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Succeeding by design: A leader’s guide

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ESSENTIALS FOR LEADERS AND THOSE THEY LEAD

Brought to you by Liz Hilton Segel, chief client officer and managing partner, global industry practices, & Homayoun Hatami, managing partner, global client capabilities

Most of us celebrate and enjoy creativity of any kind, whether it’s in the form of a tastefully designed product or a striking piece of art. McKinsey research shows a strong correlation between creativity in business and superior financial performance. But given that creativity isn’t a quantifiable metric, how can leaders harness it to spur business growth? Design thinking—a dynamic, intuitive approach to problem solving—may be the answer. Although this approach has been around for decades, it is making a resurgence as it is especially suited to operating in today’s uncertain and volatile economic environment. This week, we explore how organizations based on design-thinking principles can deliver outstanding results.

AN IDEA

Digital illustration of a swiss army knife with various design elements as the tools

Design to deliver business value

The word “design” connotes the way something looks, but design thinking goes much deeper than that. The McKinsey Design Index reveals a strong relationship between good design and exceptional business performance in both product- and service-based sectors—if the design mindset permeates all aspects of the organization, including the executive suite. “The companies with the best financial returns have combined design and business leadership through a bold, design-centric vision clearly embedded in the deliberations of their top teams,” say the authors of this McKinsey Quarterly article. That means breaking the stereotype of designers as isolated mavericks. Our research shows that organizational integration is the hallmark of successful design departments , whose leaders work with senior management to embed designers into cross-functional teams and give them the training and tools needed to collaborate and lead effectively.

A BIG NUMBER

That’s the number of best practices in design that correlate with improved financial performance. Conducting both qualitative and quantitative customer research, prototyping frequently, and creating rigorous metrics are among the actions on the list. For successful design-led companies, “design is more than a feeling,” note McKinsey partner Benedict Sheppard and colleagues. “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.”

A QUOTE

“Design thinking is a methodology that we use to solve complex problems, and it’s a way of using systemic reasoning and intuition to explore ideal future states.”

That’s McKinsey digital partner Jennifer Kilian in this podcast on how design can provide a unique competitive advantage. “Culture is extremely important to the success of a design-thinking-led organization,” she says, citing four factors that contribute to this culture : an in-depth understanding of customers, empathy with the people for whom the organization is designing, teams that collaborate on design in real time, and taking swift action. The objective is to cultivate “that learn-test-learn thinking that brings things to market that are more successful and refines faster over time,” says Kilian.

A SPOTLIGHT INTERVIEW

“Sometimes, questioning the tropes which have been handed down leads to something a bit more interesting,” says cartoonist and illustrator Tom Gauld in this interview with McKinsey’s Raju Narisetti. He’s talking about his first-time venture into writing a picture book for children, but he might well be describing the design-thinking process, where ideas undergo a rapid series of iterations, evaluations, and improvements before they are realized. Gauld drew upon a rich assortment of sources—such as old fairy-tale tropes, his daughters’ storytelling rituals, and a wealth of writing and illustration styles—to develop his modern bedtime story. And the process didn’t end there, he says: “Even in this short, one-night, one-evening story, there’s a feeling of bigness, of a fairy-tale world where there’s not just this one story going on, but there’s magic everywhere and there are possibilities.”

FAILURE IS AN OPTION

Image of a young woman looking at products to buy

Like any other business model, design thinking has limitations. For one thing, it “needs strong leadership to bring together a diverse range of stakeholders,” caution McKinsey partner Ankur Agrawal and coauthors in this article. You’ll need considerable skill and stamina to persuade teams from purchasing, manufacturing, R&D, marketing and sales, finance, and design to work together to develop and implement ideas. It’s also important to ensure that everyone in the organization concurs on design-thinking principles: for example, typical managerial thinking tends to hold failure as something to avoid , whereas design thinking welcomes failure as a chance to learn.

Lead by design.

— Edited by Rama Ramaswami, senior editor, New York

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Succeeding by design: A leader’s guide

Design to deliver business value

“Design thinking is a methodology that we use to solve complex problems, and it’s a way of using systemic reasoning and intuition to explore ideal future states.”