McKinsey Quarterly 2023 Number 1

• Decarbonizing core assets. A global mining company with dozens of mines worldwide sought to embed environmental, social, and governance (ESG) along its value chain into the core business. The company defined targets and adopted strategic initiatives to create a pathway to net-zero emissions across the enterprise. Detailed decarbonization plans were developed for each site, with steps to reduce greenhouse-gas emissions by 30 percent by 2030. Once implemented, the plan will lead to large reductions in both operating and capital expenditures. • Derisking manufacturing analytics. A global agriculture products leader wanted to deploy advanced analytics within its supply chain and manufacturing operations. Aware of the potential data and analytics risks this entailed, the company made derisking and safeguarding critical data and analytics through data governance and model risk manage ment an integral part of the effort. The move built enterprise-wide confidence in - analytics resilience and allowed the company to capture the full potential of the effort. • Planning using next-generation scenarios. A leading automotive company created two hypothetical scenarios (a technological disruption and market breakdown), then assessed the potential impact on the business and the resilience levers that would best mitigate that impact. The analysis suggested that up to 60 percent of sales losses could be miti gated. This led to a decision to diversify geographically and reduce the risk of depen dence on single sites, set up some anticipatory information mechanisms, and reduce the - - fixed-costs intensity in some production locations. • Anticipating the future. A utility with annual costs of $5 billion was facing rising prices from suppliers, in particular for basic materials. To address cost pressures strategically, the utility created an “inflation nerve center,” using tech-enabled analytics. The center identified spending priorities, anticipated and quantified inflationary risks, created live dashboards showing inflationary impact, and established a proactive process and set of levers to manage inflationary pressures. This helped the company understand the mag nitude of inflationary risks across its cost base using an analytics-driven approach. - • Turning a crisis into a growth opportunity. A global pharma company addressed the recent disruptions in healthcare supply chains, services, and access to healthcare professionals. The company designed a home-delivery system to help patients with rare diseases continue receiving treatment in the safety of their own homes. It further created a partnership with a start-up company to provide patients with physical-therapy programs through virtual channels. These innovations allocate and deploy resources more effectively; they also inspired the company to undertake a groupwide agile and lean organizational transformation. Why resilience matters: What still works and what doesn’t Companies cannot effectively respond to the current economic crisis in precisely the same way as they did to earlier crises. But some basic lessons can be drawn from past expe rience. McKinsey research on the financial crisis of 2007–08 shows that resilient companies - not only perform better than their peers through a downturn and recovery but also accelerate into the new reality, leaving peers further behind (Exhibit 2).

McKinsey Quarterly 2023 Number 1

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