The world is faced with a dual imperative in the energy transition: the energy system has to be decarbonized, but much more energy is going to be needed in the future. In this episode, Janet Bush, executive editor at McKinsey Global Institute (MGI), talks to McKinsey experts Chris Bradley and Vishal Agarwal about the hurdles that need to be cleared, particularly in Asia, to achieve decarbonization.An edited transcript of the…
Technology is increasingly shaping the prosperity and sovereignty of nations. The development of disruptive technologies such as AI, along with geopolitical events, is creating new arenas of competition, centered on investment in the innovation, production, and adoption of advanced technologies. However, large European corporations invested €700 billion a year—or €3,000 per capita—less than their US counterparts between 2015 and 2022, particularly in technology, as returns on invested capital (ROIC) for…
Daniel Yergin explained the state of the world in his 1990 Pulitzer Prize–winning book, The Prize: The Epic Quest for Oil, Money and Power. He did it again in 1998 with Commanding Heights: The Battle for the World Economy and in 2011 with The Quest: Energy, Security, and the Remaking of the Modern World. His most recent book, The New Map: Energy, Climate, and the Clash of Nations, detailed how…
Against a backdrop of light blue, three fluffy white clouds release a robust rain of blue pixels. Software as a service (SaaS) refers to cloud-based software programs delivered to users over the internet. You probably use SaaS products even if you don’t realize it; in fact, much of our online lives are supported by SaaS. Google Workspace tools—including Gmail, Google Docs, and more—are SaaS products, as are Microsoft Outlook, Slack, Zoom,…
In 2025, corporate action on nature has evolved from what was often seen as an environmental obligation into a strategic necessity. Taking action is not just about preserving our natural resources—it is a key element of business strategy. Nature plays a critical role as a foundation for the global economy, with more than half the world’s GDP dependent on nature. In this way, nature degradation—including biodiversity loss, ecosystem collapse, and…
As the world grapples with rapid technological advancements, demographic shifts, and evolving work paradigms, it is vital to invest in employee health. Why prioritize workforce health? Investing in employee health can substantially increase economic returns. Research by the McKinsey Health Institute in collaboration with the World Economic Forum indicates that enhanced employee health and well-being could generate up to $11.7 trillion in global economic value. Organizations that prioritize health often…
While consumer habits and technologies have changed rapidly, the technology function within organizations has tended to be slower to adapt. That realization—and the desire to create experiences that its customers expect—inspired Verizon Consumer and Business Group (Verizon Consumer Group) to make sweeping changes to its technology organization, from a focus on supporting channels and platforms to supporting complete customer journeys. This shift required a broad set of architectural and operational…
Business leaders today confront a changing world order: intensifying regional conflicts, rising instability, and potential shifts in trade relationships and policy. On this episode of The McKinsey Podcast, Cindy Levy and Shubham Singhal, global coleaders of McKinsey’s geopolitics work, speak with global editorial director Lucia Rahilly about how leaders can orient themselves within this evolving geopolitical landscape and, in particular, begin to move beyond mitigating risk to finding and mobilizing on new…
Government agencies often undertake complex missions that can have a large impact on society. Whether they involve modernizing infrastructure or establishing nationwide health programs, such missions could be described as “big, hairy, audacious goals”—the term coined by management experts Jim Collins and Jerry Porras in their book Built to Last. But measuring the success of such efforts can be difficult. Many public sector agencies tend to fall back on conventional…
Indian farmers expect better near-term prospects following a year of steady output and multiple years of market and weather-related disruptions. About three-quarters of farmers (76 percent) say they anticipate higher profits over the next two years, with more than 65 percent citing improved yields and higher crop prices as catalysts. This is a substantial improvement over 2022, when just 37 percent of farmers expected increased profits. These are among the…
By the numbers, the United Kingdom’s start-up technology ecosystem has a lot to be proud of. By value, it is the largest in Europe, employing over three million people and surpassing $1 trillion in valuation in 2024. Much of start-up technology investment in the United Kingdom goes to climate technology businesses, which have a positive environmental impact at their core. With over 5,000 budding climate technology start-ups and scale-ups, second…
At a glance Falling fertility rates are propelling major economies toward population collapse in this century. Two-thirds of humanity lives in countries with fertility below the replacement rate of 2.1 children per family. By 2100, populations in some major economies will fall by 20 to 50 percent, based on UN projections. Age structures are inverting—from pyramids to obelisks—as the number of older people grows and the number of younger people…
Over the past five years, the luxury industry experienced a period of exceptional value creation. Between 2019 and 2023, unprecedented demand for personal luxury goods—fashion, leather goods, watches, and jewelry among them—combined with a deep well of supply allowed the sector to achieve a 5 percent compound annual growth rate. Luxury brands outperformed global markets and achieved new profitability records. The pace of growth across the industry was remarkable and…
In McKinsey’s latest ConsumerWise research, consumers report feeling more optimistic about the US economy than they have all year. Even so, US consumer optimism overall is still lower than prepandemic levels, and more than half of consumers (53 percent) report mixed feelings or being pessimistic about the state of the economy.For decades, consumer sentiment and consumer spending have moved in sync—when people feel unsure about the economy, they spend less. But…
Life sciences is on the cusp of a new era of innovation. The convergence of breakthrough technologies, widespread access to data, and deeper insights into complex biological systems is revolutionizing how the industry approaches R&D. For instance, venture capital funding for machine-learning-enabled drug discovery surged more than sevenfold from 2019 to 2022, according to McKinsey analysis. Interest in innovative modalities such as antibody–drug conjugates (ADCs) remains strong, with the top…
The competition among biopharmaceutical companies for externally sourced assets is heating up. Despite recent successes delivering innovative therapies at a faster pace and achieving solid returns for shareholders, demand persists across a range of unmet needs. And yet, companies are increasingly pursuing the same disease areas and targets. This “herding” behavior makes it less likely that any company can outperform. Further, the breadth and complexity of all available targets and…
Innovation is flourishing in the biopharmaceutical industry. Over the past decade, the volume of Phase I candidates in the drug development pipeline has grown by 60 percent, promising potential breakthroughs in treating a wide range of diseases. At the same time, there has been a noticeable shift across the industry toward outsourcing R&D activities. Driven by the need for flexibility, specialized expertise, and wider global reach, pharmaceutical organizations have engaged…
In this episode of McKinsey on Building Products, McKinsey partner Rikki Singh sits down with Yuhki Yamashita, chief product officer at Figma, a company that provides collaborative online design tools. With a career in product and design at companies of all sizes, Yamashita has an approach to product development that centers on generating “user love.” During their conversation, Singh and Yamashita discuss building and tapping into communities to make better…
Power politics. Wars. Trade battles. Climate change. Pandemics. Geopolitics is increasingly influencing how businesses operate, pushing senior leaders to look well beyond the walls of the corner office. Council on Foreign Relations president Michael Froman has spent his career bridging these worlds, from senior positions in the administrations of Presidents Bill Clinton and Barack Obama to executive roles at Citigroup and Mastercard and serving on the board of The Walt…
Since 2019, the United States healthcare industry has experienced substantial financial pressure, with industry EBITDA as a proportion of the National Health Expenditure declining by an estimated 150 basis points (Exhibit 1). The decline has hit payers and providers particularly hard—payers’ estimated margins in 2024 could be at their lowest in a decade. Inflationary pressures have not yet been fully absorbed within the healthcare system, and providers continue to face…
Digital payments in the B2B arena have lagged far behind consumer e-commerce, even with the big shift to digital brought about by the COVID-19 pandemic. The vast majority of B2B payments occur between small and midsize businesses (SMBs), which are the target market for the B2B financial operations platform BILL. The company seeks to streamline and simplify SMBs’ financial operations, including accounts payable, receivables, and expense management. In addition, BILL…
Back in July 2023, researchers at the McKinsey Global Institute estimated that gen AI could unlock between $60 billion and $110 billion a year in economic value for the pharmaceutical and medical products industries, boosting productivity and innovation in domains across the industry’s value chain—from the way new treatments are discovered to how they are marketed and administered by physicians. Six months later, McKinsey experts dug deeper into those numbers,…
Life science companies have traditionally kept patients and consumers at arm’s length. Pharmaceutical, biotech, and medtech companies have viewed providers and payers, not patients, as their key customers and have rarely interacted with them as end customers. This approach has had to evolve in recent years. Consumers are now accustomed to apps and smartwatches that provide a 360-degree view of their well-being, and they engage with direct-to-consumer brands such as…
Despite dedicated efforts across the biopharmaceutical industry to streamline clinical development, clinical trials remain complex, costly, and time-consuming. These challenges are compounded by an increasingly competitive and crowded trial landscape. Yet accelerating clinical development remains crucial—not just for patients but for the enterprise. A 12-month reduction in the clinical development timeline can add more than $400 million in net present value (NPV) across a sponsor’s portfolio while delivering immeasurable benefits to…
We are in a moment of vast potential in life sciences—of diversified investments, breakthrough discoveries, and rapid expansion of therapeutics into new modalities and platforms. And AI is increasingly enabling data-driven decision-making across the product life cycle, from AI-supported drug candidate selection to real-time clinical trial site monitoring. However, overall industry productivity—whether measured in terms of speed, cost-effectiveness, or ROI—has been stagnant for decades. While there are undoubtedly multiple causes…
Amid growing complexities, escalating costs, and a heightened demand for innovative therapies, biopharmaceutical R&D organizations are under pressure to find ways to boost their productivity. Preclinical studies are increasingly using diverse assays, complex “omics” data, and humanized models to evaluate drug candidates. Clinical trials are adopting new trial designs and incorporating personalized-medicine approaches and even more end points. In this challenging environment, pharma leaders are turning to advanced technologies such…
The journey to bring new medicines to market remains long and costly, despite recent technological and process improvements in biopharma R&D. It takes about a decade, on average, from candidate nomination to launch, and study and application costs for investigational new drugs (INDs) have soared in recent years by 20–30 percent.These challenges stem partly from the growing complexity of research and early development, fueled by an explosion of data and…
Brazilian farmers have endured multiple challenges since 2023, including crop failures, commodity price declines, and intensified droughts, rain, and wildfires. The result is greater caution, with two-thirds of producers expecting profits to remain stable or decrease in 2024, according to a McKinsey survey. Rising input costs were Brazilian farmers’ main concern when surveyed two years ago, but now extreme weather events are seen as the biggest threat. And to navigate…
During the past five years, healthcare stakeholders’ expectations of sources of industry growth and profits have shifted toward alternative subsegments. For example, healthcare services and technology (HST) subsegments, which represented about $65 billion in earnings in 2023, will experience an estimated 9 percent CAGR during the next five years. By comparison, payer profit pools (about $55 billion in 2023) will have an estimated 7 percent CAGR during the same period.…
At a glance The ‘empowerment line’ measures progress toward a world where everyone’s essential needs are met. About 40 percent of the global population lives above the empowerment line—they can afford a standard basket of essential goods and services and begin to save. The rest live below the line, mostly in lower- and middle-income economies where GDP growth is the main driver of empowerment. At higher GDP levels, income inequality…
Beauty is no longer in the eye of the beholder; it’s at the fingertips of the generative AI (gen AI) prompter. Gen AI could add $9 billion to $10 billion to the global economy based on its impact on the beauty industry alone, and early movers have already begun testing the technology. But scaling these experiments will be challenging, given the velocity of gen AI innovation. The gap between the…
At the end of 2023, the final McKinsey Talks Operations podcast of the year concluded that there was no such thing as normal for operations leaders. Looking back on the 12 months since then, it seems the sentiment holds true—both everything and nothing has changed. In this episode, hosts Christian Johnson and Daphne Luchtenberg reflect on four recurring themes from their discussions with McKinsey experts and industry guests: building resilient…
Companies in the automotive and industrial sectors are rewiring to become software-enabled enterprises. As in-vehicle software emerges as a critical differentiator, companies have started to reevaluate the role of software and overhaul their development approaches. Today, software serves as the backbone for advanced features and safety-critical functions while enhancing operational efficiency and propelling innovation. But software can also introduce organizational challenges, because underdeveloped software capabilities can result in start-of-production delays…
Self-driving cars once seemed beyond the realm of possibility, but they are now being piloted on city streets. Now another mobility innovation has emerged that could accelerate and complement autonomy: remote driving.By combining sophisticated communication systems with real-time video feeds, remote-driving systems can instantly convey information about road conditions, traffic, and unexpected obstacles to off-site drivers who can control the vehicle’s braking and steering (Exhibit 1). These systems can be…
Over the past two decades, the shift from fixed-function hardware to software-defined hardware has revolutionized industries ranging from networking to mobile communications. With software-defined hardware, developers can improve products and services by continually updating software rather than undertaking more costly and time-consuming hardware upgrades. Devices that were once rigid and task specific are now becoming programmable and flexible, allowing them to handle new tasks and demands. Despite the functional benefits…
Shared autonomous vehicles (AVs) now operate in more than ten cities worldwide, including Beijing, Oslo, Phoenix, and San Francisco. More deployments are planned in other regions as AVs with level four capabilities—those that can handle most functions without human intervention—become increasingly sophisticated. While engineers have overcome many technological hurdles for autonomous mobility and continue to make strides, industry leaders should also address other issues—especially those related to the economics of these…
Economies continue to face a range of geopolitical, climatic, and inflation-led challenges, with some also feeling the effects of structural issues. Against this backdrop, China, India, and the US are outperforming other surveyed economies. Among developed economies, US GDP continues to eclipse European output. Real GDP in the US increased at an annual rate of 2.8% in the third quarter of 2024. In the second quarter, real GDP rose 3.0%.…
Over the past two years, generative AI (gen AI) has been a rapidly evolving trend that has touched the lives of many around the globe. Which is why the design of these formidable systems must include experts from diverse backgrounds, says James Landay, a professor of computer science at Stanford University. On this episode of the At the Edge podcast, Landay talks with McKinsey senior partner Lareina Yee about how to…
Climate change is challenging the limits of traditional insurance by creating new risks and exacerbating old ones at an unprecedented scale. As weather events increase in frequency and severity, many businesses find themselves underinsured or unable to secure coverage. Arbol addresses these growing protection gaps with parametric insurance, which quickly assesses damage based on a predetermined set of markers informed by historical data. In an interview with McKinsey’s Fabian Metzeler,…
Sector Variations in Small Business ProductivityAmerica's small businesses vary widely in productivity across different sectors. While U.S. MSMEs are on par with those in the United Kingdom, Japan, Germany, and Italy in many areas, they lag significantly in mining, transportation and storage, and administrative services. The productivity ratio of MSMEs relative to large companies also varies by sector, with the mining sector facing the widest gap, followed by information and…