McKinsey Digital Labs – where design thinking is revolutionising consultancy

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by Marc Wright

Hyo Yeon is Head of the Experience Design team at McKinsey & Company’s Digital Labs, whose client base includes the world’s largest and most complex companies. Yet her background and what she does may appear to be totally antithetical to traditional consulting; she works on rapid concepting and prototyping. As Hyo puts it: Digital Labs is there not only to think, but also to build to quickly get to market for customer input. It is a way to iterate design, “live”.

Hyo has been at McKinsey for 18 months now and is responsible for a group that has grown rapidly, from 12 to 150 designers. She has a CV that includes many cutting-edge design boutiques such as Razorfish and Fjord (now part of Accenture).

“Digitization and automation are great, great, great but then it gets to a position where it becomes creepy and weird. You get a feeling there is something slightly wrong about it. What is called the ‘uncanny valley’ – identified by Japanese robotics professor, Masahiro Mori in the 70’s” Says Yeon.

McKinsey clients too are having to address this phenomenon and more – forced to take on the disruptive threat of the likes of Uber and AirBnB to their business models. It is perhaps not surprising that the consultancy firm has responded by pulling together design thinking, development and rigorous business analysis in Digital Labs.

“I gave a talk recently to a group of new designers and told them that data is going to be the source of everything; how just being a designer – without data – is no longer a valid career. It’s about overlaying really smart data that is exponentially growing in volume to existing user insights. I think that data and machine learning arethe foundation now of strategy and will be a key part of design moving forward, for the next several years.”

At McKinsey Digital Labs Hyo and her colleagues (there are five practice areas in addition to her own) apply design thinking to problem solving. She works with traditional consultants to find a different way of tackling a challenge. This will usually mean actively injecting the outside world – and particularly the world of the customer – into a problem they are trying to solve.

“We still get requests from people to build an app for them or to look at the design of a website but we respond that these are not the right questions to start with. We tend to start with discussions about how the world is, how people are behaving, what customers expectations are – and then get into the digital experience to address them.

For the first time in my design career we are covering all the angles of a business problem. “In my previous career in digital design I used to come up with incredibly amazing user experiences, but when I took it to the CEO they would ask what is the economic impact on my business and I did not have a clear answer.”

Now design is embedded within McKinsey she can answer those questions.

“We can make the design process data-centric; we can do leakage analysis of where all the money is being wasted in a process. We can then focus on those specific points to start applying some lateral thinking and creativity.

“The consumerisation of businesses has meant that all of our expectations about how work happens in the enterprise are changing. Until recently it was all about the technology that was the distinguishing factor. Now you can go as fast or as long as you like with technology but it’s not the quantity it’s all about the quality. You have to start to think about behavioural need of users and how they will react. So now when we look at platforms, it is not just about the technological specification but also how people will use it and whether they will adopt it. It is about customer empathy.”

Sprinting in a confined space

Hyo refers to Sprint the recently-published book whose Google Ventures authors use a unique 5-day process for solving tough problems. It is a form of pressure-cooking the innovation process to get extraordinary results.

At McKinsey they have been embracing the sprint process for the past few years. For example, they may put a team literally within four walls: one wall is postered with the business operations information, another has technology detail, the third describes the User Experience, and the fourth wall is covered with the Sprint process itself. The theory is that by putting the right mixed bag of people into the same space they are able to solve complex problems in a fraction of the time of traditional work streams. It works because you have the key players from technology, legal, product and marketing, etc in the same place for concentrated bursts of time.

“We do a lot of sprints now. It enables huge encumbered organisations to be agile. It works amazingly well because people are under pressure, there are really hard deadlines, and it forces rapid decision-making. When I first did a sprint I was shocked to find that four or five key leaders from an organization had hardly met and had never had a conversation about these crucial issues.

“In a Sprint the structure is completely flat and there is no waiting for approval. Members of the team are empowered to make decisions real time. When considering a problem we look at related businesses, from other industries, to get inspired by how they have approached a problem. Design thinking is about relentless user-centricity, it’s about lateral thinking and opening up the creative process. It is about getting things quickly into user testing or into the market and getting a response and then iterating.”

Hyo was involved with a financial institution which did a sprint around the process of opening a new account. They ended up reducing that duration from two weeks of going into the branch and filling in forms with a member of staff, to just 15 minutes online. When she asked the client why they needed so many of the documents, there was no answer other than “it had always been done that way.”

Collaboration platforms

The Sprint process depends on the right people being in the same room together. But why not design a virtual collaborative platform and introduce that into the organisation? Interestingly Hyo feels that collaboration is something is not yet implemented uniformly at the enterprise level:

“Co-creation feels a bit like a rogue effort right now. Technologically sophisticated people in large companies just decide that they are going to adopt a piece of technology. For instance Slack is tool we use to communicate internally. It’s the same thing with our file sharing software; some gang of people identified it as addressing our use case, and it spread unofficially. Finally we have adopted it as our official file sharing mechanism.”

McKinsey has produced a number of reports on the benefits of the digital workplace. In July 2012 they published a white paper called The social economy: Unlocking value and productivity through social technologies. and more recently an article in the McKinsey Quarterly talked about The evolution of social technologies.

“We have lots of conversations with clients about their productivity and greater efficiency through platforms and tools that can enable that value. One of the growing areas coming out of that work on platforms is capability building. So while implementing a new platform we will also help clients look at hiring the right people and adding on the right tools. I think there is lots of room in consulting for helping those people to implement platforms properly and to pick the right solutions.”

“We are going through a transition from physical to virtual. When dealing with clients you never know where anyone is physically bit it does not matter because you are in 24/7 constant contact regardless of location. We are everywhere in San Francisco, New York, London, Berlin, Sydney St Paulo and Hong Kong. Many of our developers are in Bangalore; there is always someone up and working somewhere in the world. So in this new world it becomes all about the most easily useful tools for communicating; for sharing big chunks of data, drawing up the right kinds of insights and being able to collect everyone’s opinion in real time.

“The data informs us about where the opportunities are. It’s no longer a shotgun approach; we can hone in on the particular pain for the client or the individual consumer. The data informs us about where the opportunity areas are for the highest upswing in revenue. We can be deliberate and focused and can target for a market segment of just one. Mass generic design is over; we can now design for someone we really know. We can be really intelligent and smart about formulating the products they will want to buy.”

“But organisations are not set up to work in an agile way. These vertical silos are resistant to cross-functional collaboration. There is a reticence to get something out into the market before it’s perfect.”

She quotes Reid Hoffman, the CEO of Linkedin who said: If you are not embarrassed by the first version of your product, you’ve launched too late.

Managing the burn

Hyo has two children and she acknowledges the danger of burnout.

“Everything is in hyper-speed now. There might be a member of our team in India who has a crisis and it does not matter that it is the middle of our night – you have to get online and help.”

“We are seeing the arrival of bots and robots that take care of stuff for you. It will give you more choice about what kind of life you want to lead. But it does give you more flexibility to be an even bigger workaholic.

“I am interested in the popularity of colouring books for ‘grown-ups’. I think this is an outcome of just how crazy our world has become. I think we find comfort in reverting to tactical, tangible stuff. It’s like cleaning your brain out, like purposefully choosing to leave the country and hire a boat with zero connection so it’s physically impossible to stay connected. Some times you have to literally wash your brain out and reset it.”

But at heart Hyo is a true technophile.

“I feel like the last 25 years I have been waiting for this point, which is the convergence of all different ways of addressing a company’s challenges. Technology and consulting have long since gone together. Now design has come into the picture and joined the riding of this crazy digital wave. It’s an incredible time to reinvent, rethink, and redo – in a pragmatic way based on real information and data.

“Being in the middle of this amazing amount of opportunity is a fun place to be.”