Conquer the competition
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| | Brought to you by Alex Panas, global leader of industries, & Axel Karlsson, global leader of functional practices and growth platforms
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| | | The business landscape over the next 15 years will be transformed by industries that are more dynamic and growing faster than others. A McKinsey Global Institute report identifies 18 such sectors, or “arenas of competition,” that could gain a much larger share of the global economy by 2040. This wide-ranging group includes electric vehicles, AI software and services, video games, and drugs for obesity. “Understanding potential arenas is relevant for entrepreneurs and incumbent companies that want to compete directly in arenas, other companies that would be affected by the emergence of arenas, as well as investors looking to allocate capital to these industries,” say McKinsey’s Chris Bradley, Kweilin Ellingrud, Michael Birshan, and their coauthors. According to their analysis, these industries’ collective share of global GDP could jump from 4 percent today to 10 to 16 percent by 2040—and they could generate $29 trillion to $48 trillion in revenues, and $2 trillion to $6 trillion in profit, over the same period. | | |
| | | | | | | That’s the number of cities worldwide where shared autonomous vehicles (AVs) currently operate, including Beijing, Oslo, and San Francisco. McKinsey’s Ani Kelkar, Kersten Heineke, Martin Kellner, Philipp Kampshoff, and their coauthors note that while few AVs (one of the 18 arenas of competition) are on the road, even in cities where they’ve been deployed, we should expect to see more of them as they become more sophisticated. “For these vehicles to gain scale and expand into new locations, stakeholders cannot just strive for technological improvements; they must also focus on affordability, safety, accessibility, and sustainability while ensuring that all businesses along the value chain can profit,” the authors say. | | |
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| It’s hard to consider the future of industries without taking AI into account. Just this month at the CES 2025 tech conference, companies unveiled AI-powered innovations such as a memory-boosting app, a TV that allows viewers to isolate different audio sources, and a device that can read a book to kids using their parents’ voices. But AI’s reach goes far beyond cool electronics. For example, gen AI’s impact on the beauty industry could add $9 billion to $10 billion to the global economy. McKinsey’s Kristi Weaver, Megan Pacchia, Sara Hudson, and coauthors note that gen AI use cases in the beauty sector could include hyperpersonalized marketing, virtual try-ons, and rapid packaging and product development. “While much of the beauty industry’s products are cosmetic, gen AI applications in beauty are more than skin-deep,” they say. “Integrating the technology alongside other digital and AI tools and boosting organizational capabilities can differentiate leaders in beauty for years to come.” | | | Lead by competing for the future. | | | | | — Edited by Eric Quiñones, senior editor, New York
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