The rising toll of war in Ukraine

The rising toll of war in Ukraine – Economic outlook – Lighthouses – Driverless Cars Finally Start Losing the Drivers – ‘Riverman’ Review: In the Wake of an American Explorer

Again we tried to find the latest news for you to read in TextileFutures Newsletter.

Because of the actuality we have chosen a McKinsey podcast entitled “The rising toll of war in Ukraine”, we do let you have the transcript.

The second item is the Economic outlook of March by McKinsey and will provide the latest facts and figures on the economy.

The third feature is entitled “Lighthouses” and is about a playbook for responsible manufacturing offering a lot of new aspects that might have consequences for your own business.

The fourth item talks about “Driverless Cars finally start losing the Drivers” in San Francisco.

And last, but not least, we offer you a book review:” In the Wake of an American Explorer” we feel that has also something to do with actuality.

We hope that you find these items enjoyable and we wish you a pleasant week. Don’t forget to return to TextileFuture’s Newsletter next Tuesday.

Here starts the first item:

By guest author Sven Smit. Sven Smit is a senior partner and chair of McKinsey Global Institute in McKinsey’s Amsterdam office. Lucia Rahilly is global editorial director and deputy publisher of McKinsey Global Publishing and is based in the New York office.

Lives lost and upended. Soaring food and energy prices. Supply chains at risk. Much is at stake as the war continues.

In this episode of The McKinsey Podcast, Sven Smit, senior partner and chair of the McKinsey Global Institute, talks with Lucia Rahilly, global editorial director, about some of the potential effects of ongoing war and uncertainty in Ukraine. This conversation was recorded on March 21, 2022. An edited transcript follows.

The McKinsey Podcast is cohosted by Roberta Fusaro and Lucia Rahilly

A human—and humanitarian—crisis

Lucia Rahilly: I recognize this is a chaotic time for you, given the brutal effects of the war in Ukraine and ongoing shock and uncertainty, both in the European region and worldwide. We’re very grateful you were able to make the time to talk with us today.

Sven Smit: It’s indeed a complex time. I live in Europe, and this is so close that you can’t get it out of your heart. My mother is 80. She lived in Eastern Germany and fled from government oppression in the ’60s. She didn’t think she would live to see this again. And now it’s happening on our territory while we’re watching. This is a true atrocity and a humanitarian pain that’s unimaginable.

Lucia Rahilly: The war clearly affects all of us, but it must be particularly acutely felt in Europe, even outside the conflict zone. It’s the largest war in Europe in nearly eight decades. So I would imagine you’re hearing similar things from the leaders you talk to day-to-day.

Sven Smit: Yes. The pandemic is a virus. We can fight it with masks and vaccines. But in Ukraine, we’re fighting human against human—and that’s just so different.

Lives and livelihoods, lost and disrupted

Lucia Rahilly: This war is obviously causing massive disruption on a range of fronts. We can’t talk today about all of them, but let’s touch on at least a few. The foremost disruption, as you alluded to, is the horrific and rising toll on lives. What have we learned so far about the scale of this humanitarian tragedy—and about who is likely to bear the brunt of much of this suffering?

Sven Smit: At the moment, north of a few million people are moving out of Ukraine as refugees. That number could grow much bigger if the hostilities protract for the remainder of the year. Some people estimate it might then go north of ten million, 15 million. But there are different segments—the lives lost in the direct war, the displacement of refugees, and the displacement within Ukraine.

The energy and food crises are also pinching at the lives and livelihoods of people across the world. Among some less-well-off populations in Western Europe or the United States, energy and food make up 10–30 percent of what they spend. The price doubles, triples—all of a sudden, these people can’t do anything else but pay for food and energy. So you see some people already adjusting their behavior, eating less. And some of them just can’t pay.

Then you multiply that in a low-income country—one that maybe had an aspiring population, ready to go up the next step. Now these people get pinched by this increased price of food, increased price of energy, maybe even decreased access to food and energy. And you can easily imagine that more lives and livelihoods will be lost and disrupted outside the immediate conflict. We should not miss that. In the pandemic, there was a little bit of an under-told story: richer countries were really not paying enough attention to the pain of this economic disruption in lower-income countries.

Rising prices, rising risk

Lucia Rahilly: Food prices spiked even prior to the war, given supply chain issues and rising energy prices during the pandemic. In the US, we saw grocery prices shoot up at the highest rate in something like 40 years. Do you see increased food insecurity in Europe—and potentially also an increase in world hunger—as a big risk as a result of this war?

Sven Smit: We haven’t yet seen shipments of oil, gas, and food stopping at a massive scale. There hasn’t been a major harvest disrupted in the northern territory, which could happen if this goes through the summer. We also haven’t yet seen some form of sanction or countersanction or hostility saying, “Let’s not ship the oil.” But if that changes, either by physical disruption or by intent, we may see problems with access.

At the moment, prices are rising in anticipation of potential shortages. And what will happen is high-income countries will buy—they’ll be able to pay. And lower-income countries will have access problems—or at minimum, even greater affordability problems.

Lucia Rahilly: In some lower-income countries, there is also a history of food shortages and rising food costs contributing to social unrest and uprising.

Sven Smit: That’s not just a risk in low-income countries. The yellow-vest movement reacted to an increase in diesel prices. Only a small increase in these items—which you need to buy to stay warm, to drive to your job, to earn an income—is very disruptive. It means you have to stop buying other stuff. And that’s where the pain comes. Of course, for some, that means not going on holiday—not the worst thing in life. But for others, it means cutting back on essentials because their spend gets crowded out by these enormous price rises.

We’re all experiencing just how sensitive a doubling of the price in oil or doubling in the price of food is to the spending patterns of the lower-income parts of the population. It’s very easy for higher-income people to say, “You know, this is part of the fight,” but it really pinches other segments of the population.

Prices are rising in anticipation of potential shortages. And what will happen is high-income countries will buy—they’ll be able to pay. And lower-income countries will have access problems.

What about net zero?

Lucia Rahilly: Energy is obviously a huge disruption, given the role of Russian oil and gas not just in Europe but worldwide. I saw a quote a couple of days ago from the International Energy Agency warning that we could be headed into what they called the biggest supply crisis in decades. Sven, you’ve been so heavily involved in our energy research, including our recent report on the net-zero transition. Anything more to say about energy access, at least in the near to medium term?

Sven Smit: The first point is the energy is still flowing. But it could stop flowing. So we need to do much more radical things.

Currently, the energy policy of major countries is rotating: “Let’s build more wind. Let’s build more solar. Let’s build more nuclear.” It’s almost like saying, “Let’s try everything and find out what protects us the fastest.” What that does to net zero, what that does to the net-zero equation, I think we will only learn over time. Because the reality is that some countries might start reoperating coal plants as the fastest way to become somewhat less dependent. And other countries might actually finalize the wind farms that are already there.

For now, people are going to go all out. And then, at some point, we will resettle into a new equilibrium, which could go either way. For physical supply chains of energy that are now at stake, oil travels a little bit more on boats and can therefore be flexibly reallocated, while gas needs to be liquefied and then re-gassed. And the capacity for liquefication (SIC) and re-gassing is actually short. As a result, if we were to have a gas shortage, rebuilding might take a lot of time—much more time than we ever want.

Supply chains under strain—again

Lucia Rahilly: Supply chain resiliency had already come to the fore as an urgent priority during COVID-19 lockdowns. And obviously, COVID-19 continues to be a dynamic issue, as we’re seeing right now in China and some parts of Europe. How much worse could this get?

Sven Smit: First, we need to reframe a bit what happened last year. The narrative was a broken supply chain—but the reality was an unbelievably strong supply chain. We had unprecedented levels of demand for consumer-goods purchases in the back half of 2021. And the supply chain actually delivered. The shelves were empty because everybody bought so much. A jittery supply chain could not have fulfilled this exceptionally high level of demand.

And why was there this demand? People were not buying services. They were not yet going on holiday, not going to the restaurants—which caused an enormous demand shift toward goods. Now, at least in the West, you can see a rotation back to travel and to restaurants and other activities that may ease the demand on products a little and also relieve some pressure on the supply chain.

But of course, if basic materials from Russia and Ukraine—food, metals, fertilizer—are not shipped, then that’s a problem. And some industries have important factories or important IT talent in Ukraine. If they can’t access them, their supply chains could be impeded again.

Every single company I work with is now asking, “What were we actually producing in Ukraine? Where did we get our nickel? Where did we get our cobalt?” And then trying to figure out what to do.

Economic implications in the eurozone and beyond

Lucia Rahilly: Acknowledging that the context is incredibly dynamic, let’s turn now to some of the ways this war might play out in the eurozone specifically, which is a very sizable macroeconomy and also very highly exposed. If hostilities were to be resolved diplomatically in the coming weeks, and we were to assume a modest policy response, what might the economic implications of this war be?

Sven Smit: We might hope for this to happen. If it did, for example, we at least would be unlikely to see a stop to the supply of energy and certain critical materials, which would help. And if a resolution were to happen quickly, the refugee situation might not be quite as big, and it would be a bit faster to rebuild some of Ukraine. In that case, maybe the first or second quarter of this year might look wobbly, and then we might emerge back to some form of normal trajectory. But of course, it could get worse if the hostilities are more protracted, the sanctions stay longer at much higher levels, and so on. Then we could easily be two, three years under.

We don’t, at this moment, expect the dip to be larger than the dip during the pandemic. The simple way to think about this is that COVID-19 created an enormous demand shock. That applied across all countries because we had lockdowns everywhere. Basically, because of this demand shock, aggregate demand fell.

Energy and food and the supply chain—these are very important. But even twice the price of energy is not a 10 % GDP drop. That’s just how this translates. I’m not saying there’s no scenario imaginable where hostilities expand and you actually get a shutdown of the energy supply, in which case it could get much worse. But that’s not the scenario we’re talking about right now.

Lucia Rahilly: Say a bit more about what might happen if the war drags on.

Sven Smit: In that case, we would be a few years under with a few percent, and the question is, “How do we restore together?” Once a form of normality returns, you get a return to past growth. That depends a little bit on the energy mix. In a severe case, some stimulus to help the weakest get through will be important.

Once a form of normality returns, you get a return to past growth. That depends a little bit on the energy mix. In a severe case, some stimulus to help the weakest get through will be important.

Economic implications in the eurozone and beyond

Lucia Rahilly: Acknowledging that the context is incredibly dynamic, let’s turn now to some of the ways this war might play out in the eurozone specifically, which is a very sizable macroeconomy and also very highly exposed. If hostilities were to be resolved diplomatically in the coming weeks, and we were to assume a modest policy response, what might the economic implications of this war be?

Sven Smit: We might hope for this to happen. If it did, for example, we at least would be unlikely to see a stop to the supply of energy and certain critical materials, which would help. And if a resolution were to happen quickly, the refugee situation might not be quite as big, and it would be a bit faster to rebuild some of Ukraine. In that case, maybe the first or second quarter of this year might look wobbly, and then we might emerge back to some form of normal trajectory. But of course, it could get worse if the hostilities are more protracted, the sanctions stay longer at much higher levels, and so on. Then we could easily be two, three years under.

Energy and food and the supply chain—these are very important. But even twice the price of energy is not a 10 percent GDP drop. That’s just how this translates. I’m not saying there’s no scenario imaginable where hostilities expand and you actually get a shutdown of the energy supply, in which case it could get much worse. But that’s not the scenario we’re talking about right now.

Lucia Rahilly: Say a bit more about what might happen if the war drags on.

Sven Smit: In that case, we would be a few years under with a few percent, and the question is, “How do we restore together?” Once a form of normality returns, you get a return to past growth. That depends a little bit on the energy mix. In a severe case, some stimulus to help the weakest get through will be important.

Once a form of normality returns, you get a return to past growth. That depends a little bit on the energy mix. In a severe case, some stimulus to help the weakest get through will be important.

Lucia Rahilly: Many economists expected 2022 to be the year the global economy bounced back after the shock of COVID-19. At the start of the year, we heard a lot of optimism about returning to prepandemic growth trajectories. All that very quickly changed following the invasion of Ukraine, and the economic outlook began to feel much more precarious. What can leaders expect globally, beyond the eurozone?

Sven Smit: The eurozone is far more directly affected. It has the highest dependency on Russian energy and some of the other supply chains. We expect the US to do better and China, probably even better, although China is still dealing with another wave of COVID-19, which could be a factor. But if you just look at the war in Ukraine, Europe will feel it the most, then the US, and then China.

Leading with lessons from COVID-19

Lucia Rahilly: Acknowledging variation among the leaders and organizations you work with, is there anything you think leaders can do right now to navigate the current uncertainty?

Sven Smit: I’ve spoken to maybe 100 leaders by now. Basically, they’re going back to the playbook of dealing with COVID-19, by setting up some form of a crisis team. And they all are, first, caring for their people, which they did during the pandemic, too. But in this situation, they’re asking, “Where are my people? Where are they in Russia? What can we do? Where are they in Ukraine? What can we do about that? Who else is affected more indirectly?” And then, in their crisis teams, they’re looking into, “Can we continue our operations given our dependency on Ukraine’s supplies and on Russian supplies?”

The next level is, “OK, how is this energy disruption going to hit me? These prices mean my products will be more expensive. What do I do? Does this mean people will have to spend more on energy—and therefore that they’re likely to spend less on my products?”

Leaders are translating the information coming in to model supply disruption for their companies. And they’re asking what it will do to demand, as well. As they start adjusting their strategies, I think they are also likely to start scenario planning. They’re asking, “What kind of storm are we weathering here and in what range?”

Lucia Rahilly: Sven, I’ve heard you say that the COVID-19 crisis actually helped revitalize the social contract by massively reinforcing the social safety net in places like Europe and the US, at least temporarily. How do you see the social contract evolving in the face of the war in Ukraine?

Sven Smit: During COVID-19, the level of support to those affected by the pandemic has been enormous. Of course, you can always debate specific points—for example, “Did it exactly land in the right place?” But we did help restaurant owners. We did help factory workers. We did help people who couldn’t work inside other people’s houses.

One way or the other, a significant amount of money landed in many places. This was the largest support action in a long, long time. We have increased debt-to-GDP ratios now, but in hindsight, people thought this was worth it. The alternative would have been much worse—mass unemployment, no support. So I think we have a lesson here.

And even at the beginning of this year, when we were cutting the supply of oil and gas for other reasons, prices went up. Italy and Spain talk about billions in energy support—or they decouple VAT [value-added] taxes for energy to slightly compensate for the blow of the energy price—hoping that it won’t sustain that long.

I also think we need to be careful not to be too light on how much these price increases can affect people. Some people say, “This is the energy crisis; we anyway wanted people to shift to alternatives. And this is exactly the right thing to help fight the battle.” That might be very easy to say if you have the money. But with the old prices, if food was 30 percent of your costs, that’s now 90 percent. And that means there’s nothing left.

That’s the pain that people feel. But as the pinch gets felt more directly, we’re already creating the kind of situation we’ve had during the pandemic. And clearly, we’re taking action because we recognize that this level of energy crisis and of food insecurity—it’s not a good way for people to live.

Lucia Rahilly: That’s very helpful, Sven. Thanks so much for joining us today.

The invasion of Ukraine in February 2022 is having deep human, as well as social and economic impact, across countries and sectors. The implications of the invasion are rapidly evolving and are inherently uncertain.

As a result, this document, and the data and analysis it sets out, should be treated as a best-efforts perspective at a specific point of time, which seeks to help inform discussion and decisions taken by leaders of relevant organizations. The document does not set out economic or geopolitical forecasts and should not be treated as doing so. It also does not provide legal analysis, including but not limited to legal advice on sanctions or export control issues.

Here follows the start of the second feature:

Economic outlook

The survey content and analysis were developed by Alan FitzGerald, a director of client capabilities in McKinsey’s New York office; Vivien Singer, a capabilities and insights expert at the Waltham Client Capabilities Hub; and Sven Smit, the chair and director of the McKinsey Global Institute and a senior partner in the Amsterdam office.

This article was edited by Daniella Seiler, an executive editor in the New York office.

Worries about geopolitical conflicts, among other risks to growth, now exceed executives’ concerns about the COVID-19 pandemic. Overall economic optimism continues to decline.

Geopolitical instability is now cited as the top risk to both global and domestic economies in our latest McKinsey Global Survey on economic conditions. ¹ That’s the consensus among executives worldwide, who have cited the COVID-19 pandemic as a leading risk to growth for the past two years.

Our quarterly survey was launched four days after the invasion of Ukraine, and executives express uncertainty and concern about its impact on the economy. About three-quarters of respondents cite geopolitical conflicts as a top risk to global growth in the near term, up from one-third who said so in the previous quarter. Meanwhile, the share of respondents citing the pandemic as a top risk fell from 57 to 12 %, as much larger percentages now identify energy prices and inflation as threats to the global economy.

At the same time, overall sentiment about the economy remains largely positive, but it continues to trend downward. For the third quarter in a row, respondents are less likely than in the previous one to report that economic conditions in their respective countries and across the globe are improving. They are also less likely to believe that either global or domestic conditions will improve in the months ahead. The near-term economic outlook is especially gloomy among respondents in developed economies, whose views are increasingly downbeat compared with their emerging-economy peers.

Geopolitical conflict overshadows all other risks to growth

According to the survey results, executives expect that the economic effects of the invasion of Ukraine will be strongly felt. Seventy-six percent of all respondents cite geopolitical instability and/or conflicts as a risk to global economic growth over the next 12 months, and 57 percent cite it as a threat to growth in their home economies (Exhibit 1).

Executives see geopolitical instability as the top risk to both global and domestic growth in every geography except Greater China, ² where respondents most often cite the COVID-19 pandemic. Thirty-nine percent of respondents there say the pandemic is a threat to domestic growth, compared with 5 % of all other respondents.

Nearly two years after COVID-19 was declared a global pandemic, ³ this is the first time our respondents have not cited the pandemic as the top risk to growth in the global economy (Exhibit 2).

Overall sentiment continues to wane

While respondents tend to report improving—rather than worsening—conditions in the global economy and in their home countries, the percentages of executives saying so continue to decrease over time (Exhibit 3).

Their outlook for the next six months is even more downbeat, especially for the global economy (Exhibit 4). Forty-three percent of respondents believe the global economy will improve over the next six months, a share that’s nearly equal to the 40 percent who think conditions will worsen. This month’s result also marks the first time since July 2020 that less than a majority of respondents feel optimistic about the global economy’s prospects.

And while executives overwhelmingly cite geopolitical conflicts as a risk to economic growth, rising interest rates are a growing concern as well. Interest rates are among the top five risks to near-term growth in the global economy (for the second survey in a row) and in respondents’ home countries—and the share of respondents expecting a significant increase in near-term interest rates has more than doubled since the previous quarter. Across regions, executives in North America and in Europe are the most likely to expect interest rates to rise rather than hold steady or decrease.

The divide between developed and emerging economies grows

For the third quarter in a row, the survey results suggest a widening gap in optimism between developed-economy and emerging-economy respondents. In developed economies—where respondents cite geopolitical conflicts as a risk to growth more often than their peers do—sentiment is declining at a faster rate than in emerging economies. Only 52 % of developed-economy respondents, versus 73 % of their emerging-economy peers, say economic conditions at home have improved in recent months. In our two previous surveys, the gap was much smaller (Exhibit 5).

This trend is also evident in respondents’ views on the global economy. This month, just 39 % of developed-economy respondents say global economic conditions have improved in recent months, compared with 68 % in emerging economies. Respondents in developed economies also report a more downbeat outlook for the coming months: only 36 % believe conditions in the global economy will improve in the near term, versus 55 % of their emerging-economy peers.

Here is the start of the third feature:

By Francisco Betti, Enno de Boer, and Yves Giraud. Enno de Boer is a senior partner in McKinsey’s New Jersey office, and Yves Giraud is a senior expert in the Geneva office, as well as a platform fellow at the World Economic Forum. Francisco Betti is head of advanced manufacturing and value chains at the forum and a member of its executive committee.

The authors wish to thank Katy George, Michael Kane, Macar Stoianov, Federico Torti, and Finja Zhang for their contributions to this article.

Supply chain resilience and local manufacturing are increasingly important in today’s geopolitical context. But how can organizations bolster their operations, while also engaging their workforces and driving sustainable operations? Innovation, leadership, and inspiration will be needed—and a playbook for driving responsible industry transformation is coming together, powered by insights from the 103 members of the Global Lighthouse Network (a World Economic Forum initiative in collaboration with McKinsey). Dive deeper on the six crucial enablers of transformations toward responsible production in a new article, and be sure to sign up for a Lighthouses Live event on April 6 for even more insights. Joyce Yoo, digital editor, New York

The authors wish to thank Katy George, Michael Kane, Macar Stoianov, Federico Torti, and Finja Zhang for their contributions to this article.

Since 2018, the World Economic Forum, in collaboration with McKinsey, has sought to recognise, encourage, and accelerate the at-scale digital transformation of manufacturing by launching what is now called the Global Lighthouse Network (GLN). The GLN has become a community of manufacturers leading the way in the use of Fourth Industrial Revolution (4IR) technologies. The GLN’s 103 members, including manufacturers and other organizations along the value chain, represent a diverse range of industries that span the planet and generate a wealth of insights on achieving 4IR transformation.

— Joyce Yoo, digital editor, New York

In the current geopolitical context, local manufacturing and supply chain resilience are becoming increasingly important. At the same time, organizations face new obstacles as they strive to engage their workforces and sustain operations amid international unrest and economic headwinds. Furthermore, there are new pressures related to the need to maintain sustainability commitments and accelerate the transition toward renewable energy, while addressing more immediate energy market disruptions. These concurrent challenges call for innovation, leadership, and inspiration—indeed, manufacturers need a playbook now more than ever to guide responsible industry transformation.

The initial idea, four years ago, was that embracing digital technologies and new working modes would enable an evolution in manufacturing. Today, the GLN has made a compelling case for the ability of 4IR technology to boost productivity, growth, and sustainability.

Core enablers—innovative approaches driving successful 4IR transformation—have proved crucial as companies have endured unprecedented strains that have radically changed everyday experiences, including how people work. While companies have grappled with remote work, physical distancing, and attrition, they have also been affected by the social and emotional toll of such stressors. Lighthouses have addressed these difficulties by fostering community through a shared sense of purpose. They have invested in their people through learning and development, building a culture of empowerment and ownership among people who believe in what they are doing. In so doing, they have prioritised genuine workforce development—a true source of resiliency and a strategic advantage.

Yet even while confronting so many other trials, leading companies have responded, stepping forward to set new benchmarks and put innovation to work in the name of environmental sustainability. They have shown how responsible changes can boost eco-efficiency, yielding sustainability benefits while achieving business goals—and even realizing competitive advantages.

In September 2021, the GLN introduced a new designation—“sustainability lighthouse”—to recognize leaders in environmental responsibility. These lighthouses have achieved an impressive degree of eco-efficiency: their operations reap sustainability returns that are good for the planet and also realize important business goals. Six lighthouses have now met this rigorous new bar (Exhibit 1).

The 13 most recent GLN sites have confirmed the lessons of the early lighthouses, particularly through the increased number of successful use cases for the application of 4IR technologies. They are creating substantial value across a set of KPIs that encompass not only sustainability and productivity but also agility, speed to market, lower lot sizes, on-time delivery, and customization. The experience of the companies in this diverse network has shown what is possible through a digital transformation at scale. Their insights inform a new lighthouse playbook: a guide for organisations aiming to reach the future of manufacturing through responsible production that combines productivity, sustainability, and the active workforce engagement.

Proven approaches have endured powerful storms

The lessons that gave rise to this playbook were already materializing before the pandemic. first, two modes of scaling emerged—across production sites and along value streams—together with a comprehensive set of KPIs measuring a transformation’s impact. Second, the experience of the lighthouses revealed that six core enablers are essential for successful 4IR transformations: the agile approach, agile digital studios, the IIoT 1 stack, the IIoT academy, technology ecosystems, and transformation offices (Exhibit 2).

Despite the disruptive changes since COVID-19 emerged—and perhaps even more so because of it—these elements have continued to prove essential. The growing GLN network has reconfirmed the initial insights while detailing how they help businesses and promote responsible, sustainable growth.

A closer look at two key enablers

Two of the six core enablers—an agile approach and a transformation office—have proved particularly important across the lighthouses.

An agile transformation calls for small, specialized teams that rapidly develop experimental product iterations. Leaders establish a culture that trusts workers to experiment with creative solutions, giving them the freedom to “fail fast” and recalibrate by learning the lessons of these failures. This approach requires pragmatic workflows for iterative problem solving, as well as teams that develop designs for minimum viable products (MVPs). Priority management is essential, and frequent evaluations allow the tasks of teams and their members to shift with changing needs. The value of this agile approach includes boosted workforce engagement, focused training and skill development, creative problem solving, and the ability to scale up quickly.

Agility becomes even more powerful when paired with a strong transformation office, because effective leadership is critical for any substantial change—let alone one as comprehensive as a 4IR digital transformation. Agility calls for small, specialized teams that work in an organizational setup with clear objectives and effective collaboration. The smart-governance model of a transformation office makes it an internal change agency.

Such a transformation office defines roles and responsibilities, positioning people for success and ensuring that the necessary talents, skills, and abilities are in place through assignment, hiring, and skills development. It establishes a steering cadence, tracking progress and setting the agendas for project management meetings—and thus enabling structured reviews of the progress made by each value stream of work. And by using the latest digital resources, the office embeds new digital tool sets and new ways of working in the company’s operations.

A responsible transformation at scale

Undoubtedly, the world has changed drastically in the past two years. The resulting challenges, along with ambitious climate goals, have boosted the prominence of environmental, social, and governance (ESG) concerns. Companies have therefore redoubled their focus on environmental sustainability and on workforce engagement. Lighthouses have shown that responsible growth requires a transformation with these priorities front and center (Exhibit 3).

Now—with more lighthouses, more use cases, and more data points than ever—the network’s insights are even more compelling, for they show how companies can transform themselves at scale in a responsible way that prioritizes the planet and its people.

Sustainability

Manufacturing is a resource-heavy undertaking across the globe. A September 2021 paper from the GLN and McKinsey, Global Lighthouse Network: Unlocking Sustainability through Fourth Industrial Revolution Technologies, explores how the climate crisis has pushed environmental responsibility higher than ever on the list of industrial priorities. The paper shows how lighthouse organizations are setting the bar for environmental stewardship through pragmatic, effective, future-focused sustainability efforts. The core of eco-sustainability is a commitment to—and the implementation of—measures that reduce energy consumption, the use of water, carbon emissions, and waste.

The central lesson is that the lighthouses are defying the conventional wisdom that environmental responsibility is inherently at odds with productivity and, by extension, with profitability. Even as these front-runners embrace green technologies and other breakthroughs, they are also revealing how the 4IR transformation can simultaneously augment green measures and bolster production efficiency. In this way, they are achieving eco-efficiency, which makes sustainability and competitiveness not only compatible but also interwoven.

Workforce engagement

A company can have the best tools, the newest technology, and tremendous resources at its disposal—but if it lacks genuine workforce engagement, it will be unlikely to scale up a 4IR transformation successfully. In the past two years, the workforce engagement that lighthouses have achieved has been a critical element of their success. They have shown just how vital it is that companies put their workers at the heart of their efforts by creating a community of involved, committed people who have the support that helps companies meet the challenge of their evolving labor needs—for instance, those stemming from the labor shortages exacerbated by the pandemic.

As people leave jobs in record numbers, the front-runners are distinguished by the resilience gained from a concerted focus on their people—on the social element of ESG. The lighthouse playbook calls for a new understanding of the very nature of work itself and, accordingly, for the realization of new structures and approaches for work. For starters, companies can rethink their training and skill development pathways, beginning with a knowledge of the size and impact of the labor opportunities across operations. From there, they can design structural changes that mitigate the risks of labor demand they cannot meet, while also creating opportunities for reskilling and upskilling.

These shifts mean moving away from a hierarchical, top-down culture of micromanagement and toward an empowerment and ownership culture that fosters creative solutions. Results-oriented steering encourages people to make decisions in a space that allows experimentation and learning. Siloed teams and homogenous ways of working yield to interdisciplinary teams that collaborate across functions. Such teams create networks within and beyond the organization while facilitating cooperation with customers, suppliers, and partners.

Digitisation plays an important role in reinforcing these changes, while accelerating workforce engagement by reducing repetitive tasks and involving workers directly in higher-level activities. Advanced technologies, including augmented or mixed reality, artificial intelligence, and low- to no-code software development platforms, are empowering people in offices and on the shop floor—often with limited technical backgrounds—to come up with creative digital solutions to daily problems, increasing their productivity.

Lighthouse companies further engage their workforces across five major attributes: learning and development, empowerment and ownership, collaboration and connections, impact and recognition, and the voice of the worker. They recognize and celebrate their people and products while reinforcing the organization’s culture and values (Exhibit 4). These people leaders promote and encourage learning-focused employees who create and develop new ideas. They show that by prioritizing the worker’s voice and listening to their people (for instance, through digital channels and big data), they can understand their employees’ needs—even those that aren’t immediately apparent—better than traditional companies do.

In short, lighthouses have shown that when people are engaged, they work together to grow, change, and adapt. In this way, they see their companies through the toughest of times.

Continuing the journey and expanding the lighthouse playbook

As the playbook continues to evolve with more data, more evidence, and more valuable insights, it not only makes a compelling case for embarking on a 4IR transformation journey but also shows how to maintain a steady course even in the face of the most turbulent storms. Now, in light of all the changes the world has experienced over the past two years, leaders have even more opportunities to help manufacturing organizations and their ecosystems accelerate a responsible transformation and the scaling up of innovations.

Manufacturers face pressing climate imperatives, and environmental sustainability is no longer optional (Exhibit 5). The global mandate for responsible manufacturing is clear: organizations have little choice but to grow in a way that prioritizes the planet and its people. Recent disruptions have affected daily routines, relationships, and modes of working. These challenges make it all the more important for companies to keep workers front of mind and activity by acting to help them become more genuinely engaged with their work.

The dual challenge of sustainability and economic performance requires creativity and commitment across the value chain. The Global Lighthouse Network challenges industrial companies to continue focusing on the six core enablers that the lighthouses have shown to be essential for a successful transformation at scale, as well as on sustainability and workforce engagement. Lighthouses show the way, and the playbook helps to chart the course. The global manufacturing community can learn from and be inspired by these advanced facilities—and then set forth, with courage and hope, on a transformational journey toward the sustainable future of manufacturing.

Companies eager to learn from others while contributing to the evolution of manufacturing for the new century are encouraged to apply for membership in the GLN. All of the network’s members, whether newly recognized or existing, are eligible to be considered for designation as sustainability lighthouses. Interested forward-thinking companies are invited to learn more by emailing LighthouseNetwork@weforum.org

And here is the fourth item start:

Driverless Cars Finally Start Losing the Drivers

Waymo plans to set its fully autonomous vehicles loose on the streets of San Francisco. It marks the first time the company’s driverless cars will operate in a major city without a human behind the wheel. So where does that place Waymo among its competitors? Wall Street Journal tech reporter Meghan Bobrowsky joins WSJ Tech News Briefing host Zoe Thomas for an update on the self-driving industry.

Zoe Thomas: Truly driverless cars have been promised for a long time, but now they could become a common sight. At least around San Francisco. Waymo, the autonomous car unit owned by Alphabet has started sending its vehicles onto the streets of the city without a driver behind the wheel. This is the first time Waymo has tried out its tech without any human control in a major metropolitan area. And it’s starting small, offering rides only to its employees. So what does this step tell us about where things stand in this self-driving industry? I’m Zoe Thomas from the wall street journal. And joining me to discuss this is WSJ Tech Reporter. Meghan Bobrowsky. Hi Meghan.

Meghan Bobrowsky: Hi Zoe. Thanks for having me.

Zoe Thomas: So Meghan, obviously this is a big deal for Waymo, but can you give us a sense of how significant this is for the self-driving market overall?

Meghan Bobrowsky: Yeah. So at the beginning of February Waymo’s biggest competitor, Cruise, announced that they were going to be offering driverless taxis to the general public. So people in San Francisco, and this is only in San Francisco. So people in San Francisco can now take a fully driverless robotaxi through San Francisco at night, only from the hours of 10:30 to 5:00 and it’s free. So Waymo is sort of following up to this announcement. So they’re not quite at the point yet where they’re letting the general public use these robotaxis. They’re starting with Waymo employees specifically, but they said they have plans to sort of roll out and eventually reach the general public.

Zoe Thomas: So it sounds like Waymo is a little bit in catch-up mode. I mean, do we know what the process has been like for the them to get approval to drive these cars in California?

Meghan Bobrowsky: Yeah. So in California you need a permit to have an autonomous car with a driver in it, and you can charge some money for these rides, but you need a separate permit to not have someone in the car at all. To have these vehicles be fully autonomous, you need a permit for that. And then on top of that, you need a permit if you want to charge people money to be riding in these fully autonomous vehicles. So there’s a lot of steps you have to go through in California to get to sort of where Waymo and these other autonomous driving companies want to be. As of last year, there were six other autonomous vehicle companies that had permits of some sort to sort of test their self-driving capabilities. So there’s definitely other companies in this space, but certainly Cruise was the first one and Waymo is sort of following in their footsteps quite closely behind.

Zoe Thomas: Do we know anything about the public reaction to having these cars on the road without any drivers behind them?

Meghan Bobrokwsy: Yeah. So I can sort of speak from the emails I’ve received and the sort of general comments on Twitter. I think some people are sort of wary about this and sort of concerned about… This is something that’s so new people, I think sort of sometimes justifiably get a little freaked out if they see a car that no one is in. But if these cars are getting permits and approvals to do this, then I think time will tell sort of how safe these really are.

Zoe Thomas: What’s the goal for the companies like Waymo and Cruise and some of their competitors as well? Are these aiming to be taxi services or for goods or are they eventually trying to sell them directly to consumers?

Meghan Bobrowsky: Yeah. So Cruise and Waymo, the goal is to be able to offer fully autonomous rides. It’s a robotaxi service for consumers. So with Cruise also, they are doing self-driving deliveries as well. So they have partnered with Walmart to sort of also get into the grocery delivery business as well.

Zoe Thomas: Is San Francisco ahead in the trend of self-driving cars? I mean, walking around the streets here, it feels like you’re already seeing a lot of these cars being tested, but are they actually ahead or are other markets kind of moving ahead with their self-driving procedures as well?

Meghan Bobrowsky: Yeah. So San Francisco is the only market now that has two companies that are doing some sort of driverless vehicles and have gotten the approval to do those. Waymo is operating fully autonomous, also in Arizona, in a Phoenix suburb called Chandler. They’ve been doing that since 2020 and have just announced that they’re going to expand to downtown Phoenix with the same program they’re doing in San Francisco. So still only Waymo employees initially, but Waymo is certainly expanding as well. Cruise is currently only in sort of bigger markets.

Zoe Thomas: So safety is obviously a big issue for people when they’re thinking about driverless technologies. How is Waymo in particular approaching safety issues?

Meghan Bobrowsky: Yeah. So Waymo has been operating, has been testing its technology in San Francisco 2009. So for over a decade. That being said, there have certainly been incidents during that time where things have happened. And I think there’s still people have questions about how safe this is. And I think it’s so new that we will just have to see. And there’s regulators to sort of keep these things in check.

Zoe Thomas: What’s next for Waymo? What can we expect from the company in terms of its plans to expand this beyond just its employees?

Meghan Bobrowsky: Yeah. So Waymo has said… So right now the driverless cars are operating from early morning to late afternoon and they want to make this service 24/7 and open it up to the public. That’s their plan in San Francisco. We’ll see sort of what happens more widely, if they’re going to expand it to other markets, it’s sort of unclear there besides Arizona. So it remains to be seen.

Zoe Thomas: All right. That was our reporter. Meghan Bobrowsky thanks for joining us, Meghan.

Meghan Bobrowsky: Thanks for having me.

Zoe Thomas: To hear more tech stories from the Wall Street Journal, ask your Google assistant to play WSJ Tech News Briefing Podcast.

www.wsj.com

Here follows the fifth item:

‘Riverman’ Review: In the Wake of an American Explorer

Richard Conant traded an ordinary life for a continent-spanning journey in a red plastic canoe. Then he vanished.

By guest author Heller McAlpin. Ms. McAlpin is a frequent book reviewer for the Journal, the Christian Science Monitor and NPR.org, now in the Wall Street Journal.

In 1959 the writer Joseph Mitchell profiled a Hudson River shad fisherman in an article for the New Yorker called “The Rivermen.” He wrote: “Some men work full time on the river—on ferries, tugs, or barges—and are not considered rivermen; they are simply men who work on the river. Other men work only part of the year on the river and make only a part of their living there but are considered rivermen.”

Ben McGrath’s superb first book, “Riverman: An American Odyssey,” expands on two articles he wrote for the New Yorker about a man who paddled thousands of miles down America’s rivers in plastic canoes over many years, navigating mainly with road atlases. But Dick Conant did not make a cent on his solo journeys. In fact, that was part of his appeal for Mr. McGrath, who was drawn to this unusual adventurer who, refreshingly, was not trying to raise funds or set records.

The pianist who defied Stalin, a modern adventurer and novels from Jennifer Egan and Douglas Stuart. Plus: a 100th-birthday celebration for ‘The Velveteen Rabbit.’

The author met Conant on Labour Day 2014, on the west bank of the Hudson River in Piermont, N.Y., some 20 miles north of midtown Manhattan. Conant, about two months into a trip from Canada to Florida, had lashed his 14-foot red canoe, “packed as if for the apocalypse with army-surplus duffels and tarps and trash bags,” to an iron loop in the seawall near Mr. McGrath’s home, at the invitation of a friendly neighbor, who had waved him ashore and invited him inside for a bite. The neighbor then called over to Mr. McGrath that there was a man he might want to meet. Mr. McGrath reports that the enormous, voluble 63-year-old canoeist “looked like Santa Claus crossed with a lobster, in overalls.”

Mr. McGrath knew a good story when he saw it. He had stumbled upon an archetypal American outsider, a brilliant, sociable, sensitive misfit whose journeys harked back to America’s early romance with rivers. He tracked down Conant the following afternoon along the river bank south of Piermont, glad to reach him before he slipped out of range under the George Washington Bridge.

To say that Conant was a willing, forthcoming subject is to put it mildly. In short order, Mr. McGrath learned about Conant’s childhood as an army brat and his checkered college and Navy careers. (Conant planned his routes with an eye toward obtaining medical services at VA hospitals.) A college arts major, he had applied unsuccessfully to medical school and done stints working in hospitals and as a janitor. He spoke passionately about his love for an elusive Dulcinea named Tracy and the three unpublished books which chronicled his river journeys.

Conant explained the method behind the madness of the “strategically, not wantonly, overloaded” tarped mounds in his canoe, and was eager to share his low-tech tricks for survival, such as preserving hotdogs in pickle brine. Mr. McGrath dubs Conant’s penchant for relaxing with Louis L’Amour westerns while traveling “an escape from his escapism.” His preferred reading when “home” (a lean-to in a marshy meadow in Bozeman, Mont., where he stayed between expeditions) ran to more serious science and history.

Mr. McGrath captures his subject with warmth and humor. He writes, “At some point, after I’d lost control of the interrogation and submitted once more to the undammed stream of his consciousness, I noticed that he was sipping soy sauce straight from the bottle and pouring himself capfuls of Tabasco.” Conant explained, “All’s it does is it just flavours my mouth. I’m energizing the flavor buds.”

Mr. McGrath, who started at the New Yorker as a fact checker, knew he would need to verify the stories spilling from this garrulous raconteur. “I was reluctant to assert his legitimacy . . . as an unheralded bard of American rivers without at least some corroboration,” he writes. Because his itinerant subject would be hard to reach, Mr. McGrath records their conversations and presses for specifics, including full names of people Conant has met. Follow-up calls prove that few who crossed Conant’s path forgot him.

Then, in late November 2014, just months after he first wrote about Conant in the magazine—and about a month since last hearing from him—Mr. McGrath received a disturbing phone call from an officer of the North Carolina Wildlife Resources Commission investigating a missing boater. Duck hunters had found an overturned canoe hung up among cypress stumps near the mouth of Big Flatty Creek, west of North Carolina’s Outer Banks. Mr. McGrath’s phone number had turned up in the bags of gear that also included 17 toothbrushes, 14 ChapSticks and a mud-caked Samsung flip phone that hadn’t been used for three years.

The call triggers Mr. McGrath’s dogged quest to solve the mystery of what had happened to this bear of a man who, for more than two decades, had chosen to paddle America’s rivers under conditions in which survival replaced all other cares. “Could I at least rescue, if not the man himself, a tale of improbable heroism?” Mr. McGrath wonders.

With the blessing of Conant’s brothers, Mr. McGrath sifts through storage units filled with thousands of receipts, photographs and papers, and more than 300 of Conant’s artworks. He pores through Conant’s three massive manuscripts to re-create itineraries, and tracks down scores of people this “Studs Terkel of the riverbank” had written about. With the exception of some librarians in Bozeman, who regarded Conant as yet another “barely functioning charity case,” nearly all fondly remember this “contemporary folk hero” and his “Falstaffian appetites.” Many, including a guy with a boat called “Cirrhosis of the River,” are themselves wonderfully eccentric characters.

Mr. McGrath comes to realise that what drove his offbeat traveler to light out repeatedly was not so much a yen for wilderness and adventure but a fear of overstaying his welcome with people and a need to escape the confines of a conventional life for which he understood he was ill-suited. The irony is that Conant ends up making connections with surprisingly generous, accepting strangers at every turn. Although Mr. McGrath is unable to find answers to all his questions, his book is a tenacious, entertaining feat of narrative nonfiction that owes much to John McPhee’s splendid chronicles of peripatetic Americans.

A worthy addition to the literature of American restlessness, “Riverman” draws on what Mr. McGrath hails as the “river-trip canon,” which includes Lewis and Clark and “Huckleberry Finn.” It also evokes comparisons with Jon Krakauer’s “Into the Wild,” about doomed hiker Chris McCandless.

Dick Conant’s story, a twisted version of the pioneering explorer ideal, falls as well into the rich tradition of American oddballs and outsiders. More than the “river-trip canon,” “Riverman” made me think once again of Joseph Mitchell, who, in “Joe Gould’s Secret,” unveiled the sorry truth about a down-and-out eccentric’s long-promised but never delivered monumental “Oral History.” Mitchell called the project Gould’s “life preserver, his only way of keeping afloat.” The same might be said of Conant’s extensively documented river trips.

But Conant’s manuscripts were no phantom, and Mr. McGrath finds occasional flashes of beauty and insight among their numbingly repetitive travelogues, including this passage about a harrowing, ultimately aborted trip on the Salmon River in 1994: “The peace of mind I found, largely alone, on that white water mecca convinced me that life was capable of exquisite pleasure and undefined meaning deep in the face of failure.”

Mr. McGrath writes, “I have tried here to make Conant the hero of his own epic, while not giving anyone the illusion that it was an enviable life. Was he a tragic figure? I believe he went to extraordinary lengths to repudiate the notion.” So does “Riverman.”

www.wsj.com

‘

Newsletter of last Week

Anne Hathaway on Finding New Purpose and Acting Out We Work’s Real-Life Drama – Crisis in Ukraine: Respond and Reposition – McKinsey: Forecasting the future of stores – J. Safran Sarasin CrossAsset Weekly on Gold, China and the course of Swiss National Bank. https://textile-future.com/archives/86956

The highlights of last week’s NEWS, for your convenience, just click on the feature to read.

Acquisition

Swiss Zehnder Group acquires European air filter manufacturer Filtech https://textile-future.com/archives/87313

AI-first mobile body measuring fitting room

3DLOOK bridges the gap between physical and digital shopping with the new YourFit 2.0: the first shareable omnichannel virtual fitting room https://textile-future.com/archives/87208

Brands

Brand Loyalty Takes a Hit From Inflation, Shortages https://textile-future.com/archives/87145

China

Significant increase in EU imports from China https://textile-future.com/archives/87332

EU-China Summit: Restoring peace and stability in Ukraine is a shared responsibility https://textile-future.com/archives/87350

Companies

Bühler and Ardent Mills celebrate the opening of new state-of-the-art mill in Florida https://textile-future.com/archives/87162

H&M sales rise as Russia clouds outlook https://textile-future.com/archives/87262

H&M’s Latest Look Is Hard on Investors https://textile-future.com/archives/87323

Data

EU Services Q4 2021: majority recover after COVID-19 hit https://textile-future.com/archives/87010

Hourly labour costs ranged from EUR 7 to EUR 47 in the EU https://textilefuture.com/archives/87020

The EU imported 58 % of its energy in 2020 https://textile-future.com/archives/87028

How many EU citizens had basic digital skills in 2021? https://textile-future.com/archives/87128

Non-EU citizens make up 5.3 % of the EU population https://textile-future.com/archives/87139

COVID-19 strongly impacted young people’s employment https://textile-future.com/archives/87232

Swiss Consumer prices increased by 0.6 % in March 2022 https://textile-future.com/archives/87300

The McKinsey week in Charts https://textile-future.com/archives/87357

Divestment

GF to divest its stake in US automotive joint venture https://textile-future.com/archives/87310

Events

JEC World 2022 Conferences Programme https://textile-future.com/archives/87182

Xeikon to show Label Discovery Package at ExpoPrint Latin America 2022 https://textile-future.com/archives/87204

JEC Forum Italy: JEC GROUP and ASSOCOMPOSITI to launch a new composites event in Italy https://textile-future.com/archives/87338

Circular Economy: EU Commission proposes new consumer rights and a ban on greenwashing https://textile-future.com/archives/87122

Stand Up For Ukraine: global pledging event for refugees and internally displaced people taking place in Warsaw on April 9, 2022 https://textile-future.com/archives/87125

Taking the EU Customs Union to the next level: innovative ideas for a modern and efficient Customs Union presented by Wise Persons Group https://textile-future.com/archives/87257

EU Commission adopts proposal for conversion of hryvnia banknotes by people fleeing Ukraine https://textile-future.com/archives/87329

Intellectual Property

WIPO: New mini video – “Designs at Work in the Real World” https://textilefuture.com/archives/87153

Manufacturing

How a Japanese manufacturing concept could add value to hybrid working https://textile-future.com/archives/87078

Personalities

BURBERRY GROUP PLC – Senior Independent Director Appointment https://textile-future.com/archives/87197

KLM nominates Marjan Rintel to new CEO https://textile-future.com/archives/87268

New Products

On its path to sustainability, BASF’s Care Creations® presents new milestones during Beauty Days https://textile-future.com/archives/87072

Research

Swiss Empa: Smart bandage – In the heat of the wound https://textile-future.com/archives/87047

Swiss Empa: Novel batteries for a circular economy – CircuBAT improves eco-balance of e-mobility https://textile-future.com/archives/87249

SMEs

New OECD report shows loans to SMEs hit new heights during the pandemic, as small firms face renewed pressures during the recovery https://textile-future.com/archives/87066

Success Story

How Going for Gold inspires business winning creativity https://textile-future.com/archives/87038

Sustainability

BASF confirms ambitious climate targets and takes steps to reduce product-related emissions https://textile-future.com/archives/87017

Rester & Elis partners to convert used workwear into a new raw material https://textile-future.com/archives/87055

Romanian start-up Dressingz raises EUR 0.3million pre-seed funding https://textile-future.com/archives/87060

BASF Venture Capital invests in Oceanworks, a sustainable plastic sourcing platform https://textile-future.com/archives/87100

Cooperation on climate protection: BASF and Henkel focus on renewable raw materials in Henkel’s consumer goods products https://textile-future.com/archives/87212

EasyGov.swiss: saving time and costs for businesses https://textile-future.com/archives/87086

Transitional measures for Horizon Europe: CHF 58 million for 24 ground-breaking Swiss start-up innovations https://textile-future.com/archives/87089

Oerlikon:Progressing Toward a Sustainable Future https://textile-future.com/archives/87220

Circular Economy – the new norm in Europe https://textile-future.com/archives/87344

USA

Inflation Weighed on U.S. Consumer Spending Growth in February https://textile-future.com/archives/87274

Webinar

Webinar – Making the Most of China’s Accession (April 27, 2022) https://textile-future.com/archives/87243

WTO WTO: General Council endorses final decision on Bali tariff rate quota underfill mechanism https://textile-future.com/archives/87316

TextileFuture

by Virginia

Here starts the first item: