Sternfels (McKinsey): «How to become a world leader with quality and speed. But inequalities are a big worry».

Rising costs are everywhere. On the top of diversification, there is the green and digital transformation, there is higher inflation and higher interest rates. The bill is extremely high in a world of high public debt, especially in Italy. Don’t you agree?
Yes there are a massive amount of investments to make. How are we going to pay for all this? First of all, as you mention Italy, I must say that what I like about Italy - and this is also another reason why I am bullish on Italy - is the private debt to Gdp, which is very underleveraged. Businesses in Italy are fairly conservative in terms of healthy balance sheets. This means that these Italian companies can weather better in times of turbulence, compared to countries with high private debt to Gdp.

We have to look carefully at both sides of the balance sheet: that is, where do we need to invest but also where do returns come from. In the sustainability challenge, McKinsey research found out that between now and 2050 an amount of over 9 trillion US dollars will have to be invested in the world every year to hit the transition goals. A massive amount. We also saw business opportunities and potential with green new technologies: 12 trillion US dollars of new revenues are associated with these businesses. There is a way to make green technologies pay partially the green bill and offset the costs. Diversification of trade and supply chains is not only a pure cost too, it is also an investment, a one time investment.

What about the costs of Artificial intelligence (AI)?
There is a massive investment required here. We looked at AI in 63 specific use cases, industry by industry. We found out that there is an equivalent of 2.6 to 4.4 trillion US dollars of new revenue potential associated with the practical implementation of the GenAI today. The pay-back times are quick. As for climate protection investments, returns will be there for technology. Just don’t wait too long to implement new green technologies, don’t back off: this is our piece of advice.

Does speed matters? Wasting time comes with a cost..
Yes, speed matters. We measured speed. McKinsey found out that faster companies outperform slower companies anywhere between 30% and 50% of shareholders returns. It is a massive return. We also found out that faster companies with bad strategies or strategies that were not perfect outperformed slower companies with really good strategies. It sounds odd: the world is changing so fast, there is a premium on speed. It is not how perfect your vision is, but how quickly you can adapt to changes in the world around you. You need to be sustainably faster: this is what CEOs want now.

And what about governments? Can they go as fast as corporates?
The stereotype is that no government or institution is fast enough compared to corporates. And yet the US Congress has passed three pieces of legislation in short order: the Infrastructure Bill, the Chips Act and the Inflation Reduction Act. All three were passed in just one year. That was quick.

So if speed is so important, will it be as important to be the fastest to win the race to space?
Space is good for the world. Look at the Apollo 11 mission to the Moon for example: the semiconductors industry came from there, and software really started to develop there. We are now experiencing a new space renaissance: is there the same kind of potential in innovation now in space as there was for Apollo 11? If space is not on your radar, you are probably missing something. I say this to all industrial sectors. Space has implications for all business models. Space could be one of the next big frontiers. Creativity spurred by really challenging goals unlocks potential.

Let’s come back with our feet to Earth: what worries you the most?
Demographics, climate, geopolitics…? All these are worries but what worries me the most is the economic growth of inequality within so many countries, 8 out of 10 people as I said live in a country with growing inequality. In this Europe could lead the way as you are ahead in social inclusion. Growth comes more in places where people feel they can have a shot: we need inclusive growth. Let’s look at Africa: its role will be central in the next decade but not only for raw materials in the climate change transition and supply chains, but I think Africa, with upskilling and the commitment to skill building, will play a crucial role in intellectual property jobs, based in Africa, that will drive economic growth. When you play global demographics forward, Europe will shrink, the US will shrink slightly, China will shrink, India will grow for a while but then it will flatten. The only continent that is young and will stay young is Africa. And it will be a world with young African talents going forward.