Quantum computing has long been technology’s white whale. But in recent months, new developments suggest practical applications for this elusive technology could finally be within reach. “Quantum has been five to ten years away from fruition for many, many decades,” says McKinsey Partner Michael Bogobowicz. “Now it feels three to five years away.” In this episode of The McKinsey Podcast, Bogobowicz joins McKinsey Global Editorial Director Lucia Rahilly to discuss how quantum differs from conventional computing, what its potential use cases are likely to be, and how to prepare for the highs and lows of a world that could move exponentially faster than it does today.
In our second segment we ask, what’s the most important factor in having a successful transformation? McKinsey Senior Partner Michael Bucy says it’s the CEO.
The McKinsey Podcast is cohosted by Lucia Rahilly and Roberta Fusaro.
The following transcript has been edited for clarity and length.
What’s new on McKinsey.com
Lucia Rahilly: Let’s talk about what’s new on mckinsey.com. More on tariffs. We just published an article about the importance of establishing a nerve center that can help companies respond comprehensively and in real time.
Roberta Fusaro: And geopolitically speaking, we have an interactive called the Global Trade Explorer. It tracks the top trading partners for each world economy. It shows very clearly how trading partners have changed from 1995 to 2023.
And now, let’s hear from McKinsey Partner Michael Bogobowicz—who goes by Bogo.
What is quantum?
Lucia Rahilly: Bogo, so glad to have you on to talk about quantum.
Michael Bogobowicz: It’s a super interesting topic I’ve been working on for a few years. Quantum has been five to ten years away from fruition for many, many decades. But now it feels as though it’s three to five years away. So it’s a really good time to be having this discussion. There are so many announcements that have come out and so many big players that have thrown their hats in the ring. We’re at this real inflection point in the industry.
Lucia Rahilly: Quantum has long been part of the lexicon of computing. But it can also feel difficult to grok. Help us demystify it. What is quantum computing, and how is it different from classical computing?
Michael Bogobowicz: Traditional digital computers operate in the realm of ones and zeroes. Quantum computing opens that up to calculate in very different ways than previously were possible. It involves replacing computer chips with individual atoms and using the quantum properties of each of those individual atoms to act as an entire processor. Quantum also works differently because rather than doing things serially, we can calculate hundreds of thousands of millions of scenarios all at the same time and then come to an answer.
Lucia Rahilly: Will quantum computers replace your typical laptop?
Michael Bogobowicz: Quantum computers are really good at certain types of problems, but they’re probably not going to replace every single type of computer out there. They’re not going to replace your PC. And they’re not going to replace all servers. What they will do is act as an add-on, in the same way as your graphics card does, to solve very specific, very challenging, and often very important problems.
Quantum will be faster than anything else to solve problems like, where do I need to go, and how do I find the best route? How do I pack up a cargo plane? How do I optimize my financial portfolio? It can also do simulations. How does a drug work with different viruses and different cells? What are the related impacts and effects? Predicting that is hugely valuable not only to pharmaceutical companies but also to the people who can benefit from these drugs being accelerated through the pipeline.
Materials science is a really big deal. Turning to batteries, for example, every single slight gain in efficiency can drive huge amounts of value.
Lucia Rahilly: Relative to conventional computing, how powerful is quantum?
Michael Bogobowicz: Let’s take information security, which people have been discussing heavily. There’s this concept of Q-Day coming up, which is when encryption will break. One of the most common standards out there is the public-key cryptosystem RSA-2048. To crack that with conventional computing would take about 300 trillion years, which is longer than the lifetime of the universe. Now, the expectation is that in maybe five years, quantum computers could crack it within a few hours.
That’s because quantum operates in such a fundamentally different way. Once we get to RSA-2048, there’s a real danger of things like “steal now, decrypt later” attacks. That’s not such a big deal if it involves stealing your emails from yesterday. But if it’s the theft of things like your health information or the designs for a nuclear submarine, then it becomes a really big deal.
Einstein’s spooky action at a distance
Lucia Rahilly: It feels as if we’ve been talking about quantum for eons. Einstein had that famous line where he described quantum entanglement as spooky action at a distance. I’m sure I’m oversimplifying this to an incredible degree, but the way it was described, the metaphor was something like if you were to flip a coin on Earth, a coin entangled with that one a bazillion miles away would also flip.
It’s as though they retain some kind of entanglement, despite this incredible distance. It’s such a romantic idea, that something could be separated from you, so far away, and still be connected. But I don’t know how that plays out in terms of actual use cases and applications.
Michael Bogobowicz: It does play out in the encryption space. The question is: You can’t send information faster than the speed of light, but theoretically this happens instantly, so is that breaking the speed of light?
Lucia Rahilly: How is it possible?
Michael Bogobowicz: It’s wild. People are asking, “Well, does that break the speed of light rules?” But because you can’t send information back in a traditional way, it doesn’t break them. You can’t confirm that what you got was 100 percent the right answer until you go the other way.
Quantum is very useful in encryption, but not as good at transmitting information. But we have figured out, using Bell’s theorem and a few other methods, that it’s not some third factor that’s just coincidental—we’re very certain that they are truly entangled. And as soon as you measure one, the other one collapses. It’s mind-blowing.
Quantum is very useful in encryption, but not as good at transmitting information.
Why quantum has been so elusive
Lucia Rahilly: Why have practical applications of quantum been so difficult to implement?
Michael Bogobowicz: In the quantum space it’s very hard to interact with the particles directly, because they’re tiny. But it is very easy for other things to interact with them. What we’re doing now is teaming up hundreds of these atoms together, instead of a physical qubit. We’re now going to logical qubits, and we’ve seen 100-, 1,000-, and 10,000-fold increases in accuracy. We’re at a point where we are seeing functional computers, but the scale of the computers themselves has been too small and the error rates have been too high.
Lucia Rahilly: In the past several months, we’ve seen three of what we call the hyperscalers—Microsoft, Amazon, and Google—announce big steps forward in the development of their proprietary quantum chips. What do these advances mean for the state of quantum development?
Michael Bogobowicz: These announcements are a big confidence indicator of how quickly we’re coming to quantum computing at scale. Google, Amazon, and Microsoft have all been working on this for years.
Lucia Rahilly: Should leaders be preparing for an accelerated timeline as a result of this quantum race intensifying?
Michael Bogobowicz: Absolutely. I think we’re still very dependent on some fundamental research. But just the amount of funding pouring in over the past three or four years skyrocketed by 100-fold. We went from tens of millions of dollars being invested, to hundreds of millions of dollars being invested, to now billions and billions of dollars every single year.
Use cases in priority sectors
Lucia Rahilly: You talked a little bit about this earlier, but let’s return to it: use cases, practical applications of quantum. We recently published some research highlighting finance and telecommunications as the sectors most engaged with quantum thus far. What do those sectors stand to gain?
Michael Bogobowicz: Quantum is really good at dealing with noisy information and helping to optimize and forecast well. Portfolio optimization in the finance space is a huge area, where it could understand your risks and constraints and then build a portfolio for whatever particular investment strategy that exists.
Quantum is really good at dealing with noisy information and helping to optimize and forecast well.
Telecommunications is another one, but it is in a very different world. Adjacent to quantum computing are things like quantum sensing and quantum networks, which use the same fundamental science to build out new technologies and new capabilities. For telecom, quantum encryption is particularly interesting, because it can provide a truly secure way of communicating. As we were describing, quantum works by entangling two atoms. They’re able to talk to each other, to put it simply. So, if somebody tries to eavesdrop, it would break the connection in a way that they can’t replicate. You’re able to use the properties of fundamental physics to secure your communications.
How to prepare for the quantum era
Lucia Rahilly: Even with recent advances, if I understand correctly, widespread quantum usage remains years away. Is there anything companies should be doing or thinking about now to prepare for the potential impact of quantum?
Michael Bogobowicz: Yes. The first one regards security. If you’re not using quantum-safe algorithms—and there are some that are published—this is the first place to start. If your data is getting captured now and then decrypted in a few years, that’s a major potential risk.
A lot of the big players have already built quantum-safe algorithms into their chats. Basically, every major place where data is in transit, there are already quantum-safe algorithms. Places where data is at rest are probably the next big area that people are focusing on.
The second big piece is around talent and strategy. Right now, the talent needed to create quantum algorithms, to run quantum computers, to maintain the environment is a tiny pool. It’s thousands of people in the world. And it takes years and years to train and earn a PhD to do this type of work. So if you really want to be involved in this, you need to think now about the one or two people you’re hiring, so that you can play in the sector in three years.
Right now, the talent needed to create quantum algorithms, to run quantum computers, to maintain the environment is a tiny pool. It’s thousands of people in the world.
Otherwise, we’re going to see what happened with developers and data scientists, except tenfold worse, where the cost of hiring these people and the availability of skilled workers is massively unaffordable for most organizations. The amount of value that we’re talking about across all industries is somewhere between $1 trillion to $2 trillion of value by 2035. All the financial organizations and banks we’ve talked about have already put their right-to-play card down and started to work in this space.
The last piece is to get involved with your local innovation hubs. These hubs are a combination of universities, private companies, and public funding. They really need private companies to come in and help them understand use cases, test the technology, work, and learn. That’s probably the most cost-effective and efficient way to get into this space as an entry point.
Lucia Rahilly: So interesting. What an incredible space to be working in.
Michael Bogobowicz: How did you hear about quantum?
Lucia Rahilly: I love the Italian physicist Carlo Rovelli, who writes about quantum.
But I also have a friend who did his doctorate at MIT jointly in physics and computer science and would describe these refrigerated areas for quantum where everything had to be perfectly controlled and managed. His remark at the time was, “It will never amount to anything, but it’s the coolest field there is in physics.”
Michael Bogobowicz: Some of the pictures of the quantum computers are just gorgeous. It is also near absolute zero in those rooms, something like –273°C.
Lucia Rahilly: Have you ever visited those?
Michael Bogobowicz: Yes, we visit different sites. The amount of engineering that goes into them is absolutely incredible. They are literally holding individual atoms in stasis and then electrifying and untangling them. That’s really difficult to do, to just pull out a single atom and then keep it isolated from everything else.
Transformation starts and ends at the top
Roberta Fusaro: Now let’s hear about how CEOs can lead their companies through a transformation, with McKinsey Senior Partner Michael Bucy in conversation with our managing editor and producer, Laurel Moglen.
Laurel Moglen: Transformation is a word that means many things to different people. When it comes to organizations, how are we defining it for our conversation today?
Michael Bucy: For us, we call it a capital T transformation—an organization-wide effort to change how the company operates to drive outsize performance. And by performance we mean financial performance, operating performance, and organizational performance. These organization-wide efforts are so important because change is tough. But change is now being forced upon organizations because of the pace at which the world around us is changing.
I’ve had the privilege of doing this across all different types of industries—telecom, software, fintech, manufacturing, insurance—and the single most important factor is the role of the CEO. That is the determination of whether these efforts are successful.
Laurel Moglen: Let’s talk about that role of the CEO. What is the CEO uniquely responsible for doing during times of transformation?
Michael Bucy: The CEO sets the tone, the pace, and the scope of the change. CEOs must solve what we call collective-action problems. These happen when an individual or group is incentivized in one way, and they never optimize for the whole because of the incentives that are set up in the system.
The easiest one to conceptualize is what I call the budget problem. Every single organization faces this. The CEO demands, “I want 10 percent improvements.” But the business leader has every incentive to go for incremental improvement over last year—not the full potential. Only the CEO can step in to say, “No, we’re going to go after our full potential.”
Another collective-action problem example is the optimization of the group versus the organization. Within organizations, folks come together in their small groups—the people they work with every single day—and it becomes natural to prioritize what that group needs, potentially at the expense of the whole.
Again, the CEO is uniquely positioned to ensure that everybody says, “The organization is what really matters, not what the individual group wants.” They have to bring the organization together cross-functionally, to engage with each other, to collaborate, to push each other, to challenge each other—so that we realize our full potential.
Laurel Moglen: That leads me to my next question. Is this about the CEO rallying the employee mindset? Are there specific ways a CEO can approach that?
Michael Bucy: The CEO is really the chief storyteller. They’re the person who is setting the vision for the organization and helping the organization craft the case for change. What is the fact-based reason for why we need to transform? Why do we need to change? Why do we need to adapt from what is comfortable and how we’re operating today?
Then, the CEO needs to encourage each person in the organization—each executive, each manager, each person on the front line—to figure out their personal “why.” Why am I excited about this? Why am I motivated by this change? What’s my personal change story? This kind of storytelling is so important—not just for the narrative, but to motivate.
Laurel Moglen: We can use employees to help radiate the story. Can you talk a little bit about frontline workers?
Michael Bucy: The most important thing is that each frontline worker needs to understand their role in the change, their role within the company. What do they do every single day? What do they need to bring for the company to be successful?
There’s a story that resonates with me from a mining operation in Western Australia. They’re digging up iron ore from the ground, and one of the things that hinders the mining operations is this sticky dirt. If you’re a truck operator and you hit this sticky substance, it’s going to gum up the rest of the system. There was a worker, Norm, who was an operator at this company. Every single one of his incentives told him to keep going. But he realized he had hit the sticky dirt, and he said, “No, I’m going to slow down.” Not only did he slow down, he also told the person on the night shift, “Hey, you need to slow down as well.” That one act preserved the chain that we were trying to create. It increased the overall throughput, even though he had reduced his own throughput.
Again, this goes back to the CEO being able to cascade that vision down, so that everybody starts to understand their role—by articulating what we’re trying to accomplish as an organization.
Laurel Moglen: That seems obvious, but it’s not, is it?
Michael Bucy: Everybody having their role is an obvious thing, but it’s really hard to do in practice. It requires intense conversations and trade-offs. And it requires working together as an organization. There are four traits a CEO needs to have during a transformation.
One is aspiration, which we talked about: setting the organization up with the ambition and vision. The second is being engaged. The CEO has to be on top of what they’re trying to drive as this change and be regularly engaged in it at the right times and the right moments. Third is that the CEO has to be empowered. CEOs often know what they want to do, but because of the board or other stakeholders, they don’t always have the ability to drive what they want to. The last trait is being effective. CEOs need to step up. They need to make the decisions that only they can make.
Laurel Moglen: What happens when newly hired talent comes into an established workforce during a transformation—how can they be helped to join forces, as opposed to creating friction?
Michael Bucy: Too often, talent coming in joins a moving train. We do a really poor job of getting them up to speed on the collective journey that the rest of the organization has already been on. At the same time, when someone comes in with fresh eyes and a new perspective, they can provide the galvanizing force to get the organization to change even faster. So it’s an opportunity.
But too often, because we don’t do the proper context setting, we don’t create the right moments for them to get onto the moving train and they start to steer things in a very different direction from where everybody else is going. And the transformation isn’t as successful as it really could be.
Laurel Moglen: What would you say is the single biggest challenge you see across industries that CEOs don’t anticipate during transformations?
Michael Bucy: One of the challenges we see is that bridges aren’t built between the transformation and the day-to-day business. Two things happen as a result.
First, within the transformation itself, we’re operating at a different pace. We’re starting to make decisions faster and behave differently. But when those same attributes aren’t brought into the day-to-day business, everything feels like business as usual, and we don’t act with urgency. That leads to suboptimization.
The second issue is when the change and the transformation are not in lockstep. Therefore, you get into lots of disputes about “I can’t see the financial results here,” or “I don’t understand what is really driving my performance,” because at the bottom line, I can’t disaggregate what is driving this.
We emphasize getting closer to the operating metrics of the business. These are the leading indicators that show us where we’re heading. We also make sure we have a tight linkage within the day-to-day efforts and the change in those operating metrics.
Laurel Moglen: What comes to mind about culture and communication that a CEO is uniquely suited to instill?
Michael Bucy: First is that the CEO has to say, “What we’re doing today is not where I want to be in three months’ time, six months’ time, 12 months’ time.” Just the sheer act of setting a vision for how we want the organization to operate is a powerful change. It sets the organization onto a different course.
The second piece is to say, “OK, we’re going to operate differently.” But who is going to be the catalyst of this change? At the end of the day, it’s the leaders within the business. In general, it’s our high potentials, the ones who see the problems in the business every day. They see how we could potentially operate differently. What are the things we need to change? Unleashing them to be able to operate much differently, I think, is another powerful act that allows the organization to run much faster and move in the right direction.
Laurel Moglen: When all the teams are executing this transformation, how hands-on is the CEO in sustaining the desired impact?
Michael Bucy: I’ve got good news and bad news for CEOs. The good news is that you don’t need to be involved with the transformation 24 hours a day, seven days a week. But the bad news is that you do have to be engaged. You do have to be involved.
The cadence that we like to think of is weekly, which is enough to actually get work done—to be able to move an organization forward, to get to the fact base of what needs to be solved, and to tee up the right decisions. But it’s not so long that we’re actually losing weeks and months of a year of performance.
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