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COVID-19: Implications for business

November 18, 2020 | Executive Briefing
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COVID-19: Implications for business
Our latest perspectives on the coronavirus outbreak, the twin threats to lives and livelihoods,
and how organizations can prepare for the next normal.
COVID-19 and the great reset: Briefing

note #32, November 18, 2020
In the pandemic, capitalism’s adherents are reconsidering its
recent history and its future direction. Two new reports can
illuminate the path.
DOWNLOADS
Special Report
COVID-19: Facts and Insights, October 30
Full Report (129 pages) Article (5 pages)
This week, McKinsey experts took a step back to consider the
effects of the COVID-19 crisis on the economic system in which
much of the world operates: capitalism. Two new reports offer
complementary views. In “Rethinking the future of American
capitalism,” James Manyika, Gary Pinkus, and Monique Tuin trace
the extraordinary achievements of the American system and the
work still to come, including the need to rectify unequal and
increasingly disparate outcomes for people and places, increasing
“superstar” effects, and declining investment in public goods.
“The case for stakeholder capitalism” considers the role of

business in society—a role that companies should not resist, lest
they “find themselves on the wrong side of history … and also at a
competitive disadvantage.” Vivian Hunt, Bruce Simpson, and Yuito
Yamada examine the rising expectations for business, detail five
principles for companies to follow, and offer many practical
insights as they take action. One tactic is simply to publish your
targets: a Danish power company put forth a ten-year plan to
switch from coal to renewables; they did it in nine years, while
simultaneously increasing profits by 43 percent.
Employees may be the stakeholders that need the most attention.

According to our latest research, almost a year into the crisis,
employees—especially women, LGBTQ+ employees, people of
color, and working parents—are crying out for more support
(exhibit). Nearly all employers are aware of the challenges and
have established polices to help, but they are finding it hard to
execute their diversity, equity, and inclusion (DEI) strategies.
Asking and answering a set of tough questions can help companies
close the gap.
Exhibit
Our experts also considered the future of corporate training, an
expensive and often ineffective activity—when it did succeed, it
was through in-person, hands-on learning. The COVID-19
pandemic brought that to a halt, forcing companies to innovate. In
our latest research, we chronicle the advances companies have
made in the pandemic and the ways in which the new capabilities
they have built have secured their competitive position.
Also this week, our industry researchers looked at data’s critical

role in two transport industries, bulk and tanker
shipping and airlines; considered the effects of the COVID-19
pandemic on supply chains in retail; and outlined our latest
findings on consumer behavior, this time in Europe.
We have updated our comprehensive COVID-19 briefing materials.

The new 129-page report is now available for download.
Executives everywhere are thinking about the potential for
successful vaccines to deliver the next normal. Start with
the McKinsey Download Hub to find McKinsey’s latest research,
perspectives, and insights on the management issues that matter
most, from leading through the COVID-19 crisis to managing risk
and digitizing operations. Also consider our special collection The
Next Normal: The recovery Will Be Digital. The first two
installments—a 172-page report on technology and data
transformation and a 130-page report on the path to true
transformation—are available now. Three more are coming as part
of Our New Future, a multimedia series we created with CNBC.
You can also see the full collection of our coronavirus-related

content, visual insights from our “chart of the day,” a curated
collection of our first 100 articles related to the coronavirus,
our suite of tools to help leaders respond to the pandemic, and
how our editors choose images that help readers visualize the
impact of an invisible threat.
This briefing note was edited by Mark Staples, an executive editor

in the New York office.
For the full set of our latest perspectives on COVID-19, download our briefing note and
full briefing materials.
Download the briefing note Download the full briefing materials
A vaccine breakthrough and how companies are thinking about

purpose: here’s the latest from McKinsey’s research.
This week saw some surprising news about a large COVID-19-

vaccine trial: a leading candidate has an efficacy rate of about 90
percent. There’s a lot of green between this particular ball and the
pocket, but the news was most welcome. COVID-19 vaccines have
been a focus of our research, as seen in our July 2020 overview,
which includes a full discussion of the key issues of manufacturing
and distribution, and subsequent articles on the end of the
pandemic, an optimistic scenario for the pandemic response in the
United States, and the technology transfer that may be critical to
beating the COVID-19 crisis.
With the end in sight, or at least in fuzzy focus, companies are

thinking ahead. A critical challenge for companies in the postcrisis
era will be articulating clear, meaningful, and authentic purposes.
Some companies seem to have the answer: they know their
reasons for being, communicate them easily to customers, and
enjoy the results. Our new framework (exhibit) can help others
think through these knotty issues.
Exhibit
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Governments have not lost sight of their purpose, but fulfilling it
has become much more difficult. The gap between incoming and
outgoing funds may reach $30 trillion soon. Our latest research
shows a particularly effective bridge for governments to
consider: real estate. The public controls a vast amount of acreage,
office space, and other assets, and governments can extract much
more revenue from them without breaching the public trust. On a
related note, as part of their purpose, many businesses will
embrace sustainability; voluntary carbon markets can help them
reach their goals.
Cost management may be the yin to purpose’s yang, but is no less

essential. In our new survey of some 300 C-level executives, we
look at the ways that the corporate center is evolving. Our latest
observations find that many organizations are accelerating their
cost-reduction targets, modifying their operating models on the fly,
and redefining their functional priorities.
Our new regional research considers two large economies in Asia.

China, the world’s growth engine for the past 25 years, has come
back—in ways that may surprise you. Consumer behavior has
changed, pockets of growth are shifting, and leadership and
management practices are in flux; businesses that manufacture
and sell in China must be alive to the changes. And in Australia,
businesses would be wise to understand today’s more mindful
consumers.
Finally, the McKinsey Podcast zeroed in this week on retail, where

the talk was all about rapid revenue recovery. Say what? It’s true:
winners are recognizing the shifts in consumer behavior, adjusting
their offerings, and rebuilding their businesses. Successful
companies have five traits in common.
Executives everywhere are thinking about the potential for

successful vaccines to deliver the next normal. Start with
the McKinsey Download Hub to find McKinsey’s latest research,
perspectives, and insights on the management issues that matter
most, from leading through the COVID-19 crisis to managing risk
and digitizing operations. Also consider our special collection The
Next Normal: The recovery Will Be Digital. The first two
installments—a 172-page report on technology and data
transformation and a 130-page report on the path to true
transformation—are available now. Three more are coming as part
of Our New Future, a multimedia series we created with CNBC.


Scenario planning and a new decision tool are helping executives

cut through the murk of the pandemic’s many confusions.
Executives have noticed the striking rise in COVID-19 cases in many

parts of the world, yet they remain positive—if a trifle more wary.
In the October edition of our monthly survey of more than 2,000
leaders around the world, fewer executives than in September say
that better economic conditions are on the way (exhibit). But the
balance is still tilted toward a positive outlook, especially where
profits and customer demand are concerned.
Exhibit
We also asked respondents to vote on which of McKinsey’s nine
pandemic scenarios is most likely. As of October, they are solidly in
favor of scenario A1 (a muted recovery) but also see B2 (a
prolonged and insufficient recovery) as a scenario to consider.
Unsure about the terminology? In a new interactive, we explain
our scenarios, what executives are thinking, and how that thinking
has changed over time.
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5. When nothing is normal: Managing in extreme uncertainty
For decades, McKinsey has advocated for the advantages of
scenario planning while also recognizing the ways the approach
can fall short. The pandemic has illustrated both sides of the
equation. Enter a new approach: parametric analysis, in the form
of an “uncertainty cube.” Right now, the businesses facing the
greatest uncertainty are limiting themselves to three or four
macrolevel scenarios that provide general direction but not much
detailed guidance. The uncertainty cube uses several
macroeconomic and financing parameters to generate highly
specific advice by which to steer such a business.
Operating models, too, have come under pressure at companies

facing great uncertainty. What’s needed are new
structures designed to cope with the unprecedented conditions of
2020 and beyond. One way forward may be to embark, at last, on
a true transformation. A new video explains the logic.
This week, we were delighted to sit down with two executives

cutting remarkable paths through the pandemic. Aneel Bhusri, co-
CEO of Workday, reveals the secrets of life in the pandemic for the
finance- and HR-software powerhouse. And Sir Mark Lowcock,
under-secretary-general for humanitarian affairs at the United
Nations, explains the panoply of effects of the crisis on the United
Nations and its missions.
Also this week, McKinsey experts assessed the potential for India’s
manufacturing sector to deliver much-needed growth and jobs;
reviewed the impact of the pandemic on the global petrochemical
industry; and considered the moves that South Africa’s
insurers can make to thrive in the long term.
Finally, in the pandemic, many of us are spending more time at

home with our families. Children are naturally curious about what
parents do—and it isn’t always easy to explain. At McKinsey, we
took a crack at it and developed a new explainer for the younger
crowd. Hint: it involves fishing.
Executives everywhere are thinking through the contours of the

next normal. Start with the McKinsey Download Hub to find
McKinsey’s latest research, perspectives, and insights on the
management issues that matter most, from leading through the
COVID-19 crisis to managing risk and digitizing operations. Also
consider our special collection The Next Normal: The Recovery Will
Be Digital. The first two installments—a 172-page report on
technology and data transformation, and a 130-page report on
the path to true transformation—are available now. Three more
are coming as part of Our New Future, a multimedia series we
created with CNBC.


note #29, October 28, 2020
New views on the postpandemic futures of six sectors.
The old joke has it that nostalgia isn’t what it used to be. As the
unrelenting COVID-19 pandemic rolls on, the future isn’t what it
used to be, either. What used to be a simple idea now comes
freighted with caveats, assumptions, and speculations. In the spirit
of illumination, McKinsey researchers this week took a look at how
things might develop in six sectors beyond the next few weeks.
The auto industry is one of the world’s largest and has been

devastated by the pandemic: sales may drop by 20 to 30 percent in
2020, and we estimate that profits will fall by $100 billion. But
automakers can respond. One example: software-subscription
services, which enable people to pay for programs that unlock
features from heated seating to full self-driving capabilities, allow
dealerships to develop a better relationship with consumers while
offering drivers additional flexibility and customization.
The US restaurant industry has given many iconic brands to the

rest of the world. But today, the sector is in trouble. In our
latest podcast, we review the industry’s predicament, which we
explored earlier in some depth, and assess the innovative solutions
that companies are devising. Takeout and delivery are here to stay,
and restaurants are working to make those experiences better.
Menus also need a rethink. People don’t order sides, appetizers,
and desserts as frequently when they’re ordering for delivery—but
as leaders know, those items are often the difference between
profit and loss.
For banks, the pandemic has changed everything. Risk-

management teams are running hard to catch up with cascades of
credit risk, among other challenges. Down the line, we expect
that automated underwriting will take hold for retail and small-
business customers and will both reduce losses and save costs.
Asian insurers are looking at a more consolidated future. Our

new report argues that insurtechs’ new, pandemic-oriented
products and digital capabilities—not least the ability to reach
millions of customers within a few months—mean that a
programmatic approach to M&A is the surest strategy to overcome
the industry’s structural weaknesses.
We recently hosted a panel discussion with Shobana Kamineni,

executive vice chairperson of India’s Apollo Hospitals, to discuss
the evolving nature of healthcare at scale. Apollo Hospitals
comprises more than 7,000 physicians and 30,000 other healthcare
professionals, and its app is downloaded about 30,000 times a day.
Among the findings: public–private partnerships are working well
and have the potential to influence the future of healthcare.
Finally, we consider five fundamental questions for US higher

education, as colleges fashion their pandemic response. Also this
week: a new survey of Europe’s small and medium-size businesses
lays out the extent of the economic damage and owners’ muted
outlook.

Be Digital, featuring a 172-page curated volume that you
can download—the first of five edited collections that
accompany Our New Future, a multimedia series we created with
CNBC.


Geopolitics is back. Business leaders need to think through the

implications.
In the 1990s, adherents of Francis Fukuyama came to believe in

the “end of history.” The COVID-19 pandemic and a host of other
factors—such as climate change, cyberattacks, and terrorism—
have helped history stage a resounding comeback. Now, according
to Richard Haass, president of the Council on Foreign Relations, the
trick for businesses is to adjust and hope that history is just back
for a visit and not for revenge. In a discussion with McKinsey senior
partner and cochair of the McKinsey Global Institute (MGI) James
Manyika, Haass speaks about the return of geopolitics to the top of
the CEO agenda. Supply chains are another critical focus of the
renewed attention, as covered in MGI’s new report and partner
Susan Lund’s comments in the Economist.
McKinsey research has documented the disproportionate effects of
the crisis on ethnic minorities, both in the United States and
elsewhere. Our latest report on the topic looks at the United
Kingdom. Key findings: over the past two decades, every ethnic
minority group has made progress, in both absolute terms and
relative to the white majority, on a range of economic indicators
(exhibit). But the COVID-19 crisis threatens that progress; not only
do all ethnic-minority groups have higher age-adjusted COVID-19-
related death rates than white people do, but Bangladeshis and
Pakistanis, in particular, are concentrated in occupations that have
been hard hit by furloughs and layoffs.
Exhibit
This week, our marketing experts zeroed in on B2B businesses and
how they sell. The classic approach is person to person; think of
pharma’s armies of “detailers.” However, the COVID-19 pandemic
has moved almost all sales online, often to self-service digital
platforms. Everyone seems to be happier with the new
arrangements. Some 70 percent of buyers say they prefer digital
interactions; sellers like the greater effectiveness.
Videoconferences and live chats are helping companies seal the
deal; traditional phone calls are now a last resort.
Also this week, our industry researchers examined the latest travel

data from China to understand what it might mean for tourism and
business travel elsewhere. They also considered the new
challenges for innovation in consumer companies.

CNBC.


The stock market has many puzzled. Here’s our explanation.
In the middle of the deepest recession in memory, stock markets

are reaching new highs. Why the disconnect? To understand the
conundrum, McKinsey experts point to three factors. First, many
investors still take a long-term perspective; they are looking ahead
to the end of the pandemic. Another factor: five big-tech
companies now make up 21 percent of the S&P 500, one of the
world’s most-watched markets. And smaller, unlisted companies
have absorbed a lot of the economic damage, such as the dramatic
rise in unemployment. The overall stock market can do relatively
well even when employment and GDP are severely depressed
(exhibit).
Exhibit
Investors may also be focused on the vast differences in resilience
at companies. We interviewed leaders at several UK companies
that have done better than others during the crisis. What
distinguishes them, in a word, is agility. From a common purpose
to rapid decision making to empowered local teams, these
companies found ways to respond quickly to COVID-19. A key
finding: war-gaming for a no-deal Brexit built a solid foundation for
supply-chain resilience.
A new podcast this week examined those same supply-chain

issues, in the context of McKinsey Global Institute’s August
2020 report on risk and resilience. Experts Ed Barriball and Susan
Lund explain the research finding that, on average, companies can
expect a disruption to their production lines of one to two months
—a very long time—every three-and-a-half to four years.
Another podcast lays out the path forward for the US retail
industry; our experts explain what it means for the industry when
so many categories are tilting toward online shopping. Short
answers, from senior partner Becca Coggins: “we’re in the foothills
of what omnichannel-driven convenience will look like” and “some
big innovations will scale, now that consumer expectations have
been reset.” In another report, we examined the same forces and
their effect on Middle East and Africa retailers.
Also this week: McKinsey researchers examined the potential

for medtech innovation, and a more productive future for insurers.

next normal. Start with The McKinsey Download Hub, with
CNBC.



As the effects of the pandemic intensify gender inequality, further
threaten the economy, and raise hurdles for the health industry,
companies’ actions now could see them through the crisis.
In the sixth year of our Women in the Workplace study, conducted

in partnership with LeanIn.Org, we find that the effects of the
COVID-19 crisis have exacerbated gender disparities and their
implications for women at work, especially for mothers, female
senior leaders, and Black women across America. In addition to
being laid off and furloughed at higher rates than their male
counterparts during the pandemic, women are—notably, for the
first time in our research on the topic—considering downshifting
their careers or leaving the workforce altogether at staggering
rates.
The exodus might include as many as two million women. That

would raise a significant barrier to achieving gender parity in
leadership roles in years to come. People are thinking about
leaving the workforce for a variety of reasons (exhibit). While many
organizations are providing additional resources related to remote
working and employee well-being, there is more to be done to
meet employees’ needs for sustainable, flexible, and empathic
work environments, especially for parents and caregivers.
Exhibit
Meanwhile, the global economic contractions resulting from the
COVID-19 pandemic have far exceeded those of the Great
Recession that ended in 2009 and have occurred at a much faster
rate, hitting all sectors and many of the world’s largest employers.
As companies plan for various outcomes in 2021, our research
shows what companies seeking resilience can do today to achieve
“escape velocity” from the crisis by focusing on EBITDA1 margins,
revenue, and optionality.
An area where companies have already adjusted well is using

technology to address changing work environments and to stay
competitive. Our new global survey finds that organizations that
are successfully responding to the crisis have deployed more
advanced technologies, digital products, and tech talent to speed
up innovation—and they expect most of these changes to outlast
the pandemic.
Our research this week sheds light on two important issues facing
healthcare providers. First, similarities in flu and COVID-19
symptoms could lead to a threefold spike in demand for COVID-19
testing as flu season in the Northern Hemisphere approaches.
Maintaining sufficient capacity for testing and contact tracing will
be critical in curbing further outbreaks and protecting high-risk
groups. Second, the crisis has also led to a surgical backlog for
elective procedures because of lack of hospital capacity, workforce
shortages, and new safety protocols. Health systems will need to
optimize current clinical operations to address the discrepancies in
supply and demand.
This week we also explored how European marketing-and-sales

leaders are navigating the effects of the pandemic, the domino
effect for improving sales returns on investment, disruption that is
reshaping construction-material distribution, and steps that
distributors can take to stabilize operations and outperform
competitors.

next normal. Consider our special collection The Next Normal: The
Recovery Will Be Digital, featuring a 172-page curated volume that
you can download—the first of five edited collections that
CNBC.

This briefing note was edited by Dana Sand, an assistant managing

editor in the Atlanta office.
note #25, September 30, 2020
Executives are more hopeful about the economy than they have
been at any time so far during the COVID-19 crisis. Is an end to the
pandemic at hand?
Six months after WHO declared COVID-19 a global pandemic, the

responses to our latest McKinsey Global Survey suggest a positive
shift in economic sentiment. More than half of all executives
surveyed say economic conditions in their own countries will be
better six months from now, while 30 percent say they will worsen
(exhibit). That’s the smallest percentage of pessimists we’ve seen
since the survey in April 2020.
Exhibit
Taking a cue from those executives, our researchers delved deep
into the US situation, emerging with an understanding of what it
will take to deliver an optimistic outcome. The case depends on
the progress made to date—and the potential for more. We’ve
learned much about the natural history and epidemiology of
COVID-19. We’re developing better diagnostics, including rapid
point-of-care tests, a few of which can be completed in about 15
minutes. Case management has improved. And pharmaceutical
companies have turned out a remarkably robust pipeline of
vaccine and therapeutic candidates. Put it all together, and an end
to the pandemic is potentially within range.
Another new survey reveals the extent of the COVID-19

crisis’s disruption in working practices and behaviors. One-third of
surveyed companies have accelerated the digitization of their
supply chains, half have sped up the digitization of their customer
channels, and two-thirds have moved faster to adopt artificial
intelligence and automation. Many other workforce changes are
also in progress.
Managers need to process these changes and many others, and

come to grips with the long-term strategic-planning agenda. The
essential question: what is the right way to think about 2021 and
beyond? Should companies unbatten the hatches, or is it too soon?
For many families, it isn’t the workplace but the school that
occupies the most attention. McKinsey’s latest look at education
examines the variables that factor into decisions to reopen schools.
Also this week, McKinsey researchers focused on cash
management through the crisis and on the problems of budgeting
in healthcare systems.

next normal. Consider our special collection The Next Normal: The
Recovery Will Be Digital, featuring a 172-page curated volume that
CNBC.


A potential end to the pandemic, a bright outlook for electric

vehicles, and more.
In our latest public-health research, we assess the prospects for an

end to the pandemic. Two standards must be met. In the United
States and most other developed economies, herd immunity is
most likely to be achieved in the third or fourth quarter of 2021.
Key variables are the arrival, efficacy, and coverage of vaccines; we
anticipate four scenarios (Exhibit 1). A return to normalcy might
come sooner, possibly in the first or second quarter of 2021. Every
day matters, for lives and livelihoods.
Exhibit 1
On the economic front, the COVID-19 crisis presents the greatest
challenge in a decade for the auto sector. Global sales of light
vehicles in 2020 might decline 20 to 25 percent from prepandemic
forecasts. In the hardest-hit countries, sales could fall by 45
percent. Electric vehicles (EVs) have not been spared. But our
new research finds that EV sales may come back quickly in the next
couple of years, especially in Asia and Europe, for a few reasons
(Exhibit 2).
Exhibit 2
The crisis has also set in motion a number of trends in mobility that
will affect EVs, internal-combustion engines, and all the other ways
that people get around. A second report considers five of these
trends. One critical finding: as lives become hyperlocal, modes of
transport will change. We expect a drastic decrease in private-car
usage in some major European cities but only a slight decline in
North America. Greater China will become even more reliant on
public transit and rail as some drivers are coaxed out of their cars.
Our private-equity research teams chipped in a

comprehensive look at the effects of the crisis on sectors, and what
those mean for portfolio companies and firm strategy. Several
analyses offer insights; one on debt-service coverage ratios finds
that companies in industrial equipment and logistics are among the
most vulnerable, along with real estate, travel, and retail. Telecom
companies are better situated, as their business has been only
mildly disrupted.
Also this week: McKinsey has long been committed

to research into gender equality. In 2015, UN signatories set an
ambitious target of achieving gender equality and empowering
women and girls everywhere. Five years on, we assess the scant
progress to date, blunted by COVID-19, and offer ten things that
everyone needs to know about gender equality.
Finally, our researchers offer new views on the post-COVID-19

future of the global travel industry, graphic-paper producers,
and the global gold industry. And, with disruption everywhere,
people miss their old lives. That’s a problem for managers, who
can take three practical steps to help people process their grief.

next normal. Consider our special collection, The Next Normal: The
recovery Will Be Digital, featuring a 172-page curated volume that
CNBC.
collection of our first 100 coronavirus articles, our suite of tools to
help leaders respond to the pandemic, and a look at how our
editors choose images that help readers visualize the impact of an
invisible threat.


Companies return to work after an unusual summer—and grapple

with an uncertain future.
What now? Over the past six months, business leaders have

reorganized supply chains, set up remote operations, and made
tough financial decisions. The world anxiously awaits an effective
COVID-19 vaccine that can be readily distributed. Until then, the
priority is to reenergize organizations—to act rather than react.
Even as the uncertainties of the COVID-19 crisis multiply, the goal
must be to rebuild for the longer term. There are many ways to
lead, but regardless of the type of business or geography, ten
actions can form a path to emerge stronger from the crisis.
We start with an idea—that returning is a muscle that needs to be

exercised, not a plan to be executed once or a date to be achieved.
We go on to more specific considerations, such as the need
to make big moves fast and to be willing to rethink entire
portfolios, including where work gets done.
Those are four of the ten actions, and they make for a good
starting point. But companies must adjust for the particulars of
their industry. Healthcare companies might want to pay strict heed
to six trends that are affecting their business. Most were under
way before the crisis. But a crisis has a way of bringing things to a
head: the coming months might be the best opportunity in
memory for healthcare companies to pursue exponential
innovation, which could create an additional $400 billion in value
by 2025. And now is the time to claim the hundreds of billions of
dollars that could be saved through productivity gains.
McKinsey’s healthcare researchers also took a close look at the US

blood supply, which was fragile before the pandemic and is now
critical. Businesses have a big role to play in the solution. Blood
donors frequently cite convenience and social pressure as
prompts. Virtual campaigns for blood drives can help blood centers
quickly reach large audiences and steer them to the locations most
convenient for them.
CFOs have a critical task too: for many, it’s budgeting season. Our
new research finds that the financial-planning process for 2021
presents an opportunity to turn hard-earned lessons from the
COVID-19 pandemic into an enduring exercise in linking strategy to
value. And leaders across organizations need to consider the
problems of unresolved grief—another issue that the pandemic
has dragged into the spotlight.
Our industry research this week looked at fintech, where the news
is not altogether bad, though fintech companies may have to find a
detour on the road to profitability. We also considered M&A in
pharma, a long-running trend that should continue. Companies are
advised to make sure that three capabilities—competitive
advantage, capacity, and conviction—are up to snuff before
pursuing COVID-19-era mergers.
Finally, the pandemic has forced a reckoning for many between the
profit motive and a company’s social purpose. A team of McKinsey
editors recaps how we got from there to here, and suggests where
we might go next.
As summer turns to fall in the Northern Hemisphere, executives are

thinking through the contours of the next normal. Consider our
special collection, The Next Normal: The recovery Will Be
Digital, featuring a 172-page curated volume that you
CNBC.

help leaders respond to the pandemic, and how our editors
choose images that help readers visualize the impact of an
invisible threat.

McKinsey research focuses on the postpandemic future of

developing Asia.
No nation has escaped widespread disruption from the COVID-19

pandemic, but some have fared better than others. This week,
McKinsey researchers examined the state of the recovery in some
of the emerging Association of Southeast Asian Nations (ASEAN)
countries—Indonesia, Malaysia, Philippines, Thailand, and Vietnam
—that began the crisis at a disadvantage and have suffered
disproportionate effects. Our new report explores a series of
trends that the pandemic has caused or accelerated. Within each is
a seed of recovery, but stakeholders must be prepared to
reimagine their country’s economy in five areas: manufacturing
hubs, green infrastructure, investments in digital, talent reskilling,
and high-value food industries.
We also looked in detail at developments in two ASEAN countries.

In Indonesia, the pandemic is still raging; case counts and fatalities
are rising sharply. The first priority is to mitigate and contain the
outbreak. But even amid the current hardship and profound
uncertainty, Indonesia can reimagine and reform itself by
increasing national resilience, accelerating economic transition,
rebuilding the tourist sector, and enabling genuine change.
Vietnam, too, is contending with short-term challenges as it

emerges from the pandemic, especially in tourism and
manufacturing, two of the country’s strengths. For the long haul,
our new report argues that one essential element of growth is
renewable energy. As a country likely to be heavily affected by
climate change, Vietnam could accelerate its journey toward a less
carbon-intensive future. A new national energy plan is a good sign;
now, the challenge is to execute it. (For Vietnam and many other
countries, education is another important cog in the engine of
growth. This week, we published a comprehensive report on a
more equitable and resilient education system.)
Elsewhere in the region, our latest CEO interview, with Peter

Harmer of Insurance Australia Group, reveals new insights into
“the CEO moment” afforded by the crisis. Asked about crisis
resilience, Harmer says, “You have to tether resilience to real
beliefs. We have a deep commitment to our purpose, which is to
make your world a safer place. Our purpose is the framework
through which all our decisions are made.”
Also this week, a new McKinsey survey tapped the wisdom of

hundreds of executives across a swath of industries on the need
for speed (exhibit). Most expect significant change across ten of 12
dimensions; surprisingly, only a few expect change in their
corporate purpose. (Perhaps they have already embraced Peter
Harmer’s view.) And our industry researchers looked at the
promise of digital services at B2B service companies and
contemplated the troubled present—and potential future—
for downstream oil and gas in North America.
Exhibit
Summer may be over in the Northern Hemisphere, but great
reading knows no season. It’s not too late to catch our annual
summer reading list and our special collection, The Next Normal:
The recovery Will Be Digital, featuring a 172-page curated volume
that you can download—the first of five edited collections that
CNBC.

help leaders respond to the pandemic, and how our editors
choose images that help readers visualize the impact of an
invisible threat.

Preventing future waves of COVID-19:
Briefing note #21, August 31, 2020
After seven months of responding to the pandemic, we have

learned some things. Here are some of the key lessons and how to
apply them.
By Sarun Charumilind, Matt Craven, Jessica Lamb, and Matt Wilson
When history books one day recount the COVID-19 pandemic of

2020, it may well be a tale of human ingenuity and adaptiveness.
Although the novel coronavirus (SARS-CoV-2), the virus that causes
COVID-19, has infected more than 24 million people and left more
than 800,000 dead as of this writing, the early projections of
mortality were much worse.
Fears of millions of deaths by June 2020 have proven wrong—not

because the disease is less lethal than anticipated, but because
those fears ignored the ability of people to learn and change
behaviors. Pockets of resistance against wearing masks and
complying with other measures notwithstanding, the global public-
health response has saved millions of lives. Increasingly, countries
are restarting more aspects of normal life while keeping case
numbers tenuously in check.
Pockets of resistance against wearing masks and

complying with other measures notwithstanding, the
global public health response has saved millions of lives.
Yet the threat to lives and livelihoods persists. A COVID-19 vaccine
may yet “save the world.” But even if one proves effective, it will
be many months before we will have the capacity to vaccinate
everyone—and there are new concerns about
reinfection.2 Therapeutics such as dexamethasone and remdesivir
appear to provide important benefits for those with severe cases
but are not alone sufficient to stop deaths from COVID-19.
New therapies are possible but by no means guaranteed. Countries
will very likely need to plan for almost another year during which
public-health measures are their primary tools for saving lives. In
the meantime, the world cannot be idle. Societies have been
upended, causing unprecedented disruption to economies,
education systems, and the day-to-day lives of people everywhere.
And as we and others have argued, saving lives and opening
societies is a false trade-off.
In that area, too, our ability to learn and adapt is proving

dispositive. Countries that have successfully reduced their number
of COVID-19 cases have generally been more successful at
reopening their economies. For them, controlling the virus
ultimately has come down to two things: understanding what to do
and executing well. Both have been challenging at various points.
For example, the evidence base for the population-wide use of
masks only became compelling a few months into the pandemic
response. In contrast, the importance of testing has been clear
from the earliest days, but many countries have faced operational
challenges in ramping up their capacity.
While there is much more to learn, this article summarizes what

response leaders have discovered so far about what to do and how
to do it. Every jurisdiction is doing some of these things; none of
them are new for experts in infectious diseases. But we have tried
to describe specific considerations for practitioners looking to
adopt and adapt best practices to their management of the COVID-
19 pandemic. Given the outsize role that businesses are taking in
the crisis response in numerous countries, many of the ideas are as
relevant to private-sector leaders as to those in the public sector.
Interventions are divided into three categories—detecting disease,
reducing the number of new cases, and limiting mortality—and can
be tailored for specific populations and settings (Exhibit 1).
Exhibit 1
Detecting disease
The ability to detect cases of COVID-19 is a critical prerequisite for
effective public-health programs. A comprehensive program might
include traditional disease surveillance, cluster analysis to
understand local patterns of transmission, and wastewater
surveillance for early warning of disease hot spots.
Disease surveillance
An ability to collect, analyze, and interpret data is fundamental to

the management of infectious diseases. While many people have
grown familiar with epidemiological metrics such as test-positivity
rates and case-fatality ratios, many countries and regions still rely
on 20th-century surveillance systems. The biggest gaps are in data
collection and integration: there is no shortage of data-crunching
horsepower in the world, but everyone is forced to work from the
same imperfect data sets. Even seven months into the COVID-19-
pandemic response, there is a surprising level of disagreement
about questions as basic as the true number of people who have
been infected with SARS-CoV-2 and the number of deaths
attributable to it. Continuing to expand testing, as described later
in this article, is a big part of improving surveillance.
The best surveillance systems seamlessly combine data from

traditional sources with newer data sets, such as anonymized
mobility tracking—and do so in near real time. They provide a high
level of detail and transparency around the characteristics and
location of those infected while protecting individual privacy. And
they improve over time as a design principle, incorporating new
sources of data and improving quality to reduce friction in the
response.
The best surveillance systems seamlessly combine data

from traditional sources with newer data sets, such as
anonymized mobility tracking—and do so in near real
time.
Cluster analysis
The medical community has learned much about how COVID-19 is
passed from person to person and therefore how to prevent
transmission. But there is more to learn about the specific nature
of transmission in particular geographies. The examination of
chains of infectious-disease transmission, or cluster analysis, helps
medical professionals understand how, when, where, and between
whom transmission occurs.
Locally relevant information can focus public-health measures on

steps that will make a difference and deemphasize those that
won’t. A study of more than 3,000 cases across 61 clusters in
Japan, for example, identified healthcare facilities and retirement
centers as among the most important centers of
transmission.3 Similarly, clusters in the United Kingdom have been
identified around retirement homes, in hospitals, and in
meatpacking factories—the latter also being a source of clusters in
Germany.
Cluster analysis has revealed the importance and characteristics of

so-called superspreaders (infected individuals who pass the
disease to many others). A deeper understanding of transmission
dynamics may allow some regions to move from broad-based
interventions to targeted ones. It can also allow for more nuanced
risk assessments, for example, to determine who can safely access
senior-care facilities.
Wastewater surveillance
An important advance in surveillance capabilities came with the

discovery that SARS-CoV-2 is present in the stool of infected
people and is detectable even in highly diluted samples, such as
municipal wastewater. Wastewater sampling, used for decades to
monitor for polio, appears to detect viral increases of COVID-19 up
to six days earlier than diagnostic tests of individuals do.4 While a
number of locations, including Queensland in Australia, Ashkelon
in Israel, and Boise in the United States,5 are piloting or using this
approach to monitor for COVID-19, wastewater remains an
underutilized tool globally.
The wastewater-surveillance approach is most applicable in low-

prevalence settings where an increase in cases is more noticeable
and testing of individuals might otherwise be limited. Ideally,
public-health leaders would have the ability to work upstream
when increases in viral concentration are detected—for example,
from testing town sewers to determining which neighborhoods are
the source of the virus.
Reducing the number of new cases
Preventing new cases of COVID-19 ultimately requires reducing the

opportunity for infected individuals to pass the disease to others.
That can be done by identifying and isolating those who have been
infected or are at high risk, ensuring physical distance and airflow
management, reducing the risk of the encounters that do happen,
and reducing case migration from higher-prevalence areas. The
basic tool kit for the reduction of new cases is well understood by
experts and nonexperts alike. It includes canceling mass events,
restricting capacity in social settings (particularly indoors or with
large numbers of people), implementing confinement measures,
and restricting internal movement (Exhibit 2). Those measures can
be reinforced through effective behavior-change communication
and focused implementation for high-risk groups or specific
geographies. And since COVID-19 vaccines are likely to be
approved eventually, leaders may want to start now in preparing
to deploy one effectively. In this section, we highlight some
second-order or less appreciated lessons from the pandemic
response so far.
Exhibit 2
Identifying and isolating those infected
Widespread, accurate, efficiently managed testing and contact-

tracing programs allow countries to isolate those who have or are
at high risk of contracting COVID-19. Testing and tracing have
played major roles in the successful response to various phases of
the pandemic in a number of countries, including Austria, Iceland,
New Zealand, and South Korea.
Despite the apparent simplicity of testing and tracing, practitioners

learned the hard way through early missteps. Among their many
lessons are the following:
 Communicate clearly with the public about

the appropriate uses and limitations of different
types of tests, including antigen, molecular, and
antibody testing.
 Address supply-chain and logistical

challenges to keep expanding testing access until
most cases are being detected. Test-positivity rates
above 5 percent suggest that too many cases are
being missed.
 Make use of pooled testing to boost capacity

where needed, especially in low-prevalence settings.
Combine testing for surveillance with testing for
positive-case identification.
 Accelerate testing turnaround time by

ensuring that those performing tests are
compensated based on speed and accuracy, not just
volume. Accelerate the application of test results by
integrating data platforms for testing with those for
contact tracing, shortening the time to quarantine.
 Staff enough personnel, as the core of

contact-tracing programs is human-to-human
conversation. Overinvest in community sensitization
to the value of tracing and importance of contact
quarantine. Digital contact-tracing tools with high
adoption can also accelerate contact identification
and shorten the time to quarantine.
 Don’t expect contact tracing to work

perfectly initially; take a data-centric approach to
improving operations and effectiveness over time.
 Recognize that isolating for ten to 14 days is

onerous, especially for low-income individuals.
Social services and options for out-of-home
isolation, such as in converted hotels, can improve
the effectiveness of quarantine and make it more
tolerable.
Managing risk in encounters between people
COVID-19 is spread primarily from person to person, including

from those not showing symptoms, through the air (either on
droplets or by truly being airborne). Close proximity and poor
airflow increase the risk of transmission, while the use of facial
coverings decreases it. Specific considerations for risk reduction
vary depending on risk, context, and other conditions.6
Limited evidence from US states suggests that mask mandates are

correlated with greater reductions in new cases than mask
recommendations are. Different masks offer varying levels of
protection. N95 respirators fitted to users provide the greatest
protection,7 protecting both the wearer and those around them.
Supply constraints, cost, and user comfort mean that universal N95
use is not practical in many settings. Three-layer surgical masks
provide the next greatest protection. Goggles and other eye
protection may provide incremental protection to the wearer
relative to a mask alone.8
Frequent hand washing and environmental cleaning reduce the

transmission of COVID-19. However, the relative emphasis on
environmental cleaning has decreased, as evidence suggests that
transmission primarily occurs from person to person rather than
via objects in the environment.
Reducing case migration
Across the world, countries are taking different approaches to

restricting importation of COVID-19 cases. They range from
complete bans on international travel to targeted bans on travel
from locations with high caseloads to screening and quarantine
requirements for arriving travelers. In some countries, including
Australia and the United States, some of those measures also apply
for travel within countries. In many cases, companies and other
institutions are implementing their own policies beyond those
required by governments. Measures that are based on consistent,
easily understood criteria are more likely to maintain high levels of
public buy-in and participation.
Changing behaviors
A successful response to the COVID-19 pandemic requires

convincing large numbers of people to change their behaviors.
Some countries have seen significant resistance to such changes,
particularly those around physical-distancing measures and facial-
covering mandates. A lack of trust in governments, information
overload, and inconsistent messaging over time have all
contributed to that opposition. Effective public-health
communication can accelerate the adoption of new behaviors.
Effective communication includes segmenting populations based

on the combination of channels, influencers, and messages most
likely to resonate with individual groups. While there are positive
examples from the response to the COVID-19 pandemic, the
public-health community could learn more from experts in
targeting and tailoring political and consumer-marketing messages.
The influence model can help. It suggests that people are most
likely to change behaviors when four elements are in place:
 Understanding and conviction in what is

being asked. “I believe that wearing a face mask will
help protect me and my community from COVID-
19.”
 Reinforcement with formal mechanisms,

which may include both ‘carrots’ and ‘sticks.’ “The
grocery store has both a sign, which I can see as I
approach, saying that masks are required and a
greeter handing them out.”
 Confidence and skill building in the new

behavior. “I’ve worn a mask enough times that I’ve
stopped worrying about looking silly.”
 Role modeling the new behavior. “The mayor
of my town and almost everyone around me are
wearing masks. Those not doing so look like the
exceptions.”
Applying insights from the influence model to COVID-19-related
communications is an area in which collaboration might help.
Many jurisdictions are enlisting the help of partners, celebrities,
and influencers to amplify their messages. For example, in the
United States, basketball star Stephen Curry asked questions of
infectious-disease expert Anthony Fauci live on Instagram. That
served to bring evidence-based public-health information to
audiences less likely to access official sources.
Protecting vulnerable populations
The COVID-19 pandemic has a disproportionate impact on a

number of vulnerable populations. Such groups include people
whose age or health puts them at increased risk and those at
greater risk because of socioeconomic factors (Exhibit 3).
Communities with severe housing problems, unemployment rates,
incarceration rates, poverty levels, and food insecurity suffer 1.4 to
4.0 times as many COVID-19-related deaths as other communities.
Vulnerable populations are less likely to have access to healthcare
in most countries and are more likely to have underlying health
conditions.
Exhibit 3
In addition to measuring and tracking the impact of the COVID-19
pandemic on vulnerable populations, designing protective
interventions requires identifying what makes those groups more
vulnerable to infection. Approaches might include prioritizing
access to testing, targeting communications, and providing
additional support for quarantine and isolation. Interventions will
likely need to be multipronged, since the most vulnerable
communities are often vulnerable for multiple reasons.
Furthermore, the stakeholders best positioned to implement
interventions effectively will need resources, which would ideally
be allocated proportionately to the outsize impact of COVID-19
infection on vulnerable communities.
Planning for a vaccine
It is reasonable to hope that Emergency Use Authorization (or its

equivalent) may be granted to one or more COVID-19-vaccine
candidates before the end of 2020.9 While vaccines will be valuable
new tools, their approval will bring a whole new set of questions
for leaders.
Planning now will increase the chance of a successful vaccine

rollout. Those on point will need to monitor closely the technical
characteristics of the most promising vaccine candidates. Such
monitoring includes understanding the likely dosing regimen,
potential efficacy, and side effects. From there, they will need to
develop a clear, scenario-based strategy for prioritizing vaccine
access, recognizing the range of potential vaccine outcomes and
combinations available.
Every jurisdiction is likely to be vaccine-supply constrained in the

short term, so agreeing on grounding principles in advance will
make allocation decisions easier down the road. So will designing
the end-to-end supply and delivery systems that will be needed.
The plan should include systems for ensuring series completion in
the case of a multidose vaccine and data systems for tracking those
who have been vaccinated. It may include temporarily expanding
the roles of medical practitioners—for example, by allowing those
with lower levels of qualification to administer vaccines, after
training, in uncomplicated cases.
Finally, planners may need to overinvest in addressing vaccine

hesitancy in areas where surveys suggest it is a significant concern.
Communications around vaccines will be both challenging and
important given the likely complexity of information around
efficacy, safety, and dosing across multiple vaccine candidates.
Limiting mortality
In addition to limiting case numbers, reducing the mortality
associated with COVID-19 is a key element of the fight against the
disease. Clinicians and health-system leaders have learned much
about both the specific clinical management of COVID-19 and how
to prepare health systems to manage surges in cases while
maintaining essential services.
Health-system preparedness
In the early days of the COVID-19 pandemic, the world anxiously

witnessed many countries’ health systems strain under the
exponential onslaught of cases. Critical-care capacity was a
bottleneck, given that one in five patients, initially, were
dependent on ventilators. Healthcare supply chains, especially for
personal protective equipment, were overwhelmed.
To create surge capacity, health systems and consumers ceased

elective care—seemingly overnight. That resulted in an imbalance
of capacity, with overloaded health systems in COVID-19
epicenters transformed into disaster-response hubs. In areas
where the disease had not yet spread, care centers sat empty,
waiting for an outbreak they were unsure would ever arrive.
We know now that health systems in any developed country

should be able to anticipate, plan for, manage, and successfully
navigate the pandemic adequately both for patients with COVID-19
and for patients with other diseases. Some require focused action,
especially surge capacity, supply availability, workforce readiness,
clinical-operations processes, structure for COVID-19-case
governance, and financial resiliency.10
Use of therapeutics and clinical management
The search for effective therapies for COVID-19 has yielded two
important advances, so far, but no breakthrough transformative
enough to obviate the need to limit cases. Dexamethasone, an
injected corticosteroid, was shown to reduce mortality by 35
percent in patients requiring mechanical ventilation and by 18
percent in those requiring oxygen only.11 Remdesivir has been
shown to reduce recovery time by an average of four days.12
Both drugs emerged from the medical community’s initial focus on

repurposing drugs that were already approved or in late-stage
development for the treatment of other diseases. The focus is now
shifting to new R&D. In the months ahead, additional evidence
may support therapies based on other antivirals and monoclonal
antibodies. In addition to specific therapeutics for COVID-19, there
have been advances in the nonpharmaceutical management of the
disease. For example, there is some evidence to support the use of
“proning”—placing patients face down—to reduce the need for
mechanical ventilation.13
Policy makers can continue to keep a close eye on both the

evidence for new therapeutics and the standards of clinical
practice. Over time and with further advances, strong health
systems may succeed in reducing COVID-19-related mortality to
the point at which the disease is far less feared.
Public-health measures to control the COVID-19 pandemic will be

relevant for as long as its risk continues. Many countries and
regions have risen to the challenge by combining multiple public-
health measures that work for them, although almost all have
some room to improve. As we consider what it will take to respond
to current and future waves of COVID-19, we can take some
comfort from the fact that far more is known about controlling
SARS-CoV-2 than was understood seven months ago. It is up to all
of us to learn, adapt, and apply those lessons effectively.
Download the article (PDF–435KB).
About the authors
Sarun Charumilind is a partner in McKinsey’s Philadelphia office,

where Jessica Lamb is a partner; Matt Craven is a partner in the
Silicon Valley office; and Matt Wilson is a senior partner in the New
York office.
The authors wish to thank Damien Bruce, Penny Dash, Pooja

Kumar, and Taylor Ray for their contributions to this article.
This article was edited by Dennis Swinford, a senior editor in the

Seattle office.

note #20, August 27, 2020
Amid one of the greatest bull markets ever for technology,

semiconductor fabs must find ways to keep up. And all advanced-
industry companies should organize for speed to sustain their
current pace.
This week, McKinsey healthcare researchers documented

the shortage of medical oxygen in developing countries, a long-
standing problem made worse by COVID-19. New ideas can help
these regions meet short-term needs and set the foundation for a
better long-term future.
Our industry research focused on semiconductors and the
industries that make and use advanced electronics. Chips control
everything from toys and smartphones to laptops and thermostats.
In the pandemic, demand has soared for many of these products—
even as supply chains have faltered and geopolitical tensions have
risen. But will the boom last? Such questions have semiconductor
companies thinking about their manufacturing plants. In a winner-
take-all industry, even a slight edge in manufacturing can help a
company capture an outsize portion of revenues (exhibit). Our
new report outlines the essential ingredients of tomorrow’s
successful fab.
Exhibit
Chipmakers and other advanced manufacturers have been running
hot for six months now, with some notable notches in their belts.
One factory recently ran at more than 90 percent capacity with
only about 40 percent of the typical workforce. But few leaders
think the pace is sustainable. Our new report lays out what it will
mean for companies to switch from running on adrenaline to
making organizational speed a permanent part of their cultures.
The pace is unlikely to slacken soon. As our new global

survey suggests, the appetite for automation has not dimmed.
Instead, the factors for success are shifting. More and more,
successful organizations are finding ways for people to work in
concert with new technologies.
In fact, automation is among the key themes that can lift India to
prosperity. That’s the conclusion of a new report from McKinsey
Global Institute published this week. The pandemic has sounded a
clarion call for India to accelerate growth. Our analysis suggests
that a program of targeted reforms, including greater productivity
in several sectors, can help the country produce the 90 million
nonfarm jobs it needs to create by 2030.
This week, McKinsey researchers also examined cash management

at privately owned companies and reviewed lessons from the past
for US governors and mayors planning a second term.
Download the full briefing materials.

Download the article.
We are in the thick of August, the time of year when many people
take a break, or at least slow down—even in a pandemic. With
that in mind, McKinsey broadened its annual summer reading
list and asked 60 diverse leaders to share books that have inspired
them, that have provided a much-needed respite, or that they look
forward to reading. We hope you draw some inspiration from this
list and find ways to restore yourself during these unusual times.
Speaking of reading, our special collection, The Next Normal: The

recovery Will Be Digital, has a 172-page curated volume that you
can download—the first of five edited collections produced to
CNBC.

invisible threat.

McKinsey’s latest research looks at restoring economic activity,

today and tomorrow.
This week, we returned to the overarching story of the pandemic:

the twin imperatives of saving lives and livelihoods. Our latest
research builds on reports we published in April and May 2020,
and on recent academic findings that the stringency of national
lockdowns is not well correlated with changes in GDP. In our
new report, we find that successful control of the virus is the key to
unlocking the economy, by restoring the confidence consumers
need to reengage in economic activity. In countries that have
successfully controlled the coronavirus (“near zero” countries),
economic activity (in the form of discretionary mobility) has
returned to normal; in those that have not (“balancing act”), it is
still about 40 percent lower than before the pandemic (exhibit).
Exhibit
It seems that controlling the virus can get countries back to where
they were at the start of the year. But where do we go from there?
A companion report outlines the future of economic growth in the
United States, by looking back at what worked well in the years
after the 2008–09 recession. Federal, state, and local governments
can take a range of actions to both improve productivity and
stimulate demand. Among the most powerful is investment in
inclusive growth and unlocking the maximum productive potential
of all people in communities. For example, achieving gender
equality could add $4 trillion to the US economy, and closing
the Black–white wealth gap could add a further $1.5 trillion.
Businesses, too, are eager to boost productivity and demand.

Consumer companies may feel these needs more acutely than
most, as two reports published this week demonstrate. McKinsey
experts outlined the five bold moves that consumer companies
should make to adapt their organizations to the exigencies of the
crisis. Another requirement is to meet the next-normal consumer.
Seemingly every consumer behavior has been altered by the crisis;
companies need to adapt to big changes in how people get their
information, what and where they buy, and how they experience
shopping.
This week, we also surveyed executives at cell and gene

therapy companies about the effects of the pandemic; reviewed
the challenges of securing digitally savvy talent at aerospace and
defense companies; calculated the significant impact of COVID-19
on mining operations; considered the prospects of upstream oil
and gas operations; and surveyed liquefied natural gas buyers on
their changing preferences.
We are in the thick of August, the time of year when many people
take a break, or at least slow down—even in a pandemic. With
that in mind, McKinsey broadened its annual summer reading
list and asked 60 diverse leaders to share books that have inspired
them, that have provided a much-needed respite, or that they look
Speaking of reading, our special collection, The Next Normal: The

recovery Will Be Digital, has a 172-page curated volume that you
can download—the first of five edited collections produced to
CNBC.

invisible threat.

As consumer needs change with the ups and downs of the

pandemic, and companies look for signs of recovery, McKinsey
continues to explore ways to approach the next normal from
leadership and operational perspectives.
The abrupt halt of global travel during the COVID-19 crisis, aside

from delaying personal trips and vacations, has had a major impact
on businesses across sectors. Companies with workforces used to
frequent travel—along with the airlines and hotels that depend on
revenue from that travel—have been particularly affected. As
companies continue to enforce travel restrictions and workers
resort to virtual meetings, travel-industry players are looking to
rebound from the crisis, but it may be a years-long road to
recovery. Our latest research shows that, historically, business
travel rebounds from crises at a slower pace than leisure travel
(exhibit). As outbreaks in some regions stabilize and travel
resumes, travel providers can work to accommodate changing
needs and, in turn, boost customer confidence.
Exhibit
Our research this week explores how business operations may
change as the travel industry and other sectors reimagine the next
normal in a world of physical distancing and evolving consumer
behaviors. For operationally intensive sectors, our
analysis suggests that the COVID-19 crisis has accelerated
automation and digitization. Upskilling and reskilling the workforce
will become even more of a priority. For consumer-goods leaders,
reshaping the sales function and fostering collaboration between
retailers and manufacturers will be critical.
More broadly, our conversations with executives this week

demonstrate that successfully weathering the pandemic will also
require a people-centered approach to internal and remote
leadership. Our interview with Steve Collis, CEO of
AmerisourceBergen, considers how a daily executive meeting can
be used not only for decision making but also as an opportunity to
extend empathy to colleagues. Mike Henry, CEO of BHP,
similarly tells us that prioritizing people and building strong
relationships has boosted the company’s resilience. He says,
“Against the backdrop of COVID-19, there’s a premium on getting
out, demonstrating empathy, and engaging with people to
understand what their concerns are.”
This week we also analyzed how companies can mitigate risks

in industrial supply chains and utilize their procurement functions
and spend analytics to bolster resilience; explored
ways behavioral-health leaders can build on the current
momentum for change in the industry; and looked at how Australia
can gauge the scope of the pandemic’s effects on different
industries and workforces and address cautious consumers.
Also this week: we’ve added a special collection, The Next Normal:

The recovery Will Be Digital. This 172-page volume is the first of
five edited collections produced to accompany Our New Future, a
multimedia series we created with CNBC. You can download
it here.
We’ve now reached August, the time of year when many people
take a break, or at least slow down—even in a pandemic. With that
in mind, McKinsey broadened its annual summer reading list and
asked 60 diverse leaders to share books that have inspired them,
that have provided a much-needed respite, or that they look

invisible threat.
We continue to track economic and epidemiological developments

around the world. For an overview, read our latest briefing
materials (July 6, 2020). In 54 pages, we document the current
situation, the economic outlook, the forces shaping the next
normal, and the new organizational structures that can help
companies keep pace sustainably.
This briefing note was edited by Dana Sand, an assistant managing

editor in the Atlanta office.

Banks are using new techniques to find out who’s ‘swimming
naked.’ And new MGI research looks at the cost of disruption in
global supply chains.
Millions of employees have lost their jobs and cannot pay their

credit cards. Restaurants and shops are only slowly reopening;
many cannot pay their rent. Industrial companies can’t make
payments on their equipment leases. Landlords have less income
and cannot keep up with their mortgages. Suddenly, the world is
awash in credit risk. Our new research shows how banks are
tending to a radical surge in demand for one of their most ancient
practices: measuring and monitoring credit risk. Leading banks are
deploying a new configuration of sector analysis, borrower
resilience, and high-frequency analytics. They are moving past
sectoral analysis to take subsector views of the probability of
default (exhibit). Some are going even deeper, to understand
what’s happening in the financial life of their borrowers.
Exhibit
Like credit risk, supply chains have experienced intense disruption.
This week, the McKinsey Global Institute looked at the effects not
only of COVID-19 but of all manner of disruptions, including natural
disasters, geopolitical uncertainty, climate risk, cyberattacks, and
more. A key finding: over the course of a decade, companies can
expect disruptions to erase half a year’s worth of profits.
This week, McKinsey also had the privilege of speaking with three
CEOs about what is shaping up to be the defining moment in their
careers. Alain Bejjani, CEO of Majid Al Futtaim, told us about
the resilience needed to keep this Dubai-based operator of
shopping malls and other consumer real-estate businesses vital
and relevant during the crisis. Lance Fritz, CEO of Union Pacific
Railroad, talked with us about tactics to stay present in video calls
and keep the board informed. Kristin Peck, the brand-new CEO of
animal-health company Zoetis, reflected on the core beliefs that
have kept her company on track through the crisis.
Also this week: a new report documents the disproportionate

effect of the pandemic on Asian-American communities. And
McKinsey’s industry research examined the potential for greater
collaboration with government in global tourism, outlined the
moves that European restaurants are taking to thrive in the next
normal, considered how life insurers can use artificial intelligence
to better underwrite risk, and reviewed the nascent Tech for
Good movement in the United Kingdom.
McKinsey continues to track economic and epidemiological

developments around the world. For an overview, read our
latest briefing materials (July 6, 2020). In 54 pages, we document
the current situation, the economic outlook, the forces shaping the
next normal, and the new organizational structures that can help
companies keep pace sustainably. You can also see the
full collection of our coronavirus-related content, visual insights
from our “chart of the day,” a curated collection of our first 100
coronavirus articles, our suite of tools to help leaders respond to
the pandemic, and a look at how our editors choose images that
help readers visualize the impact of an invisible threat.


note #16, July 30, 2020
Our latest executive survey reveals a darkening outlook. But our
review of vaccine research provides a ray of hope. This week,
McKinsey covers the yin and yang of the pandemic.
In North America and in developing markets, executives have

become less hopeful about their countries’ economies and more
cautious in their views on potential scenarios for COVID-19
recovery. That’s a key finding from our latest poll of more than
2,000 global executives. Leaders in China and India, on the other
hand, are growing more upbeat (exhibit).
Exhibit
One thing that will certainly improve expectations in every country
is news of a safe and broadly available vaccine. Our
latest research looks at global vaccine development and finds that
early data on safety and immunogenicity in Phase I and II trials are
promising, though limited. Our review of historical attrition rates
suggests that the current pipeline may yield more than seven
approved products over the next few years, with some available
for emergency use late this year or early in the next. A new
interview with Microsoft’s chief technology officer explains
how artificial intelligence is aiding vaccine development. After
development, it’s on to production, where we argue that tech
transfer may be critical to beating the disease.
Our new research on leadership in the crisis turned up several

intriguing developments this week, starting with the idea of
creating a “to be” list. Our interview with the CEO of Cincinnati
Children’s Hospital talks about how leaders can choose to be
generous and genuine with some colleagues, and collaborative and
catalytic with others. Leaders can also acquaint their teams
with lessons from the past. We looked at the post–World War II
era, when countries rebuilt from the ashes, to extrapolate ideas
that are just as relevant now. Finally, we identified the ways that
leaders can shift mindsets and behaviors to reopen safely.
In the COVID-19 crisis, many companies are finding new leaders in

unexpected places, well down the org chart. Some young middle
managers are defying the problems and frustrations of this difficult
period to achieve far more than others. Leading companies are
capitalizing on this by installing four talent-management
practices to thrive beyond the pandemic. These companies are also
revisiting the playbook of chief HR officers, to understand how the
crisis has changed the game.
McKinsey’s industry-research teams were active this week,

publishing new reports on the resiliency of national banking
systems; the future of US freight and logistics; the lessons of past
crises for mining companies; the recovery of Germany’s travel
industry; and the next normal for European bancassurance.
Readers interested in banking should also see our interview with
the chairman of the State Bank of India, India’s largest lender and
the world’s largest digital bank. And bankers, retailers, and others
should consult our must-see guide on how to understand and
shape consumer behavior.

companies keep pace sustainably. You can also see the

note #15, July 23, 2020
Economic recovery depends on the return of the consumer—but

shopping will never be the same. New McKinsey research
considers the possibilities.

The ubiquitous face mask does more than protect against viral

spread; it also changes the way we look at one another—and thus
symbolizes the mystery of customer behavior in the pandemic.
Several new McKinsey research efforts analyze the changes taking
place in the homes of consumers, on their phones, and in stores.
“Reimagining marketing in the next normal,” for example,
documents six of the biggest shifts emerging from COVID-19. One
of the most intriguing is the rising importance of neighborhoods:
with travel largely shut down, marketers must figure out how to
localize their outreach.
Another momentous shift: customers care more

about sustainability: our survey finds that European consumers
want fashion firms to act responsibly by considering their social
and environmental impact. This survey is part of McKinsey’s
comprehensive effort to document customer sentiment across
dozens of countries throughout the pandemic.
Both consumer-goods makers and retailers have everything at

stake in understanding these shifts. For consumer companies, the
future is about three things: getting better at predicting demand,
being alive to all the ways they might increase their sales, and
using agile techniques to sustain the hard-won momentum.
For retailers—particularly grocers, apparel companies, and
restaurants—the way forward starts with new ideas about revenue
management (a fundamental rethink of products, pricing, and
promotions might be in order) and about operating models
(especially store footprints, which will depend on how soon cities
reopen). Such operational issues are paramount in Africa and Asia;
our latest research collects useful innovations from those regions
and around the world.
B2B customers too are changing, and their providers must adapt.
Our latest insights, based on a detailed survey, suggest that B2B
companies may be too focused on the here and now. In times like
these, first movers do better than the competition by finding new
pockets of growth and reshaping go-to-market approaches to
serve them.
Chief executives can help their marketing chiefs meet these goals,
and much more besides. As some of our most senior colleagues
argue, this may be the CEO moment of our times. Companies can
reset themselves and their potential by embracing four shifts:
unlocking bolder (“10x”) aspirations, making their “to be” lists just
as important as their “to do” lists, fully embracing stakeholder
capitalism, and harnessing the full power of CEO peer networks.
This week, McKinsey researchers also considered the future of

mobility in India, reviewed the changes underway in Europe’s
private banks, surveyed physicians about their employment
prospects, looked at the reset that supply chains need, and
explored two hot topics in tech: how to get value from cloud
computing and the shifting priorities of cybersecurity.

invisible threat.

note #14, July 16, 2020
As many countries struggle to control the pandemic, McKinsey

remains tightly focused on the global healthcare response to it.

This week, we reviewed the potential for South Africa’s small

businesses to survive during the pandemic and to thrive after it,
considered the case for more M&A as corporate India seeks to
recover from the crisis, looked at the ways shared mobility might
come back after it ends, offered recommendations on pricing for
property and casualty insurers, and pondered the future
of packaging design (including an interview with the CEO of Sealed
Air).
But we focused mainly on healthcare systems. Testing is critical for

containing COVID-19, yet many countries still struggle with
shortages of the necessary materials. Our new article looks at five
parts of the testing process and examines the bottlenecks in each.
Some US laboratories, for example, have reported unused capacity
to conduct tests, even as patients and healthcare workers report
difficulty securing them. Similar mismatches have arisen in the
United Kingdom, and they are also showing up in supplies of
reagents, test kits, and other consumables. To fix the problems,
countries will have to make capacity more visible by establishing
information nerve centers.
Another focus of research is airborne transmission of the

coronavirus. World Health Organization guidelines now state that
it may be possible indoors, especially for people who spend
significant amounts of time in crowded, poorly ventilated rooms.
Our new article not only offers a primer on air purification, air
filtration, and airflow management but also examines the steps
that building managers, safety experts, and others might take to
optimize airflows and ventilation indoors and to limit the spread of
the virus.
This week also saw news about a successful vaccine trial. Thanks to
that, the world may be able to look ahead to the pandemic’s end.
But as a McKinsey team writes, this is not the last pandemic. To
correct deficiencies in the surveillance of and response to
infectious diseases, governments will have to make substantial
investments—but they will be well worth the money (exhibit). Our
research outlines the shifts needed in healthcare systems.
Exhibit
Ara Darzi, director of the United Kingdom’s Institute of Global
Health Innovation, has similar aspirations: he is simultaneously
focusing on new ideas that can help tame COVID-19 and on the
longer term beyond it. In an interview with McKinsey’s Rodney
Zemmel, Lord Darzi explains how healthcare can transition from a
“sickness service” to a “health and well-being service.” One critical
step is to recognize that “we have many pandemics—only we don’t
call them pandemics. We have the pandemics of obesity,
cardiovascular disease, and diabetes.” McKinsey Global Institute
covered the substantial upside of addressing these chronic
conditions in a new report published last week.

invisible threat.


note #13, July 9, 2020
As lockdowns lift, businesses are thinking about their next moves.

McKinsey research offers insights into the near future.
companies sustainably keep pace. You can also see the
Around the world, economies are cautiously reopening. Businesses

are keeping one eye firmly on the here and now but also
tentatively looking ahead to what’s shaping up as a great reset.
Our new research this week offers several takes on this theme.
Start with the global pandemic’s front line: the healthcare sector.
This week, the McKinsey Global Institute published a
new report, Prioritizing health: A prescription for prosperity, which
measures the potential of proven interventions to reduce the
global burden of disease. Taking advantage of them would not only
alleviate a problem exposed by COVID-19—people with diabetes,
hypertension, chronic obstructive pulmonary disorder, and obesity
have been hit hardest—but also add, in our estimate, $12 trillion
to global GDP in 2040.
Reimagining the workforce is another pressing task. Executives

everywhere wonder how to bring people back to the workplace
and how they will do their jobs. Our new research takes a look at
the challenges of creating a sense of belonging, common purpose,
and shared identity when some people work in their homes and
some in offices and factories. Another article considers the great
reset’s tactical challenges, such as guarding against cyberattacks on
remote workers.
Small businesses confront some of these problems. But much as

Ginger Rogers danced the same steps as Fred Astaire—only
backward and wearing high heels—small businesses must make
the necessary changes at a greater relative cost and with less
working capital. Our new research examines the struggles of US
small businesses in three sectors (restaurants, manufacturing, and
retailing) that could be facing a long, hard recovery (exhibit).
Exhibit
Another sector thinking hard about its future is infrastructure. In
the United States, two scenarios are possible: a boom spurred by a
government stimulus or a bust as tax revenues and user fees dry
up. Agencies and investors alike must prepare for both outcomes.
One key to generating a rapid impact from infrastructure spending
is to repair existing assets.
This week we also look at global freight flows (down 13 to 22

percent this year) and the varied potential for recovery, reviewed
the implications of COVID-19 for the US food supply chain, and
considered the challenges of pricing in a pandemic.

COVID-19: Briefing note #12: July 2,

2020
One step forward, two steps back: the pandemic is giving new
depth of meaning to that well-worn expression. Our new research
explores both parts of it.

latest briefing materials. In 94 pages, we document the situation,
show how countries and companies can transition toward the next
normal, and offer planning advice across multiple horizons. You
can also see the full collection of our coronavirus-related content,
visual insights from our “chart of the day,” a curated collection of
our first 100 coronavirus articles, and our suite of tools to help
leaders respond to the pandemic. New this week: a look at how
our editors choose images that help readers visualize the impact of
an invisible threat.
In a week when the global pandemic seemed to gather strength,

our new research both shows the grim economic news and reveals
a streak of optimism that many are starting to feel. Our
monthly global economic conditions snapshot indicates that 52
percent of executives now say that their national economies are
doing substantially worse, up from 10 percent in March 2020. Yet
the proportion of executives who expect profits to rise within six
months rose by four percentage points, and leaders in retail, high
tech, and telecom are increasingly optimistic about the return of
customer demand. In June, many more executives around the
world said that the economies of their home countries would soon
be doing better than had said so in May.
Another new global survey examined sentiment among people

who make financial decisions for their households. Across the
globe, they are reporting lower income, savings, and spending. In
most countries, 20 to 60 percent of these decision makers say they
fear for their own jobs. Roughly half have no more than four
months of savings.
These grim statistics present a challenge for banks and other

consumer-facing businesses, such as telecom companies, retailers,
health systems, and utilities. A delicate balancing act awaits these
organizations as they work to ensure that customers receive the
necessary support—and that lenders can continue to cultivate
relationships with their borrowers—while preserving shareholder
value in the longer term. A detailed perspective
on utilities considers this and other conundrums. So does a new
look at African banks.
The virus’s spread is accelerating, but businesses everywhere are

both coping with their urgent needs and looking ahead to the time
when their employees can safely return to work. As that moment
comes closer—let us hope—three new research efforts show, first,
how leaders can seize the moment to support their employees by
building on the trust their early efforts have engendered and,
second, how they can engage employees through clear and
inspiring communication. And our survey of US companies shows
that same insistent streak of optimism: respondents expect most
employees to be working onsite by December.
One lesson of the crisis is the need for speed: the pandemic obeys
no speed limits, so businesses have had to adapt through quick
fixes and workarounds. How can they keep these successful
innovations going over the long term? Our new research
suggests nine ways to reinvent the organization for speed.
This week, we also looked at how companies can reset their capital

spending, demystified the role of quantitative models, and talked
with two McKinsey experts about how to choose the right path to
unlock the economy.

COVID-19: Briefing note #11: June 25,
2020
Every industry is adapting to life during a pandemic. New McKinsey

research examines the implications for six sectors.

developments in Europe and around the world. For an overview,
read our latest briefing materials. In 94 pages, we document the
current situation and show how countries and companies can
transition toward the next normal and plan across multiple
horizons. You can also see the full collection of our coronavirus-
related content, visual insights from our “chart of the day,” a
curated collection of our first 100 coronavirus articles, and
our suite of tools to help leaders respond to the pandemic.
This week we zeroed in on critical developments in six major

industries, starting with consumer goods. Research we published
last year (here and here) documented the recent trends in
consumer M&A and the ways that successful companies used
acquisitions to accelerate revenues and profits at a time when
growth was elusive. Our latest research reveals that COVID-19 has
accelerated some of these trends and created new realities. One
critical finding: consumers are returning to big brands they know
and trust. While these companies accounted for only 16 percent of
the industry’s growth in 2015–18, that figure rose to 39 percent in
2018–19—and reached 55 percent in the first three weeks of April
2020.
In times of crisis, all eyes focus on the insurance sector. This week,

we surveyed insurance agents in China, the first country to reopen.
The outlook there is complex: some lines, such as health insurance,
fared well, while others, such as property and casualty, suffered
significant declines and are just now recovering.
At semiconductors companies, the pandemic has posed questions

for every aspect of the business model. Our April
2020 research outlined the potential shifts in demand. This
week’s update offers scenarios in which demand might revive, and
the ways that companies can adapt while also preparing the
enterprise to emerge stronger in the next normal.
Software makers are also in the midst of (yet another) disruption.
For the past ten years, the rise of software as a service (SaaS) has
reshaped the enterprise-software industry. Growth accelerated,
but industry profitability tumbled. Our research finds that the next
ten years will be just as tumultuous. SaaS companies are at a
crossroads: COVID-19 will accelerate the footprint of SaaS, given
the growth of remote working, the rapid deployment of digital
solutions, and the lower up-front costs.
Like many other industries, engineering and construction has had

to reimagine how work gets done. This week, we spoke with an
industry leader, who revealed the ways that his company has
adapted.
Finally, while small business might not be an industry, it is a mighty

economic sector that employs tens of millions of people in the
United States. Our new research finds that between 1.4 million and
2.1 million US small businesses could close permanently as a result
of the first four months of the pandemic. Certain sectors are
particularly at risk (exhibit).
Exhibit
This week, we also examined the priorities for companies in India
to thrive in the next normal; reviewed the early returns on post-
COVID-19 discretionary spending in China, India, and Indonesia;
and considered the lessons of the past that might prove helpful as
policy makers seek to revive the US economy. Finally, we were
privileged to speak with two remarkable leaders, Mellody
Hobson of Ariel Investments and Hubert Joly of Best Buy, about the
challenges of leadership in extraordinary times.

2020
Our latest research focuses on recovery in Europe.
Governments worldwide have already allocated more than $13

trillion to stabilize economies in freefall and restart growth. These
measures, written and delivered at speed, have succeeded in many
ways. But as the crisis drags on, new questions are arising. Is the
money directed in the best possible way? And is more needed?
This week, McKinsey researchers looked at ways to fill the gaps

that COVID-19 has created in US state budgets. Worldwide,
we estimate that government deficits could reach $30 trillion by
2023. That’s a sobering figure. But we believe that if governments
and the private sector work together as never before, they can
avoid the disastrous consequences of massive deficits, lay the
foundations for a new social contract, and begin to shape a
postcrisis era of shared, sustainable prosperity.
Our new research on Europe suggests that governments can start

by distinguishing between sectors that can navigate the crisis
safely, and others, such as those that were already in decline and
were then badly hit by the crisis, that may need structural change.
In Germany, for example, you will find both types of sectors in
abundance (exhibit).
Exhibit
developments in Europe and around the world. For an overview,
read our latest briefing materials. In 94 pages, we document the
current situation and show how countries and companies can
transition toward the next normal and plan across multiple
horizons. You can also see the full collection of our coronavirus-
related content, visual insights from our “chart of the day,” a
curated collection of our first 100 coronavirus articles, and
This week we documented many of the COVID-19-related shifts

taking place in Europe. A critical issue now coming to a head
concerns privacy: How do companies comply with the European
General Data Protection Regulation and also support contact
tracing and testing measures? Another is mobility: transportation
systems may be permanently altered in the crisis. Our
new research on the United Kingdom outlines the implications.
Some of those concern the many UK start-ups offering novel

transport solutions. This week, our new research found that small
and medium-size businesses in the United Kingdom face dire
prospects: one in five may not survive past August 2020. In the
recovery, European governments cannot do all the heavy lifting;
our analysis suggests that European foundations have a window of
opportunity to step up their actions and play an essential role in
national rebuilding and recovery efforts. And we interviewed a
leading UK dealmaker on the potential to restart major capital
projects through standby agreements and other moves that keep
projects on track.
This week, we also presented ideas for retailers to redefine value

and affordability for newly strapped consumers, addressed big
shifts in physicians’ behavior, explained why insurers need
to revamp their distribution models, and considered a safer,
better future for travel.

2020
Our latest research examines the social risks of COVID-19.
Even as societies and businesses race to reopen, the global

pandemic still poses significant problems. This week, we
documented an accelerating one: loneliness. In many parts of the
world, the social fabric was already fraying before the pandemic.
Now, as former US surgeon general Vivek H. Murthy, MD, points
out, COVID-19 is disconnecting us further from our human
relationships. That might cause a “social recession, with profound
consequences for our health, for our productivity in the workplace,
for how our kids do in school.”
McKinsey is tracking developments on all these fronts. For an

overview, read our latest briefing materials. In 94 pages, we
document the current economic and epidemiological situation and
show how to transition toward the next normal and to plan across
multiple horizons. You can also see the full collection of our
coronavirus-related content, visual insights from our “chart of the
day,” a curated collection of our first 100 coronavirus articles, and
This week, we investigated loneliness and other effects of the
lockdown and physical distancing in Europe. Across the Continent,
the proportion of people who say that they feel lonely “most or all
of the time” has nearly tripled. Loneliness is higher in countries,
such as Bulgaria and Greece, where trust and satisfaction with
relationships were already at low levels in 2018.
For many, the cure for loneliness might be a return to the office,
the subject of some of our latest research. Many people say they
are happy working from home. But could their happiness be
running on fumes of the social capital built up through years of
water-cooler conversations, meetings, and social engagements?
Has working from home succeeded only because it is viewed as
temporary, not permanent? Hundreds of billions in real-estate
investment are riding on these questions.
Most industries are engaged in similarly momentous discussions.

This week we published new perspectives on
the fashion, hospitality, infrastructure, institutional-investing, nursi
ng, and public-transport sectors. We also reviewed developments
in Spain and Africa (payments and food supplies), as well as trillion-
dollar ideas for governments around the world.
Although the news is bleak, Vivek Murthy sees cause for optimism:

“I think that this could be an extraordinary opportunity for us to
step back and ask ourselves if we’re leading the kind of lives that
we really want to lead. This is our chance to ask ourselves where
people fit in our priority list and whether there’s a gap between
our stated priorities and our lived priorities.”

2020
This has been an extremely painful time for communities across
the United States and beyond, even as the pandemic continues to
take its toll. We are amplifying our commitment to do our part to
ensure that black lives are spoken for and valued, both inside our
firm and beyond. Our ongoing research on the US racial-wealth
gap and on diversity and inclusion is intended to clarify some of the
underlying issues and potential paths forward.
Research we published in April called out the disproportionate

effects of COVID-19 on black Americans, who are almost twice as
likely to live in the counties where the risk to health and economic
activity is highest if and when contagion strikes (exhibit). Many of
these places were the scene of this week’s anguished protests.
Exhibit
Our newest research looks at the pandemic’s effects on US
minority-owned small businesses. Vulnerable even before the
pandemic, it has struck them disproportionately hard. Many of
them are in the industries most susceptible to health and
economic problems, such as accommodations and food services,
retail, and healthcare. Owners are innovating and staying flexible,
helping their communities to cope with the crisis. But these
businesses are highly vulnerable; they need help from the private,
public, and social sectors.
Similar dynamics afflict US minority students. Previous

McKinsey research has demonstrated the costs of a sizable
achievement gap between white students and black and Hispanic
ones. Our latest research, published this week, finds that the
pandemic not only threatens to widen the achievement gap but
also poses problems for all learners. The hurt could last a lifetime.
People of color are vulnerable to yet another effect of the COVID-

19 crisis as it affects large companies. Previous crises show there is
a very real risk that as companies adapt to new ways of working,
inclusion and diversity may unintentionally recede as strategic
priorities. Yet as our latest report on inclusion and diversity argues,
that would place companies at a disadvantage: they could not only
face a backlash from customers and talent now but also, down the
line, fail to better position themselves for growth and renewal.
McKinsey continues to research many aspects of leadership

through the crisis. This week, we reported on dozens of our new
research efforts, including the emerging themes dominating
boardrooms; the post-COVID-19 future for US rail and trucking
companies; the lessons learned from Asia’s manufacturing and
supply chains; a new approach to tracking demand for travel; the
potential for telehealth; and the safety protocols that hospitals,
grocery stores, and others have used to stay open.
Our latest briefing pack details, across 94 pages, the current

economic and epidemiological situation, how to transition to the
next normal, and planning across multiple horizons. Please also see
the full collection of content, visual insights from our “chart of the
day,” a curated collection of our first 100 coronavirus articles, and

COVID-19: Briefing note #7, May 27,
2020
New insights on consumer sentiment and the return to work.
The Memorial Day weekend in the United States, always a somber

occasion and never more so than this year, seemed to mark a
turning point in the COVID-19 crisis. As spring turned to summer,
many US regions started to reopen, as did others in Europe, Latin
America, and Asia. Despite ongoing public-health concerns, the
desire to spend and shop is palpable. This week, McKinsey
published new surveys of consumers
in Argentina, Australia, Brazil, Central America, and the United
States, detailing the strength of the consumer urge in each
country. The outlook is brighter. Consumers are less anxious and
depressed about health concerns. Business executives are a bit
more optimistic this month than last. And our new surveys
of global B2B buyers and those in Asia and Europe suggest that
confidence is holding firm.
That said, the picture these surveys paint is complex. In a sense,

the world is turning from “resilience” to “return”—the third of the
five pandemic elements we sketched out in late March. To get back
to business, many companies are running spreadsheets to see how
many people spaced six feet apart will fit in an office, planning one-
way paths through the workplace, and figuring out adaptations to
restrooms, lunchrooms, and entrances. All of those are critical
tasks, but they are not enough. What’s needed is a return
“muscle”: an enterprise-wide ability to absorb uncertainty and
incorporate lessons into the operating model quickly.
One of the skills that will help with that urgent need is surely
analytics, widely recognized for its problem-solving and predictive
prowess, which is becoming a modern-day sextant to navigate the
COVID-19 crisis. Analytics can help tackle numerous urgent tasks
facing businesses today: forecasting demand, identifying potential
supply-chain disruptions, targeting support services to at-risk
workers, and determining the effectiveness of crisis-intervention
strategies, to name a few.
Also on that list: improving the experience of customers, many of

them frightened, some jobless, and all of them deeply uncertain
about the next normal. To renew and refresh their connections to
the people they serve, companies need to recognize what’s
happening now, and respond in three ways: digital excellence, safe
and contactless engagement, and dynamic customer insights.
These are just a few of the issues McKinsey has researched and
written about in recent days to help companies and countries lead
through the crisis. Please see the full collection of content, visual
insights from our “chart of the day,” a curated collection of
our first 100 coronavirus articles, and our suite of tools to help
leaders respond to the coronavirus outbreak.

COVID-19: Briefing note #6, May 13,
2020
Emerging evidence provides some tantalizing glimpses into the

epidemiology of the global pandemic.
By Matt Craven, Mihir Mysore, and Matthew Wilson
As the reopening of economies continues across much of Europe

and North America, it’s worth taking stock of the epidemiological
situation and trends that will define the months ahead. At the time
of this writing, the official counts of cases and deaths from COVID-
19 have passed four million and 280,000, respectively. Recent
studies have made increasingly clear that each of these figures is a
significant underestimate. Population antibody surveys suggest
that official counts are underestimating the true number of cases
by a factor of five or more (although in several cases the
methodology has been called into question) (Exhibit 1).
Exhibit 1
Comparisons of 2020 and 2019 mortality rates show that
substantially more people are dying this year, although we don’t
know how much of this is due to missed deaths from COVID-19
rather than excess mortality from other causes (Exhibit 2).
Exhibit 2
The pandemic and public health—five trends to watch
With lives at stake, a thoughtful approach is paramount. Here are

the five emerging trends that private-sector leaders need to
monitor.
There are still many places where the epidemic is getting worse
While much of the media narrative is about reopening, many

countries, including several of the largest emerging economies, are
still on the “upslope” of the epidemic, with daily case counts
increasing (Exhibit 3). While an increasing number of countries and
regions have proven that they can use lockdowns to drive a
reduction in cases, to date, we have few examples of success
outside higher-income countries. The next few weeks will be
critical tests of our ability to “bend the curve” in more countries
with varying contexts and healthcare capacity. In some of these
countries, the absolute number of deaths is relatively low;
interventions against COVID-19 will need to be viewed through the
lens of both lives and livelihoods.
Exhibit 3
Reopening is a massive natural experiment—make sure you learn

from it
We have never before attempted to shut down the modern global

economy, much less reopen it in the setting of an ongoing
pandemic. We have a few examples of strategies that seem to
work better, or worse, but none of us know with any certainty the
best actions. Even places with strong initial responses like Hong
Kong and Singapore have faced challenges as they reopen.14 China
has also seen an increase in cases in the past few days.15
In the United States, there is only a loose correlation between
disease prevalence and plans for reopening. States with more
cases generally plan to reopen later, but there are exceptions.
A similar point can be made about businesses’ plans to reopen.

Companies are planning different approaches, even based on the
same underlying fact base. This implies that leaders across the
public and private sectors should build learning and adaptation
into their reopening plans from the start. Relevant lessons might
come from other geographies, other sectors, or from peers and
competitors. Leaders should be prepared to incorporate new
information and alter their approaches, either incrementally or
radically, as new information becomes available.
Resurgence seems to be not a question of if but when, where, and

how bad. Many experts are focused on a potential second wave of
COVID-19 in the northern hemisphere this autumn.16 This is
certainly possible. But focusing on the risks of autumn and winter
causes us to look past the summer, which is risky because it is
sooner and because it is when many jurisdictions will be reopening
and testing.
R is important, but so is the absolute number of new cases
Over the past few months, many have become more familiar with
epidemiological concepts like the reproduction number (R) of a
virus. R defines the transmissibility of a pathogen, as measured by
the average number of people to whom each infected person
transmits. R is a measure of change; it tells us how fast the
epidemic will expand or shrink. Values greater than one define a
growing epidemic, while those less than one define a shrinking
one.
R has been getting a lot of attention, for example, in defining the

packages of interventions that can yield R<1 in a given setting. But
the absolute number of cases is also important. Imagine two cities,
each with an R of 0.9, implying a slightly declining epidemic. But
one of the cities has 1,000 new cases per day and the other has
ten. The former faces a far higher risk in reopening than the latter.
In practice, we are seeing countries and regions take divergent

approaches to this question (Exhibit 4). Hubei Province in China
waited until reported cases were near zero to reopen, whereas
Italy and Spain took the first steps to reopening with daily case
counts at more than 1,000. Every location needs to balance public-
health and economic imperatives; we can’t say which approach is
better, but we are likely to learn more about what works in the
weeks and months ahead.
Exhibit 4
It’s (still) all about testing, tracing, and targeted quarantine
Significant resources are required to run a program of testing,

contact tracing, isolation, and quarantine at the required scale, but
relative to the economics of lockdowns or global recession, these
costs are trivial. Many countries are still far short of where they
need to be on testing, and contact-tracing programs remain a
patchwork. Our recent article provides more details on contact
tracing. Strengthening these programs remains an urgent priority
for many geographies. This point is no less important for having
been made frequently.
In any country, here are the four metrics to watch in assessing the
strength of test, trace, and quarantine efforts:
 Test positivity rate, which measures

(imperfectly) the extent to which testing systems are
capturing all cases. The World Health Organization
recommends a target of less than 10 percent
positivity.
 Tests per million population, a measure of

the depth of testing.
 Average number of contacts identified per

case, which measures how effective contact-tracing
systems are at identifying and isolating the likely
next generation of cases. The figure will tend to be
lower in lockdown settings than when people are
moving and interacting freely.
 Fraction of cases arising from contact lists, a

measure of the portion of cases arising from known
sources versus undetected community transmission.
An element of transmission dynamics now beginning to receive
more attention is transmission within households.17 We may need
to rethink the current model of home isolation and develop
modified strategies for mild and asymptomatic cases given that
isolation can prove difficult for many. Any new model should of
course ensure a comfortable experience for those who test
positive, so that they’re strongly inclined to follow the
recommended approach.
Innovation—and clinical evidence—leads to hope
The speed and scale of the R&D response to the COVID-19

outbreak is unprecedented in human history, with billions of
dollars being spent and committed in pursuit of drugs, vaccines,
and diagnostics for the virus. Today, there are more than 150
vaccines in the pipeline, and 200 drug candidates. On diagnostics,
beyond the RT-PCR18 and classic lateral-flow immunoassays already
in use for many viral and antibody tests, new technologies such as
CRISPR19 have already been granted emergency-use authorization
by the US Food and Drug Administration.20
The past few months have seen the launch of numerous trials in an
effort to find therapies and vaccines—with some challenges from
studies that are too small in size, or not randomized or controlled.
As of early May, more than 1,700 trials are in progress targeting
COVID-19 and related complications. More of these are
randomized and controlled clinical studies—and some are starting
read out results, providing evidence to support new approaches to
prevent and manage COVID-19 infection and associated
complications. The expert consensus is that enhanced treatments
for COVID-19 will likely be available by the end of 2020; and only
12 to 18 months will likely be needed21 to bring a vaccine to market
at sufficient scale for widespread immunization, compared with
the typical five or more years. Some developers have even
indicated a vaccine may be available sooner for limited use, with
an emergency-use authorization for health workers issued as early
as this fall.22
Here are five areas to watch:
 The great vaccine-platform race. At the time

of writing, 13 vaccines are already in clinical trials,
and the full pipeline spans a massive range of
platforms, including RNA, DNA, inactivated viruses,
protein subunits, and virus-like particles (VLPs). The
virus and viral-vector approaches are traditional;
others are nascent. Each platform will start to
produce data in the months ahead, starting with
evidence of vaccine safety and then potentially
demonstrations of immunogenicity (and even
efficacy) toward the end of the year, though we still
need to better understand the link between
immunogenicity and correlates of protection. While
having multiple platforms in development increases
the likelihood of a successful vaccine, each platform
has different competitors, ranging from smaller
biotech companies to multinationals, as well as
distinct manufacturing requirements, with
implications for the scale-up of capacity.
 A more nuanced understanding of the uses of

different therapeutics. The initial discussion on drugs
has focused almost exclusively on repurposed
antivirals and antimalarials for treatment. The 200-
plus candidates currently in development cover a
broad range of use cases—from postexposure to
prophylaxis, and from mild and moderate to severe
cases. The more than 1,700 active trials are
expanding the focus from drugs that directly attack
the virus to those that confer immunity and to those
that target complications of COVID-19 such as
cytokine-release syndrome (CRS) and, more recently,
acute respiratory distress syndrome (ARDS). Labs are
deploying a wide array of platforms, from
repurposed antivirals (as mentioned above) to
monoclonal and polyclonal antibodies to neutralize
the virus to immune modulators for ARDS/cytokine
storms, and even cell-therapy approaches for late-
stage disease. The emergency-use authorization for
remdesivir is an important milestone for COVID-19
drug development as well. In the coming months, we
anticipate that a more nuanced understanding of the
different use cases and the types of approaches
being tested will help reduce the mortality rate of
COVID-19 and also change the standard of care.
 A new normal and unrealized opportunity for

data sharing. Unlike the experience with prior
epidemics (including Ebola), COVID-19 has been
characterized by unprecedented sharing of
prepublication data, analyses, and results via
medRxiv, a collaborative platform. This proliferation
of information can support innovation and has been
rapidly integrated into both the media and policy
discussions—sometimes, however, to unfortunate
effect. Looking forward, as the scientific community
seeks to make meaningful interpretations of the
thousands of running studies, we need to bring
together the patient-level data from the hundreds of
small, undersize, not-well-controlled,
compassionate-use, and observational studies, in a
responsible way. Meta-analyses of such studies will
help us know if therapies actually work, at what
dosing and clinical regimen. There are efforts
underway in the ecosystem to address this—and
hopefully a collaborative model emerges that could
remain with us postpandemic.
 The impact of novel R&D

models. Competitors are collaborating in ways never
expected.23 Companies are banding together in
multilateral collaborations, some formal and some
informal, to advance innovation. For example,
leading plasma manufacturers are partnering in
novel ways to produce a single unbranded
immunoglobulin product; more than 15 pharmacos
are collaborating in a COVID-19 R&D forum to
advance, individually and collectively, the most
promising drugs and vaccines; and decades-long
competitors Sanofi and GSK are partnering on
COVID-19 vaccine development. Novel master
protocols, often with inspired names (such as
Solidarity, Recovery, and ACTT), are being used to
simultaneously test multiple drugs.24 Innovators are
deploying novel development plans and trial designs
as well; for example, Pfizer and BioNTech are
simultaneously testing four vaccines in their
combined Phase I/II study. These approaches are not
without risk given the parallel work in traditionally
sequential stage-gated processes.
 The challenge of separating the signal from

the noise. With Ebola, a substantial R&D mobilization
ran into difficulties recruiting patients to test all of
the approaches being considered. Some of these
same challenges are happening with COVID-19.
Ensuring that studies are well controlled and
appropriately powered will be critical to
understanding what actually works. Further, data
sharing will hold the key to advance our
understanding and interrogation of the benefit/risk
trade-off. Multiple prioritization efforts are
attempting to do this but are still in the early stages.
In some ways, the scale of the mobilization may be
the biggest challenge.
About the authors
Matt Craven, MD, is a partner in McKinsey’s Silicon Valley

office. Mihir Mysore is a partner in the Houston office. Matt
Wilson is a senior partner in the New York office.
This article was edited by Mark Staples, an executive editor in the

New York office.
COVID-19: Briefing note #5, April 13,
2020
Our latest perspectives on the coronavirus pandemic.
By Matt Craven, Mihir Mysore, Shubham Singhal, and Matt Wilson
In this note, we offer some of our latest insights on the COVID-19

pandemic, starting with a survey of the current epidemiology and
the five dynamics leaders need to watch: the efficacy of the surge
in critical care, the expansion of testing and other traditional
approaches, the development of antibody testing, the unknown
nature of immunity, and a wave of innovation that might produce
treatments and vaccines.
We then highlight four of our many recently published articles,

each designed to help senior executives think through the
challenges of restarting economies. These and many more articles
are available in our collection of coronavirus thinking.
The outbreak is moving quickly, and some perspectives here may

soon be out of date. This article reflects our perspective as of April
13, 2020. We will update it regularly as the crisis evolves.
COVID-19: Where we are, and where we might be

heading
COVID-19 continues to spread rapidly around the world. Almost

every country has reported cases, but the burden is asymmetrically
distributed. In the past seven days (April 6–12), 46 percent of new
confirmed cases have been reported in Europe and 39 percent in
the United States. To an extent, that’s because countries are at
different stages of the pandemic. Some that were effective at
initial containment, such as Singapore and Hong Kong, have seen
resurgence and are implementing additional measures to address
it. Others, such as many countries in Western Europe, have seen
the number of new cases plateau or begin to decline and are
debating the right approach to reopening their economies. Some
countries appear to be at the peak of infection and are urgently
building surge capacity in their health systems. In other parts of
the world, the number of cases is rising rapidly. Countries such as
Russia and Turkey are seeing a recent acceleration. India too has
experienced a significant increase in the number of cases since the
beginning of April and has evolved its response strategy, including
extending the nationwide lockdown.
The public-health tools and approaches to be deployed vary

considerably based on this status (Exhibit 1). Measures including
physical distancing, travel restrictions, effective use of personal
protective equipment (PPE), testing and tracing, and healthcare
surge capacity require more or less emphasis, depending on
epidemic phase and local context. Local use of these measures
varies considerably—physical distancing may be near-impossible in
crowded urban settings, for example, and the apps and digital tools
for contact tracing like those used in China may not be acceptable
in other parts of the world. Another challenge is the dependencies
among these measures: to take one example, the timeliness and
stringency of physical distancing measures substantially influences
how other tools should be deployed.
Exhibit 1
Although a consensus has emerged around the use of physical
distancing to slow transmission in many high-prevalence settings, a
few countries, such as Sweden, are pursuing an alternative “herd
immunity” strategy focused on protecting the most vulnerable
populations while using only limited distancing measures to flatten
the curve for others. The goals are to maintain many aspects of
economic and social life today and, over time, to develop a large
enough pool of exposed people (about 70 to 80 percent) to
“protect the herd.” Other countries are closely watching the
outcome of this approach.
The months ahead will probably be quite volatile and dynamic. It

now appears likely that some places will experience a local
resurgence as restrictions are lifted and economies reopen. That
will influence countries at the earliest stages. For example,
Singapore has seen a resurgence mainly from imported cases,
which have led to local transmission; this suggests that restrictions
on international travel may continue. As China gradually reopens,
the tactics it used (including group-based isolation models and
setting a norm of wearing masks in the workplace) and their
efficacy will inform approaches around the world. Western
Europe’s experience in relaxing restrictions, and the most
successful approaches there, will inform the approaches deployed
in the United States.
Considering the variety of approaches in use, public understanding

and consensus will evolve day by day. We will continue to find out
more about the coronavirus—how it is mutating, the duration of
immunity, its transmission dynamics, and so on. For example, it
now appears that the virus probably won’t be highly seasonal,
given the recent rapid growth in a number of hot spots in the
Southern Hemisphere. But it is still possible that the arrival of
summer in the Northern Hemisphere will slow transmission
somewhat, as some studies in both labs and natural contexts
suggest.25
With all this in mind, we believe that leaders should closely watch
five health-response dynamics in the coming weeks:
 The efficacy of the health-system surge and

how it is maintained over time. Countries with
rapidly increasing numbers of cases are finding ways
to expand their critical-care capacity massively. Their
ability to do so, and to push mortality from COVID-
19 to lower levels, will not only save lives but also
engender confidence in their health systems’ ability
to manage a resurgence. Over time, as cases plateau
and then decline, there will be questions about how
long to maintain surge capacity while also guarding
against resurgence. Providers will be under pressure
to consider the broader context of a capacity surge;
for example, in the United States, the mass
cancellation of elective medical procedures and the
associated financial hardship for many providers is
likely to force difficult discussions about which
procedures should be allowed to restart, and when.
Other effects of surge capacity, on vaccine-
preventable diseases and maternal and child health,
will also be critical to monitor.
 The scaling of traditional public-health

approaches. In parallel with the surge in critical care,
countries also need to think about building surge
capacity in traditional public-health approaches—
disease surveillance, contact tracing, and targeted
quarantines. Such a surge must build on current
efforts to scale viral testing rapidly, mostly through
RT-PCR26 machines. Exhibit 2 shows the somewhat
surprising relationship between testing and the
number of cases—generally, countries that have
tested more people have diagnosed fewer cases per
thousand people. Moreover, to detect and control
flare-ups quickly, widespread access to viral testing
will become increasingly important as countries and
cities prepare to relax distancing measures. In some
countries, this testing capacity could be paired with
at-scale contact tracing, with privacy-by-design
embedded; and quarantine facilities to help localize
hot spots and prevent a broader resurgence.
Exhibit 2
 The development of antibody testing and
understanding of sero-prevalence. We have little
idea how many people have been exposed to this
coronavirus. One recent study in a hard-hit area of
Germany showed that about 14 percent of the
population has been—far from the levels of
exposure required for herd immunity to emerge but
higher than many had expected.27 A lot of other
studies are underway to assess the portion of the
population exposed to COVID-19. If individual or
herd immunity is to play a meaningful role in
reopening, antibody tests to measure exposure must
be widely available. While many such tests are being
developed, their accuracy and availability have been
challenged. The arrival of accurate, widely available
antibody tests will help countries understand how
close they are to achieving herd immunity and
whether they can use immunity as a meaningful
signal to start reopening.
 The nature of immunity. People exposed to

other coronaviruses have exhibited durable
immunity for several years after exposure. Everyone
hopes the same holds true for the novel coronavirus,
but we don’t know for sure. Emerging reports of
recovered patients testing positive again on RT-PCR
acute-infection tests raise questions about
reactivation, as do studies in China showing very low
levels of antibodies among some infected people.
While it is unlikely that the duration of immunity is
short, any new information about this issue would
require a significant shift in strategy.
 Innovation. There has been an

unprecedented burst of global pharmaceutical R&D
related to COVID-19. Today, more than 130
therapeutic candidates and 80 vaccine candidates
are under consideration across a range of modalities
and use cases, such as treatment of severe disease
and pre-exposure prophylaxis. If drugs already
approved for other indications prove effective in
treating COVID-19, they could be deployed most
quickly, but in coming months readouts on
experimental new drugs will also arrive. The massive
scale-up of clinical trials—especially randomized
placebo-controlled studies—will provide evidence to
guide clinical decisions. Similarly, the unprecedented
consortium of plasma companies generates hope
that hyperimmune immunoglobulin can be
developed quickly. Seven vaccines are already being
tested in humans.28 Although at-scale production
and distribution is not likely for 12 to 18 months
after a successful trial, these vaccines would provide
a critical element in the armamentarium against
COVID-19. For all these innovations, a central
challenge will be rapidly scaling up production to
meet global needs.
Getting back to work: Four insights
The pandemic’s economic challenges are unprecedented. Since the

crisis began, McKinsey has published more than 70 articles on the
extraordinary public-health and economic impact, as well as the
ideas that government and business leaders need to safeguard
lives and livelihoods. In the past week, four articles have captured
the attention of leaders around the world. We summarize these
articles here and invite you to take in the full collection.
‘How to restart national economies during the coronavirus crisis’
by Andres Cadena, Felipe Child, Matt Craven, Fernando Ferrari,

David Fine, Juan Franco, and Matthew Wilson
The threat of COVID-19 to lives and livelihoods will fully resolve

only when enough people are immune to the disease to blunt
transmission, either from a vaccine or direct exposure. Until then,
governments that want to restart their economies must have
public-health systems that are strong enough to detect and
respond to cases.
The first and most obvious factor in determining readiness is the

number of new cases in a given area. Regions with significant
ongoing transmission should expect that restarting economic
activity will only lead to more transmission. Case numbers and,
more importantly, hospitalizations need to be low enough for a
health system to manage individually rather than through mass
measures. A second factor in thinking about this is the strength of
the systems in place for detecting, managing, and preventing new
cases, including adequate medical capacity, especially of intensive
care units (ICUs), for those with severe disease; the ability to
perform a diagnostic test for COVID-19 with a fast turnaround
time; and several other elements.
If we combine a system’s level of strength with an assessment of

the intensity of virus transmission, we can evaluate any region’s
readiness to restart activity (Exhibit 3). These two dimensions
determine four stages of readiness to reopen the economy, with
Stage 4 the least ready and Stage 1 the most.
Exhibit 3
‘Europe needs to prepare now to get back to work—safely’
by David Chinn, Hauke Engel, Daniel Härtl, Milena Quittnat, Pal Erik
Sjatil, Marja Seidel, Sven Smit, Sebastian Stern, and Eckart
Windhagen
As European countries begin to consider how to exit lockdowns,

local leaders are often the people best placed to evaluate
conditions and impose measures that maximize economic recovery
while protecting public health. Decisions about which measures to
deploy, when and where, should be made locally—if possible,
district by district—because there are material differences in the
severity of the crisis and economic circumstances (Exhibit 4).
Exhibit 4
Authorities will need three essential elements to ensure robust
implementation. First, leaders will require effective, ready-to-act
local-authority structures. In Italy, regional governments
collaborated with Rome to establish a national lockdown that
allowed regions to apply more stringent rules as necessary.
Second, solutions and directives must be clear and simple, so that

the public and businesses can understand them. This might require
using new communication channels, such as mobile messaging.
Third, measures must be consistent. If the guidance one day is that

shops can admit five people at a time for six hours a day and in the
next week that rule changes to two people for eight hours, the
results will be irritation, noncompliance, and the erosion of trust in
public authorities.
‘Winning the (local) COVID-19 war’
by Tom Latkovic, Leah Pollack, and Jordan VanLare, MD
Local US leaders, such as mayors and governors, have an outsized

role in the fight against COVID-19. We see six domains for
engagement:
 Foundational public health. We assessed 23

public-health interventions and identified the most
fundamental ones.
 Societal compliance. We monitored different

approaches to ensure compliance and found a
steeper decline in infections where communities
enforced policies tightly (through arrests, for
example) than in those that used only fines.
 Health-system capacity. To prevent demand

for healthcare services from outstripping supply, we
found that at least a doubling of critical-care
capacity is probably possible and necessary, at least
temporarily, across most parts of the United States.
 Industry safeguards. If the risk of contagion

continues for 12 to 18 months, public- and private-
sector leaders should promote the most effective
adaptations and safeguards to economic activity,
including physical barriers, face guards, physical
distancing, health screenings before entry, and
generous and flexible sick leave. Sectors will vary in
how critical they are and their ability to safeguard.
 Protection of the vulnerable. COVID-19 is

especially destabilizing for vulnerable populations,
including people with chronic physical- or
behavioral-health conditions, limited mobility,
advanced age, and unmet health-related social
needs, such as food and housing insecurity. Each will
require targeted interventions.
 Economic health. Local leaders need to

develop a fact base on their economies and then
ensure that money from new and current programs
gets into the hands of citizens quickly and easily.
‘Could the next normal emerge from Asia?’
by Oliver Tonby and Jonathan Woetzel
The COVID-19 outbreak began in Asia—but so have early

indications of containment, new protocols, and the resumption of
economic activity. Although the risk of another outbreak remains,
economic-activity indicators in China suggest that urban activities
are returning to pre-outbreak levels. Traffic congestion and
residential-property sales are close to where they stood in early
January 2020. Air pollution and coal consumption have returned to
74 and 85 percent, respectively, of their January 1 levels. A recent
McKinsey survey of 2,500 Chinese consumers indicates “cautious
optimism”—a gradual regaining of confidence, which should
increase spending. At this moment, strong public-health responses
in China, Singapore, and South Korea appear to have been
successful. Significant evidence indicates that the curve of
cumulative confirmed COVID-19 patients in Asia is becoming
flatter.
As companies in the region resume activity, they may be the

world’s first to shape the “next normal.” What will that look like?
Four dimensions could define it:
 Rethinking social contracts. In crises, the

state plays an essential and expanded role,
protecting people and organizing the response. This
power shift transforms long-held expectations about
the roles of individuals and institutions.
 Defining the future of work and

consumption. The crisis has propelled new
technology across all aspects of Asian life, from e-
commerce to remote-working and -learning tools,
including Alibaba’s DingTalk, WeChat Work, and
Tencent Meeting. New working and shopping
practices will probably become a permanent fixture
of the next normal.
 Mobilizing resources at speed and

scale. Within weeks, China added tens of thousands
of doctors and hospital beds. Several governments
invested in new tools to map transmission and rolled
out huge economic-stimulus plans. Asia has a proven
ability to mobilize resources in a crisis.
 Moving from globalization to
regionalization. The pandemic has exposed the
world’s risky dependence on vulnerable nodes in
global supply chains. China, for example, accounts
for about 50 to 70 percent of global demand for
copper, iron ore, metallurgical coal, and nickel. We
could see a massive restructuring as production and
sourcing move closer to end users and companies
localize or regionalize their supply chains.
About the authors
Matt Craven, MD, is a partner in McKinsey’s Silicon Valley

office. Mihir Mysore is a partner in the Houston office. Shubham
Singhal is a senior partner in the Detroit office. Matt Wilson is a
senior partner in the New York office.

New York office.
COVID-19: Briefing note #4, March 30,

2020
Our latest perspectives on the coronavirus pandemic.

By Matt Craven, Mihir Mysore, Shubham Singhal, Sven Smit, and Matt Wilson
The pandemic continues to expand. More than 175 countries and

territories have reported cases of COVID-19, the disease caused by
the coronavirus (SARS-CoV-2). Case growth has accelerated to
more than 735,000 cases and 35,000 deaths as of March 30. Some
geographies have a handful of cases, others with early community
transmission have a few hundred, and those with uncontrolled,
widespread transmission have tens of thousands. Governments
have launched unprecedented public-health and economic
responses. The situation evolves by the day.
In this note, we offer some of our latest insights, starting with five
likely epidemiologic swing factors that will largely determine the
contours of the pandemic in the next year. We then summarize
two new articles designed to help senior executives lead through
the crisis. In “Beyond coronavirus: The path to the next normal,”
we outline five time frames to help leaders organize their thinking
and responses. And in “Safeguarding our lives and our livelihoods:
The imperative of our time,” we explain how business and society
can and must take on both spheres of action, right away. These
and many more are available in our collection of coronavirus
thinking. We conclude with a short list of the areas in which
executives should be concentrating their thought and attention.
Epidemiological swing factors for COVID-19
Every country is looking to join the few that have controlled the
epidemic for now and are focusing on preventing a resurgence.
The next stages in every country are unknowable (Exhibit 1). But in
our view, the spread or control of the virus in the next year comes
down to five factors:
 Growth of new transmission complexes and

evidence of seasonality. While most countries in the
world have at least one case, most counts are
relatively low. The extent to which these countries
follow the path of countries such as Singapore that
have achieved rapid control, versus that of western
Europe and the United States, will be a major driver
of outcomes. Moreover, these geographies also
skew to more tropical climates and will provide
some evidence on how much of a mitigating effect
heat and humidity will have on the coronavirus. If
the virus proves to be seasonal, this has the
potential to shape both emerging and existing
transmission complexes.
 Impact of physical-distancing measures. We

know that rigorous, at-scale physical-distancing
measures can drive a significant reduction in the
number of new COVID-19 cases. However, given the
range of approaches in use—and the varying
stringency with which they are being applied—
there’s much still to learn about what exactly works
and how long it takes. In the next one to two weeks,
we will learn much more, as we begin to see
evidence of the impact of physical distancing in
Europe and the United States.
 Efficacy of health-system surge. As the world

has awakened to the potential risks of COVID-19,
there has been a massive effort to add capacity to
the healthcare system rapidly. This has rightly
focused on adding acute-care capacity, providing
ventilators, and building stocks of other critical
medical supplies, such as personal protective
equipment. If this surge (combined with efforts to
reduce the demand on the health system) can
prevent health systems from being overwhelmed,
mortality from COVID-19 will be significantly lower.
The development of clinically validated treatments
could be a similar boon, but the emerging evidence
on that front is mixed, thus far.
 Readiness of the health system to navigate

recurrence. As authorities begin to think about
what’s needed to navigate a postpeak environment,
the public-health tools deployed will have a different
emphasis from today’s focus in Europe and the
United States. They will include at-scale testing,
sophisticated real-time surveillance, rigorous contact
tracing, and rapid, targeted quarantine to isolate
cases and contacts. This mix of tools is how Korea,
Singapore, and Taiwan have rapidly contained
COVID-19. An antibody test would be a powerful
tool in this arsenal, since it would show which
people are at risk and which aren’t. Even as public-
health authorities negotiate an unprecedented
period of demand on the health system, they will
need to design and build systems to prevent
resurgence of the disease as we pass the peak.
 Emergence of herd immunity. Herd immunity

occurs when a sufficient portion of the population
isn’t susceptible to an infectious disease; at that
point, transmission doesn’t propagate, for lack of
available hosts. It typically occurs through either
widespread exposure or immunization. With a
disease as infectious as COVID-19, experts believe
that more than two-thirds of the population would
need to be immune to create herd immunity.29 But
there’s much that we don’t know about the
possibility of multiple strains of the virus—and about
the duration of human immunity. Answering those
questions will have important implications for the
course of the pandemic.
Exhibit 1
Two new insights
We have recently published several new articles on the pandemic.

Two have captured the attention of leaders worldwide. We
summarize them here and invite you to take in the full case in
our collection.
‘Beyond coronavirus: The path to the next normal’
By Kevin Sneader and Shubham Singhal

What will it take to navigate this crisis, now that our traditional
metrics and assumptions have been rendered irrelevant? More
simply put, it’s our turn to answer a question that many of us once
asked of our grandparents: What did you do during the war?
Our answer is a call to act across five stages, leading from the crisis
of today to the next normal that will emerge after the battle
against coronavirus has been won: Resolve, Resilience, Return,
Reimagination, and Reform (Exhibit 2).
Exhibit 2
Collectively, these five stages represent the imperative of our time:
the battle against COVID-19 is one that leaders today must win if
we are to find an economically and socially viable path to the next
normal.
‘Safeguarding our lives and our livelihoods: The imperative of our

time’
By Sven Smit, Martin Hirt, Kevin Buehler, Susan Lund, Ezra

Greenberg, and Arvind Govindarajan
We see enormous energy invested in suppressing the coronavirus,

while many urge even faster and more rigorous measures. We also
see enormous energy expended on stabilizing the economy
through public-policy responses. However, to avoid permanent
damage to our livelihoods, we need to find ways to “timebox” this
event: we must think about how to suppress the virus and shorten
the duration of the economic shock.
To aid decision makers, we have developed scenarios, based on

three likely paths for the spread of the virus and the public health
response, and three potential levels of effectiveness for
governmental economic response (Exhibit 3).
Exhibit 3
Many leaders currently expect one of the scenarios shaded in
Exhibit 3 (A1–A4) to materialize. In each of these, the COVID-19
spread is eventually controlled, and catastrophic structural
economic damage is avoided. These scenarios describe a global
average, while situations will inevitably vary by country and region.
But all four of these scenarios lead to V- or U-shaped recoveries.
Other, more extreme scenarios can also be conceived, and some of

them are already being discussed (B1–B5 in Exhibit 3). One can’t
exclude the possibility of a “black swan of black swans”: structural
damage to the economy, caused by a yearlong spread of the virus
until a vaccine is widely available, combined with the lack of policy
response to prevent widescale bankruptcies, unemployment, and a
financial crisis.
Steps to take now
Amid the chaos and all the incoming advice, it’s hard to know
exactly what leaders should do today. We suggest they focus their
time on four areas:
 Support and protect employees in this brave

new world. Many institutions have put basic
protections in place for their employees and
customers. Companies have activated no-travel and
work-from-home policies for some workers and
physical-distancing-at-work measures for others.
The challenge is evolving. For remote workers,
interruptions are more frequent than in the office.
Making a mental separation from a sometimes-
chaotic home life is tough. Workers are finding that
they don’t have the skills to be successful in an
extended remote environment, from networking to
creating routines that drive productivity. They worry
that staying remote could make them less valuable,
especially in a recessionary environment.
As our colleagues recently explained, three goals are
essential. Companies need to increase
communication, balancing the needs of the business
with expectation setting and morale building, so
employees know that their well-being is top of mind.
They also need to change working norms, making
remote work practical and simple whenever
possible. And of course, they must protect people’s
health, with whatever measures are appropriate to
the workplace: positive hygiene habits, personal
protective equipment, amended sick-leave policies—
whatever it takes to ensure health and safety.
 Monitor leading indicators of how and where

the pandemic is evolving and conduct scenario
planning using both epidemiological and economic
inputs. Earlier, we sketched out the swing factors to
watch to understand how the coronavirus pandemic
might develop. As companies develop scenarios,
they might want to consider the article
“Safeguarding our lives and our livelihoods: The
imperative of our time,” which details McKinsey’s
nine epidemiologic and economic scenarios.
 Think about the next horizons of COVID-19. In

the urgency of the moment, it’s easy to lose sight of
the actions that might be needed tomorrow—and
the day after that. The article “Beyond coronavirus:
The path to the next normal,” explains the five
horizons that every executive should use to ensure
an organization’s rapid response, adaptation to
change, and reemergence in a position of strength.
 Evolve the nerve center to plan for the next

phase. Every assumption underpinning a business is
open to question. To take one example, we might be
in the midst of the largest drawdown in demand
since the Second World War. The pendulum might
not swing back fully once the outbreak has relented.
Having experienced a new way of living, consumers
are recalibrating their spending, increasing the
likelihood that spending may permanently shift
between categories and that online services could
get adopted far faster. Decoding this new normal—
and ensuring that the company has a strategy to
navigate it—is an important part of the work of
a nerve center. Approaches such as using a portfolio
of initiatives and planning for decision making under
uncertainty can go a long way toward creating a
compass for business leaders to follow.
The next normal will look unlike any in the years preceding the
coronavirus, the pandemic that changed everything. In these
briefing notes, we aim to provide leaders with an integrated
perspective on the unfolding crisis and insight into the coming
weeks and months.
About the authors
Matt Craven is a partner in McKinsey’s Silicon Valley office, Mihir

Mysore is a partner in the Houston office, Shubham Singhal is a
senior partner in the Detroit office, Sven Smit is a senior partner in
the Amsterdam office, and Matt Wilson is a senior partner in the
New York office.

New York office.
2020
Current perspectives on the coronavirus outbreak.
At the time of writing, there have been more than 160,000

confirmed cases of COVID-19 and more than 6,000 deaths from the
disease. Older people, especially, are at risk (Exhibit 1). More than
140 countries and territories have reported cases; more than 80
have confirmed local transmission. Even as the number of new
cases in China is falling (to less than 20, on some days), it is
increasing exponentially in Italy (doubling approximately every four
days). China’s share of new cases has dropped from more than 90
percent a month ago to less than 1 percent today.
Exhibit 1
WHO declared COVID-19 a pandemic on March 11, 2020. In its
message, it balanced the certainty that the coronavirus (SARS-CoV-
2) will inevitably spread to all parts of the world, with the
observation that governments, businesses, and individuals still
have substantial ability to change the disease’s trajectory. In this
note, we describe emerging archetypes of epidemic progressions;
outline two scenarios for the pandemic and its economic effects;
and observe some of the ways that business can improve on its
early responses.
Our perspective is based on our analysis of past emergencies and

our industry expertise. It is only one view, however. Others could
review the same facts and emerge with a different view. Our
scenarios should be considered only as two among many
possibilities. This perspective is current as of March 16, 2020. We
will update it regularly as the outbreak evolves.
Archetypes for epidemic progression
Many countries now face the need to bring widespread community

transmission of coronavirus under control. While every country’s
response is unique, there are three archetypes emerging—two
successful and one not—that offer valuable lessons. We present
these archetypes while acknowledging that there is much still to be
learned about local transmission dynamics and that other
outcomes are possible:
 Extraordinary measures to limit spread. After

the devastating impact of COVID-19 became evident
in the Hubei province, China imposed
unprecedented measures—building hospitals in ten
days, instituting a “lockdown” for almost 60 million
people and significant restrictions for hundreds of
millions of others, and using broad-based
surveillance to ensure compliance—in an attempt to
combat the spread. These measures have been
successful in rapidly reducing transmission of the
virus, even as the economy has been restarting.
 Gradual control through effective use of

public-health best practices. South Korea
experienced rapid case-count growth in the first two
weeks of its outbreak, from about 100 total cases on
February 19 to more than 800 new cases on
February 29. Since then, the number of new cases
has dropped steadily, though not as steeply as in
China. This was achieved through rigorous
implementation of classic public-health tools, often
integrating technology. Examples include rapid and
widespread deployment of testing (including the
drive-through model) (Exhibit 2), rigorous contact
tracing informed by technology, a focus on
healthcare-provider safety, and real-time integrated
tracking and analytics. Singapore and Taiwan appear
to have applied a similar approach, also with broadly
successful results.
Exhibit 2
 Unsuccessful initial control, leading to
overwhelmed health systems. In some outbreaks
where case growth has not been contained, hospital
capacity has been overwhelmed. The
disproportionate impact on healthcare workers and
lack of flexibility in the system create a vicious cycle
that makes it harder to bring the epidemic under
control.
There are also other approaches being considered (such as a focus
on reaching herd immunity); the impact of these is unclear.
Two scenarios
Based on new information that emerged last week, we have

significantly updated and simplified our earlier scenarios. A
number of respected institutions are now projecting very high case
counts. The most pessimistic projections typically give the virus full
credit for exponential growth but assume that humans will not
respond effectively—that is, they assume that many countries will
fall into the third archetype described earlier. We believe this is
possible but by no means certain. The scenarios below outline two
ways that the interplay between the virus and society’s response
might unfold and the implications on the economy in each case.
Exhibit 3 lays out a number of critical indicators that may provide
early notice of which scenario is unfolding.
Exhibit 3
Delayed recovery
Epidemiology. In this scenario, new case counts in the Americas

and Europe rise until mid-April. Asian countries peak earlier;
epidemics in Africa and Oceania are limited. Growth in case counts
is slowed by effective social distancing through a combination of
national and local quarantines, employers choosing to restrict
travel and implement work-from-home policies, and individual
choices. Testing capacity catches up to need, allowing an accurate
picture of the epidemic. The virus proves to be seasonal, further
limiting its spread. By mid-May, public sentiment is significantly
more optimistic about the epidemic. The Southern Hemisphere
winter sees an uptick in cases, but by that point, countries have a
better-developed playbook for response. While the autumn of
2020 sees a resurgence of infections, better preparedness enables
continued economic activity.
Economic impact. Large-scale quarantines, travel restrictions, and

social-distancing measures drive a sharp fall in consumer and
business spending until the end of Q2, producing a recession.
Although the outbreak comes under control in most parts of the
world by late in Q2, the self-reinforcing dynamics of a recession
kick in and prolong the slump until the end of Q3. Consumers stay
home, businesses lose revenue and lay off workers, and
unemployment levels rise sharply. Business investment contracts,
and corporate bankruptcies soar, putting significant pressure on
the banking and financial system.
Monetary policy is further eased in Q1 but has limited impact,

given the prevailing low interest rates. Modest fiscal responses
prove insufficient to overcome economic damage in Q2 and Q3. It
takes until Q4 for European and US economies to see a genuine
recovery. Global GDP in 2020 falls slightly.
Prolonged contraction
Epidemiology. In this scenario, the epidemic does not peak in the

Americas and Europe until May, as delayed testing and weak
adoption of social distancing stymie the public-health response.
The virus does not prove to be seasonal, leading to a long tail of
cases through the rest of the year. Africa, Oceania, and some Asian
countries also experience widespread epidemics, though countries
with younger populations experience fewer deaths in percentage
terms. Even countries that have been successful in controlling the
epidemic (such as China) are forced to keep some public-health
measures in place to prevent resurgence.
Economic impact. Demand suffers as consumers cut spending
throughout the year. In the most affected sectors, the number of
corporate layoffs and bankruptcies rises throughout 2020, feeding
a self-reinforcing downward spiral.
The financial system suffers significant distress, but a full-scale

banking crisis is averted because of banks’ strong capitalization and
the macroprudential supervision now in place. Fiscal and
monetary-policy responses prove insufficient to break the
downward spiral.
The global economic impact is severe, approaching the global

financial crisis of 2008–09. GDP contracts significantly in most
major economies in 2020, and recovery begins only in Q2 2021.
Responding to COVID-19: What companies are

missing
Our conversations with hundreds of companies around the world

on COVID-19 challenges have allowed us to compile a view of the
major work streams that companies are pursuing (Exhibit 4).
Exhibit 4
While this list is fairly comprehensive, some companies are taking
other steps. However, we have seen evidence that many
companies are finding it hard to get the major actions right. We
have consistently heard about five challenges.
Having an intellectual understanding isn’t the same as internalizing

the reality
Exponential case-count growth is hard to internalize unless you

have experienced it before. Managers who haven’t experienced
this or been through a “tabletop” simulation are finding it difficult
to respond correctly. In particular, escalation mechanisms may be
understood in theory, but companies are finding them hard to
execute in reality, as the facts on the ground don’t always conform
to what it says in the manual. Crisis case studies are replete with
examples of managers who chose not to escalate, creating worse
issues for their institutions.
Employee safety is paramount, but mechanisms are ineffective
Policy making at many companies is scattershot, especially at those

that haven’t yet seen the coronavirus directly. Many, such as
professional-services and tech companies, lean very conservative:
their protection mechanisms often add to a perception of safety
without actually keeping people safer. For instance, temperature
checks may not be the most effective form of screening, given that
the virus may transmit asymptomatically. Asking employees to stay
at home if they are unwell may do more to reduce transmissibility.
Such policies are more effective if employees receive
compensation protection—and insulation from other
consequences too.
Some companies aren’t thinking through the second-order effects

of their policies. For example, a ban on travel without a
concomitant work-from-home policy can make the office very
crowded, leading to higher risk of transmission. Others are
adopting company-wide policies without thinking through the
needs of each location and each employee segment.
Optimism about the return of demand is dangerous
Being optimistic about demand recovery is a real problem,

especially for companies with working-capital or liquidity shortages
and those veering toward bankruptcy. Troubled organizations are
more likely to believe in a faster recovery—or a shallower
downturn. Facing up to the possibility of a deeper, more
protracted downturn is essential, since the options available now,
before a recession sets in, may be more palatable than those
available later. For example, divestments to provide needed cash
can be completed at a higher price today than in a few weeks or
months.
Assumptions across the enterprise are misaligned
Some companies are pursuing their coronavirus responses strictly

within organizational silos (for example, the procurement team is
driving supply-chain efforts, sales and marketing teams are
working on customer communications, and so on). But these
teams have different assumptions and tend to get highly tactical,
going deep in their own particular patch of weeds rather than
thinking about what other parts of the company are doing—or
about what might come next.
The near term is essential, but don’t lose focus on the longer term
(which might be worse)
Immediate and effective response is, of course, vital. We think that

companies are by and large pursuing the right set of responses, as
shown in Exhibit 4. But on many of these work streams, the longer-
term dimensions are even more critical. Recession may set in. The
disruption of the current outbreak is shifting industry structures.
Credit markets may seize up, in spite of stimulus. Supply-chain
resilience will be at a premium. It may sound impossible for
management teams that are already working 18-hour days, but too
few are dedicating the needed time and effort to responses
focused on the longer term.
The coronavirus crisis is a story with an unclear ending. What is

clear is that the human impact is already tragic, and that
companies have an imperative to act immediately to protect their
employees, address business challenges and risks, and help to
mitigate the outbreak in whatever ways they can.
For the full set of our latest perspectives, please see the
attached full briefing materials, which we will update regularly. We
welcome your comments and questions
at coronavirus_client_response@mckinsey.com.
For more of the latest information on COVID-19, please see reports

from the European Centre for Disease Control and Prevention,
the US Centers for Disease Control and Prevention, and WHO; and
the live tracker of global cases from Johns Hopkins University.


2020
A range of outcomes is possible. Decision makers should not
assume the worst.
Less than ten weeks have passed since China reported the

existence of a new virus to the World Health Organization. This
virus, now known as SARS-CoV-2, causing COVID-19 disease,
spread quickly in the city of Wuhan and throughout China. The
country has experienced a deep humanitarian challenge, with
more than 80,000 cases and more than 3,000 deaths. COVID-19
progressed quickly beyond China’s borders. Four other major
transmission complexes are now established across the world: East
Asia (especially South Korea, with more than 7,000 cases, as well
as Singapore and Japan), the Middle East (centered in Iran, with
more than 6,500 cases), Europe (especially the Lombardy region in
northern Italy, with more than 7,300 cases, but with widespread
transmission across the continent), and the United States, with
more than 200 cases. Each of these transmission complexes has
sprung up in a region where millions of people travel every day for
social and economic reasons, making it difficult to prevent the
spread of the disease. In addition to these major complexes, many
other countries have been affected. Exhibit 1 (see an updated
version of the exhibit here) offers a snapshot of the current
progress of the disease and its economic impact.
The next phases of the outbreak are profoundly uncertain. In our

view, the prevalent narrative, focused on pandemic, to which both
markets and policy makers have gravitated as they respond to the
virus, is possible but underweights the possibility of a more
optimistic outcome. In this briefing note, we attempt to distinguish
the things we know from those we don’t, and the potential
implications of both sets of factors. We then outline three
potential economic scenarios, to illustrate the range of
possibilities, and conclude with some discussion of the implications
for companies’ supply chains, and seven steps businesses can take
now to prepare.
Our perspective is based on our analysis of past emergencies and

on our industry expertise. It is only one view, however. Others
could review the same facts and emerge with a different view. Our
scenarios should be considered only as three among many
possibilities. This perspective is current as of March 9, 2020. We
will update it regularly as the outbreak evolves.
What we know, and what we are discovering
What we know. Epidemiologists are in general agreement on two

characteristics of COVID-19:
 The virus is highly transmissible. Both

observed experience and emerging scientific
evidence show that the virus causing COVID-19 is
easily transmitted from person to person. The US
Centers for Disease Control and Prevention
estimates that the virus’s reproduction number (the
number of additional cases that likely result from an
initial case) is between 1.6 and 2.4, making COVID-
19 significantly more transmissible than seasonal flu
(whose reproduction number is estimated at 1.2 to
1.4) (Exhibit 2).
Exhibit 2
 The virus disproportionately affects older
people with underlying conditions. Epidemiologists
Zunyou Wu and Jennifer McGoogan analyzed a
report from China Centers for Disease Control and
Prevention that looked at more than 72,000 cases
and concluded that the fatality rate for patients 80
and older was seven times the average, and three to
four times the average for patients in their
70s.30 Other reports describe fatality rates for people
under 40 to be 0.2 percent.
What we are still discovering. Three characteristics of the virus are
not fully understood, but are key variables that will affect how the
disease progresses, and the economic scenario that evolves:
 The extent of undetected milder cases. We

know that those infected often display only mild
symptoms (or no symptoms at all), so it is easy for
public-health systems to miss such cases. For
example, 55 percent of the cases on board the
Diamond Princess cruise ship did not exhibit
significant symptoms (even though many passengers
were middle-aged or older). But we don’t know for
sure whether official statistics are capturing 80
percent, 50 percent, or 20 percent of cases.
 Seasonality. There is no evidence so far

about the virus’s seasonality (that is, a tendency to
subside in the northern hemisphere as spring
progresses). Coronaviruses in animals are not always
seasonal but have historically been so in humans for
reasons that are not fully understood. In the current
outbreak, regions with higher temperatures (such as
Singapore, India, and Africa) have not yet seen a
broad, rapid propagation of the disease.
 Asymptomatic transmission. The evidence is

mixed about whether asymptomatic people can
transmit the virus, and about the length of the
incubation period. If asymptomatic transfer is a
major driver of the epidemic, then different public-
health measures will be needed.
These factors notwithstanding, we have seen that robust public-
health responses, like those in China outside Hubei and in
Singapore, can help stem the epidemic. But it remains to be seen
how these factors will play out and the direct impact they will
have. The economic impact too will vary considerably.
Economic impact
In our analysis, three broad economic scenarios might unfold: a

quick recovery, a global slowdown, and a pandemic-driven
recession. Here, we outline all three. We believe that the prevalent
pessimistic narrative (which both markets and policy makers seem
to favor as they respond to the virus) underweights the possibility
of a more optimistic outcome to COVID-19 evolution.
Quick recovery
In this scenario, case count continues to grow, given the virus’s

high transmissibility. While this inevitably causes a strong public
reaction and drop in demand, other countries are able to achieve
the same rapid control seen in China, so that the peak in public
concern comes relatively soon (within one to two weeks). Given
the low fatality rates in children and working-age adults, we might
also see levels of concern start to ebb even as the disease
continues to spread. Working-age adults remain concerned about
their parents and older friends, neighbors, and colleagues, and
take steps to ensure their safety. Older people, especially those
with underlying conditions, pull back from many activities. Most
people outside the transmission complexes continue their normal
daily lives.
The scenario assumes that younger people are affected enough to

change some daily habits (for example, they wash hands more
frequently) but not so much that they shift to survival mode and
take steps that come at a higher cost, such as staying home from
work and keeping children home from school. A complicating
factor, not yet analyzed, is that workers in the gig economy, such
as rideshare drivers, may continue to report to work despite
requests to stay home, lest they lose income. This scenario also
presumes that the virus is seasonal.
In this scenario, our model developed in partnership with Oxford

Economics suggests that global GDP growth for 2020 falls from
previous consensus estimates of about 2.5 percent to about 2.0
percent. The biggest factors are a fall in China’s GDP from nearly 6
percent growth to about 4.7 percent; a one-percentage-point drop
in GDP growth for East Asia; and drops of up to 0.5 percentage
points for other large economies around the world. The US
economy recovers by the end of Q1. By that point, China resumes
most of its factory output; but consumer confidence there does
not fully recover until end Q2. These are estimates, based on a
particular scenario. They should not be considered predictions.
Global slowdown
This scenario assumes that most countries are not able to achieve
the same rapid control that China managed. In Europe and the
United States, transmission is high but remains localized, partly
because individuals, firms, and governments take strong
countermeasures (including school closings and cancellation of
public events). For the United States, the scenario assumes
between 10,000 and 500,000 total cases. It assumes one major
epicenter with 40 to 50 percent of all cases, two or three smaller
centers with 10 to 15 percent of all cases, and a “long tail” of
towns with a handful or a few dozen cases. This scenario sees
some spread in Africa, India, and other densely populated areas,
but the transmissibility of the virus declines naturally with the
northern hemisphere spring.
This scenario sees much greater shifts in people’s daily behaviors.

This reaction lasts for six to eight weeks in towns and cities with
active transmission, and three to four weeks in neighboring towns.
The resulting demand shock cuts global GDP growth for 2020 in
half, to between 1 percent and 1.5 percent, and pulls the global
economy into a slowdown, though not recession.
In this scenario, a global slowdown would affect small and mid-size

companies more acutely. Less developed economies would suffer
more than advanced economies. And not all sectors are equally
affected in this scenario. Service sectors, including aviation, travel,
and tourism, are likely to be hardest hit. Airlines have already
experienced a steep fall in traffic on their highest-profit
international routes (especially in Asia–Pacific). In this scenario,
airlines miss out on the summer peak travel season, leading to
bankruptcies (FlyBe, the UK regional carrier, is an early example)
and consolidation across the sector. A wave of consolidation was
already possible in some parts of the industry; COVID-19 would
serve as an accelerant.
In consumer goods, the steep drop in consumer demand will likely

mean delayed demand. This has implications for the many
consumer companies (and their suppliers) that operate on thin
working-capital margins. But demand returns in May–June as
concern about the virus diminishes. For most other sectors, the
impact is a function primarily of the drop in national and global
GDP, rather than a direct impact of changed behaviors. Oil and gas,
for instance, will be adversely affected as oil prices stay lower than
expected until Q3.
Pandemic and recession

This scenario is similar to the global slowdown, except it assumes
that the virus is not seasonal (unaffected by spring in the northern
hemisphere). Case growth continues throughout Q2 and Q3,
potentially overwhelming healthcare systems around the world
and pushing out a recovery in consumer confidence to Q3 or
beyond. This scenario results in a recession, with global growth in
2020 falling to between –1.5 percent and 0.5 percent.
Supply-chain challenges
For many companies around the world, the most important

consideration from the first ten weeks of the COVID-19 outbreak
has been the effect on supply chains that begin in or go through
China. As a result of the factory shutdowns in China during Q1,
many disruptions have been felt across the supply chain, though
the full effects are of course still unclear.
Hubei is still in the early phases of its recovery; case count is down,
but fatality rates remain high, and many restrictions remain that
will prevent a resumption of normal activity until early Q2. In the
rest of China, however, many large companies report that they are
running at more than 90 percent capacity as of March 1. While
some real challenges remain, such as lower than usual availability
of migrant labor, there is little question that plants are returning
back to work quickly.
Trucking capacity to ship goods from factories to ports is at about

60 to 80 percent of normal capacity. Goods are facing delays of
between eight and ten days on their journey to ports.
The Baltic Dry Index (which measures freight rates for grains and
other dry goods around the world) dropped by about 15 percent at
the onset of the outbreak but has increased by nearly 30 percent
since then. The TAC index, which measures air-freight prices, has
also risen by about 15 percent since early February.
In the next few months, the phased restart of plants outside Hubei
(and the slower progress of plants within Hubei) is likely to lead to
challenges in securing critical parts. As inventories are run down
faster, parts shortages are likely to become the new reason why
plants in China cannot operate at full capacity. Moreover, plants
that depend on Chinese output (which is to say, most factories
around the world) have not yet experienced the brunt of the initial
Chinese shutdown and are likely to experience inventory
“whiplash” in the coming weeks.
Perhaps the biggest uncertainty for supply-chain managers and

production heads is customer demand. Customers that have
prebooked logistics capacity may not use it; customers may
compete for prioritization in receiving a factory’s output; and the
unpredictability of the timing and extent of demand rebound will
mean confusing signals for several weeks.
Responding to COVID-19
In our experience, seven actions can help businesses of all kinds.

We outline them here as an aid to leaders as they think
through crisis management for their companies. These are only
guidelines; they are by no means exhaustive or detailed enough to
substitute for a thorough analysis of a company’s particular
situation.
Protect your employees. The COVID-19 crisis has been emotionally

challenging for many people, changing day-to-day life in
unprecedented ways. For companies, business as usual is not an
option. They can start by drawing up and executing a plan to
support employees that is consistent with the most conservative
guidelines that might apply and has trigger points for policy
changes. Some companies are actively benchmarking their efforts
against others to determine the right policies and levels of support
for their people. Some of the more interesting models we have
seen involve providing clear, simple language to local managers on
how to deal with COVID-19 (consistent with WHO, CDC, and other
health-agency guidelines) while providing autonomy to them so
they feel empowered to deal with any quickly evolving situation.
This autonomy is combined with establishing two-way
communications that provide a safe space for employees to
express if they are feeling unsafe for any reason, as well as
monitoring adherence to updated policies.
Set up a cross-functional COVID-19 response team. Companies

should nominate a direct report of the CEO to lead the effort and
should appoint members from every function and discipline to
assist. Further, in most cases, team members will need to step out
of their day-to-day roles and dedicate most of their time to virus
response. A few workstreams will be common for most companies:
a) employees’ health, welfare, and ability to perform their roles; b)
financial stress-testing and development of a contingency plan; c)
supply-chain monitoring, rapid response, and long-term resiliency
(see below for more); d) marketing and sales responses to demand
shocks; and e) coordination and communication with relevant
constituencies. These subteams should define specific goals for the
next 48 hours, adjusted continually, as well as weekly goals, all
based on the company’s agreed-on planning scenario. The
response team should install a simple operating cadence and
discipline that focuses on output and decisions, and does not
tolerate meetings that achieve neither.
Ensure that liquidity is sufficient to weather the storm. Businesses

need to define scenarios tailored to the company’s context. For the
critical variables that will affect revenue and cost, they can define
input numbers through analytics and expert input. Companies
should model their financials (cash flow, P&L, balance sheet) in
each scenario and identify triggers that might significantly impair
liquidity. For each such trigger, companies should define moves to
stabilize the organization in each scenario (optimizing accounts
payable and receivable; cost reduction; divestments and M&A).
Stabilize the supply chain. Companies need to define the extent

and likely duration of their supply-chain exposure to areas that are
experiencing community transmission, including tier-1, -2, and -3
suppliers, and inventory levels. Most companies are primarily
focused on immediate stabilization, given that most Chinese plants
are currently in restart mode. They also need to consider rationing
critical parts, prebooking rail/air-freight capacity, using after-sales
stock as a bridge until production restarts, gaining higher priority
from their suppliers, and, of course, supporting supplier restarts.
Companies should start planning how to manage supply for
products that may, as supply comes back on line, see unusual
spikes in demand due to hoarding. In some cases, medium or
longer-term stabilization may be warranted, which calls for
updates to demand planning, further network optimization, and
searching for and accelerating qualification of new suppliers. Some
of this may be advisable anyway, absent the current crisis, to
ensure resilience in their supply chain—an ongoing challenge that
the COVID-19 situation has clearly highlighted.
Stay close to your customers. Companies that navigate disruptions
better often succeed because they invest in their core customer
segments and anticipate their behaviors. In China, for example,
while consumer demand is down, it has not disappeared—people
have dramatically shifted toward online shopping for all types of
goods, including food and produce delivery. Companies should
invest in online as part of their push for omnichannel distribution;
this includes ensuring the quality of goods sold online. Customers’
changing preferences are not likely to go back to pre-outbreak
norms.
Practice the plan. Many top teams do not invest time in

understanding what it takes to plan for disruptions until they are in
one. This is where roundtables or simulations are invaluable.
Companies can use tabletop simulations to define and verify their
activation protocols for different phases of response (contingency
planning only, full-scale response, other). Simulations should clarify
decision owners, ensure that roles for each top-team member are
clear, call out the “elephants in the room” that may slow down the
response, and ensure that, in the event, the actions needed to
carry out the plan are fully understood and the required
investment readily available.
Demonstrate purpose. Businesses are only as strong as the

communities of which they are a part. Companies need to figure
out how to support response efforts—such as by providing money,
equipment, or expertise. For example, a few companies have
shifted production to create medical masks and clothing.
The checklist in Exhibit 3 can help companies make sure they are
doing everything necessary.
Exhibit 3
2020
The following is McKinsey’s perspective as of March 2, 2020.
What we know about the outbreak
COVID-19 crossed an inflection point during the week of February

24, 2020. Cases outside China exceeded those within China for the
first time, with 54 countries reporting cases as of February 29. The
outbreak is most concentrated in four transmission complexes—
China (centered in Hubei), East Asia (centered in South Korea and
Japan), the Middle East (centered in Iran), and Western Europe
(centered in Italy). In total, the most-affected countries represent
nearly 40 percent of the global economy. The daily movements of
people and the sheer number of personal connections within these
transmission complexes make it unlikely that COVID-19 can be
contained. And while the situation in China has stabilized with the
implementation of extraordinary public-health measures, new
cases are also rising elsewhere, including Latin America (Brazil), the
United States (California, Oregon, and Washington), and Africa
(Algeria and Nigeria). The US Centers for Disease Control and
Prevention has set clear expectations that the United States will
experience community transmission, and evidence is emerging
that it may be happening already.
While the future is uncertain, it is likely that countries in the four

mature transmission complexes will see continued case growth;
new complexes may emerge. This could contribute to a perception
of “leakage,” as the public comes to believe that the infections
aren’t contained. Consumer confidence, especially in those
complexes, may erode, and could be further weakened by
restrictions on travel and limits on mass gatherings. China will
mostly likely recover first, but the global impact will be felt much
longer. We expect a slowdown in global growth for 2020. In what
follows, we review the two most likely scenarios for economic
impact and recovery and provide insights and best practices on
how business leaders can navigate this uncertain and fast-changing
situation.
Economic impact
In our base-case scenario, continued spread within established

complexes, as well as community transmission in new complexes,
drives a 0.3- to 0.7-percentage-point reduction in global GDP
growth for 2020. China, meanwhile, continues on its path to
recovery, achieving a near-complete economic restart by mid-Q2
(in spite of the current challenges of slow permissions and lack of
migrant-worker capacity). As other geographies experience
continued case growth, it is likely that movement restrictions will
be imposed to attempt to stop or slow the progression of the
disease. This will almost certainly drive a sharp reduction in
demand, which in turn lowers economic growth through Q2 and
early Q3. Demand recovery will depend on a slowing of case
growth, the most likely cause of which would be “seasonality”—a
reduction in transmissions similar to that seen with influenza in the
northern hemisphere as the weather warms. Demand may also
return if the disease’s fatality ratio proves to be much lower than
we are currently seeing.
Regions that have not yet seen rapid case growth (such as the
Americas) are increasingly likely to see more sustained community
transmission (for example, expansion of the emergency clusters in
the western United States). Greater awareness of COVID-19, plus
additional time to prepare, may help these complexes manage
case growth. However, complexes with less robust health systems
could see more general transmission. Lower demand could slow
growth of the global economy between 1.8 percent and 2.2
percent instead of the 2.5 percent envisioned at the start of the
year.
Unsurprisingly, sectors will be affected to different degrees. Some
sectors, like aviation, tourism, and hospitality, will see lost demand
(once customers choose not to eat at a restaurant, those meals
stay uneaten). This demand is largely irrecoverable. Other sectors
will see delayed demand. In consumer goods, for example,
customers may put off discretionary spending because of worry
about the pandemic but will eventually purchase such items later,
once the fear subsides and confidence returns. These demand
shocks—extended for some time in regions that are unable to
contain the virus—can mean significantly lower annual growth.
Some sectors, such as aviation, will be more deeply affected.
In the pessimistic scenario, case numbers grow rapidly in current

complexes and new centers of sustained community transmission
erupt in North America, South America, and Africa. Our pessimistic
scenario assumes that the virus is not highly seasonal, and that
cases continue to grow throughout 2020. This scenario would see
significant impact on economic growth throughout 2020, resulting
in a global recession.
In both the base-case and pessimistic scenarios, in addition to

facing consumer-demand headwinds, companies will need to
navigate supply-chain challenges. Currently, we see that
companies with strong, centralized procurement teams and good
relationships with suppliers in China are feeling more confident
about their understanding of the risks these suppliers face
(including tier-2 and tier-3 suppliers). Others are still grappling with
their exposure in China and other transmission complexes. Given
the relatively quick economic restart in China, many companies are
focused on temporary stabilization measures rather than moving
supply chains out of China. COVID-19 is also serving as an
accelerant for companies to make strategic, longer-term changes
to supply chains—changes that had often already been under
consideration.
To better understand which scenario may prevail, planning teams

can consider a set of leading indicators like those in the exhibit
(see an updated version of the exhibit here).
ABOUT THE AUTHOR(S)

Matt Craven is a partner in McKinsey’s Silicon Valley office; Linda Liu is a partner in the New
York office, where Matt Wilson is a senior partner; and Mihir Mysore is a partner in the Houston
office.
This article was edited by Mark Staples, an executive editor in the New York office.
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