More than a feeling: Ten design practices to
deliver business value
As design thinking nears its 50th
birthday, many companies still struggle to realize value from design. Those
that succeed often follow ten best practices.
Amazon Prime. The
Apple iPhone. Netflix. Tesla. For those
companies that get design right, the prizes are rich. The S&P 500 companies
that invested most into design processes, capabilities, and leadership over the
past decade, including design stalwarts such as Disney, Nike, and P&G,
outperformed the rest of the index by 211 percent.
The importance of design is only
increasing (see sidebar, “What is design?”). Consumers have instant access to
global marketplaces and ever-higher expectations of service. They no longer distinguish
between physical and digital experiences. This makes it increasingly difficult
to make your product or service stand out from the crowd. As a result, design
has become a CEO-level topic for many executives.
But while the concept of “design thinking”
emerged as far back as 1969, and while many companies have tried to adopt its
principles, relatively few have made true shifts in growth and profitability
through design. Fewer still have been able to prove concretely the exact value
of the design actions they’ve taken.
We have begun to explore the underlying
design practices that allow some firms to succeed above others. Our research
into global companies across multiple industries aims to uncover the
connections between business value and design. Our early findings, presented in
this article, are not yet statistically significant; we will continue to expand
our data set in 2018 to reach that goal. But already some trends are evident.
We see ten design actions across three themes that appear to correlate with
improved financial performance.
First, for these firms, design is
more than a department. Design-led companies are structured in ways that
encourage all functions to focus on their customers. This generally means that
design is not a single department; rather, design experts are everywhere,
working within small, cross-functional teams with shared incentives and regular
customer interaction.
Second, design
is more than a phase. Good design-led companies use quantitative and
qualitative research during early product development, combining techniques
such as warranty-data analysis, social-media scraping, focus groups, and
ethnographic research to better understand their customers’ needs. However, the
best companies continue listening and iterating long after the initial conceptual phase, remaining
invested in improving customer experiences postlaunch.
Finally, successful design-led companies
don’t act on gut alone. For them, design is more than a feeling. They
measure and manage design as rigorously as they do cost, quality, and time.
Design strength is a C-level metric, and the head of design stands shoulder to
shoulder with the heads of sales, operations, and finance.
More
than a department
1) From departmental silos to cross-functional teams.
Companies with a
central, siloed design department (sometimes subsumed into marketing or
R&D) generally performed less well financially than those that let
designers off the leash and distributed design experts into cross-functional product-focused teams. This was equally true where design expertise is
brought in from external agencies—the business itself is still responsible for
integrating these partners into one customer-obsessed development team.
One major European furniture manufacturer
experimented by setting up both a central design department and smaller,
independent design teams, embedded within different product groups. It found
that the distributed teams were much more successful: they had clearer focus on
their customers; better cross-functional partnerships, resulting in 10 percent
faster time to launch; and a 30 percent higher success rate for getting
concepts to market.
2) From narrow experts to interdisciplinary designers.
Whether you are
developing a new vehicle, a medical device, or a banking service—physical, digital, and service designs are converging. Companies increasingly recognize
that such distinctions aren’t meaningful to customers. As a result, we saw
improved financial performance in those companies that broke down barriers and
cross-trained designers in skills such as industrial and user-interface design,
compared with those that maintained historical divisions with little
cross-fertilization.
For the ecobee3 smart thermostat, design
firm LUNAR2needed
to develop interfaces for the customer to operate the physical product and to
control it through a mobile app or PC. Asking the customer to learn three
different interfaces was out of the question. The solution was a single team of
digital and physical designers creating a common visual identity. Harmonizing
product experience and aesthetics across the discipline divide produced an
intuitive system that was the highest-rated smart thermostat by customers on Amazon
and Apple in the months after launch,
despite little in the way of marketing or promotion.
3) From cubicles to garages.
In a Silicon Valley “garage,” there are no
departments, titles, or assigned offices. Everyone is focused on making a great
product that meets a customer need. The environment is more like a workshop
than an office, designed to encourage collaborative focus on building a great
product together.
A global consumer-packaged-goods player
recently created a new design studio down the street from its main innovation
center. A single open-air space with a concrete floor, it was a stark contrast
to the more formal innovation offices. The designers, marketers, and engineers
started making decisions in real time together, rather than waiting for formal
meetings. For example, if the product changed shape, the packaging team was
aware so that it could adapt right away. These small changes in decision making
and collaboration added up to big improvements in time to market and
employee-satisfaction scores, and to a set of products whose return on
investment is considerably higher than that of products historically developed
at the innovation center.
More
than a phase
4) From a design stage to continuous design.
A design-led approach to product creation
means that design happens throughout development, not just at the early concept
phase. From laying out a product road map, through preparations for production
and launch, and all the way to in-service support, design should keep the team
true to customer needs for the life of the product.
Nespresso, for example, involves designers
throughout its products’ life cycles and throughout the business system.
Designers observe customer reactions both in store and online and have evolved
a museum-like retail experience, mobile ordering and two-hour delivery, a
loyalty club, an online magazine, and much more.
Sometimes keeping designers involved
throughout the process requires a novel approach. For example, submarine
architects write two product specifications. The first one covers core
functionality, such as size and speed, and is frozen early on. The second specification,
for electronics and communications equipment, is left open to allow designers
to prototype and iterate with the customer over the course of the build as well
as to incorporate advances in technology. It should come as no surprise that
car manufacturers have started following a similar approach, updating vehicle
software remotely postsales based on designers’ and engineers’ continuing
review of driver data.
5) From qualitative to full-spectrum research.
Qualitative research through user groups,
interviews, and field observation is a powerful tool to understand consumer
desires and motivations. Augmenting this with quantitative analytics, such as
harvesting online reviews or analyzing warranty service, can detect underlying
behaviors and lay a deeper foundation on which to build winning design
concepts. Companies that used both forms of customer research created products
that were more highly rated than those from companies that used qualitative
research alone.
One US healthcare provider, for example,
scoured multiple sources of patient and operational data, from interviews to
medical records to motion-tracking cameras. As a result, it redesigned the way
care was delivered, reconfiguring hospital layout to minimize cross-infection
and reduce length of stay by 10 percent.
6) From prototype once to prototype often.
Most R&D stage-gate processes begin
with a product description and business model. Design-led companies begin with
a prototype that answers a customer need, backed up with a business case. Design
is inherently iterative, and companies that emphasize prototyping early rather
than perfectly move more quickly toward products that customers love. This
notion is core to the agile process pioneered by software companies, as is the
use of minimum viable products, which gives teams the ability to quickly test
and improve concepts and then test them again.
The design team at a major fast-moving
consumer-goods company might have benefited from these ideas. Unwilling to
present early mock-ups to leadership, it held off on multiregion research until
molded parts could be produced. When a basic design feature of these prototypes
was rejected by consumers, the time and cost sunk into tooling meant the entire
project had to be scrapped. For one of its next products, the design team made
many more prototypes at every stage of development, resulting in a dramatic
drop in production-line issues normally associated with the launch of a new
product, and a reduction in time to market of almost 15 percent.
More
than a feeling
7) From middle management to the C-suite.
The
customer-centric culture needed to drive
design impact throughout a business must start at the C-suite, with design leaders who are also
credible business leaders. They must strive to remain aware of what their
customers love about their products and defend what customers hold dear through
the tortuous path to market.
Aston Martin and Burberry are widely
regarded as two of the most valuable brands in the world and are regularly
featured in rankings of top brands. Both have placed design leaders as company
directors, to ensure that the voice of the customer and the importance of
product quality are never far from the top management team.
8) From perspectives to metrics.
The key to connecting design with
commercial success is the ability of leaders to eschew subjective opinions or
personal preferences and instead make decisions based on a factual
understanding of the customer. Design metrics—such as customer-satisfaction
scores and human-factors risk calculations—give leadership hard data on which
to base crucial decisions. Some companies have developed design metrics that
allow them to measure design during product development as rigorously as they
measure quality, cost, and delivery.
For one medical-device maker developing a
new flagship product, that meant introducing design metrics based on conjoint
analysis: a technique to test the relative importance of different features
with hundreds of physicians. This enabled rapid iteration and quantification of
the market value of proposed design features, allowing the product director to
request and invest development resources based on firm evidence rather than gut
feel. Furthermore, it highlighted the one genuinely game-changing design
feature, which it subsequently included in the final design.
By John Edson, Garen Kouyoumjian, and Benedict Sheppard December 2017
https://www.mckinsey.com/business-functions/mckinsey-design/our-insights/more-than-a-feeling-ten-design-practices-to-deliver-business-value?cid=other-eml-alt-mip-mck-oth-1712
9) From financial to customer-based incentives.
The best-performing companies we
investigated measured the long-term commercial impact of customer satisfaction.
They tied senior-management bonuses to customer satisfaction in addition to
revenue- and profit-based measures. This included indirect measures such as
design awards and reviews as well as direct measures such as user scores.
One consumer-goods manufacturer saw an
above-forecast increase in both sales and customer satisfaction after linking
management and development-staff pay to user ratings for launched products,
much the way that financial institutions do for hitting commercial targets.
10) From incremental to brave.
Design-led companies create products in
response to customers’ needs and desires, but they aren’t afraid to bring their
own vision to the market. They are willing to put long-term brand strength
ahead of short-term turnover, and they aren’t shy about sharing resources and
opinions with design thinkers outside their organization to strengthen their
offer to customers.
When faced with an escalating
technological arms race in gaming consoles, Nintendo chose to throw its weight
behind a different and more inclusive gaming environment. Harnessing existing
technology in new ways led to the Wii, a design that was inferior to its
competitors with respect to raw performance—but outsold them by up to 6:1 at
launch and introduced new customers to gaming.
How can
your company harness the value of design?
None of the companies we’ve assessed so
far exhibited mastery of all ten design actions. However, those that
implemented several showed both improved financial performance and increased
customer loyalty, in a time when many companies are suffering from falling
customer satisfaction.
Consider Disney. Throughout its storied
history, Disney has put customers at the center of everything it does. And when
customer satisfaction at its theme parks began to sag, because of long lines
and high costs, it again focused on the customer—and deployed several of the
actions described in this article. It created cross-functional teams to
“reinvent the vacation experience.”3It
studied what customers actually did in the park, using both ethnographic
interviews and quantitative tools such as mapping family journeys around the
park. It built a “garage,” called the ideation lab, to prototype the
“MagicBand,” a digital device that it thought could solve the problems. The
first prototype was made from materials picked up at Home Depot, and more than
40 prototypes followed. The company brought in outside design and technology
firms to help. Top executives at Disney championed the effort at every step.
Missteps along the way were accepted and mostly overcome. In 2014, Disney World
rolled out the MagicBand across the park. Customer satisfaction soared, as
digitally monitored wait times fell, digital diversions made wait times feel
shorter, and preordered food magically appeared as guests entered restaurants.
The new technology does not yet do everything the company hoped—but it is
already making a big difference.
Is your company harnessing the value of
design? Are your competitors capturing market share by more forceful use of the
ten actions? Design is more than a feeling: it is a CEO-level priority
for growth and
long-term performance. Take the time to find out where your company is getting
design right, and where it is only feeling its way along.
https://www.mckinsey.com/business-functions/mckinsey-design/our-insights/more-than-a-feeling-ten-design-practices-to-deliver-business-value?cid=other-eml-alt-mip-mck-oth-1712
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