McKinsey's Analysis Highlights: Few Businesses Contributing Significantly to Overall Economic Expansion
Productive Pioneers Shaping the Future
A recent McKinsey analysis shatters the notion that widespread productivity growth comes from multiple companies making steady progress. Instead, the report reveals that a select few companies drive most of the growth. "Progress is propelled more by a handful of companies taking monumental strides than by a multitude making minuscule advancements," the study states.
The McKinsey Global Institute delved into the growth of 8300 companies in the US, UK, and Germany from 2011 to 2019, focusing on value added per employee, and choosing this period as it was void of crises like the financial crisis or COVID-19 pandemic.
Few Companies Propel Growth
Thirteen companies in Germany accounted for approximately 65% of the total productivity growth, representing a mere 0.4% of the companies evaluated. If there were 20 more companies like these, productivity growth would double. This underscores the fact that economic progress hinges on a tight-knit circle of pioneers.
The drivers behind these successful companies extend beyond run-of-the-mill efficiency gains. They enhance their productivity through strategic moves and targeted decisions, such as innovative business models, technological breakthroughs, or a keen focus on particularly productive markets and products. German companies like Zalando, Rewe, Carl Zeiss, Hapag-Lloyd, and MTU Aero Engines are among the productive trailblazers.
Innovation, not Efficiency, is the Key
The heart of this investigation? It's not only about boosting efficiency but also the courage to venture into new territories. Germany boasts strong players in conventional industries like automotive manufacturing. However, in emerging sectors like electronics or semiconductors, the country faces a significant hurdle. Innovation is the primary focus for the future.
According to Jan Mischke, a partner at McKinsey and co-author of the report, "It isn't just the sheer number of companies, but the scaling of a few highly dynamic firms that propels productivity increases." For future success, the emphasis should shift from efficiency to innovation, as the study suggests.
Innovation plays a pivotal role in promoting competitive advantage, improving operational efficiency, unlocking new markets, and fostering sustainability, according to McKinsey's research. Leveraging these principles can help set companies apart from their competitors and drive them towards unrivaled prosperity.
- The McKinsey Global Institute's study reveals that a select few companies, such as Zalando, Rewe, Carl Zeiss, Hapag-Lloyd, and MTU Aero Engines in Germany, accounted for approximately 65% of the total productivity growth from 2011 to 2019.
- The report by McKinsey states that if there were 20 more companies like the productive pioneers mentioned above, productivity growth in Germany would double.
- The success of these companies is not only due to run-of-the-mill efficiency gains but also strategic moves, innovative business models, technological breakthroughs, and a focus on particularly productive markets and products.
- According to Jan Mischke, a partner at McKinsey and co-author of the report, the key to future productivity increases lies not just in the number of companies but in the scaling of a few highly dynamic firms, suggesting a shift from efficiency to innovation for future success.
