Building a design-driven culture

Jennifer Kilian,
Hugo Sarrazin,
and Hyo Yeon

McKinsey Digital September 2015

It’s not enough to just sell a product or service—

companies must truly engage with their customers. Here’s
how to embed experience design in your organization.
At one point in the movie The Best Exotic Marigold Hotel, Judi Dench, who plays a grieving widow,
is connected with a customer-service agent at a call center in India. Despite being told Dench is in
mourning, the call-center rep sticks to her script with a sadly predictable result: hurt feelings and a lost
customer. By the end of the movie, Dench’s character has moved to India and reinvented herself as—
wait for it—a call-center trainer. In her initial session, she conducts a role-playing exercise in which
she demands operators go off script and respond to customers as human beings first. The result?
Instead of angry hang-ups, the call-center reps make human connections and customers for life.

While the movie is fictitious, of course, the broader lesson lies at the core of a real-world
business need: empathy. Using empathy to put customers, clients, and end users at the
center of the problem-solving equation is the foundation of design thinking. With this focus,
design becomes a tool for change, capable of transforming the way companies do business,
hire talent, compete, and build their brand. To quote Nobel laureate Herbert Simon, the act of
design “devises courses of action aimed at changing existing situations into preferred ones.”

From product to experience

Think about a product you recently bought. Now think about the experience you had buying
and using that product. Increasingly, it’s difficult to separate these two elements, and we’re
actually seeing many cases where customers prioritize the experience of buying and using a
product over the performance of the product itself. In fact, customer experience is becoming a
key source of competitive advantage as companies look to transform how they do business.

This fixation on customer experience isn’t just for the cool start-up world. Consider HP and the
mundane task of replacing printer ink. Through HP Instant Ink, the company has executed a
subtle shift away from pure transactions—customers simply buying ink when they need it—and
toward establishing an ongoing service relationship, wherein HP knows when its printers will
run out of ink and preemptively ships more, saving customers time and effort. And making
their lives easier not only makes customers more productive but also makes them happy and
generates loyalty. Similarly, heavy-industry stalwart John Deere is transforming its business
by moving beyond pure equipment to provide farmers with digital services such as crop
advisories, weather alerts, planting prescriptions, and seeding-population advice.

Few would dispute that these sorts of developments are good for the customer and build
loyalty. But there’s a larger question for businesses: Are they worth it? While a hard metric
 on the return on investment of design is notoriously elusive, the value is clearly borne out
in other ways. According to the Design Management Institute’s Design Value Index, for
example, design-driven companies have maintained a significant stock-market advantage,
outperforming the S&P 500 by an extraordinary 219 percent over the past ten years.1

At individual companies, you don’t have to look far to see the value of design. When Walmart
revamped its e-commerce experience, unique visitors to its website increased by 200 percent.
When Bank of America undertook a user-centered redesign of its process for account
registration, online-banking traffic rose by 45 percent.2 And the business value of design has
only been underscored by the recent hiring of high-profile designers by venture-capital firms;
last year, for example, energy-focused Khosla Ventures appointed the former head of Google’s
user-experience team, Irene Au, as an operating partner.

Many companies are committing to improve the user experience. But making design a core
capability that drives growth and competitive advantage means companies need to go further.

The four elements of design-driven culture

Really understanding the customer
Pretty much all companies insist they focus on the customer. Yet reality often belies that
assertion. Budgets and key performance indicators often are not aligned with performance on
customer metrics. Research may be superficial. Business decisions made at the executive level
often fail to consider the impact on customers.

The difference with design-driven companies is that they seek to go far beyond understanding
what customers want to truly uncovering why they want it. They recognize that while data are
important for understanding customer behavior, they’re woefully short on empathy. Design-
driven companies turn to ethnographers and cultural anthropologists. These “empathy sleuths”
conduct contextual one-on-one interviews, shopper-shadowing exercises, and “follow me
homes” to observe, listen, and learn how people actually use and experience products. They
plot out customer decision journeys to understand exactly what motivates people, what
bothers them, and where there are opportunities for creating delightful experiences.

Marketing leaders at Sephora, for example, were watching millennials shopping on their site and
realized that before buying, these customers would often go to YouTube to look for videos of people
using the product. That prompted the cosmetics retailer to create its own videos to serve this need.
In another example, a user-experience scientist at GE’s San Ramon innovation center conducted
1 Jeneanne Rae, “Good
119 interviews in the process of helping GE redesign its marine-shipping positioning system. The
design drives shareholder
value,” Design Management result: an award-wining design that enables mariners to focus on ship handling in dangerous and
Institute, May 2015, dmi.org. environmentally sensitive locations instead of the distraction of managing technology.
2 Jim Ross, The business
When one large North American bank tracked consumer behavior for 30 days—including
value of user experience, D3
Infragistics Services, January what and when bills were paid, how frequently consumers used ATMs, and how often they got
2014, infragistics.com. cash—it discovered, contrary to expectations, that consumers didn’t care about the typical

2
banking products that institutions usually try to push on them. All its customers wanted was
to sign up for an account. As a result, the bank provided services as needed and, based on
observed customer-usage patterns and behaviors, it became much more judicious about
recommending the right products to meet their needs.

Bringing empathy to the organization

One essential to running a design-driven company is making sure the right people with the
right skill set are in the right place. To start, that means ensuring a chief design lead has a
seat at the table where strategic decisions are made. That person could be a chief design
officer, a chief digital officer, or a chief marketing officer. All that matters is that whoever has the
responsibility is the primary customer advocate. He or she must bring the customer’s point of
view to business decisions, translate business goals into customer-friendly initiatives, and build
a culture in which employees think about how what they do affects customers.

Pushing that perspective through the company requires making a designer a core part of
any product or service development and building a design-driven process around individual
customer journeys. During these initiatives, design should take an active role in bridging multiple
functions—including finance, legal, IT, marketing, and operations—so that these groups can not
only be part of the process but also start to directly understand the value that design can deliver.

Building these bridges requires extending customer advocacy and customer-centric empathy to
more roles in the organization. In IT, for example, design should have a role in devising the technical
solutions that support customer experiences. In product design, designers should contribute
customer insights that influence prototypes as well as the final product. And before a product is
released publicly, a senior designer should be responsible for consistency of experience across all
touchpoints, from product to packaging to social-media marketing, web design, and e-commerce.

Raising the design capabilities of a company requires moving customer empathy beyond the
skill set of a design team to permeate all areas of the business. Deutsche Bank, for example,
required all employees to use products that its customers used as a way to understand what
customers were experiencing.

Solidifying this design approach requires, among other things, metrics that focus on the
customer. Customer satisfaction and retention are standard measures, but key performance
indicators should include, for example, customer lifetime value, real-time customer satisfaction
by segment, and “leaky bucket” ratios to highlight where customer issues may be spiking. The
goal is to track the depth of the relationship between customer and brand over time.

Designing in real time

Developing any customer journey requires input from many functions. We believe in a “braided” ap-
proach that combines design, business strategy, and technology as the core working group (Exhibit 1).
These functions should work together to make decisions, ensure that the designed journey aligns with
the business strategy and is delivering value, and keep customer experience a top-of-mind issue.

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 Web 2015
Building a design-driven culture
Exhibit 1 1
Exhibit of 2

In a ‘braided’ design model, three functions work together

in lockstep.

A “BRAIDED” DESIGN MODEL

Design
Strategy Frame
Technology Map business opportunity and strategy based on
market and organizational factors
“Trendscrape”; identify user needs and define
experience principles
Identify technology developments; assess current
technology environment

Cocreate
Reframe problem statements based on
customer feedback
Define value proposition
Conduct workshops with customers and experts
to cocreate optimal experience
Identify data and technology

Prototype
Build rapid prototypes
Iterate design as required with customer feedback
Create technology-development (agile) plan
Build business case

Validate
Test usability
Assess technology, process, and organizational
needs for realization
Validate with overall business strategy

Govern
Role model best-practice innovation process
tied to business strategy
Build governance model for ongoing investment
and evolution

Source: McKinsey Digital Labs

At the same time, we recognize that because developing a customer journey requires so many
different functions and skill sets, the process can quickly become bogged down in endless
email chains and meetings. Our preferred approach for mitigating this is what we call a “four
wall” approach: setting up a war room from day one and bringing in people from design,
engineering or IT, operations, and project management who are committed to the process
(Exhibit 2). Depending on the product or service and the tactics demanded, we include people
with backgrounds in research, user experience, industrial design, interaction and visual design,
service design, and rapid prototyping.

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 Web 2015
Building a design-driven culture
Exhibit 2 2
Exhibit of 2

Cross-functional teams work in the same room simultaneously,

using each wall to track a specific focus.

THE FOUR WALLS—DESIGN IN ACTION

Customer-journey Technology
and experience wall wall

• Personas • Architecture maps

• Journey mapping • Data structures
• Research insights • Systems diagrams
• Inspirational trends • Application flows

Business-operations Team-
and process wall planning wall

• Internal organization and process owners • Master plan

• Internal processes (before and after) • Project timeline
• Critical business decisions • Team-member names
• Inputs to business case • Daily priorities
• Key performance indicators • Status of tasks

Source: McKinsey Digital Labs

Each group gets its own wall, which functions as a working surface dedicated to customer
journeys, technology, business operations, and planning. Every day begins with a team
meeting in which members discuss what they will do, what they hope to achieve, and what
issues they may confront. Each wall becomes an ordered mosaic of Post-it notes capturing
tasks, actions, progress steps, people, and ideas, visible for all to see. This approach supports
on-the-fly decision making. Team members can simply walk across the room, get their
questions answered, come to a decision, and move forward.

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 Acting quickly
Good design is fast. That means getting a product to market quickly, which depends on rapid
prototyping, frequent iteration, and adjustments based on real customer feedback. In a design-
driven culture, companies are unafraid to release a product that is not totally perfect. That means
going to market with a minimally viable product, the better to learn from customer feedback,
incorporate it, and then build and release the next version. Consider Instagram, which launched
by rolling out a product, learning which features were most popular (image sharing, commenting,
and liking), and then relaunching a stripped-down version. The result was 100,000 downloads in
less than a week 3 and seven million registered users in the app’s first nine months. 4

To discover what the dashboard of the future might look like, Chrysler paired its customers with
designers and product engineers to develop prototypes. The project started with a bare-bones
dashboard—just a steering wheel and a blank center console. Customers were asked to build
their ideal dashboard by choosing from a kit of dozens of digital and mechanical screens, buttons,
and levers. While the results showed pronounced country-by-country differences, everyone
agreed on one element: a bigger physical dial on the dash to control the volume of their stereo.

The bottom line? Rapid prototyping is critical for getting live feedback and avoiding costly
mistakes down the road. In our experience, advanced companies can prototype and launch a
product or service in as few as 16 weeks.

Questions for the design journey

Transforming your company into one that uses design as a driver of change takes time. Here
are some questions we’ve found helpful in successfully making that journey:

ƒƒ Do you have a senior design leader with real authority? Hire a chief design officer or vice
president of design strategy. Empower this person with a seat in the C-suite and the
backing of the CEO. Ensure that design factors such as customer implications are part of
any business strategy.

ƒƒ Are you continuously reviewing your metrics? Make metrics a “contact sport.” That means
going beyond reviewing design metrics and key performance indicators regularly to
reviewing them continuously (often in real time), testing them, and changing your actions in a
constant test-and-learn cycle.

3 Jolie O’Dell, “iPhone

ƒƒ Are designers working with the right people in the organization? Assign designers to critical
photo app Instagram nabs
functions so that design is actively contributing to business decisions and experience
100K users in one week,”
Mashable, October 2010, development across the entire customer journey. Identify and implement your first four-wall
mashable.com. experiment with design, engineering or IT, operations, and project management.
4 Jennifer Van Grove,
ƒƒ Do you really understand what motivates your customers? Create a map of the customer
“Instagram celebrates 150
millionth photo,” Mashable, journey and use human-centered-design research techniques to interact with customers
August 2011, mashable.com. and uncover pain points and opportunities to delight.

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ƒƒ How can you speed up your processes? The nimble start-up mentality that defines Silicon
Valley also creates a new sense of cadence. Set challenging timelines, prioritize, and “do the
doable.” Speed is better than perfection.

Customers increasingly expect products and services that are designed to meet their needs,
delight them with unexpectedly great experiences, and address a heightened sense of
aesthetics. Companies that meet those needs are rewarded with fierce brand loyalty and
higher spending, which translates into fatter profit margins. But that kind of success only
happens by design.

Jennifer Kilian is a digital VP in McKinsey’s New York office, Hugo Sarrazin is a director in the
Silicon Valley office, and Hyo Yeon is a digital partner in the New Jersey office.

Copyright © 2015 McKinsey & Company. All rights reserved.