McKinsey Quarterly 2023 Number 1

Can leaders lift their companies to the next frontier of resilience— not only to survive but also to thrive?

A confluence of crises and disruptions has darkened European skies. The energy crisis is already dire and could get worse. The war in Ukraine continues, an unabated humanitarian tragedy. The cost of life’s essentials has gone through the roof—prices in some countries have risen eightfold. Business signs are weakening. In July and August of 2022, purchasing man agers’ indexes indicated contraction for the first time since - - - early 2021. China, a key supplier and customer, is wres tling with its own economic problems. The effects of climate change are pronounced across the continent, with drought and extreme heat curtailing hydropower and even put ting industrial production at risk. The energy crisis threatens to derail the net-zero transition. Semiconductor short ages, technological shortfalls, and labor shortages remain. The latest McKinsey scenarios, undertaken in partner ship with Oxford Economics, suggest that European GDP will most likely contract overall in 2023 (Exhibit 1). How will Europe’s business leaders respond? This is a defining moment for a generation of executives who have never been tested in quite this way. Yes, today’s leaders have faced down the global financial crisis, the euro crisis, Brexit, and the COVID-19 pandemic. All were challenging in their way; each crisis called for ingenuity, grit, and deter mination. Many business leaders met these challenges - exceptionally well. But today they face a unique conflu ence of crises that is of another magnitude. The play books of the past will be only moderately helpful. - Businesses need new approaches to build the resilience required in these decisive times, through a perceptive response to current challenges, foresight to anticipate the next round of disruptions, and capability for adaptation that will set the business on a foundation for success ful growth. - -

© Lost Horizon Images/Getty Images

83