Tag Archives: Health

Staying Focused on the Big Picture

U.S. election-related uncertainty may persist a while longer, but the relatively optimistic longer-term economic outlook hasn’t changed.
By Lisa Shalet – Now that former Vice President Joseph Biden is President-Elect, much of the election uncertainty has dissipated. Markets have factored in Biden’s win as well as the apparent lack of a Congressional Democratic sweep, but headlines concerning the transition of power could contribute to volatility.

We encourage investors to ignore short-term price swings based on the headlines and stay focused on the bigger picture. We still believe that investors should emphasize global stocks over bonds. Morgan Stanley & Co. strategists forecast that the S&P 500 Index, a broad measure of the U.S. market that is now trading around 3500, may reach 3700 by the middle of next year.

Several key points in our economic outlook are unlikely to change due to election results. Here are three reasons why:

The V-shaped economic recovery is on solid ground. October’s nonfarm payroll data was a solid upside surprise, with the unemployment rate falling and the labor participation rate rising. Consumer sentiment is holding up, and manufacturing and services indicators continue to show expansion. Housing and durable goods orders support the capital spending narrative of the new business cycle. In 2021, U.S. GDP could grow at an annualized pace of 5% to 6%—in part because the recession this year enhances the year-over-year comparison, but also given the midyear return to growth. Such economic expansion could power double-digit increases in corporate profits.

The Federal Reserve remains ultra-dovish. The central bank has stayed firm on holding its key short-term fed funds rate near zero through December, 2023. Low interest rates can stimulate growth by facilitating more borrowing, allowing consumers and businesses to spend more. The Fed has yet to define metrics or time frames for “average inflation targeting,” which will likely allow inflation to trend higher without rate intervention to check its rise. Under a policy known as quantitative easing, the Fed also continues to buy government bonds at a significant pace, a direct injection of liquidity across fixed-income markets that can also contribute to economic growth.

The COVID-19 trajectory is unlikely to lead to national lockdowns. The recent surge in new infections is unfortunate and concerning, however, as was the case in the summer, the U.S. economy remains resilient in the face of localized shutdowns. We believe that public health measures and vaccine availability will drive the pandemic’s economic impact. Hopefully by January, we could be past the peak of new cases and closer to available vaccines. Drug development pipelines remain on track to deliver some scaled vaccine distribution by summer, 2021. more>

Updates from Chicago Booth

Would you trust a machine to pick a vaccine?
Machine learning is being tasked with an increasing number of important decisions. But the answers it generates involve a degree of uncertainty.
By Emily Lambert – Back before COVID-19, Chicago Booth’s Sanjog Misra was on vacation in Italy with his son, who has a severe nut allergy. They were at a restaurant and couldn’t read the menu, so Misra opened an app that translates Italian to English, and pointed his phone at the menu to find out if one of the dishes was peanut free. The app said it was.

But as he prepared to order, Misra had a thought: Since the app was powered by machine learning, how much could he trust its response? The app didn’t indicate if the conclusion was 99 percent certain to be correct, or 80 percent certain, or just 51 percent. If the app was wrong, the consequences could be dire for his son.

Machine learning is increasingly ubiquitous. It’s inside your Amazon Alexa. It directs self-driving cars. It makes medical decisions and diagnoses. In the past few years, machine-learning methods have come to dominate data analysis in academia and industry. Some teachers are using ML to read students’ assignments and grade homework. There is evidence that machine learning outperforms dermatologists at diagnosing skin cancer. Researchers have used ML to mine research papers for information that could help speed the development of a COVID-19 vaccine.

They’re also using ML to predict the shapes of proteins, an important factor in drug development. “All of our work begins in a computer, where we run hundreds of millions of simulations. That’s where machine learning helps us find things quickly,” says Ian Haydon, the scientific communications manager for the Institute for Protein Design at the University of Washington. Some scientists there are developing vaccines, and others are trying to develop a drug compound that would stop the novel coronavirus from replicating. more>

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Updates from McKinsey

Reimagining the auto industry’s future: It’s now or never
Disruptions in the auto industry will result in billions lost, with recovery years away. Yet companies that reimagine their operations will perform best in the next normal.
By Thomas Hofstätter, Melanie Krawina, Bernhard Mühlreiter, Stefan Pöhler, and Andreas Tschiesner – Electric mobility, driverless cars, automated factories, and ridesharing—these are just a few of the major disruptions the auto industry faced even before the COVID-19 crisis. Now with travel deeply curtailed by the pandemic, and in the midst of worldwide factory closures, slumping car sales, and massive layoffs, it’s natural to wonder what the “next normal” for the auto sector will look like. Over the past few months, we’ve seen the first indicators of this automotive future becoming visible, with the biggest industry changes yet to come.

Many of the recent developments raise concern. For instance, the COVID-19 crisis has compelled about 95 percent of all German automotive-related companies to put their workforces on short-term work during the shutdown, a scheme whereby employees are temporarily laid off and receive a substantial amount of their pay through the government. Globally, the repercussions of the COVID-19 crisis are immense and unprecedented. In fact, many auto-retail stores have remained closed for a month or more. We estimate that the top 20 OEMs in the global auto sector will see profits decline by approximately $100 billion in 2020, a roughly six-percentage-point decrease from just two years ago. It might take years to recover from this plunge in profitability.

At the operational level, the pandemic has accelerated developments in the automotive industry that began several years ago. Many of these changes are largely positive, such as the growth of online traffic and the greater willingness of OEMs to cooperate with partners—automotive and otherwise—to address challenges. Others, however, can have negative effects, such as the tendency to focus on core activities, rather than exploring new areas. While OEMs may now be concentrating on the core to keep the lights on, the failure to investigate other opportunities could hurt them long term.

As they navigate this crisis, automotive leaders may gain an advantage by reimagining their organizational structures and operations. Five moves can help them during this process: radically focusing on digital channels, shifting to recurring revenue streams, optimizing asset deployment, embracing zero-based budgeting, and building a resilient supply chain. One guiding principle—the need to establish a strong decision-making cadence—will also help. We believe that the window of opportunity for making these changes will permanently close in a few months—and that means the time to act is now or never. more>

Updates from Chicago Booth

When giving feedback, focus on the future
By Sarah Kuta -When managers give performance-improvement feedback to employees, they presumably want the conversations to result in positive changes—not to inspire defensiveness, excuses for poor performance, or skepticism of the managers’ point of view.

Offering forward-looking feedback can help keep such conversations productive, suggests research by Humanly Possible’s Jackie Gnepp, Chicago Booth’s Joshua Klayman, Victoria University of Wellington’s Ian O. Williamson, and University of Chicago’s Sema Barlas.

Performance-improvement feedback often fails when managers spend too much time diagnosing or analyzing what went wrong in the past, according to the researchers. When managers and employees talk about possible next steps and solutions, however, employees tend to be more receptive to the feedback and more likely to intend to act on it, the researchers find.

Recipients respond just as well to predominately negative feedback as they do to positive feedback, so long as the conversation focuses primarily on how the recipient can best move forward, the research suggests. more>

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Updates from McKinsey

Many investments in digital farming have not fulfilled their full potential. What can companies do to improve returns?
Creating value in digital-farming solutions
By Shane Bryan, David Fiocco, Mena Issler, RS Mallya Perdur, and Michael Taksyak – Over the past 20 years, agriculture has undergone a digital revolution. It started quietly with original-equipment manufacturers that began to sell harvesters with guidance systems and auto steering, then roared to life in 2013 with Monsanto’s nearly $1 billion acquisition of the digital-agriculture company Climate Corporation. Since then, there has been an arms race within the industry, with billions of dollars invested and hundreds of millions of acres affected by digital farming.

The rapid pace of investment and broad adoption of digital technologies on the farm are a testament to the power of digital to reduce costs, boost yields, and put more money in the pockets of growers. However, despite the promise of digital-farming solutions, our research suggests that such investments have not lived up to expectations of the companies that made them. To explore why this might be the case and what could be done to improve outcomes, we conducted a survey of more than 100 industry executives from across the agriculture value chain.

For the purpose of this article, we define “digital farming” as any platform or application that processes input data to provide growers or crop advisers with agronomic decision-making support. These include proven digital offerings (such as variable-rate application) and ones that are more novel (such as in-season sensing). We excluded automation equipment, drones, and services that are not linked to agronomic decisions (for example, fleet-management software).

The survey found that most agriculture companies have invested in digital-farming solutions, but less than 40 percent of respondents (representing a broad swath of the industry) self-reported positive returns. To understand why, we tested a number of success factors, several of which dramatically increase perceived success. These standout factors include:

  • high attention from CEO and top team
  • clear strategy and business case linked to value creation
  • at-scale investment

About two-thirds of survey respondents indicated they had just one of these success factors in place; this suggests that the disappointing returns from digital-farming investments may be due to lack of adequate preparation. more>

If we want more companies like Patagonia, we need laws to enforce it

If we want to get past “woke capitalism,” this is what it’ll take to get companies to an equitable relationship with both workers and society.
By Kristin Toussaint – A day after the August NBA strike in response to yet another police shooting—this time, Jacob Blake, in Kenosha, Wisconsin—Uber’s head of diversity and inclusion, Bo Young Lee, tweeted out the company’s new billboard campaign. “If you tolerate racism, delete Uber,” the sign read. Lee added, “Now is the time for all people and organizations to stand up for what is right.”

Corporate America had already been examining its complicity in furthering systemic racism and inequality in the wake of a summer rife with police killings of Black people. Uber, for its part, was one of many companies standing up for what’s right—so long as it didn’t have to change too radically. Several weeks earlier, Uber had committed to anti-racism education for riders and drivers, established that it had no tolerance for discrimination, and pledged $1 million toward criminal justice reform. Even so, the company had committed more than $30 million to overturn AB5, the California law that requires its contract drivers be treated as full-time employees. In other words, Uber was arguing against the single biggest thing it could do to foster equity: give its drivers, which some estimates have put at two-thirds non-white, the stability of healthcare and benefits. (When asked for comment, Uber pointed to previous statements on how it’s fighting AB5 because its workers want flexibility.)

Uber’s moves embody what’s known as “woke capitalism,” where businesses respond to societal issues such as systemic racism with representational gestures, from sobering statements to strategic donations. For some people, this is enough. Or so executives hope.

But for others, society’s multiple, overlapping crises have created an opportunity to make companies more accountable—and, ideally, more innovative. “There’s basically no one arguing for shareholder primacy anymore,” says Julius Krein, founder of the public-policy journal American Affairs. “[Corporate leaders] don’t want to leave the current model because they don’t know what comes next, and they’re afraid.” A movement argues that they don’t have to be.

For a glimpse of the future, business leaders need only look to the companies that have best handled the tumult of 2020. They were the ones that were “woke” long before this year. Patagonia’s decision to pay employees while stores were shuttered during lockdowns was not the first time it put workers first: The company has offered on-site childcare for more than three decades. The call Ben & Jerry’s made to dismantle white supremacy following the police killing of George Floyd was not a bandwagon move: The ice cream brand had supported a congressional bill that would study the effects of slavery and discrimination and recommend reparations. Both companies have built reputations as the rare institutions that care about their employees, the communities in which they operate, and the environment. more>

The ‘circular economy’—neither safe nor sustainable

The circular economy holds out the hope of living within the planet’s resources. Turning aspiration into action is another matter.

By Vera Weghmann – A little over a year ago, schoolchildren across the globe embarked on huge strikes over the climate emergency. Our global economic system is unsustainable: continuous economic growth and endless consumption mean ever-increasing waste. Waste which is buried, dumped at sea or turned into ash pollutes the environment and creates the need to extract further raw materials.

The European Union’s ambition to move towards a circular economy, and in particular its Circular Economy Action Plan, should therefore be welcomed. The circular economy implies radical change to how production and consumption are organized—away from a linear model of growth (extract, make, dispose) to a sustainable alternative (recycle, reuse, remake, share). Waste then becomes a resource.

In a report commissioned by the European Federation of Public Service Unions (EPSU), I showed however that the circular economy does not operate of itself. Especially, waste management—central to the circular economy—is an essential public service. Unfortunately, the pay of workers in waste management is often low, working conditions hard and unpleasant and, on top of that, health and safety is often disregarded. The report highlighted that very little attention has been paid to workers operating essential waste services to keep society running and maintain a sustainable environment. In the EU action plan the workers—formal and informal—relied upon are not even mentioned. more>

Budget 2020: promising tax breaks, but relying on hope

By Peter Martin – Tax cuts aren’t the half of it.

The personal income tax cuts promised in the budget will cost A$17.8 billion over four years.

The measures aimed at supporting businesses – the temporary instant tax write off of capital investments, the temporary ability to use losses to reduce previous tax payments, the JobMaker hiring credit and the enhanced apprentice wage subsidy — will cost $26.7 billion, $4.8 billion, $4 billion and $1.2 billion.

That’s a total of $36.7 billion — a subsidy for private businesses without precedent.

The clumsy wording in the part of the budget that sets out strategy says the aim is to “drive sustainable, private sector-led growth and job creation”.

‘Driving private sector-led growth’

Driving private sector-led growth doesn’t quite make sense, but it’s easy to get a handle on what it means.

By itself, business isn’t in a position to drive much.

Even with the budget measures – even with the Australian Taxation Office allowing most businesses to write off everything they spend on equipment over the next two years – non-mining business investment is expected to collapse 14.5% this financial year and bounce back only 7.5% the next. more>

A Message From the Future II: The Years of Repair

Can we imagine a better future? If we stop talking about what winning actually looks like, isn’t that the same as giving up?
By Naomi Klein – Another Covid-19 lesson we wanted to highlight had to do with why the abuses that long predated the pandemic suddenly received so much more attention during it. It’s a lesson, perhaps, about the relationship between speed and solidarity. Because for those of us privileged enough to self-isolate, the virus forced a radical and sudden slowdown, a paring and editing down of life to its essentials that was undertaken in a bid to stop the virus’s spread. But that slowness had other, unintended effects as well. It turns out that when the deafening roar of capitalism-as-usual quiets, even a little, our capacity to notice things that were hidden in plain view may grow and expand.

There is no one answer or simple explanation for why we find ourselves in the throes of the deepest and most sustained public reckoning in a half-century with the evil that is white supremacy. But we cannot discount the “solidarity in vulnerability that the pandemic has generated,” as Eddie Glaude Jr. put it, while discussing his brilliant and highly relevant biography of James Baldwin, “Begin Again.” In forcing all of us to confront the porousness of our own bodies in relationship to the vast web of other bodies that sustain us and the people we love — caregivers, farmers, supermarket clerks, street cleaners, and more — the coronavirus instantly exploded the cherished, market-manufactured myth of the individual as self-made island.

For all of these reasons and more, as we searched for a unifying principle that could animate a future worth fighting for, we settled on “The Years of Repair.” The call to repair a deep brokenness has roots in many radical and religious traditions. And it provides a framework expansive enough to connect the interlocking crises in our social, economic, political, informational, and ecological spheres.

Repair work speaks to the need to repair our broken infrastructures of care: the schools, hospitals, and elder care facilities serving the poor and working classes, infrastructures that failed the test of this virus again and again. It also calls on us to repair the vast damage done to the natural world, to clean up toxic sites, rehabilitate wild landscapes, invest in nonpolluting energy sources. It is also a call to begin to repair our stuff rather than endlessly replace it in an ever-accelerating cycle of planned obsolescence — what the film refers to as “the right to repair.” more>

Updates from McKinsey

What it will take to create a more inclusive economy
By Liz Hilton Segel – What do we mean when we talk about building an inclusive economy?

An inclusive economy is fundamental to building a next normal after the COVID-19 crisis where we can thrive. It means creating an economy that provides opportunities to underserved people and communities; creates resilient, higher-wage jobs for workers; and ensures the mental health needs of people are met, enabling more productivity, greater personal and professional fulfillment, and many other benefits.

Businesses are facing a host of new challenges right now, and leaders in every industry have a full-slate of change on their agendas. But building an inclusive economy has never been more critical—and the time is now to embark on the journey. Here are three elements I shared with the FT that will help us along the way.

In a recent McKinsey survey of 800 executives in nine countries, 85 percent said their businesses have somewhat or greatly accelerated digitization during the pandemic, and nearly two-thirds reported that their companies have accelerated automation and artificial intelligence. To ensure this transformation doesn’t leave vulnerable workers behind, organizations must identify the skills their recovery business model depends on, then develop and scale tailored resources and programs to close any skills gaps among their employees.

These reskilling programs and workforce policies should be developed in partnership across departments and in tandem with industry leaders, business associations, educational, and social-sector institutions to build a better-prepared, resilient talent pipeline.

For instance, McKinsey recently joined the Rework America Alliance, formed by the Markle Foundation. The initiative will help millions of workers, regardless of formal education, move into good jobs in the digital economy by accelerating the development of a system of worker training that is specifically aligned to jobs that employers will need to fill. McKinsey is working to translate analytics into targeted guidance on reskilling opportunities, leading to better wages and better quality jobs. more>