ESSENTIALS FOR LEADERS AND THOSE THEY LEAD

When business leaders look to generate revenue growth, design may not be the first thing that comes to mind. But design is no longer mostly about how something looks—increasingly, it’s becoming a dynamic problem-solving approach that can have great impact and increase shareholder value. Our research has found that design-led companies outperform their competitors by a considerable margin. “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,” notes McKinsey partner Jennifer Kilian. However, the methodology may not be easy to implement, as it involves making fundamental changes to organizational culture and practices. This week, we discuss some starting points.

AN IDEA

Go for the ‘triple win’

Good design can allow an organization to succeed on three fronts—growth, margin, and sustainability—observe McKinsey experts in an episode of the McKinsey on Consumer and Retail podcast. This “triple win” may be within reach if companies pay closer attention to the design of their products and packaging. Thanks to new digital technologies that combine qualitative and quantitative user data, “we now have much more transparency into what consumers want and expect,” says McKinsey senior partner Jennifer Schmidt. These insights can inform and enhance product and packaging design. “You can bring together people from design, R&D, marketing, procurement, finance,” says Schmidt. “It can be a team sport now; all the different functions can come together and use that information to deliver the triple wins.” By changing its packaging, one company was “able to come up with breakthroughs in all three of the areas we’ve talked about,” she adds. “That’s one of my favorite stories.”

A BIG NUMBER

3

That’s the number of steps it takes to implement “skinny design,” which involves fitting more product into smaller packages to maximize shelf space, reduce transportation costs, and minimize stockouts. “The good news is that companies can often implement the elements of skinny design quickly and with little investment,” note McKinsey’s Dave Fedewa, Daniel Swan, Warren Teichner, and Bill Wiseman. A key step is to build a strong technological foundation: one company used a digital teardown database to compare its packaging volume with that of its competitors. The tool revealed a cube optimization opportunity that could reduce the company’s logistics costs and carbon footprint.

A QUOTE

“Improving your design capability can improve your company’s financial performance.”

That’s McKinsey partner Benedict Sheppard on the importance of implementing design thinking in an organization. Companies that perform the best in design achieve higher average revenue growth and shareholder return than their peers, McKinsey research shows. But Sheppard cautions against launching company-wide design transformations that may not show tangible impact. “My advice would be to choose one important upcoming product or service design to pilot improvements on,” he suggests. And to excel at design, it’s essential to apply it across four critical dimensions—“being good at one or two isn’t enough,” in Sheppard’s view. For example, top-performing companies view design as a continuous process of iteration and as everyone’s responsibility, not as a siloed function.

A SPOTLIGHT INTERVIEW

PepsiCo chief design officer Mauro Porcini believes that the wants and needs of human beings should be at the center of all design and innovation. “It’s the biggest challenge right now because we’re in a moment of transition, and many companies are not yet understanding how important it is to focus on this,” he says in a discussion with McKinsey. What he calls the “principles of meaningful design” may spring from a human-centric mindset. “They’re essentially about creating products that are relevant from a functional standpoint, an emotional standpoint, and a semiotic standpoint,” he says. Products also need to be environmentally and financially sustainable; Porcini emphasizes that they should be financially successful enough to reach as many people as possible. “You want billions of people to enjoy your product instead of creating something extraordinary that just four or five people in the world can enjoy.”

– Edited by Rama Ramaswami, senior editor, New York

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