The race is on to build sufficient data center capacity to support a massive acceleration in the use of AI. Data center demand has already soared in response to the role data plays in modern lives. But with the emergence of generative AI (gen AI), demand is set to rise even higher. And that is likely to presage a supply deficit. As challenging as this could be, companies and investors…
According to economic historian Dr. Chris Miller, “You can’t understand the modern world without putting chips at the center of the story.” That conviction led Miller, an associate professor at the Fletcher School at Tufts University and nonresident senior fellow at the American Enterprise Institute, to research and write the 2022 nonfiction best seller Chip War: The Fight for the World’s Most Critical Technology. In an interview with McKinsey alumnus…
Private credit has become a more popular financing option across many industries and types of businesses—and the opportunity for investors to deploy this approach is growing. In this episode of Deal Volume, McKinsey’s podcast on private markets, McKinsey partner and host Brian Vickery speaks to Vivek Mathew, president and head of asset management at Antares Capital, one of the world’s largest private credit managers. They discuss how the private credit…
The consumer-packaged-goods (CPG) and retail industries are entering an era marked by a focus on growth and a search for value. The past decade has been particularly challenging, with population growth slowing and consumer attention fragmenting. To respond, companies must push an ambitious dual agenda, as McKinsey outlined in a recent article. They need to find new pockets of growth through portfolio management and enhance capabilities to improve performance. This…
Digitization, rapid advancements in AI technologies, and slower gains in power usage efficiency have significantly escalated the demand for data centers, with major implications for global power market dynamics. In Europe, demand for data centers is expected to grow to approximately 35 gigawatts (GW) by 2030, up from 10 GW today. To meet this new IT load demand, more than $250 to $300 billion of investment will be needed in…
If you have an ambition but no plan behind it, you’re probably not going to get the results you’re looking for. According to recent McKinsey research on the UK economy, the highest-performing UK companies have grounded their ambitions in a set of five conditions—looking at investors, incentives, sources of growth, partnerships, and people. And the results speak for themselves. On today’s episode of The McKinsey Podcast, senior partners Andrew Goodman and Tunde…
This transcript has been lightly edited for clarity.What keeps capital project leaders awake? Ishaan Nangia: What we hear consistently from capital project leaders is that there is a huge amount of value attached to their capital management system. Between 2022 and 2027, about $130 trillion of capital will be spent, and that’s almost a 70 percent increase compared with the previous five years. Our research suggests that most large capital…
Rising uncertainty surrounding future electricity demand could affect Europe’s energy transition and power infrastructure investment plans. Governments and system operators have projected that power demand in major European countries could increase by as much as 7 percent per year to 2030 after two decades of relative stagnation. In McKinsey’s Global Energy Perspective 2024 report, the Continued Momentum scenario projects growth to be only slightly above 2 percent CAGR. Further McKinsey…
At a glance Arenas are a unique category of industries defined by two characteristics: high growth and dynamism. They capture an outsize share of the economy’s growth, and the market shares of players within them change to an outsize degree. We have identified 18 potential arenas of the future that could reshape the global economy, generating $29 trillion to $48 trillion in revenues by 2040. These arenas range from AI…
Brazil is hosting the G20 Summit for the first time this year, a role that will allow it to lead the discussion on critical global issues. High on the agenda at this year’s summit, held in Rio de Janeiro on November 18 and 19, is the challenge of climate change and the capital-intensive energy transition required to reduce greenhouse gas emissions (GHG) that are contributing to it, as agreed in…
Leading a global organization in today’s fragmented world is difficult—perhaps more difficult than ever. Since the outbreak of COVID-19 and the acceleration of geopolitical tensions, leadership teams have faced an increasing number of uncertainties and disruptions. These include the sudden emergence of upending technologies, such as generative AI; the energy transition; and a global workforce seeking more autonomy, empowerment, flexibility, and mobility. There is a compounding and interconnected effect across…
In this episode of The Committed Innovator, McKinsey innovation leader Erik Roth speaks with the founder, president, and medical director of the Child Mind Institute in New York City, Dr. Harold Koplewicz. At a time of increasing concerns globally about child and adolescent mental health, the organization is working to use advanced imaging technologies and AI to help revolutionize diagnosis and treatment of psychiatric illness and psychological and learning disorders.…
Positive news is emerging from various sources, suggesting the global economy might be turning a corner, though substantial risks remain. Central banks face a challenging balancing act between managing inflation and promoting growth, which led to divergent actions this month. Several banks cut rates to boost the economy in September, while others tightened policy to tame inflation. Although headline inflation is approaching central banks’ targets, core inflation remains elevated. The…
The tantalizing vision for global payments has long been that they’d be safe, simple, quick, inexpensive, and ubiquitous. This promise has come closer with each new technological advance. However, instant payments have ushered in the Decoupled Era, a term coined in last year’s Global Payments Report. In this environment, payments are becoming disconnected from accounts, and the number of players is proliferating, fragmenting the value chain, increasing complexity, and endangering…
Over the past decade, the telecom industry has faced one daunting challenge after another. Telcos have endured relentless competitive pressure from fast-moving technology companies that entered their core sectors of communications, connectivity, and data transport. In the hopes of igniting revenue growth, telcos have sought to reinvent themselves. They have created new tech-driven product offerings—from the Internet of Things (IoT) and software as a service (SaaS) to over-the-top (OTT) video…
This transcript has been lightly edited for clarity.What is shifting in tech-enabling operational transformations? This is clearly the age of AI. With the rapid advances in generative AI, it has become very easy to consume AI, and therefore companies are making significant investments over the last few years in the cloud infrastructure across various gen AI technologies, as well as machine learning investments. And there’s an increasing difference between leaders,…
This transcript has been lightly edited for clarity.What is causing so many consumer product leaders to rethink their products and portfolios? Jan Henrich: Renovating and innovating the existing portfolio has never been more important than it is these days. First, consumer discretionary spending is tightening. Second, passing on inflation costs to the consumer is getting more difficult. And last, it is very hard to get a portfolio right the first…
Farmers worldwide are navigating challenges such as increased input prices, extreme weather events, and commodity price volatility. Given the current macroeconomic environment, the priority for farmers today is improving productivity, whether through agriculture technologies (agtech) for improving operations, biological products, or sustainable practices. This report offers insights for organizations collaborating with growers, outlining strategies that could deliver more-personalized products and services to boost productivity and seize emerging opportunities. Since 2018,…
Medtech value creation has been a story of haves and have-nots in recent years. Since 2019, the top value creators have outpaced the S&P 500, while the rest of the industry has struggled (Exhibit 1). Industry and capital market volatility during the COVID-19 pandemic masked the differences in performance between the top medtech companies and their peers. In the years since, investor behavior has revealed just how wide of a…
Data center real estate is such a hot topic that some have wondered whether it’s overhyped. But the digital and cloud revolutions—and the scale-up of AI—are fueling truly enormous demand for data centers. In turn, there are a variety of ways that real estate companies can participate in the growth of the industry. McKinsey senior partner Pankaj Sachdeva talks with McKinsey Global Publishing’s Katy McLaughlin about what these companies should…
Across private markets globally, there is persistent pressure to effectively deploy capital, generate higher-than-average returns, and exit investments profitably. Yet challenges remain daunting, including inflation and interest rate volatility in the macroenvironment and intense competition for assets resulting from investors holding significant dry powder aimed at a scarce number of targets offering sustainable sources of competitive advantage. It’s thus unsurprising that deal volumes and value for the global private equity…
Chemical players tend to have strong, ingrained sales functions. Over the past 18 months, however, a combination of long-standing internal issues and external shocks—such as the effects of inflation on chemical manufacturing and customer destocking—has caused revenues to plateau or even decline. In fact, our research shows that diversified chemical players saw year-over-year volume drop by as much as 10 percent in the first quarter of 2023, and specialty players…
Do the math on generative AI (gen AI), and the numbers can seem heady. But according to recent research, only a small percentage of companies are beginning to deliver meaningfully on its promise—and many have succumbed to “death by a thousand pilots,” in the words of Rodney Zemmel, global leader of McKinsey Digital. In this episode of The McKinsey Podcast, Rodney and fellow senior partners and coauthors Eric Lamarre and Kate…
Companies are entering a new phase with generative AI (gen AI), as they realistically ponder how to deploy the potent technology responsibly and profitably. The answer, says Navrina Singh, founder and CEO of Credo AI and today’s guest on this episode of the At the Edge podcast, is proper governance in the form of continuous human oversight. Singh speaks with McKinsey senior partner Lareina Yee about the importance of monitoring, measuring,…
Climate technologies play a crucial role in the net-zero transition, with their potential to abate 90 percent of man-made emissions globally by 2050. According to McKinsey estimates, a successful transition will require the creation of 1,000 unicorns (start-ups valued at $1 billion or more) and 300 decacorns (start-ups valued at $10 billion or more) in the climate tech space by 2030. This is a massive challenge, especially as the fundraising and…
McKinsey: How have European banks started to implement gen AI? Gökhan Sari: Since we spoke last year, we’ve seen a tremendous effort to implement gen AI across most of our clients. Last year, it was more about, “Should we try it? Are we going to have hallucinations? What about the regulatory aspects?” But this year, it’s all about, “OK, it’s working in a few places, how can we scale this…
The last few years have been among the most successful in the recent history of retail banking, with a confluence of macroeconomic trends driving growth and profitability. In some geographies, pandemic-era government stimulus lifted economic growth, fueled consumer spending, created favorable conditions for balance sheet expansion, and helped keep credit risk in check. Following the pandemic years, rising interest rates improved banks’ net interest margins as loan interest grew faster…
Carbon emissions are a global challenge, but the way each company responds to the risks and assesses new opportunities should be highly case specific. While compliance is critical, strategy should matter most of all. CFOs must ensure that their organizations meet customer priorities, adapt to regulatory changes, and develop an informed view of carbon management tools. Too often, companies can have multiple, inconsistent, and ineffective carbon data and analyses across…
The need for semiconductors has exploded since 2010, and despite a recent downturn in 2023, the semiconductor industry is trending toward recovery and long-term growth to more than $1 trillion in revenue by 2030. Comparable to previous market cycles, some segments of the semiconductor industry have grown, while others have contracted. In this market cycle, the demand for chips to power smartphones and personal computers has dropped, and the demand for…
Media executive and entrepreneur Uday Shankar has played a key role in the transformation of entertainment and media in India and the Asia–Pacific region over the past three decades. After getting his start in journalism, Shankar transitioned to the entertainment business in 2007 as CEO of Star India, part of News Corp. He later went on to hold executive roles at 21st Century Fox (Asia) and Disney (Asia–Pacific). While at…
E-commerce is undergoing a fundamental change that is reshaping how customers buy and companies sell. While generative AI (gen AI) has grabbed the attention of executives over the past year, a quieter wave of technology-driven innovation is washing over almost every aspect of e-commerce. This technology infusion is powering a much more comprehensive and integrated version of next-gen e-commerce, in which a broad ecosystem of capabilities—such as R&D, logistics, warehousing,…
Leadership is never easy—not for nothing did Shakespeare write, “Uneasy lies the head that wears the crown.” The job of leader may seem even more imposing these days given a range of micro- and macro- social, economic, and geopolitical forces. But amid the challenges, there is always the opportunity for growth, says Daniel Vasella, the former chairman and CEO of Novartis AG. Vasella has counseled hundreds of global CEOs through…
The world needs more productivity growth. As a recent McKinsey Global Institute report argues, it’s the best possible antidote to wealth inequality, inflation, and exploding debt and could provide crucial funding for the net-zero transition and improved living standards. It’s also what every company needs. Yet productivity growth has largely declined since the global financial crisis of 2007–09, particularly in the most advanced economies (Exhibit 1). The macro causes of…
Spiritual health, often overlooked in holistic well-being, deserves greater attention. While physical health has traditionally been the main focus and mental and social health are gaining recognition, spiritual well-being plays a critical role in enhancing overall health. McKinsey Health Institute’s (MHI) global survey of 41,000 people finds that spiritual health matters to many, regardless of age, country, or religious beliefs. Studies further show that fostering spiritual health can significantly improve…
What will it take for the consumer goods industry to turn its fortunes around? Once a leader in total shareholder returns (TSR), the industry has fallen from the top to the bottom quartile in TSR performance. This episode of the McKinsey on Consumer & Retail podcast examines the reasons for that decline—and what consumer packaged goods (CPG) companies can do about it. The episode is excerpted from a webinar on “Rescuing…
Executive summaryThe automotive industry has been a stronghold of the European economy for decades but is now facing disruption from electric mobility. In 2023, the industry contributed $1.9 trillion in gross value added (GVA), with technology and car exports creating $620 billion in value. Electric mobility could add $240 billion to $300 billion in GVA in after-sales support and services by 2035. But based on current trends, European production value…
The narrative surrounding generative AI (gen AI), a moon shot, once-in-a-generation innovation, is that it could utterly reinvent how businesses—consumer-packaged-goods (CPG) companies among them—are run. CPG leaders are heeding the call. In a 2024 survey of CPG leaders, 71 percent said they adopted AI in at least one business function of their organizations (up from 42 percent in 2023), while 56 percent said they were regularly using gen AI. However,…
At a glance Micro-, small, and medium-size enterprises (MSMEs) are the bedrock of the US economy. They employ nearly six in ten workers, produce almost 40 percent of value added nationally, and grow into a meaningful share of very large corporations. MSMEs in the United States are only half as productive as large companies, compared with 60 percent in other advanced economies. Narrowing the productivity gap, which is equivalent to…
Consumer-facing companies across all types of sectors have already begun to harness the power of modern retailing techniques. Tactics such as bundled offers and dynamic pricing can provide a boost to an organization’s revenue and profit. At the same time, they are creating better, more relevant experiences for consumers. Airlines, however, have yet to capture many of these benefits. For instance, some might fail to bundle the sale of a…
No matter where one turns these days, engaging with some form of AI is likely. From the algorithms that power social media to virtual assistants that answer questions and control smart devices, AI is actively shaping how the world works. Opinions about AI’s impact on the workforce range from positive expectations that it will reduce employees’ workloads to negative sentiments that AI will replace human interactions. In healthcare—with patient lives at…