GloSho'14: McKinsey & Company - Matt Rogers

1. 0
Resource Revolution
How to Capture the Biggest Business
Opportunity in a Century
Matt Rogers
Director, McKinsey & Company
#ResourceRev

2. 1
Resource Revolution – the Basics
▪ 2.5B people entering the middle class, putting pressure on resources—
companies need to improve resource productivity 3-5% annually to keep up
▪ Combining information technology with industrial technology can drive 10x
productivity improvements on both supply and demand side
▪ This shift in the way we produce and use resources will restructure most
traditional industrial markets and will require a new approach to management
▪ Today’s examples: Oil, Buildings, Autos, Consumer Electronics—each
industry facing a 10x productivity shift today

3. 2
Discontinuity: 100x more people, 10x more income, 10x faster
100 million 1 billion
UK
$7,500
$6,000
$4,500
$3,000
$1,500
China
China India
1600 1700 1800 1900 2000 2100
$0
USA
Germany
Japan
South Korea
India
GDP per capita in 1990 US dollars purchasing power parity
Size of bubble = population
Year

4. 3
Concurrent supply challenge: Reserves are getting more expensive
to extract and lower grade
$1,500
$1,000
$500
$0
Costs
2005 U.S. dollars
Indexed units
120
80
40
0
1960 Energy 2011
Grades
Average Australian Grade Indexed 100
1844
Labor
%Copper
g/t Silver
g/t Gold
% Lead
2010

5. 4
We have seen a steep change in labor productivity, but
not yet in energy or resources
GDP per
hour worked
(labor)
GDP per
ton of oil
equivalent
(resource)
Productivity growth
(multiples of 1820 productivity)
48
36
24
12
1820 1840 1860 1880 1900 1920 1940 1960 1980 2000 2020
0

6. 5
Nanotechnology
Biology
Software
Systems
engineering
Interchangeable
parts
Success requires a new management toolkit
1. Reduce Waste
2. Substitute
3. Circularity
4. Optimize
5. Virtualize

7. 6
ACES: from 67 cents/mile today to 10 cents/mile
and universal access
Connected
Autonomous
maintenance
& charging
Extend range
Electrified
Auto route
Autonomous Shared
Match open trips & 2 minute service
▪ No up
front cost
for
batteries
▪ Use only
size car
you need

8. 7
PRIME: Advanced Buildings with Net Zero Energy at 0-5% Premium
More useable
space
Faster to build
Easier to
configure
Moving from R2 to R30
Efficient
Modular
Productive Integrated
Better lighting; comfort; security
▪ Advanced
HVAC
▪ Solar plus
storage
▪ LEDs
plus wifi
makes
DSM

9. 8
4D: Restructuring the utility industry
10^6 more
information
intensive
Extend range
Disruptive
Distributed
resources
Dispatched
demand
Digital
network Auto route
Matching supply and demand resources
in real time to keep market balanced
▪ Localized
demand
mgmt

10. 9
TECH: Increasing Circularity in Technology Driven Industries
Better Products
Better Supply Chains
Efficient
Total
engineering
Circular
Supply
Holistic end
game
Recycling start to finish
Integrated Life Cycle
management
Software upgradeable
Better market structure
Risk substituted out

11. 10
For Businesses: Use less, GET MORE.
BASICS ALL
SUPPLIED IN
CONTAINER
EQUIPMENT AS
SERVICE FOR YOU

12. 11
Questions for Discussion
▪ Where do you have opportunities to improve performance of the businesses in
your portfolio by taking waste out of the equation?
▪ Where are the opportunities to increase circularity?
▪ What would it take to reduce the risk and improve margins in your businesses
through substitution?
▪ Where are you at risk from being disrupted by optimization and virtualization?
Where can you turn these into advantages?

13. 12
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Thank you!
Available on
Amazon.com
Restructuring markets globally:
•Transportation
•Utilities and Water
•Oil and Gas
•Mining
•Buildings and Construction
•Food and Agriculture
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