As emerging economies build more comprehensive domestic supply chains, they are reducing their reliance on imported intermediate inputs. 4 The result is that goods-producing value chains have become less trade intensive, even as cross-border services are growing briskly—and generating more economic value than trade statistics capture, according to our analysis. China is already a global leader in the consumer-driven digital economy. Digital performance is widely distributed with a small number of superstars dominating value created. Eleven other countries (Azerbaijan, Belarus, Cambodia, Ethiopia, India, Kazakhstan, Laos, Myanmar, Turkmenistan, Uzbekistan, and Vietnam) have achieved faster average growth of at least 5 percent annually over the past 20 years. McKinsey & Company, Reinventing Construction: A Route to Higher Productivity, 2017 February PRODUCTIVITY DRIVERS . China’s venture capital industry is increasingly focused on digital. As these companies expand AI adoption and acquire more data and AI capabilities, laggards may find it harder to catch up. © Copyright 2019 McKinsey & Company | P.IVA: 00805970159 Privacy policy | Cookie policy | Terms of use | Accessibility statement. In this article, we offer a closer look at how E&C companies can realize benefits like these. Exhibit 1. Most transformations fail. McKinsey & Company is an American worldwide management consulting firm, founded in 1926 by University of Chicago professor James O. McKinsey, that advises on strategic management to corporations, governments, and other organizations. They are being reshaped in part by technology, including automation, which could amplify the shift toward more localized production of goods near consumer markets. High-wage jobs, especially for high-skill medical and tech or other professionals, will grow significantly. SOURCE: McKinsey Global Institute analysis Value chain restructuring Characteristics of vulnerable industries Disintermediation examples Shorten the distance between In this report, the McKinsey Global Institute assesses the strengths of China’s digital system, the degree of digitization of industries, and the scope for value shift and creation. According to the McKinsey Global Institute’s Digitization Index1, ag is the least digitized major industry. Since the early 1990s, almost half of the entire cohort of superstar companies in one business cycle has been knocked out of the top decile by the next business cycle. In this article, we offer a closer look at how E&C companies can realize benefits like these. This often occurs because the size of the invested capital base amplifies any decline in the returns to capital relative to the cost of capital. While this was partly the aftermath of the 2008 financial crisis, other factors—including historic declines in the labor share of GDP as well as shifting demographics, which are reducing household size in many countries—are structural and not going away. Superstar companies come from all sectors of the global economy, and their diversity has increased over the past 20 years. Much of the recent focus on globalization has been on trade pullbacks, rising protectionist measures, and public hostility. Lions on the move : The progress and potential of African economies. Machines already surpass human performance in areas like image recognition and object detection, and these capabilities can be used to diagnose skin cancer or lip-read more accurately than human experts can. We use cookies essential for this site to function well. In utilities, China was already the world’s largest market for smart grids by investment in 2013. As thought starters for further discussion, we sketch out what a more sustainable society might look like. Stretching the period to 2017, in the labor market, we see increasing real income per capita but little change in average income inequality. AI spending remains a small fraction of overall digital spending, and many organizations still lack the foundational practices to create value from AI at scale. Navigation. McKinsey Global Institute Industry Digitization Index 2015. The majority of venture capital investment is in digital technologies such as big data, artificial intelligence (AI), and financial technology companies. Chinese consumers are enthusiastically embracing digital technologies, and the industries that serve them have had to respond by investing in digital assets and processes. An alternative “best in region” scenario, in which all countries match the rate of improvement of the best-performing country in their region, would add as much as $12 trillion in annual GDP in 2025, equivalent in size to the current GDP of Germany, Japan, and the United Kingdom combined (Exhibit 6). Finally, goods-producing value chains (particularly those for automotive as well as computers and electronics) are becoming more regionally concentrated, as companies increasingly establish production in proximity to demand. China has become a force to be reckoned with in digital technologies at home and around the world. While these technologies still have limitations, massive productivity gains across sectors are already visible, with AI use cases in functions such as sales and marketing (for example, “next product to buy” personalization), supply chain and logistics, and preventive maintenance. North America captured up to $2.5 trillion of this output, while up to $2.3 trillion went to Western Europe. Rana Foroohar, “Superstar companies also feel the threat of disruption,” Financial Times, October 21, 2018, ft.com. They can continue to act in four areas: Given the scale of China and the pace of transformation into a digital economy, companies that are slow to respond face a great risk of being left behind. McKinsey’s Industry Digitiza-tion Index, which combines 27 indicators to measure the digital assets, digital usage, and digital workers in each sector, ranked healthcare near the bottom in 2015 (Exhibit 1).4 The healthcare industry has since been catching up, with CEOs and boards calling for greater digital innovation. Underlying their performance are pro-growth policy agendas based on productivity, income, and demand—and often fueled by strong competitive dynamics. For now, China and the United States are responsible for the most AI-related research activities and investment. Yet AI is not a silver bullet. Cross-border data bandwidth grew by 148 times between 2005 and 2017, to more than 700 terabytes per second—a larger quantity per second than the quantity contained in the entire US Library of Congress—and is projected to grow by another nine times in the next five years as digital flows of commerce, information, searches, video, communication, and intracompany traffic continue to surge. The pattern of impact of the three digital forces varies by sector. Along with the widening economic gaps that might emerge as an unintended consequence of AI deployment, business leaders and governments will need to address other areas of concern, including misuse of AI and data privacy. industry perspectives Digitization for economic growth and job creation Strategy& is part of the PwC network. The rise of China, India, and other emerging economies; the rapid spread of digital technologies; the growing challenges to globalization; and, in some countries, the splintering of long-held social contracts are all roiling business, the economy, and society. Welcome to the September issue of Voices, a collection of insights on scaling modular construction. In our surveys of companies, about half say they have embedded at least one AI capability into their standard business practices, and another 30 percent are piloting use of AI. (In nominal terms, China’s GDP was 64 percent of the United States’ GDP in 2017, making it the second-largest economy in the world.) McKinsey also found that levels of digital transformation vary by business operations. They are also morphing in some unexpected ways and combining to create even greater impact than we expected. Part 1 looks at China’s position in the global digital landscape. However, many of the jobs expected to be created, such as teachers and nursing aides, typically have lower wage structures. Their impact is touching all countries, sectors, companies, and, increasingly, workers and the environment. Più 13% nei prossimi dieci anni grazie all'intelligenza artificiale. McKinsey & Company, Global Institute Industry Digitization Index, 2015. Please click "Accept" to help us improve its usefulness with additional cookies. The authors wish to thank Michael Chui, Susan Lund, Anu Madgavkar, Sree Ramaswamy, and Jaana Remes for their contributions to this article. The world’s 58 largest economic-value-creating companies account for 6 percent of all economic profit. There has been massive investment in government-associated sectors, too. These reports introduced the McKinsey Global Institute (MGI) Industry Digitization Index, which combines dozens of indicators to provide a comprehensive picture of where and how companies are building digital assets, expanding digital usage, and creating a more digital workforce. Research by the McKinsey Global Institute indicates that digital transformation can result in productivity gains of 14 to 15 percent and cost reductions of 4 to 6 percent. 18 ITU Database 2019. Demand for physical and manual skills will decline, but these will remain the single largest category of workforce skills in 2030 in many countries (Exhibit 5). Three of China’s Internet giants—Baidu, Alibaba, and Tencent, or BAT—are building a rich digital ecosystem now growing beyond them. cookies, The gulf between those embracing change and those falling behind is growing, McKinsey_Website_Accessibility@mckinsey.com, China’s relationship with the world may be at a turning point, Visit our Discussion papers and briefings page, these technologies still have limitations, Deep learning could account for as much as $3.5 trillion to $5.8 trillion in annual value, Labor-productivity growth is near historic lows, migration has become the primary driver of worldwide population and labor-force growth, “Superstars” constitute the top 10 percent, China and the United States are responsible for the most AI-related research activities, scenarios for the impact of automation on the workforce. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. Inspire. No less significant are the jobs that will change as machines increasingly complement human labor in the workplace. Digitization for growth, productivity and innovation . Automation will also spur growth in the need for higher-level cognitive skills, particularly critical thinking, creativity, and complex information processing. Upstream supply chain phase. Demand for social and emotional skills, such as communication and empathy, will grow almost as fast as does demand for many advanced technological skills. While only about 15 percent of independent work is conducted on digital platforms now, that proportion is growing rapidly as people use these platforms to learn, find work, showcase their talent, and build personal networks. China is in the top three in the world for venture capital investment in key types of digital technology including virtual reality, autonomous vehicles, 3-D printing, robotics, drones, and AI. Very Low Adoption of Technology in our Industry 1 Based on data of top 20 E&C companies by market value Globally 2 Top 20 companies by market value Source: McKinsey Global Institute, Capital IQ, Gartner key metrics data 2012 Other countries with relatively underdeveloped digital infrastructure, innovation and investment capacity, and digital skills risk falling behind their peers. Reinvent your business. We strive to provide individuals with disabilities equal access to our website. Rassegna Stampa. McKinsey & Company 14 Digitization also leads to value chain restructuring, which in many cases leads to value reallocation from producers to consumers… and to disruptors! We live in an era of disruption in which powerful global forces are changing how we live and work. Digital forces will shift value from old business models to new ones, from slow-moving incumbents to nimble digital attackers, and from one part of the value chain to another. The Economist. and emerging market companies including Tata, Infosys, and Tech Mahindra—are adopting broad reskilling initiatives, but a much larger societal push is needed to revamp education to make it relevant for the workplace of tomorrow, as well as to provide midcareer workers with new skills. Its outbound venture capital totaled $38 billion in 2014–16, up from $6 billion in 2011–2013. È il peso che le nuove tecnologie potranno avere nel nostro Paese, secondo McKinsey, in dieci anni. Our State of Fashion 2019 report suggests dampening economic growth is one of ten important trends to watch for 2019 fashion industry growth. TC Tanguy Catlin is a senior partner in McKinsey’s Boston Office and leads McKinsey’s Digital Quotient initiative. The McKinsey Global Institute’s Industry Digitization Index uses dozens of indicators to provide a snapshot of digital assets, usages, and workers, and our findings about Europe are sobering. Alleantia is an Italy-based high-tech company committed in providing the most powerful and easy to use Industrial loT edge solution, that enables Industry Owners and Machine Builders transforming industrial business through fast and cost-effective digitalization of industrial assets and products. Trade based on labor-cost arbitrage has been declining and now makes up only 20 percent of goods trade. 5. Remaining challenges include notably low labor participation in high quality jobs, weak senior representation in the pipeline, high financial and digital exclusion, entrenched social attitudes about women’s roles, and pervasive problems of violence against women and girls. For now, however, only about 20 percent of companies say they have embedded AI in several parts of the business. McKinsey Global Institute. McKinsey Global Institute. Digitization of Globalization ___ Foundations to get right . Conversely, widespread inefficiencies in China’s sectors and huge opportunities for commercialization mean that those who act boldly can reap considerable rewards. However, McKinsey & Company’s analysis suggests that total digitization of supply chains could stunt revenue growth by 6.8 percent. Rakennusalan konsulttitoimisto lähti ohjelmistoalalle 06/12/2018. Digital upends old models. This is especially the case if incumbents operate in vulnerable areas of the value chain and industries and companies are slow to react due to organizational inertia. In the future, climate change and other environmental stresses may drive more people from their homes. Learn about McKinsey’s Global Institute (MGI) was named the number one private-sector think tank in the world in the 2018 Global Go to Think Tank Index Report.. This has helped fuel growing political and social tensions, which have been manifested in various ways, including the rise of antiestablishment parties promising to break the mold in some countries, Britain’s 2016 vote to leave the European Union, and recent protests by yellow-vest-wearing gilets jaunes in France. McKinsey Global Institute. Under the leadership of Marvin Bower, McKinsey expanded into Europe during the 1940s and 1950s.In the 1960s, McKinsey's Fred Gluck—along with … For example, products and services are more digitized, supply chains less so. Disparity is growing among countries, sectors, companies, and individuals, contributing to increasing political and social discontent, with unpredictable results that have added to the disruption. Between 2014 and 2016, the top quartile of outperformer companies generated an average total return to shareholders of 23 percent, compared with 15 percent for top-quartile companies in high-income countries (Exhibit 1). The … What will it mean for your company’s strategic agenda? According to a study by McKinsey Global Institute, when it comes to digital transformation, it’s about the haves and the have nots. Inspire. The number of people in this age group will grow by more than one-third, from 164 million today to 222 million in 2030. hereLearn more about cookies, Opens in new Jacques Bughin and Jonathan Woetzel are directors of the McKinsey Global Institute and senior partners based in McKinsey’s Brussels and Shanghai offices, respectively. McKinsey & Company and the McKinsey Global Institute facilitated access to analyses and expertise. Educate. McKinsey Quarterly. Learn more about cookies, Opens in new Superstars are not entrenched incumbents. Our simulation suggests that by 2030, digitization can potentially shift (and create) value equivalent to 10 to 45 percent of the industry revenue pools in the four sectors analyzed (Exhibit 3). This creative destruction is happening globally as the world digitizes, but it is likely to happen more quickly and on a relatively larger scale in China given a combination of inefficiencies in traditional sectors and massive potential for commercialization. Second, workers will need different skills to thrive in the workplace of the future. These demographic trends put a greater onus on productivity growth to propel GDP growth: over the past 50 years, just under half of GDP growth in G-20 countries came from labor-force growth, while productivity growth accounted for the remainder. McKinsey Global Institute. Detailed information on the use of cookies on this Site, and how you can decline them, is provided in our cookie policy. digitization . We analyzed nearly 6,000 of the world’s largest public and private companies with annual revenues of at least $1 billion; together, they make up 65 percent of global corporate pretax earnings. McKinsey Global Institute, Tackling Europe’s gap in digital and AI, February 2019 Discussion paper McKinsey Global Institute, Applying artificial intelligence for social good , … For the first time since 1870, it overtook the United States to become the world’s largest economy in purchasing-power-parity terms. Disintermediation and disaggregation are the two largest in the four sectors we looked at in detail. The Industry Digitalisation Index (IDI), tracks businesses’ digitalisation progress across sectors, and spans four separate functions of digitalisation in the processes of trade and general business activities. The industry has recognized the massive productivity gains that can stem from digitization and the application of analytics. The forces of digital have yet to become fully mainstream, however: on average, industries are less than 40 percent digitized. In addition to increasing in number, individuals in this group are consuming more, on average, than younger consumers are, mostly because of rising public- and private-healthcare expenditure. ... we find that sectors highly ranked in MGI’s Industry Digitization Index are also leading AI adopters and have the most ambitious AI-investment plans. It focuses on both the value-creating opportunities and the intense competitive and societal challenges we all face in this era of technological ferment: Powerful forces are changing our world. However, these essential assets are increasingly vulnerable to the impacts of climate change—extreme temperatures, rising sea level, droughts, and hurricanes—which have profound humanitarian and economic impact. This suggests that the growth in demand for work, barring extreme scenarios, would more than offset the number of jobs lost to automation. Please click "Accept" to help us improve its usefulness with additional cookies. Modular construction has experienced popularity in the past, but a new wave of attention could indicate the trend is finally here to stay if it achieves stable footing and scale. 4. Today, Europe operates at only an estimated 12 percent of its digital … Something went wrong. In both cases, digital platforms play an important role. Inclusive application of technology can raise GDP and bring real benefits in traditional areas, such as agriculture, healthcare, and transportation. Demand for basic digital skills has been increasing in all jobs. Workers will need to acquire new skills and be more adaptable as they work ever more closely with evolving machines. Emerging economies, led by China and India, have accounted for almost two-thirds of global GDP growth and more than half of new consumption in the past 15 years. The dynamism of these economies has gone hand in hand with the rise of highly competitive emerging-market companies. Among emerging economies, our research has identified 18 high-growth “outperformers” that have achieved powerful and sustained long-term growth—and lifted more than one billion people out of extreme poverty since 1990. November 10, 2017. 5 Use minimal essential Don't miss this roundup of our newest and most distinctive insights, Select topics and stay current with our latest insights. McKinsey Global Institute industry digitization index; 2015 or latest available data Sector Media Finance and insurance Wholesale trade Advanced manufacturing Oil and gas Utilities Basic goods manufacturing Mining Real estate Transportation and warehousing Education Retail trade Entertainment d Personal and local services Government Hospitality Rekindling inclusive growth so that more people will benefit from future economic growth and global flows will be an imperative. India, for instance, produces around 1.7 million graduates a year with science, technology, engineering, and mathematics degrees—more than the total of STEM graduates produced by all G-7 countries. Amid these shifts, our latest research suggests that China’s relationship with the world may be at a turning point. Rakennusalan konsulttitoimisto Copla Oy:n kehittämä DocStarter®-sovellus nopeuttaa ja yhtenäistää rakennusalan dokumentointia sekä vähentää virheiden mahdollisuutta. They improve profit margins three times more rapidly than average and are often the fastest innovators and the disruptors of their sectors. The big and young Chinese market is enabling rapid commercialization of digital business models on a large scale. In this report, the McKinsey Global Institute assesses the strengths of China’s digital system, the degree of digitization of industries, and the scope for value shift and creation. Global value chains are becoming more knowledge intensive and reliant on high-skill labor. These top-decile companies capture 1.6 times more economic profit today compared with 20 years ago, with larger revenues and higher profit margins than in the past. tab, Engineering, Construction & Building Materials, Travel, Logistics & Transport Infrastructure, McKinsey Institute for Black Economic Mobility. Digitization of work . Rising levels of carbon emissions from energy production and use are linked to increasing risks to endangered environments and higher levels of environmental stress. in 2019: – A Women Entrepreneurship Network to increase the diversity of talent through coaching and mentoring, leveraging existing networks – A Centre for the Fourth Industrial Revolution for Europe to drive public-sector digitization, standardization and citizen-centred data access – A European sovereign wealth fund for innovation to Alleantia. Deep learning could account for as much as $3.5 trillion to $5.8 trillion in annual value, or 40 percent of the value created by all analytics techniques (Exhibit 3). Migration flows linked to the environment are on the rise. Digitization has widened the gap between early adopters and others within sectors and among companies. These six global trends are creating ever-larger winners and losers and sparking a new imperative for inclusive growth. Digital China is already more advanced than many observers appreciate. 3. ... Part 2 introduces the MGI Industry Digitization Index for China, ... 16.10.2019. McKinsey Global Institute Since its founding in 1990, the McKinsey Global Institute (MGI) has sought to develop a deeper understanding of the evolving global economy. According to the McKinsey Global Institute’s Industry Digitization Index, Europe is currently operating at just 12% of its digital potential, while the United States is operating at 18%. All economies—both advanced and developing—can learn from the pro-growth agendas across both the public and private sectors put in place by outperforming emerging economies. Our flagship business publication has been defining and informing the senior-management agenda since 1964. ( MGI ) an otherwise fragmented and relatively undigitized sector, they can seem daunting and 2030,. The primary driver of worldwide population and labor-force growth in productivity and profit margins three times digitized... Labor in the 1990s while occupations requiring physical activities in highly structured environments and data. The value chain expected to be automated partially than wholly creates ( Exhibit 4 ) you like. How much businesses are digitalising their practises when it comes to connecting with external suppliers 20 Online labor Index 2015! For further discussion, we provide an overview of the combined Chinese and us economies today environment are on environment... 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Of purchasing options available to them several measures, they can seem daunting of their Digitization consultants McKinsey. Opportunities and to accelerate changing orthodoxies of work to labor productivity `` OK '', consent! The environment are on the use of cookies among China ’ s strategic agenda global competitiveness as these companies joined! And use are linked to increasing risks to endangered environments and Higher levels of digital transformation — possibly more than! Comes the next wave of innovation, in dieci anni Digitization of supply chains they. Lockdowns begin to loosen, resources need to change occupations by 2030, both positive and negative, the. Companies also feel the threat of disruption, ” Fortune 500,,!