Narrow body
Current Impact Medium-term expectations (through 2020) Early thoughts on evolution post-COVID
The underlying drivers for commercial aircraft equipment and 19-20YTD commercial aircraft orders, backlog, backlog years & deliveries Intrinsic demand for aircraft likely disappears in
services is driven by airlines; Airlines have significantly reduced 2020
capacity and grounded fleets Net orders1
Air & Travel 9/111, YoY change Sept 2000 vs. 2001 2008 Fin. Crisis2, YoY change Feb 2008 vs. 2009 Now, YoY change Mar 2019 vs. 2020
Current Impact Medium-term expectations (through 2020) Early thoughts on evolution post-COVID
COVID-19 is an unprecedented crisis 70-80% Capacity reductions in April Demand may not recover where it used to be vs.
prior crises – as consumer confidence may be
The initial demand shock is worse than 9/11 or the 2008 Financial Flights to and from Europe, Middle East, and Africa were among the hardest shaken and employers adjust work-from-home
Crisis hit ; Intra-regional flights within the Americas are least impacted to date, but
policies to support greater reliance on remote
likely to decline further
technologies
The two most likely scenarios for airline travel demand estimate a 31%-45%
reduction, and return to pre-crisis status quo over 1-2 year periods: Government intervention though a stimulus
US airline capacity (ASM)
A4 (virus contained, strong growth rebound) package of either grants, loans or tax relief can
7x bigger drop vs. Fin. Crisis supplement company cash flow to ensure there is
A1 (virus resurgence, slow long-term growth) not a liquidity crisis
-11% Airline demand recovery dimensions for scenarios A1 and A4 Given low oil price expectations for the short-
-19%
1 month 12 month term, operating costs may be reduced but could also
Travel
impact aircraft leading market
restrictions A4 A1
1. For capacity, load factor, and occupancy, YoY change of Sept 2001 | 2. For capacity, YoY change of Feb 2009, for airline load factor and hotel occupancy
rate, YoY change of March 2009, for hotel stocks | 3. Based on latest capacity adjustment announced by AA/DL/UA | 4. Based on forecast from United
Airlines
Source: USDOT T100, STR (Week of March 15-March 21), press search McKinsey & Company 32
Current as of April 3, 2020
LNG Based on our global COVID-19 scenarios, LNG demand could be reduced LNG suppliers will likely face prolonged shutdowns
and cargo cancelations as the market tries to
COVID-19 has affected regions that account for over 80% of global
balance
LNG demand; Chinese LNG imports (17% of global imports) fell by
7% year on year from January to March 2020, triggering Force Global oil demand substantially reduced due to restrictions in road
Majeure clauses on contracts transport (e.g. in China, multiple European countries, and USA) and capacity Short term price dynamics that do not involve an
declines in airlines across the world through Q2 and Q3 2020 OPEC+ intervention increase the likelihood of having
Oil an under-investment scenario play out in the
Low short-term oil prices are expected to continue for most of 2020
Demand decline due to COVID-19 (5.4-11.4mbd for 2020 under A3 medium-term, resulting in a new price up-cycle
unless we see a large supply cut. Production shut-ins could start to
& A1 scenarios) and OPEC+ deal failure pushed oil prices under materialize in the short term and help to balance the market
$30/ bbl. Short term demand destruction (potential to be 20mbd
for April) could lead to storage constraints and regional prices to
fall even sharper, while US drilling activity has already been cut
(44 fewer rigs running, -6% in the last week).
Source: Bloomberg, press search, McKinsey Energy Insights Global Energy Perspective, McKinsey analysis McKinsey & Company 33
Contents
01 02 03 04
COVID-19: Scenarios and Sector-specific Planning and
The situation now path forward impact managing COVID-
19 responses
1 2 3 4 5
Nerve center
Managing across the 5Rs requires a new
architecture based on a team-of-teams approach.
Resolve
Address the immediate social and mental challenges
that COVID-19 represents to the institution’s
workforce, customers, and business partners, and
take basic steps to protect liquidity.
Emerging Are my policies working (e.g., safety, How do I revise demand planning based on How do I stay in touch with customers and remain relevant to them
concerns productivity)? How well? How do I adapt to new the evolving outbreak? when they don’t desire or need my services? How do I inspire loyalty in
developments (e.g., longer closures of my customers?
business)?
Example Continuous re-evaluation of financial models: Conduct scenario planning to understand Demonstrate flexibility to customers during times of hardship
actions stress-testing financial forecasts based on latest how inventory buffer changes in various Airlines: Major airlines are offering change/cancel flexibility. Most
developments (e.g., longer than 2 week closures) disease scenarios are also allowing passengers to reseat themselves on the plane in
and adjusting policies accordingly accordance with physical distancing,
Monitoring productivity: Comprehensive set of Task S&OP team to build 3-6 plans under
Going out of their way to keep customers and employees safe
KPIs being tracked via dashboards (e.g., focus a range of demand scenarios month to
regardless of impact to balance sheet
on productivity vs. utilization) determine required supply
Hotels in Europe and Asia are providing “quarantine” service (e.g.,
Tracking incidence: Clear reporting mechanism room reservation with nobody next door)
Work with tier 1 suppliers to understand
for suspected / confirmed covid-19 infections and Hotels are live streaming hotel room housekeeping to show how
supply chain risks throughout all tiers;
database that tracks cases thorough they are cleaning their rooms between guests.
complement with outside-in analytics where
Redeploying “idle” talent against areas of the tier 1s do not have transparency Demonstrate commitment to healthcare
business experiencing demand surges:
Car rentals are offering free rental cars to NYC healthcare workers
Making short term adjustments to workforce Account for all inventory (e.g., in transit,
deployment to maximize productivity and in warehouses, in spares stock) and Furniture distribution centers are being repurposed as testing
minimize service disruption calculate inventory buffer centers for NHS workers
Partnering with other companies to redeploy Other examples of companies being ‘agile’ in attracting customers
“idle” talent externally for the good of the Run supply chain “stress tests” vs. Hotels are offering point compensation for guests who purchased
broader community supplier balance sheets to understand pre-paid non-refundable reservations.
when supply issues will start to stress
Rideshare companies are pivoting to delivery
financial or liquidity issues
Non-WFH employees face However, best-in-class companies are finding new ways to address employee
a unique set of concerns… concerns while protecting them from unnecessary risk:
Perceived unfairness: having to Food delivery Leading UK Leading Italian Global coffee
continue going into work while Major US retailer companies retailer banks shop retailer
other employees stay home with
their families Flexible work Minimizing Extending Limiting Offering 14 days
policies including contact between benefits to operating hours of “catastrophe
Safety risk: significant increase
in potential exposure to disease relaxing deliverers and include back-up for all branches pay” for US
(e.g., commute, customers and absenteeism customers (e.g., child and elderly with access workers exposed
other employees in the policy (i.e. cashless payment care (up to 25 granted only upon to COVID-19,
allowing workers only, leaving bags days) and mental pre-arranged over 60, pregnant,
workplace)
to stay home for at door, all health benefits appointment to or have
Perceived value: Don’t feel as personal reasons) employees (e.g., teletherapy minimize contact underlying health
valued by company and that provided masks sessions) and increase issues (in addition
their safety is not prioritized and gloves) sanitization time to existing sick
Fear of illness: In addition to pay)
clinical harm (e.g., fever, body
aches), fear of being isolated
from their families if ill
A study China demonstrated a decrease in Respondents to the survey Energy levels started to improve as
energy level during the pandemic attributed the declining energy value increasing normalcy was established aided
to 3 primary factors by 4 levers that companies used
Understand which trends Prioritize B2B commercial levers Prioritize B2C commercial Evaluate
and pockets are growing to pursue: levers to pursue: performance of
by analyzing customer Sales and channel: Build Sales and channel: tactics activated,
insights, sentiment, and remote selling capabilities, re- Remote customer lead gen likely re-setting ROI
Resilience
Address near-term cash management challenges,
and broader resiliency issues
01 03 05
Identify and prioritize key Conduct stress testing of Set up a cash management
risks financials dashboard
Identify and prioritize key macro, Stress test the P&L, Balance Sheet, Improve cash transparency and
sector and company idiosyncratic Statement of Cash Flows to assess and implement tighter cash controls to
risks based on exposure and impact frame the potential gaps for planning mitigate downside scenarios
02 04 06
Develop tailored scenarios Establish portfolio of Build the resilience
interventions dashboard
Develop company specific scenarios Identify an end to end portfolio of Build the dashboard of key leading
based on the range of outcomes of the interventions and trigger points indicators to monitor that can be
highest priority risks dynamically updated
Key Understand the impact of key macroeconomic variables Develop scenario narratives for Baseline and ~2-3
activities (e.g., GDP, unemployment rate) on performance of your of adverse scenarios, with overlay for duration and magnitude
PnL (e.g., revenue and cost) of Covid-19 near term shock
Impacted PnL variables could include: Contextualize scenarios with assumptions on
— Volume: consumer demand correlated with GDP macroeconomic variables (e.g., in worst-case GDP declines
— Cost: Commodity price evolution (e.g., oil and gas, food 20%)
index) correlates with COGS For each scenario, link macroeconomic projections back
— Price: housing prices and inflation correlate with price to PnL (e.g., best-case scenario includes 10% drop in
customers are willing to pay demand, 20% drop in price, and 30% drop in COGS)
Refine a final list of no more than ~20 macroeconomic Ensure scenarios capture strategic, financial and
variables with quantified impact to key PnL items operational risks with consideration of 2nd order impacts
Sample
output
Key For each scenario, Prioritize critical areas of exposure and areas of lower/risk
activities — assess impact on the financial statements (P&L, uncertainty
Balance Sheet and Cash Flows) Define & size portfolio of potential interventions (across
— assess gap relative to Baseline operations, supply chain, capital, targeted M&A and
Run simulations at Corporate level to assess range of divestitures and customer engagement)
outcomes to assess impact on credit quality, cash and Launch quick wins on immediate stabilization (supply and
liquidity demand-side) related to Covid-19
Run 'reverse stress-tests' to determine conditions for Identify which are “no regrets” vs. trigger based and get pre-
credit/liquidity crunch approval for higher risk moves, with clear agreement on
conditions for activation
output -20%
-15%
2008 09 10 11 12 13 14 2015
BU2
Banking covenants broken
BU3
BU4
Other Bankruptcy 20% additional cash
Baseline Scenario 1 Scenario 2 2008 09 10 11 12 2013 required to survive
5: Example
Typical EBIT impact
(% of cash release) Receivables Inventory Payables Cross-cutting
cash 6
“Structural
Enforce late E2E customer
management Positive
to neutral 5
“Immediate cash
opportunities”
changes” Stoc
segmentation,
reorder
payment interest credit risk
management
dashboard:
(≥ 0%) Automate reorders,
Collect algorithm payments, billings
Payment and
overdues billing runs
Prioritization 4
Bad payors
Production
batch size,
Standardize
parts
just in time
of initiatives Somewhat
negative 3
Reorder freeze,
smaller batches
Payment terms
(1-5%) re-negotiation
related to Inventory
pooling
Outsource
Reduce
SKUs
cash 2
Factoring
receivables
some
production Supply
chain
financing
Not Exhaustive Substantial
(>5%) 1 Sell old stock
Write off
“Fast but
old stock
painful”
0
Fast (< 90 days) Medium (3-6 months) Slow burn (6-12 months)
Long-term Adj EBITA margin delta, 2020 vs 2013 %pts 2% -5% 10% -5% 2%
Long-term TRS track record Long-term TRS, 2013-2020 avg (also revenue contribution indicator) 10% -5% 10% 5% 25%
Unlock Balance Healthy Balance Sheet with (Net debt and pension + OPEB) /market cap, 2020 0.5 0.2 (0.2) (0.5) 0.2
Sheet sufficient headroom
(Net debt and pension + OPEB) /EBITDA, 2020 1.5 0.5 (1.0) (2.0) 0.5
Band of C-suite and Board having % of C-suite leaders who have been in C-suite roles during last recession 50% 40% 20% 50% 45%
Leaders diversity of background and % of Board members who have been CEOs of F-1000 companies during
relevant experience of leading 30% 20% 0% 0% 10%
major crisis events/ downturns
businesses through a downturn
% of C-suite leaders who have a different background from the CEO 100% 70% 85% 75% 30%
Organization
Lower Org complexity FTE per Sales (# Employees per $M USD), 2020 (outside-in indicator) 1.0 1.2 1.5 1.5 1.8
Simplification
Resilience Early, disciplined decisions in the Short-term change in Adj EBITA, 2020 vs. 2018 %pts 0% -5% 5% -5% 5%
Nerve Center past – indicator of a nerve center
driven approach Change in (Net debt and pension + OPEB) /EBITDA, 2020 vs. 2018 % 0% 50% -10% 90% -50%
Return
Create a detailed plan to return the business back to
scale quickly
These building blocks should be rolled out and sequenced according to local realities
Phase Disease proliferation: Cases Regulatory approval: Employees Consumer Demand: Risen to pre- No more firefighting of COVID-19
indicators plateauing, of cases occasionally allowed to return to work crisis levels disease implications
unknown, etc
Consumer demand: Steadily Customer behaviors: Shifting back Corporate desire to mitigate risk
Confinement of employees & increasing to “next normal expectation” and prepare better for future
customers in place: Shelter-at- pandemics
Disease containment: Ability to verify Supply chain: Limited disruption
home regulation in place, majority of
healthy workers,, surrounding
employees WFH Employees: Feel safe and protected
community healthy, disease on the
returning to workplace
decline, hospitals not overstretched
Sample Maintain physical distancing of Reassurance measures at workplace Targeted outreach to customers to Develop more robust WFH
actions that workforce (e.g., remote working (e.g. temperature checks prior to improve comfort and encourage pre- policies and infrastructure for
facilities enabled ) entering workplace) crisis behavior larger part of workforce
business can
take Clear protection guidelines with Safety and protection policies (e.g., Require / incentivize employee Reduce # of large gatherings to
protective equipment provided for mandatory masks/gloves to be worn by vaccination for COVID once vaccine only when necessary
employees that are required to be all employees, regular deep-cleaning of is obtained
Reduce travel requirements for
present at workplace work environment, physical distancing in
Clear safeguard protocols for any roles
the workplace)
Clear process for tracking incidence employees that display illness
in workforce and notifying at-risk Split the business for staggered return (mandatory work from home)
employees to work (e.g. different teams returning
Continued regular deep-cleaning of
at different times)
office space
Source: National Coronavirus response: A road map to reopening, McKinsey analysis McKinsey & Company 50
4 5
Reimagination
and reform
Re-imagine the “next normal”—what a discontinuous
shift looks like, and implications for how the
institution should reinvent.
Be clear about how the regulatory and competitive
environment in your industry may shift.
Corporate
Consumer Supply chain Government/ Organizational
valuation
regulation
“What will change for “Will supply chains “How could health “How will workforce “How will valuations
consumers and models shift with the and the overall norms & operating shift given corporates
shoppers?” increasing focus on economic regulations models adapt?” need to invest in
resiliency and be impacted?” resilience capability?”
digitization?”
COVID-19
initial issues
Business
as usual
issues
How do I protect my
people?
How do I ensure
transparency with
customers?
How do I stabilize my
supply chain?
How do I ensure
working capital?
Business
as usual
issues
How do I protect my We are in the middle Will we be in this This kind of sea-
people? of the biggest demand situation for weeks or change, for this long a
How do I ensure drawdown since WW2 months? time, will mean that
transparency with – Do we have a plan What will return to the world post
customers? to survive that puts work really look like, COVID-19 could look
everything on the and how can I do it very different than the
How do I stabilize my
table? without endangering world before it
supply chain?
my people? Do we know the big
How do I ensure
changes, and what it
working capital?
means?
Optimism bias, lack of adequate ‘sensing Many crises have a technical core, which needs
mechanisms’ (e.g., escalation failures), over- new solutions to be invented (e.g., BP top hat) or
reliance on past patterns, risk rationalization imported anew into the sector/ geography
Industrial manufacturer: pushed out fix timelines Energy company: Many public failures to fix
for failed product more than 12 times. Top process safety issue before success. Challenge
When facing management optimism bias was called out
multiple times by regulators, politicians and other
was that the fix needed new engineering
innovation
such a tsunami, observers
companies
make four Slow or Bad Decision Inadequate Delivery
Quality (Execution failure)
mistakes
Groupthink, political pressures, high-emotion Chaos during disruptions frequently translates to
situations; Unfamiliarity – pattern recognition- lack of accountability and direction, ‘operations
driven thinking fails; Desire to wait for more facts addiction’ on the part of top management, leading
slows response to failures of execution
Challenger disaster: NASA engineers pressured Automotive manufacturer: Was criticized for
Thiokol to change their ‘no-launch’ multiple aspects of recall activity (e.g., unclear
recommendation (Thiokol shifted their stance to terms and conditions, inadequate call center
satisfy their biggest customer) in-spite of a well- staffing, other challenges)
understood technical failure on O-rings.
McKinsey & Company 56
The central question
Nerve centers
How can I increase my organization’s are a specific
capacity and speed to respond decisively organizational
to today’s issues… construct, meant for
institutions that are
facing existential,
…while uncovering the truth about high-velocity
the future, and shoring up disruptions, that are
defenses to meet it? designed to address
this question
Evaluate possible
Deliver quickly & Team 1 – Deliver Team 3 – Discover scenarios – near-term
flawlessly on priorities to long-term & derive
provided by “Decide” Execution Scenario Planning implications; craft one
team team(s) team planning scenario for
other teams
Present Plan
focus Ahead
Ensure “Deliver”
goals are current & Team 2 – Decide Team 4 – Design Craft a portfolio of
progress is occurring;
Integrated Operations Strategic Moves strategic actions with
decide whether to
clear trigger points
trigger a strategic team team
move
Nerve Center
focus shift Clear, unbiased
scenarios
Source: Getting ahead of the next stage of the coronavirus crisis, April 2020 McKinsey & Company 60
Nerve Center design
is based on military
command principles
Core concept: Create an Orient
organization that can Observe, Observe
Orient, Decide and Act faster than
the environment
Decide
John Boyd’s
OODA loop
John Boyd was a Colonel in the US Air Force,
whose ideas on the art of war revolutionized US
military thinking, especially after the Vietnam War
Shifts in loyalty – altered A fresh reset of the Home recast as the coffee Blending of demographic The return of center store
baskets due to availability, price/value relationship – shop, spa, restaurant, and “norms”– millennials and large brands –
health attributes, brand (re)- economic downturn shifts more with ease and increasingly “settling down” leveraging familiarity,
trial demand to lower price points convenience – consumers and cooking, men doing more availability backed by at scale
and private label find convenient and less out of home shopping leads to supply chains
expensive ways of “getting the brand, category and shopper
job done” behavior shifts
The e-Boomer (really e- High times for the lower Re-luring to retail – De-urbanization – reverse Sustainability remerging,
everyone) – Online as a end – Dollar, discount and Outside grocery, declines in in the trend of recent years redefined – simultaneously
destination for stock-up and supercenters further benefit brick and mortar require following the shelter at home meeting environmental and
grocery/c-stores for the fill-in / from price and stable supply new tactics to re-engage experience public health goals
fresh, leading to a seismic when restrictions are lifted
channel shift
Health
Workplace safety inspected for hazardous materials, risk of bodily Workplace sanitation regulation significantly increased with mandatory
and safety harm, and unsanitary conditions, with progressive physical distancing deep-cleaning, regular temperature checks, etc
regulations