How design helps top companies to grow and win
by Julian Koschwitz, Experience Design Director, Digital McKinsey
In recent years design has evolved from an operative to a strategic function. This is evident in the financial impact design-driven organizations have [1], the increase in M&A activity in this space through consulting and tech firms [2], and the growing number of Chief Design Officers and Design Partners at consulting and venture capital firms [3].
With this a new role became present: Business designers who focus on the strategic levers of design.
Why you should read this
You are a business consultant and are eager to understand what the deal is with all the new kids on the block. You are curious to see what you can learn from them and how to best collaborate, especially when it comes to digital transformation efforts where creating new and innovative business models becomes more relevant than optimizing existing ones.
Or you are a designer excited about all the new things out there. Business consulting is one of them! You want to see what your role is in this area and how you can push the needle, especially when it goes beyond product design and design thinking and towards creating new businesses holistically.
Business designers as inclusive creators
Business designers take on an inclusive role. They connect stakeholders to gather needs using human-centered design methods, then translate insights into ideas that lead to solutions. All is heavily guided by co-creation, immersion, and iteration.
Business designers go beyond customer needs. They bring together people and disciplines and look at their core problems in new ways. This makes them best positioned for taking on an inclusive role.
Design historically brought innovation in the form of physical artefacts, manifested in Architecture, Industrial Design, Fashion or Graphic Design. In past decades the decoupling of its problem solving approach, labeled Design Thinking, has proven effective. Its role in business often became closely associated with innovation, delivered by focusing on customer needs and emphasizing experimenting over conceptualizing [4].
Business designers apply a generative approach to solving problems. This is defined by asking questions, deriving insights and translating these into tangible solutions. So, how is this different to a traditional analytical approach to solving business problems? Very different, but don’t fear: it’s complementary. An analytical approach is great in solving problems that have been solved before, e.g. “Why is profitability failing?”. A generative approach works when solving complex problems by creating something new, e.g. “How can we invent a new travel experience?”
To get there, designers start with a vision and core questions, then collect data through explorative methods. Often these are qualitative methods, like ethnography and phenomenology. Insights are then translated into designs, which are then tested experimentally in form of prototypes to evaluate the ideas that were derived from insights.
Thus design is perfectly positioned when the ask is to solve open, complex, networked and dynamic — i.e. wicked — problems where “trusted routines just don’t work anymore” [5].
Business designers create things that are new and relevant for people
To design means to uncover what is relevant and desirable for people. To get there Designers immerse themselves into the worlds of people they design for and collaborate with. Rather than working from labs business designers build up a multi-dimensional cognitive and sensual understanding. Considering that people don’t follow stringent strategies of optimization, as economic theory would want them to do, immersion is core to truly understanding what is relevant [6].
The logic we use to understand the world as it is can hinder us when we seek to understand the world as it could be.
— Roger L. Martin
This is driven by a mindset of “What if a desired state was achieved”, even if there is no empirical evidence yet that connects the current state “As is” with the desired “What if” state.
To ask “What if…” means to design for something new. This might be completely new to the world, like a disruptive business such as Airbnb, or something new for an organization, like digitizing an existing business. Design is the driving force to win, and increasingly so since technology is becoming more and more commoditized. Thus, starting a digital business is more feasible than ever, enabled through AWS, React, NodeJS and the like that made it easy to build working digital products. But working doesn’t equal successful. This shows in the number one reason start-ups fail: Building a working solution and that doesn’t address a need or solve a problem [7].
A business designer’s mission is exactly to make this market — product match. Learning the customer needs and business vision, and then deriving the value proposition, then building a sound and focused business [3].
For Columbus Regional Health (CRH), setting up an innovation centre to improve patient care was new and something they haven’t done before. They realized soon that traditional frameworks (e.g. Lean Sigma) didn’t provide the insights they needed. They then employed design thinking instead. This resulted in a much higher number of finished projects to improve patient care. More than $1MM in positive financial impact and an increase of $3 MM in funding [8].
Good design produces healthy growth
To state the most obvious first: “good design is good business” [9]. In 2018 this is evident when looking on the return that investors get from design-driven S&P 500 companies [10].
This further is supported by an increasing number of Designers as CEOs and founders, Chief Design Officers and Design Leaders. Appointed by companies like Airbnb, Apple, Capital One, Coca-Cola, GE, Nike, Johnson & Johnson and many more.
Beyond the economic benefit design contributes positively to an inclusive way of working. To make this more tangible, let’s look at a recent experience a McKinsey Design team has made with a Pharma company, let’s call them Health Co.
The goal of Health Co was to best support early drug researchers in their work of determining new therapeutic concepts to fight the diseases they focused on. The Design team immersed themselves in the research labs and offices with the scientists, observed and listened to them. This built an immense positive momentum within the organization, fostered collaboration among therapeutic areas and thus improved the outcome of new concepts through a new way of working.
Design is impactful because it helps companies to grow their business to be more successful, and their culture to be more inclusive.
Business designers in consulting firms drive strategic directions of organizations through new thinking and approaches. They work collaboratively, using human-centered methods and take bold steps towards creating desired futures.
Not all companies are fully comfortable with this approach yet. Those who embrace it have seen it pay of financially and culturally.
References:
1. Kumar, J., Au, I., Stewart, M., Lefelt, T., & Dill, K. (2016, May). Design Leadership for Business Innovation. In Proceedings of the 2016 CHI Conference Extended Abstracts on Human Factors in Computing Systems (pp. 1043–1046). ACM.
2. Maeda, J (2017). Design in Tech, https://www.slideshare.net/johnmaeda/design-in-tech-report-2017
3. Au, I. (2016). Design in venture capital, O’Reily Media, https://www.oreilly.com/ideas/design-in-venture-capital
4. Buchanan, R. (1992). Wicked problems in design thinking. Design issues, 8(2), 5–21.
5. Martin, R. L. (2009). The design of business: Why design thinking is the next competitive advantage. Harvard Business Press, Chicago
6. Thaler, R. (2015). The Making of Behavioral Economics: Misbehaving. New York.
7. https://www.cbinsights.com/research/startup-failure-post-mortem/
8. IDEO and CRH, https://www.crh.org/about-us/innovation
9. Watson T. Jr, (1973), http://www-03.ibm.com/ibm/history/ibm100/us/en/icons/gooddesign/
10. DMI, 2015, http://www.dmi.org/?DesignValue
