The Path to the Next Normal

The path to the next normal Leading with resolve through the coronavirus pandemic May 2020 Cover image: © Cultura RF/Getty Images Copyright © 2020 McKinsey & Company. All rights reserved. This publication is not intended to be used as the basis for trading in the shares of any company or for undertaking any other complex or significant financial transaction without consulting appropriate professional advisers. No part of this publication may be copied or redistributed in any form without the prior written consent of McKinsey & Company. The path to the next normal Leading with resolve through the coronavirus pandemic May 2020 Introduction On March 11, 2020, the World Health Organization formally declared COVID-19 a pandemic, underscoring the precipitous global uncertainty that had plunged lives and livelihoods into a still-unfolding crisis. Just two months later, daily reports of outbreaks—and of waxing and waning infection and mortality rates— continue to heighten anxiety, stir grief, and cast into question the contours of our collective social and economic future. Never in modern history have countries had to ask citizens around the world to stay home, curb travel, and maintain physical distance to preserve the health of families, colleagues, neighbors, and friends. And never have we seen job loss spike so fast, nor the threat of economic distress loom so large. In this unprecedented reality, we are also witnessing the beginnings of a dramatic restructuring of the social and economic order—the emergence of a new era that we view as the “next normal.” Dialogue and debate have only just begun on the shape this next normal will take. But since the onset of the pandemic, McKinsey has published a rapidly growing collection of insights (at least 250, at this two-month mark) on the impact of COVID-19 on the economy, the workforce, and the gamut of functions and industries, both globally and in specific regions across the world. We have collected and curated the first 100 of these articles into four compendiums, organized by the initial stages of the path we see as leading from the current crisis to the post-pandemic era—the next normal that will materialize after the battle against coronavirus has been won. These initial stages are Resolve, Resilience, and Return; as we progress, they will be followed by Reimagination and Reform. In this first compendium, The path to the next normal, we curate a selection of articles related to the initial stage, Resolve: how to confront the crisis, lead with purpose, and determine the scale and pace of action necessary to navigate toward greater resilience. We set forth strategies for keeping businesses and other institutions running—organizing a nerve center, for example, and enabling communities to work, and learn, remotely. And we offer examples to mobilize leaders across boards and the C-suite. At the time of this publication, the course of the pandemic remains unclear, and safeguarding both lives and livelihoods remains an exigent priority. We hope these insights begin to illuminate the path toward a future still in flux— and inspire leaders with the necessary resolve to help forge the next normal. You can download this and three other compendiums at McKinsey.com/pathbeyondcovid-19, as well as find these and our entire collection of individual insights at McKinsey.com/covid-19. We look forward to your feedback at [email protected]. Raju Narisetti Global Publishing Director Elect McKinsey Publishing 2 Contents Charting a purposeful Organizing the Experimenting path to the next normal response with remote education at scale 6 Beyond coronavirus: The path 58 Responding to coronavirus: to the next normal The minimum viable nerve center 114 Coronavirus and the campus: How can US higher education organize to respond? 11 Demonstrating corporate 66 Getting ahead of the next stage purpose in the time of of the coronavirus crisis coronavirus 120 Coronavirus: How should US higher education plan for an To weather a crisis, build a 77 uncertain future? network of teams Leading with resolve 126 Getting the next phase of remote learning right in higher education 18 Leadership in a crisis: Working remotely Responding to the coronavirus 131 School system priorities in the outbreak and future challenges 86 Revisiting agile teams after an age of coronavirus abrupt shift to remote 24 A leader’s guide: Communicating with teams, stakeholders, and 94 When governments go remote communities during COVID-19 Mobilizing the 98 Adapting workplace learning in C-suite 32 Decision making in uncertain the time of coronavirus times 140 Boards in the time of coronavirus 104 A blueprint for remote working: 38 Applying past leadership lessons Lesson from China to the coronavirus pandemic 146 The CFO’s role in helping companies navigate the coronavirus crisis 44 Positive leadership in uncertain times 152 When investors call: How your business should talk about 47 Re-energizing through the coronavirus epidemic: Stories from China 156 The CIO’s moment: Leadership through the first wave of the coronavirus crisis 162 Driving digital change during a crisis: The chief digital officer and COVID-19 168 How chief data officers can navigate the COVID-19 response and beyond 174 Leading with purpose: How marketing and sales leaders can shape the next normal 3 Charting a purposeful path to the 6 Beyond coronavirus: The next normal path to the next normal 11 Demonstrating corporate purpose in the time of the coronavirus 4 5 © Baona/Getty Images Beyond coronavirus: The path to the next normal The coronavirus is not only a health crisis of immense proportion—it’s also an imminent restructuring of the global economic order. Here’s how leaders can begin navigating to what’s next. by Kevin Sneader and Shubham Singhal 6 The path to the next normal May 2020 “For some organizations, near-term survival is the Our answer is a call to act across five stages, leading only agenda item. Others are peering through the from the crisis of today to the next normal that fog of uncertainty, thinking about how to position will emerge after the battle against coronavirus themselves once the crisis has passed and things has been won: Resolve, Resilience, Return, return to normal. The question is, ‘What will normal Reimagination, and Reform. look like?’ While no one can say how long the crisis will last, what we find on the other side will not look The duration of each stage will vary based on like the normal of recent years.” geographic and industry context, and institutions may find themselves operating in more than one These words were written 11 years ago, amid the stage simultaneously. Today, on McKinsey.com, a last global financial crisis, by one of our former group of colleagues published “Safeguarding our managing partners, Ian Davis. They ring true today lives and our livelihoods: The imperative of our time,” but if anything, understate the reality the world is which emphasizes the urgency of solving now for the currently facing. virus and the economy, and thereby precedes our focus here on reimagining the future, post-pandemic. It is increasingly clear our era will be defined by a fundamental schism: the period before COVID-19 Collectively, these five stages represent the and the new normal that will emerge in the post-viral imperative of our time: the battle against COVID-19 era: the “next normal.” In this unprecedented new is one that leaders today must win if we are to find reality, we will witness a dramatic restructuring of an economically and socially viable path to the the economic and social order in which business and next normal. society have traditionally operated. And in the near future, we will see the beginning of discussion and debate about what the next normal could entail and Resolve how sharply its contours will diverge from those that In almost all countries, crisis-response efforts previously shaped our lives. are in full motion. A large array of public-health interventions has been deployed. Healthcare Here, we attempt to answer the question being systems are—explicitly—on a war footing to posed by leaders across the public, private, and increase their capacity of beds, supplies, and social sectors: What will it take to navigate this crisis, trained workers. Efforts are under way to now that our traditional metrics and assumptions alleviate shortages of much-needed medical have been rendered irrelevant? More simply put, it’s supplies. Business-continuity and employee- our turn to answer a question that many of us once safety plans have been escalated, with remote asked of our grandparents: What did you do during work established as the default operating mode. the war? Many are dealing with acute slowdowns in their The shock to our livelihoods from the economic impact of virus-suppression efforts could be the biggest in nearly a century. Beyond coronavirus: The path to the next normal 7 operations, while some seek to accelerate to meet for liquidity and solvency are clearly paramount. demand in critical areas spanning food, household But soon afterward, businesses will need to supplies, and paper goods. Educational institutions act on broader resilience plans as the shock are moving online to provide ongoing learning begins to upturn established industry structures, opportunities as physical classrooms shut down. resetting competitive positions forever. Much of This is the stage on which leaders are currently the population will experience uncertainty and focused. For more, please see “Coronavirus: personal financial stress. Public-, private-, and Leading through the crisis” on McKinsey.com. social-sector leaders will need to make difficult “through cycle” decisions that balance economic And yet, a toxic combination of inaction and paralysis and social sustainability, given that social remains, stymying choices that must be made: cohesion is already under severe pressure lockdown or not; isolation or quarantine; shut down from populism and other challenges that the factory now or wait for an order from above.

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