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How can they retain this speed once the pandemic abates?" property="og:description" name="description"/><meta content="https://www.mckinsey.com/industries/industrials-and-electronics/our-insights/organizing-for-speed-in-advanced-industries" name="url" property="og:url"/><meta content="index,follow,all" name="robots"/><meta content="https://www.mckinsey.com/~/media/mckinsey/industries/advanced%20electronics/our%20insights/organizing%20for%20speed%20in%20advanced%20industries/organizing-for-speed-standard-1536x1536.jpg" property="og:image" name="image"/><meta content="{47E7EB97-E31E-4F87-9CB7-D4855B019556}" name="sid"/><link href="https://www.mckinsey.com/industries/industrials-and-electronics/our-insights/organizing-for-speed-in-advanced-industries" rel="canonical"/><meta content="Advanced Industries" name="practice-name"/><meta content="N34" name="practice-code"/><meta content="summary_large_image" name="twitter:card"/><meta content="@mckinsey" name="twitter:site"/><title>Organizing for speed in advanced industries | McKinsey</title><meta content="Insights & Publications" name="sections"/><meta content="Organizing for speed in advanced industries" name="twitter:title"/><meta content="Faced with the COVID-19 crisis, companies in advanced industries have become more nimble and accelerated decision making. How can they retain this speed once the pandemic abates?" name="twitter:description"/><meta content="Article" property="contenttype" name="contenttype"/><meta content="https://www.mckinsey.com/~/media/mckinsey/industries/advanced%20electronics/our%20insights/organizing%20for%20speed%20in%20advanced%20industries/organizing-for-speed-standard-1536x1536.jpg?mw=677&car=42:25" name="twitter:image"/><meta content="Organizing for speed in advanced industries" name="twitter:image:alt"/><meta content="public" name="accesslevel"/><meta content="false" name="excludefromclientlink"/><meta content="article" name="articletype"/><meta content="Elizabeth Mygatt | Asutosh Padhi | Charlotte Relyea | Brooke Weddle" name="authors-name"/><meta content="2020-08-20T00:00:00Z" name="itemdate"/><meta content="Advanced Industries | Article | August 20, 2020" name="searchresults-tags"/><script type="application/ld+json">{"@context":"https://schema.org","@type":"Article","url":"https://www.mckinsey.com","publisher":{"@type":"Organization","name":"McKinsey & Company","logo":{"@type":"ImageObject","url":"https://www.mckinsey.com/~/media/Thumbnails/Mck_Logo"}},"mainEntityOfPage":{"@type":"WebPage","@id":"https://www.mckinsey.com/industries/industrials-and-electronics/our-insights/organizing-for-speed-in-advanced-industries"},"datePublished":"2020-08-20T11:00:00Z","dateCreated":"2020-08-20T01:03:09Z","dateModified":"2020-08-20T00:00:00Z","heading":"Organizing for speed in advanced industries","image":"https://www.mckinsey.com/~/media/mckinsey/industries/advanced%20electronics/our%20insights/organizing%20for%20speed%20in%20advanced%20industries/organizing-for-speed-standard-1536x1536.jpg","description":"Faced with the COVID-19 crisis, companies in advanced industries have become more nimble and accelerated decision making. 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Article</div></div></div><div><button data-component="mdc-c-button" aria-label="" type="button" id="button_id" class="mdc-c-button___U4iY2_8032924 mdc-c-button--ghost mdc-c-button--size-medium FullHero_mck-c-full-hero__arrow__jtXdj" data-click-track="true" data-layer-event-prefix="UI Item" data-layer-action="click" data-layer-category="article" data-layer-text="skip article header section" data-layer-region="full hero"><span data-component="mdc-c-icon" class="mdc-c-icon___oi7ef_8032924 mdc-c-icon--size-xl___3BEee_8032924 mck-arrow-down-icon"></span></button></div></div></div></div></div></div></div><div data-component="mdc-c-module-wrapper" data-module-theme="dark" data-module-background="deep-blue" data-module-category="AnchoredHero" data-module-gradient-position="bottom-right" class=""><div class="FullHero_mck-c-full-hero__second-fold__gUeV7" tabindex="-1"><div class="mck-c-full-hero__second-fold-content"><div class="mck-o-container"><div class="mck-o-container--wrapped mck-o-container--mobile-spacing mdc-u-grid mdc-u-grid-gutter-xxl"><div class="mdc-u-grid mdc-u-grid-col-md-12"><div class="mdc-u-grid-col-md-start-2 mdc-u-grid-col-md-end-12 mdc-u-grid-col-lg-start-3 mdc-u-grid-col-lg-end-11"><div data-component="mdc-c-description" class="mdc-c-description___SrnQP_8032924 mdc-u-ts-8 FullHero_mck-c-full-hero__description__WOtti"><span>Faced with the COVID-19 crisis, companies in advanced industries have become more nimble and accelerated decision making. How can they retain this speed once the pandemic abates?</span></div></div></div></div></div></div></div><div class="FullHero_mck-c-full-hero__background__tdkXY"></div></div></div><div class="mck-o-container"><div class="mck-o-container--wrapped mck-o-container--mobile-spacing mdc-u-grid mdc-u-grid-gutter-xxl"><section data-layer-region="article-body-header" class="mdc-u-grid mdc-u-grid-col-md-12 mck-u-animation-blur-in-400 byline-share-container"><div class="mdc-u-grid-col-md-start-2 mdc-u-grid-col-md-end-8 mdc-u-grid-col-lg-start-3 mdc-u-grid-col-lg-end-8 mdc-u-ts-9"><span> </span><span class="AuthorsByLine_mck-c-authors-byline__author__XdrlD"><span class="AuthorsByLine_mck-c-authors-byline__no-wrap__Ced0j"><a data-component="mdc-c-link" href="/our-people/elizabeth-mygatt" class="mdc-c-link-inline___7DRrt_8032924 mdc-c-link-inline--secondary___YKoOK_8032924"><span class="mdc-c-link__label___Pfqtd_8032924">Elizabeth Mygatt</span></a> </span></span><span class="AuthorsByLine_mck-c-authors-byline__author__XdrlD"><span class="AuthorsByLine_mck-c-authors-byline__no-wrap__Ced0j"><a data-component="mdc-c-link" href="/our-people/asutosh-padhi" class="mdc-c-link-inline___7DRrt_8032924 mdc-c-link-inline--secondary___YKoOK_8032924"><span class="mdc-c-link__label___Pfqtd_8032924">Asutosh Padhi</span></a> </span></span><span class="AuthorsByLine_mck-c-authors-byline__author__XdrlD"><span class="AuthorsByLine_mck-c-authors-byline__no-wrap__Ced0j"><a data-component="mdc-c-link" href="/our-people/charlotte-relyea" class="mdc-c-link-inline___7DRrt_8032924 mdc-c-link-inline--secondary___YKoOK_8032924"><span class="mdc-c-link__label___Pfqtd_8032924">Charlotte Relyea</span></a><span> </span></span></span><span class="AuthorsByLine_mck-c-authors-byline__author__XdrlD"><span class="AuthorsByLine_mck-c-authors-byline__no-wrap__Ced0j"><a data-component="mdc-c-link" href="/our-people/brooke-weddle" class="mdc-c-link-inline___7DRrt_8032924 mdc-c-link-inline--secondary___YKoOK_8032924"><span class="mdc-c-link__label___Pfqtd_8032924">Brooke Weddle</span></a></span></span></div><div class="mdc-u-grid-col-md-start-8 mdc-u-grid-col-md-end-12 mdc-u-grid-col-lg-start-8 mdc-u-grid-col-lg-end-11 ArticleContent_mck-c-article-content__share-tools__kWRRw"></div></section><main data-layer-region="article-body" class="mdc-u-grid mdc-u-grid-gutter-xxl"><div class="mdc-u-grid mdc-u-grid-col-1 mdc-u-grid-col-md-12"><div class="mdc-u-grid-col-md-start-2 mdc-u-grid-col-md-end-12 mdc-u-grid-col-lg-start-3 mdc-u-grid-col-lg-end-11"><div class="mdc-o-content-body mck-u-dropcap"><div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="DownloadsSidebar_mck-c-downloads-sidebar__iFmyt mck-o-xs-right-span"><div data-layer-region="downloads-right-rail"><h3 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_8032924 mdc-c-heading--title___5qyOB_8032924 mdc-c-heading--border___K8dj3_8032924"></h3><div><div data-component="mdc-c-link-container" class="mdc-c-link-container___xefGu_8032924"><a data-component="mdc-c-link" href="#/download/%2F~%2Fmedia%2Fmckinsey%2Findustries%2Fadvanced%20electronics%2Four%20insights%2Forganizing%20for%20speed%20in%20advanced%20industries%2Forganizing-for-speed-in-advanced-industries.pdf%3FshouldIndex%3Dfalse" class="DownloadsSidebar_mck-c-downloads-sidebar__download-link__fPqFQ mdc-c-link___lBbY1_8032924" target="_self" data-layer-event-prefix="Download Link" data-layer-action="click" data-layer-report-type="" data-layer-file-name="organizing-for-speed-in-advanced-industries" data-layer-report-name="organizing-for-speed-in-advanced-industries>"><span data-component="mdc-c-icon" class="mdc-c-icon___oi7ef_8032924 mdc-c-icon--size-md___yi5fA_8032924 mck-download-icon"></span><span class="mdc-c-link__label___Pfqtd_8032924"> (7 pages)</span></a></div></div></div></div> <p><strong>In almost every conceivable dimension</strong>, the COVID-19 crisis is fundamentally challenging companies’ assumptions about how they do business. The scale of the pandemic’s impact and the uncertainty about its future course and consequences are forcing changes in organizational structure, decision-making processes, technology, and operations, from manufacturing to sales and marketing. </p>  <p>As discussed in an <a href="/capabilities/people-and-organizational-performance/our-insights/ready-set-go-reinventing-the-organization-for-speed-in-the-post-covid-19-era">earlier article</a>, many companies have already undertaken major shifts in these areas. They have reconsidered ways of working, organizational structures, and talent. The common factor in these changes has been increased operational and decision-making speed in an unprecedentedly dynamic environment. And it is already clear that this requirement is here to stay. The question facing companies in all sectors is how to move from adrenaline-based speed to speed by design—in other words, how to build increased speed into their operations on a permanent basis.</p> <p>In McKinsey’s recent Global Leadership Survey on organizational speed, which included about 900 senior executives from nine industries, respondents revealed that they were already focused on the need for speed. A large majority, including leaders from advanced industries,<span class="FootNote_footnote-holder__tjRqy"><a aria-label="footnote" href="javascript:void(0);" class="FootNote_footnote-wrapper__AIRwL undefined FootNote_bottom__9aoSL FootNote_inactive__VZfCp" aria-describedby="f48fdfdd-2b59-4818-9ee6-75f6bded8766"><sup class="FootNote_footnotesup__e73z_">1</sup><span class="FootNote_notch-wrapper__b_5NS"><span class="FootNote_notch__omKtY"></span></span><span class="FootNote_tooltip__QtrbA mdc-u-mt-2"><span class="FootNote_footnote-content__r2OVl"><span id="f48fdfdd-2b59-4818-9ee6-75f6bded8766" aria-hidden="true" data-module-theme="light" class="FootNote_footnote-text__VjKgO mck-u-links-inline">Advanced industries include automotive and assembly, aerospace and defense, advanced electronics, building technology, semiconductors, shipbuilding, and machinery.</span></span></span></a></span> expect major change in almost every facet of their organizations as a result of the COVID-19 crisis. Fundamental and lasting shifts are predicted in everything from the structure of meetings to the role of leadership, and from core processes and technology to talent, skills, and organizational culture. “Purpose” is one of the only areas where less than 20 percent of respondents anticipate meaningful change. </p> <p>Respondents from companies in advanced industries, like those in other sectors, already report significant successes in <a href="/industries/industrials-and-electronics/our-insights/the-need-for-speed-accelerating-product-improvement-at-industrials">boosting efficiency, effectiveness, and speed</a> during the crisis. Another survey finding, however, should be of concern: while executives in advanced industries agree that lasting and broad-based change is coming, they are markedly less optimistic than their peers in other industries about their organizations’ ability to sustain performance improvements in a post-COVID-19 world. This article investigates the perceived obstacles ahead and suggests ways to address them.</p> <h2>Acceleration in the face of crisis</h2> <p>Speed is not, of course, an unfamiliar concept in advanced industries. In normal times, a fast-paced operating model helps companies in this sector manage the broad ecosystem of interdependencies across their supply chains in the face of disruption and the rapid innovation and digital transformation required by changing sector dynamics.</p>  <p>In the same spirit, advanced-industries organizations have adapted their operating models to meet the challenges presented by the coronavirus pandemic. They have increased the speed of decision making, implemented radical changes in work practices, and rapidly implemented transformational investments that have allowed many companies to maintain productivity and meet customer expectations. Consider a few success stories:</p> <ul> <li><em>Multiplying productivity. </em>A major industrial factory ran at more than 90 percent capacity with only about 40 percent of the typical workforce.</li> <li><em>Turbocharging improvements.</em> A US industrial player drove a lean-manufacturing program with 90 percent of its support employees working remotely. It accelerated progress on maturing frontline initiatives to achieve 30 percent greater productivity and quality.</li> <li><em>Developing new products.</em> A major engineering company in aerospace and defense designed and manufactured ventilators within a week.</li> <li><em>Going remote.</em> A US defense contractor shifted two-thirds of its workforce to remote work. This required significant process innovation, given its need to support sensitive customer missions.</li> <li><em>Shifting operations.</em> A major shipbuilder switched from three to two shifts for thousands of employees, coordinating directly with local officials.</li> </ul> <p>Survey respondents report myriad larger and smaller efficiency improvements, including big supply-chain changes, reductions in business travel time, better technology use to speed up meetings, streamlined electronic-approval processes, and a shift from in-person to online marketing.</p> <p>Many respondents mentioned the benefits of greater remote and online working. One said remote working “ushered in a new paradigm where the best experts from anywhere in the world can easily offer perspectives on how to resolve complex production problems.” </p> <p>Another reported that remote work, coupled with time made available by production slowdowns, enabled engineers to “meet their mechanics” and deepen their understanding of practical issues in handling parts. </p> <p>“Meeting online to make decisions, which still puts people face to face, had a massive impact on our ability to quickly move forward and implement with the working teams,” wrote one executive from a firm operating on a far-off campus, where meetings previously required travel between buildings.</p> <div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="mck-c-disruptor1up mck-o-md-center mck-u-inline-module-border-top mck-u-inline-module-border-bottom mck-u-screen-only" data-layer-region="disruptor-1up"><div class="mdc-u-grid mdc-u-grid-gutter-md mdc-u-grid-col-lg-12 mdc-u-grid-col-md-12 "><div class="mdc-u-grid-col-md-span-12"><header data-component="mdc-c-header" class="mdc-c-header"><div class="mdc-c-header__block___i1Lg-_8032924"><h3 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_8032924"><div>Would you like to learn more about our <a href="/industries/industrials-and-electronics/how-we-help-clients">Industrials & Electronics Practice</a>?</div></h3></div></header></div></div></div> <p>“Approvals for projects that yield significant benefits are being fast-tracked,” said another. The result: normal approval lead times fell by 50 percent.</p> <p>A respondent at one company described moving testing and design processes online, using remotely accessed data, computer-aided design (CAD) and computer-aided management (CAM), and design-review programs. The company also used online tools to review plant operations, rather than making in-person visits.</p> <p>Others reported organizational and structural changes. “During COVID-19, we chose to integrate three business units/legal entities into one,” said one respondent. “This was done completely virtually...... This integration allowed our customers to deal with one business unit regardless of brand, streamline warehousing procedures, and unite the accounting platform. The immediate result is a 15 percent increase in speed to fulfill spare-parts orders and onsite requests for assistance.”</p> <p>While these results are impressive, they occurred during a time of crisis. Companies knew that they had to move quickly and decisively in response to the COVID-19 crisis, and they did not hesitate to make changes. It was something of an adrenaline-based response. As advanced-industries companies try to make organizational speed a permanent part of their culture, they may encounter more obstacles, and they need to build the muscle to sustain this bias to action.</p> <div data-module-category="" class="PullQuote_mck-c-pullquote__DbaQ5 mck-o-lg-center"><blockquote data-component="mdc-c-blockquote" class="PullQuote_mck-c-blockquote__6n21p PullQuote_mck-c-blockquote--hide-quotes__CpGpg mdc-c-blockquote mdc-c-blockquote--is-quotes___TozKo_8032924"><p>As advanced-industries companies try to make organizational speed a permanent part of their culture, they may encounter more obstacles.</p></blockquote></div> <h2>Challenges to achieving speed by design within advanced industries</h2> <p>If companies can maintain the improvements prompted by the COVID-19 crisis—flatter hierarchies, faster decision making, nimble teamwork, and a new approach to learning and talent development—they could achieve significant benefits. Our research suggests that companies that successfully create a faster operating model tend to be more profitable, have stronger innovation outcomes, and experience greater growth.</p> <p>With this in mind, advanced-industries companies should strive to make recent changes permanent. Our survey suggested, however, that they struggle more with implementation than their peers in other sectors. There is a notable mismatch between executives’ expectations of change and their beliefs in their companies’ ability to make that change.</p> <div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="mck-c-disruptor1up mck-o-md-center mck-u-inline-module-border-top mck-u-inline-module-border-bottom mck-u-screen-only" data-layer-region="disruptor-1up"><div class="mdc-u-grid mdc-u-grid-gutter-md mdc-u-grid-col-lg-12 mdc-u-grid-col-md-12 "><div class="mdc-u-grid-col-lg-span-4 mdc-u-grid-col-md-span-5 Disruptor1Up_mck-c-disruptor1up__image___2Gc4"><picture data-component="mdc-c-picture"><img alt="Ready, set, go: Reinventing the organization for speed in the post-COVID-19 era" src="/~/media/mckinsey/business%20functions/people%20and%20organizational%20performance/our%20insights/ready%20set%20go%20reinventing%20the%20organization%20for%20speed%20in%20the%20post%20covid%2019%20era/ready-set-go-1536x1536.jpg?cq=50&mh=145&car=16:9&cpy=Center" loading="lazy"/></picture></div><div class="mdc-u-grid-col-lg-span-8 mdc-u-grid-col-md-span-7"><header data-component="mdc-c-header" class="mdc-c-header"><div class="mdc-c-header__block___i1Lg-_8032924"><h3 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_8032924"><div>Ready, set, go: Reinventing the organization for speed in the post-COVID-19 era</div></h3></div></header><div data-component="mdc-c-link-container" class="mdc-c-link-container___xefGu_8032924 mdc-c-link-container--display-column___X0HDD_8032924 mck-c-disruptor1up__content Disruptor1Up_mck-c-disruptor1up__content--links__VV4lE mdc-u-grid-gutter-md"><a data-component="mdc-c-link" href="/capabilities/people-and-organizational-performance/our-insights/ready-set-go-reinventing-the-organization-for-speed-in-the-post-covid-19-era" class="mdc-c-link-cta___NBQVi_8032924"><span class="mdc-c-link__label___Pfqtd_8032924">Read the article</span><span data-component="mdc-c-icon" class="mdc-c-icon___oi7ef_8032924 mck-link-arrow-right-icon"></span></a></div></div></div></div> <p>At a macro level, more than 70 percent of executives in advanced industries who responded either agreed or strongly agreed that their companies would see large-scale changes in ways of working, leadership, technology and systems, and core processes (Exhibit 1). The principal drivers of this change in advanced industries were the need to reduce costs (59 percent), to increase speed of reaction to changes in the marketplace (47 percent), and to increase productivity (39 percent). </p> <div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="mck-c-inline-module-container mck-o-md-center"><div class="mck-c-content-header"><div class="ContentHeader_mck-c-content-header__eyebrow__cBTe_"></div></div><div class="mck-u-inline-module-border-bottom"><picture data-component="mdc-c-picture" class="Exhibit_mck-c-exhibit__image__pyIDm"><source media="(min-width: 768px)" srcSet="/~/media/mckinsey/industries/advanced%20electronics/our%20insights/organizing%20for%20speed%20in%20advanced%20industries/svgz-organizingspeed-ex1.svgz?cq=50&cpy=Center"/><img alt="Many different drivers are prompting companies in advanced industries to make changes in light of COVID-19." src="/~/media/mckinsey/industries/advanced%20electronics/our%20insights/organizing%20for%20speed%20in%20advanced%20industries/svgz-organizingspeed-ex1.svgz?cq=50&cpy=Center" loading="lazy"/></picture></div><div class="mck-u-sr-only"></div></div> <p>Across sectors, respondents noted that the COVID-19 crisis had already led to significant changes in operations, sales, supply chains, manufacturing, and human resources. Fully 71 percent of advanced-industries respondents reported that the pandemic had already had a significant negative impact on the stability of business outcomes—a higher proportion than in any other sector (Exhibit 2). </p> <div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="mck-c-inline-module-container mck-o-md-center"><div class="mck-c-content-header"><div class="ContentHeader_mck-c-content-header__eyebrow__cBTe_"></div></div><div class="mck-u-inline-module-border-bottom"><picture data-component="mdc-c-picture" class="Exhibit_mck-c-exhibit__image__pyIDm"><source media="(min-width: 768px)" srcSet="/~/media/mckinsey/industries/advanced%20electronics/our%20insights/organizing%20for%20speed%20in%20advanced%20industries/svgz-organizingspeed-ex2.svgz?cq=50&cpy=Center"/><img alt="COVID-19 has had a significant impact on business—and leaders in advanced industries believe that it has had a negative impact in many areas." src="/~/media/mckinsey/industries/advanced%20electronics/our%20insights/organizing%20for%20speed%20in%20advanced%20industries/svgz-organizingspeed-ex2.svgz?cq=50&cpy=Center" loading="lazy"/></picture></div><div class="mck-u-sr-only"></div></div> <p>Yet in assessing their own companies’ performance relative to peers, these executives were less positive than those from other sectors. A higher percentage of executives in advanced industries believed their companies were underperforming other sectors on organizational resilience, profitability, speed, and digital development; similarly, a smaller percentage of executives in advanced industries thought their companies were outperforming peers in other sectors. </p> <p>Questioned about perceived obstacles to operating at greater speed, executives in advanced industries cited organizational silos, slow decision making, and a lack of strategic clarity. Further, 31 percent of advanced-industries respondents reported problems with formal hierarchy—a much higher percentage compared with other sectors. </p> <h2>Building speed</h2> <p>This analysis suggests that advanced-industries organizations have considerable work ahead if they want to make speed a permanent feature of their businesses. Key activities must include rethinking ways of working, <a href="/capabilities/people-and-organizational-performance/our-insights/ready-set-go-reinventing-the-organization-for-speed-in-the-post-covid-19-era">reimagining organizational structures</a>, and reshaping talent (Exhibit 3).</p> <div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="mck-c-inline-module-container mck-o-md-center"><div class="mck-c-content-header"><div class="ContentHeader_mck-c-content-header__eyebrow__cBTe_"></div></div><div class="mck-u-inline-module-border-bottom"><picture data-component="mdc-c-picture" class="Exhibit_mck-c-exhibit__image__pyIDm"><source media="(min-width: 768px)" srcSet="/~/media/mckinsey/industries/advanced%20electronics/our%20insights/organizing%20for%20speed%20in%20advanced%20industries/svgz-organizingspeed-ex3.svgz?cq=50&cpy=Center"/><img alt="Companies must focus on nine activities to increase organizational speed" src="/~/media/mckinsey/industries/advanced%20electronics/our%20insights/organizing%20for%20speed%20in%20advanced%20industries/svgz-organizingspeed-ex3.svgz?cq=50&cpy=Center" loading="lazy"/></picture></div><div class="mck-u-sr-only"></div></div> <p>Fortunately, survey results suggest that organizations are beginning to understand the type and scale of changes required. Consider a few examples:</p> <ul> <li><em>Rethinking ways of working.</em> An aerospace company envisages a radically streamlined process to design, test, and install new passenger-facing features on aircraft, such as touchless boarding, self-cleaning surfaces, and redesigned security-screening procedures. Ideally, the path to adopting new features and processes will be measured in weeks or months. Another company suggests teleworking will become a cornerstone of its operations, with the aim of sharing expertise and spreading work around the globe and around the clock. </li> <li><em>Reimagining structures.</em> Building on experience during the COVID-19 crisis, advanced-industries companies are significantly simplifying internal processes for project approval. One executive spoke of going from 30 handoffs to just three and reducing new-project cycle times from more than 20 weeks to five. Another was planning to institutionalize new forms of teamwork and collaboration between engineers and technical teams, with a focus on making parts easier to manufacture. </li> <li><em>Re-adapting talent.</em> Advanced-industries companies are unlocking hidden reserves of talent in their efforts to navigate the challenging COVID-19 business environment. One surveyed company said it was now drawing on talented leaders one or two layers below the head of business or function and redeploying them to focus entirely on planning and generating new scenarios every week. This is excellent training for more senior roles. Another advanced-industries company, with its attention drawn by the crisis to the risks of supply-chain instability, is redirecting its recruitment effort to hiring procurement experts who can help improve <a href="/capabilities/operations/our-insights/why-now-is-the-time-to-stress-test-your-industrial-supply-chain">supply-chain management</a>. This major change could add 10 percent to the company’s workforce.</li> </ul> <p>These are just a few examples of changes underway. But the scale of the challenges facing advanced-industries companies will require many more adjustments. Survey results suggest that companies in this sector will not succeed in building for speed unless their leaders take a hard and fundamental look at the way their organizations are constructed and managed at every level, starting at the top. </p> <p>To get started, organizations can pursue a two-speed approach. They can make quick moves to lock in new changes that have generated positive outcomes, while simultaneously undertaking a broader evaluation of the structural and procedural foundations upon which the organization is built. This two-speed approach allows organizations to obtain some immediate gains while building the proper foundation for sustained speed going forward.</p> <hr/> <p>Momentum is here (for now). Leaders see the art in what is possible, and employees have their eyes open to sustainable ways of working. The talent market is democratizing. Moreover, we know that in advanced-industries, the market favors those who are able to innovate fast, make bold moves, and rapidly reallocate resources to lock in speed. We admire the incredible impact that advanced-industries companies have generated in such a short period of time and are optimistic about <a href="/industries/industrials-and-electronics/our-insights/beyond-covid-19-rapid-steps-that-can-help-machinery-and-industrial-automation-companies-recover">their potential</a> to do more as they reimagine their work processes and organizational structures.</p></div><div class="container-placeholder"></div></div></div><div class="mdc-u-grid mdc-u-grid-gutter-xl"><section role="contentinfo" data-layer-region="article-about-authors" class="mdc-u-grid mdc-u-grid-col-md-12 AboutAuthor_mck-c-about-author__nRJzu"><div class="mdc-u-grid-col-md-start-2 mdc-u-grid-col-md-end-12 mdc-u-grid-col-lg-start-3 mdc-u-grid-col-lg-end-11"><h5 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_8032924 mdc-c-heading--title___5qyOB_8032924 mdc-c-heading--border___K8dj3_8032924 mdc-u-align-center"></h5><div data-component="mdc-c-description" class="mdc-c-description___SrnQP_8032924 mdc-u-ts-8 mck-u-links-inline mck-u-links-inline--secondary mdc-u-mt-5"><div><p><strong>Elizabeth Mygatt</strong> is an associate partner in McKinsey’s Boston office, <a href="/our-people/asutosh-padhi"><strong>Asutosh Padhi</strong></a> is a senior partner in the Chicago office, <strong><a href="/our-people/charlotte-relyea">Charlotte Relyea</a></strong> is a senior partner in the New York office, and <strong><a href="/our-people/brooke-weddle">Brooke Weddle</a></strong> is a partner in the Washington, DC, office.</p> <p>The authors would like to thank Aaron De Smet, Reed Doucette, Randy Lim, Jane Qu, and Iyad Sheikh for their contributions to this article.</p></div></div></div></section><section class="mdc-u-grid mdc-u-grid-col-md-12 mck-u-screen-only"><div class="mdc-u-grid-col-md-start-2 mdc-u-grid-col-md-end-12 mdc-u-grid-col-lg-start-5 mdc-u-grid-col-lg-end-9"><h5 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_8032924 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type="application/json">{"props":{"pageProps":{"locale":"en","dictionary":{},"sitecoreContext":{"route":{"name":"Organizing for speed in advanced industries","displayName":"Organizing for speed in advanced industries","fields":null,"databaseName":"web","deviceId":"fe5d7fdf-89c0-4d99-9aa3-b5fbd009c9f3","itemId":"47e7eb97-e31e-4f87-9cb7-d4855b019556","itemLanguage":"en","itemVersion":1,"layoutId":"ae753eb4-a035-40b4-83bf-4b4438df6742","templateId":"683910db-02ba-40ba-92e7-726c880160a9","templateName":"ArticleJSS","placeholders":{"jss-main":[{"uid":"232bb7e9-289f-492d-a916-2b6185e44a84","componentName":"ArticleTemplate","dataSource":"","fields":{"data":{"articleTemplate":{"title":{"jsonValue":{"value":"Organizing for speed in advanced industries"}},"sEOTitle":{"value":""},"description":{"jsonValue":{"value":"Faced with the COVID-19 crisis, companies in advanced industries have become more nimble and accelerated decision making. How can they retain this speed once the pandemic abates?"}},"sEODescription":{"value":""},"displayDate":{"jsonValue":{"value":"2020-08-20T00:00:00Z"}},"body":{"value":"[[DownloadsSidebar]]\n\u003cp\u003e\u003cstrong\u003eIn almost every conceivable dimension\u003c/strong\u003e, the COVID-19 crisis is fundamentally challenging companies\u0026rsquo; assumptions about how they do business. The scale of the pandemic\u0026rsquo;s impact and the uncertainty about its future course and consequences are forcing changes in organizational structure, decision-making processes, technology, and operations, from manufacturing to sales and marketing. \u003c/p\u003e\n[[MostPopularArticles 5]]\n\u003cp\u003eAs discussed in an \u003ca href=\"/capabilities/people-and-organizational-performance/our-insights/ready-set-go-reinventing-the-organization-for-speed-in-the-post-covid-19-era\"\u003eearlier article\u003c/a\u003e, many companies have already undertaken major shifts in these areas. They have reconsidered ways of working, organizational structures, and talent. The common factor in these changes has been increased operational and decision-making speed in an unprecedentedly dynamic environment. And it is already clear that this requirement is here to stay. The question facing companies in all sectors is how to move from adrenaline-based speed to speed by design\u0026mdash;in other words, how to build increased speed into their operations on a permanent basis.\u003c/p\u003e\n\u003cp\u003eIn McKinsey\u0026rsquo;s recent Global Leadership Survey on organizational speed, which included about 900 senior executives from nine industries, respondents revealed that they were already focused on the need for speed. A large majority, including leaders from advanced industries,[[Footnote 1]] expect major change in almost every facet of their organizations as a result of the COVID-19 crisis. Fundamental and lasting shifts are predicted in everything from the structure of meetings to the role of leadership, and from core processes and technology to talent, skills, and organizational culture. \u0026ldquo;Purpose\u0026rdquo; is one of the only areas where less than 20 percent of respondents anticipate meaningful change. \u003c/p\u003e\n\u003cp\u003eRespondents from companies in advanced industries, like those in other sectors, already report significant successes in \u003ca href=\"/industries/industrials-and-electronics/our-insights/the-need-for-speed-accelerating-product-improvement-at-industrials\"\u003eboosting efficiency, effectiveness, and speed\u003c/a\u003e\u0026nbsp;during the crisis. Another survey finding, however, should be of concern: while executives in advanced industries agree that lasting and broad-based change is coming, they are markedly less optimistic than their peers in other industries about their organizations\u0026rsquo; ability to sustain performance improvements in a post-COVID-19 world. This article investigates the perceived obstacles ahead and suggests ways to address them.\u003c/p\u003e\n\u003ch2\u003eAcceleration in the face of crisis\u003c/h2\u003e\n\u003cp\u003eSpeed is not, of course, an unfamiliar concept in advanced industries. In normal times, a fast-paced operating model helps companies in this sector manage the broad ecosystem of interdependencies across their supply chains in the face of disruption and the rapid innovation and digital transformation required by changing sector dynamics.\u003c/p\u003e\n[[Ceros Covid]]\n\u003cp\u003eIn the same spirit, advanced-industries organizations have adapted their operating models to meet the challenges presented by the coronavirus pandemic. They have increased the speed of decision making, implemented radical changes in work practices, and rapidly implemented transformational investments that have allowed many companies to maintain productivity and meet customer expectations. Consider a few success stories:\u003c/p\u003e\n\u003cul\u003e\n \u003cli\u003e\u003cem\u003eMultiplying productivity. \u003c/em\u003eA major industrial factory ran at more than 90 percent capacity with only about 40 percent of the typical workforce.\u003c/li\u003e\n \u003cli\u003e\u003cem\u003eTurbocharging improvements.\u003c/em\u003e A US industrial player drove a lean-manufacturing program with 90 percent of its support employees working remotely. It accelerated progress on maturing frontline initiatives to achieve 30 percent greater productivity and quality.\u003c/li\u003e\n \u003cli\u003e\u003cem\u003eDeveloping new products.\u003c/em\u003e A major engineering company in aerospace and defense designed and manufactured ventilators within a week.\u003c/li\u003e\n \u003cli\u003e\u003cem\u003eGoing remote.\u003c/em\u003e A US defense contractor shifted two-thirds of its workforce to remote work. This required significant process innovation, given its need to support sensitive customer missions.\u003c/li\u003e\n \u003cli\u003e\u003cem\u003eShifting operations.\u003c/em\u003e A major shipbuilder switched from three to two shifts for thousands of employees, coordinating directly with local officials.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eSurvey respondents report myriad larger and smaller efficiency improvements, including big supply-chain changes, reductions in business travel time, better technology use to speed up meetings, streamlined electronic-approval processes, and a shift from in-person to online marketing.\u003c/p\u003e\n\u003cp\u003eMany respondents mentioned the benefits of greater remote and online working. One said remote working \u0026ldquo;ushered in a new paradigm where the best experts from anywhere in the world can easily offer perspectives on how to resolve complex production problems.\u0026rdquo; \u003c/p\u003e\n\u003cp\u003eAnother reported that remote work, coupled with time made available by production slowdowns, enabled engineers to \u0026ldquo;meet their mechanics\u0026rdquo; and deepen their understanding of practical issues in handling parts. \u003c/p\u003e\n\u003cp\u003e\u0026ldquo;Meeting online to make decisions, which still puts people face to face, had a massive impact on our ability to quickly move forward and implement with the working teams,\u0026rdquo; wrote one executive from a firm operating on a far-off campus, where meetings previously required travel between buildings.\u003c/p\u003e\n[[Disruptor1UP dis1]]\n\u003cp\u003e\u0026ldquo;Approvals for projects that yield significant benefits are being fast-tracked,\u0026rdquo; said another. The result: normal approval lead times fell by 50 percent.\u003c/p\u003e\n\u003cp\u003eA respondent at one company described moving testing and design processes online, using remotely accessed data, computer-aided design (CAD) and computer-aided management (CAM), and design-review programs. The company also used online tools to review plant operations, rather than making in-person visits.\u003c/p\u003e\n\u003cp\u003eOthers reported organizational and structural changes. \u0026ldquo;During COVID-19, we chose to integrate three business units/legal entities into one,\u0026rdquo; said one respondent. \u0026ldquo;This was done completely virtually...... This integration allowed our customers to deal with one business unit regardless of brand, streamline warehousing procedures, and unite the accounting platform. The immediate result is a 15 percent increase in speed to fulfill spare-parts orders and onsite requests for assistance.\u0026rdquo;\u003c/p\u003e\n\u003cp\u003eWhile these results are impressive, they occurred during a time of crisis. Companies knew that they had to move quickly and decisively in response to the COVID-19 crisis, and they did not hesitate to make changes. It was something of an adrenaline-based response. As advanced-industries companies try to make organizational speed a permanent part of their culture, they may encounter more obstacles, and they need to build the muscle to sustain this bias to action.\u003c/p\u003e\n[[PullQuote 1]]\n\u003ch2\u003eChallenges to achieving speed by design within advanced industries\u003c/h2\u003e\n\u003cp\u003eIf companies can maintain the improvements prompted by the COVID-19 crisis\u0026mdash;flatter hierarchies, faster decision making, nimble teamwork, and a new approach to learning and talent development\u0026mdash;they could achieve significant benefits. Our research suggests that companies that successfully create a faster operating model tend to be more profitable, have stronger innovation outcomes, and experience greater growth.\u003c/p\u003e\n\u003cp\u003eWith this in mind, advanced-industries companies should strive to make recent changes permanent. Our survey suggested, however, that they struggle more with implementation than their peers in other sectors. There is a notable mismatch between executives\u0026rsquo; expectations of change and their beliefs in their companies\u0026rsquo; ability to make that change.\u003c/p\u003e\n[[Disruptor1UP dis2]]\n\u003cp\u003eAt a macro level, more than 70 percent of executives in advanced industries who responded either agreed or strongly agreed that their companies would see large-scale changes in ways of working, leadership, technology and systems, and core processes (Exhibit 1). The principal drivers of this change in advanced industries were the need to reduce costs (59 percent), to increase speed of reaction to changes in the marketplace (47 percent), and to increase productivity (39 percent). \u003c/p\u003e\n[[Exhibit 1]]\n\u003cp\u003eAcross sectors, respondents noted that the COVID-19 crisis had already led to significant changes in operations, sales, supply chains, manufacturing, and human resources. Fully 71 percent of advanced-industries respondents reported that the pandemic had already had a significant negative impact on the stability of business outcomes\u0026mdash;a higher proportion than in any other sector (Exhibit 2). \u003c/p\u003e\n[[Exhibit 2]]\n\u003cp\u003eYet in assessing their own companies\u0026rsquo; performance relative to peers, these executives were less positive than those from other sectors. A higher percentage of executives in advanced industries believed their companies were underperforming other sectors on organizational resilience, profitability, speed, and digital development; similarly, a smaller percentage of executives in advanced industries thought\ntheir companies were outperforming peers in other sectors. \u003c/p\u003e\n\u003cp\u003eQuestioned about perceived obstacles to operating at greater speed, executives in advanced industries cited organizational silos, slow decision making, and a lack of strategic clarity. Further, 31 percent of advanced-industries respondents reported problems with formal hierarchy\u0026mdash;a much higher percentage compared with other sectors. \u003c/p\u003e\n\u003ch2\u003eBuilding speed\u003c/h2\u003e\n\u003cp\u003eThis analysis suggests that advanced-industries organizations have considerable work ahead if they want to make speed a permanent feature of their businesses. Key activities must include rethinking ways of working, \u003ca href=\"/capabilities/people-and-organizational-performance/our-insights/ready-set-go-reinventing-the-organization-for-speed-in-the-post-covid-19-era\"\u003ereimagining organizational structures\u003c/a\u003e, and reshaping talent (Exhibit 3).\u003c/p\u003e\n[[Exhibit 3]]\n\u003cp\u003eFortunately, survey results suggest that organizations are beginning to understand the type and scale of changes required. Consider a few examples:\u003c/p\u003e\n\u003cul\u003e\n \u003cli\u003e\u003cem\u003eRethinking ways of working.\u003c/em\u003e An aerospace company envisages a radically streamlined process to design, test, and install new passenger-facing features on aircraft, such as touchless boarding, self-cleaning surfaces, and redesigned security-screening procedures. Ideally, the path to adopting new features and processes will be measured in weeks or months. Another company suggests teleworking will become a cornerstone of its operations, with the aim of sharing expertise and spreading work around the globe and around the clock. \u003c/li\u003e\n \u003cli\u003e\u003cem\u003eReimagining structures.\u003c/em\u003e Building on experience during the COVID-19 crisis, advanced-industries companies are significantly simplifying internal processes for project approval. One executive spoke of going from 30 handoffs to just three and reducing new-project cycle times from more than 20 weeks to five. Another was planning to institutionalize new forms of teamwork and collaboration between engineers and technical teams, with a focus on making parts easier to manufacture. \u003c/li\u003e\n \u003cli\u003e\u003cem\u003eRe-adapting talent.\u003c/em\u003e Advanced-industries companies are unlocking hidden reserves of talent in their efforts to navigate the challenging COVID-19 business environment. One surveyed company said it was now drawing on talented leaders one or two layers below the head of business or function and redeploying them to focus entirely on planning and generating new scenarios every week. This is excellent training for more senior roles. Another advanced-industries company, with its attention drawn by the crisis to the risks of supply-chain instability, is redirecting its recruitment effort to hiring procurement experts who can help improve \u003ca href=\"/capabilities/operations/our-insights/why-now-is-the-time-to-stress-test-your-industrial-supply-chain\"\u003esupply-chain management\u003c/a\u003e. This major change could add 10 percent to the company\u0026rsquo;s workforce.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThese are just a few examples of changes underway. But the scale of the challenges facing advanced-industries companies will require many more adjustments. Survey results suggest that companies in this sector will not succeed in building for speed unless their leaders take a hard and fundamental look at the way their organizations are constructed and managed at every level, starting at the top. \u003c/p\u003e\n\u003cp\u003eTo get started, organizations can pursue a two-speed approach. They can make quick moves to lock in new changes that have generated positive outcomes, while simultaneously undertaking a broader evaluation of the structural and procedural foundations upon which the organization is built. This two-speed approach allows organizations to obtain some immediate gains while building the proper foundation for sustained speed going forward.\u003c/p\u003e\n\u003chr /\u003e\n\u003cp\u003eMomentum is here (for now). Leaders see the art in what is possible, and employees have their eyes open to sustainable ways of working. The talent market is democratizing. Moreover, we know that in advanced-industries, the market favors those who are able to innovate fast, make bold moves, and rapidly reallocate resources to lock in speed. We admire the incredible impact that advanced-industries companies have generated in such a short period of time and are optimistic about \u003ca href=\"/industries/industrials-and-electronics/our-insights/beyond-covid-19-rapid-steps-that-can-help-machinery-and-industrial-automation-companies-recover\"\u003etheir potential\u003c/a\u003e\u0026nbsp;to do more as they reimagine their work processes and organizational structures.\u003c/p\u003e"},"isFullScreenInteractive":{"boolValue":false},"hideStickySocialShareBar":{"boolValue":false},"desktopID":{"value":""},"mobileID":{"value":""},"desktopURL":{"value":""},"mobileURL":{"value":""},"desktopPaddingPercentage":{"value":""},"mobilePaddingPercentage":{"value":""},"desktopOverrideHeight":{"value":""},"mobileOverrideHeight":{"value":""},"cerosOembedURL":{"value":""},"cerosRenderMode":{"targetItem":null},"cerosBackgroundColor":{"targetItem":null},"hideByLine":{"boolValue":false},"tableOfContentsTitle":{"value":"TABLE OF CONTENTS"},"accessStatus":{"targetItem":{"key":{"value":"RegisteredUsers"},"value":{"value":"Registered Users"}}},"articleType":{"targetItem":{"displayName":"Article"}},"hasSpecialReport":{"boolValue":false},"contentType":{"targetItem":{"displayName":"Article"}},"sourcePublication":{"targetItem":null},"externalPublication":{"value":""},"excludeFromClientLink":{"boolValue":false},"originalPublishDate":{"jsonValue":{"value":"2020-08-20T11:00:00Z"}},"footnotes":{"value":"\u003col\u003e\n \u003cli\u003eAdvanced industries include automotive and assembly, aerospace and defense, advanced electronics, building technology, semiconductors, shipbuilding, and machinery.\u003c/li\u003e\n\u003c/ol\u003e"},"contributoryPractice":{"targetItems":[{"displayName":"Industrials \u0026 Electronics"},{"displayName":"People \u0026amp; Organizational Performance"}]},"aboutTheAuthors":{"value":"\u003cp\u003e\u003cstrong\u003eElizabeth Mygatt\u003c/strong\u003e is an associate partner in McKinsey\u0026rsquo;s Boston office,\u0026nbsp;\u003ca href=\"/our-people/asutosh-padhi\"\u003e\u003cstrong\u003eAsutosh Padhi\u003c/strong\u003e\u003c/a\u003e is a senior partner in the Chicago office, \u003cstrong\u003e\u003ca href=\"/our-people/charlotte-relyea\"\u003eCharlotte Relyea\u003c/a\u003e\u003c/strong\u003e is a senior partner in the New York office, and \u003cstrong\u003e\u003ca href=\"/our-people/brooke-weddle\"\u003eBrooke Weddle\u003c/a\u003e\u003c/strong\u003e is a partner in the Washington, DC, office.\u003c/p\u003e\n\u003cp\u003eThe authors would like to thank Aaron De Smet, Reed Doucette, Randy Lim, Jane Qu, and Iyad Sheikh for their contributions to this article.\u003c/p\u003e"},"authors":{"targetItems":[{"template":{"id":"3FBABDB63A094F68B1F8E1BBE1BA124E","name":"Author"},"id":"8327D9637781484895446289B9DAB2FA","name":"Elizabeth Mygatt","authorTitle":{"value":"Elizabeth Mygatt"},"description":{"value":"Advises clients across a variety of sectors on topics regarding organizational transformation with expertise in organizational design, governance and decision rights, leadership, and change management"},"thumbnailImage":{"alt":"","src":null},"profile":{"targetItems":[{"standardImage":{"src":"/~/media/mckinsey/our people/elizabeth mygatt/liz-mygatt_profile_1536x1152.jpg","alt":"Elizabeth Mygatt"},"emailLinks":{"value":""},"linkedInUrl":{"value":"https://www.linkedin.com/in/elizabeth-mygatt/"},"description":{"value":"Guides organizational transformation by improving operating model design, clarifying governance and decision making, and enhancing talent strategy"},"locations":{"targetItems":[{"name":"Boston","displayName":"Boston"}]},"firmTitle":{"value":"Partner"},"thumbnailImage":{"alt":"Elizabeth Mygatt","src":"/~/media/mckinsey/our people/elizabeth mygatt/liz-mygatt_headshot_988x741.jpg"},"url":{"path":"/our-people/elizabeth-mygatt"}}]}},{"template":{"id":"3FBABDB63A094F68B1F8E1BBE1BA124E","name":"Author"},"id":"CFA029BDCA314C10958B49301C9506C1","name":"Asutosh 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