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On interactive duty: What SXSW 2018 will be remembered for

by Peri Kadaster and Christian Kunz

Despite the diversity of people and breadth of perspectives at SXSW 2018, a handful of themes popped up consistently that we think will have the most impact over time:

Designing and investing in a strong partner ecosystem

Many leading digital companies are loosening the reins they used to hold tightly around systems and moving to modern and flexible technology landscapes. Yes, they may still be "owning" code, but they have built a technology landscape to orchestrate a large set of partners that they can add or replace as needed. They choose not to build everything themselves but instead to be smart about leveraging outside components and services, control how they enter into partnership agreements, and know how to assess where it truly differentiates to build yourself and where it doesn't.

No room for ‘one-trick ponies’

We couldn't walk more than a few feet without hearing references to AI and machine learning, which were truly the most buzzed-about themes. But what was interesting were some of the implications raised, not only from the consumer perspective but also from the entrepreneur/producer point of view.

Our colleague and good friend Mahin Samadani was on a great panel that examined why some products fail in market. In this context, he posited that yes, more and more products are being designed by leveraging machine learning. But, he continued, the changes made in tools today necessitate a change in the talent that works with them tomorrow. That means people who can work across disciplines, designers who will need to work with neuroscientists, and vice versa. On a macro level, it means building diverse teams, a notion that has been proven empirically many times and in many ways.

Overall, the true impact of design can no longer be evaluated in a vacuum, any more than business analysis or engineering or any other discipline. The most impactful innovation moving forward will be driven by the people who can offer both deep expertise in their own area, as well as the "soft skills" needed by the interdisciplinary teams of the future.

Using powers for good—and managing for evil

We're used to hearing platitudes about how "technology will save the world." While that may not be wholly incorrect, the narrative at SXSW was a bit more nuanced this year. Many discussions focused not only on technology's benefits, but also on its risks. And speakers didn't just acknowledge that there are risks. They were pushing people in the room to accept responsibility for managing those risks and to become more aware of even the unintended negative potential of new technologies. There's a lot of focus on how to use technology "for good."

Having a ‘portfolio’ of ways to test the market

Designing for failure today means there is no single process to go to market; the process to test a product with ten people needs to be significantly different and leaner than launching in a market of one million customers. It is also a mind-set shift—to being aware that most products do fail. For a product to not fail it needs to be successful across many different dimensions—user experience, marketing execution, business strategy and engineering. Nothing short of an inclusive approach will succeed.

A session on product thinking for the future focused on how seemingly successful products like Swiffer, Trello and Facebook have failed on some levels. The common reasons, based on the research, are that product innovation is a complex system and many companies lack the mind-set and methodology to take this complexity seriously. Instead, they run away from it and oversimplify. An inclusive approach, embracing the full context and complexity of the go-to-market process, becomes even more important now that an increasing number of products are being designed with the help of data, machine learning and other forms of AI.

Moving at the right speed(s)

As the saying goes, timing is everything. At a session on leading rapid transformation at scale, one key message was that organizations need to find the right timing and positioning and move holistically.

But it's not as simple as it sounds, especially for organizations spread across a large number of business units, geographies, and functions. Managing the speed of an organization is not necessarily centrally driven. Parts of an organization may be moving at different speeds, but knowing they are moving in the same, right direction is what is important. This suggests that companies don't need to move quickly on every single area. But they could, in fact, reduce the time spent on nonvalue areas or inefficient processes—for example, by removing bottlenecks that prevent collaboration with stakeholders in other parts of the organization. And there are certain areas where taking enough time matters for the success of a product. Perhaps the best example is taking the time to continuously test and improve products with users.

Being ‘all in’

The likelihood of success in a digital transformation increases when the push for it is present throughout the organization.

The implications of this are manifold; first and foremost, it may mean acquiring digital-native capabilities or training existing talent with digital-first capabilities like design thinking and agile ways of working. But while this sort of bottom- up change is necessary, it isn't sufficient. Companies also need the right mandate from C-level executives and operations that actually walk the talk.

During a session on corporate innovation, an attendee from a large telecom company explained that, after interviewing hundreds of entrepreneurs about designing a start-up ecosystem, the company now partners with one or more start-ups on every new project, exchanging not just expertise but also ways of working.

Peri Kadaster is director of marketing for McKinsey Digital Labs. Christian Kunz is an associate partner in McKinsey's Dubai office and a global leader in our Digital Business Building efforts.