Posts Tagged ‘mckinsey’

10 years later: Will buying Lunar Design make McKinsey more nimble?

project1Around 10 years ago, I’d made this rough sketch of the innovation consulting landscape as I saw it at the time. The overlap of business and design was the topic du jour, and IDEO had just begun seeding the media with stories of the Empathy Economy and the magic of “design thinking”.

Today*, peterme’s blogpost woke me up with the news that McKinsey had purchased Lunar Design. If you’re not familiar with the ID landscape in the US, particularly on the West Coast, then a few words on Lunar will help with context. Afaik, they’ve always been a most respected medium sized industrial design studio – I have a vague recollection of meeting John Edson in some social gathering related to my work with Core77. Besides, back in the day, before social media came along to completely fragment what was left of the interwebs, the design world was a much smaller place.

Once I’d released my first impressions on Twitter (one of the reasons there’s a lot less blogging these days is how much of our pondering ends up being diffused through those addictive 140 character bursts), I recalled the diagram I’d created in September 2005. That was the period when I’d immersed myself wholly and completely in exploring the interstitial spaces between “Business” and “Design”, developing much of the foundation of my consulting practice.  You can see the seeds of today’s hybrid research driven consumer-centric strategies and the evolution of the traditional methods and frameworks to suit the needs of the informal sector in the explorations of a decade ago.

Ten years to respond to changes in the environment

Enough indulgence in the circumlocutions of yore, lets take a step back and look at the diagram again, this time with today’s news layered on top (as crudely drawn as the original).

project10That red box marks the spot of the combined Lunar+ McKinsey offer. Does this acquisition stretch McKinsey in a continuum (heh) across the entire bottom half of this position map? Or will Lunar Design hold that space for them while they keep their corner on the bottom right?

Given they’ve had a digital design department in some affordable corner of the universe, I’m assuming they’d managed to stretch their service offering and client deliverable capabilities as far they could without actually stepping fully fledged into the hard core world of industrial design. Their lack of strategic design planning was obvious.

FANcase

You’ll note that their earlier attempts to discuss product design tend to emphasize the B-School approach of conjoint analysis and elements from industrial engineering such as value analysis. Having debated the pros and cons of conjoint analysis vociferously in product development as taught in an MBA program as well as taken electives in value engineering during my engineering undergrad, I can recognize the clumsiness of the design strategy for competitive advantage approach in this case study. Its incremental.

Design catapulted itself into the boardroom in the meantime

This is not to say that the gurus at McKinsey were wrong. Business has, since the beginning of organizational management of mass production and practice, considered industrial design as a line item. Its place in the hierarchy of business was clear – marketing and finance and sales would inform the designers and the engineers what they had to do and how to do it.

Business schools emphasize analytical thinking while strategy teaches us frameworks and methods for analysis, after the fact. NPV will let you forecast returns but the method requires you to know exactly what you plan to do, in order to cost it, at the outset. There is no room built into the system for either experimentation or iteration. Brainstorming is a carefully curated meeting and free association or wild guesses frowned upon by middle management. The bottomline is a numbers game. And that’s a game that McKinsey’s designed to win.

The ‘magic’ of design

Yet as Steve Jobs would have shown you, there’s an intuitive leap in vision and innovation that happens (by magic) for which there’s no careful step by step replicable process to follow. Synthesizing the vast variety of data and distilling it down into a visualized whole – a concept to be manifested in the form of a prototype or rendering – is often a post it covered version of a pub brawl. Sure, there are a 101 Methods, as Vijay will remind you but the reality is one of scribbles, sketches, whiteboards, foolscap sheets and Lego.

The eureka moment is in the conversations – brainstorming – a phase built into the design process at least once if not more. This space in time is critical to the design (and of course, innovation yada yada) process. Business processes don’t really have this space built in – brainstorming and discussions become management by walking around and watercooler discussions – moments to be captured in the interstitial spaces between powerpoints and presentations and slidesets of excel spreadsheets.

And so you have design case studies which inform you that the removal of half an inch of spindle will save you 0.7% of your cost.

Can the black turtlenecks help the suits be nimble?

Much has already been said in the past 10 years about the value of design’s approach to problem solving and the insights it can bring to bear on business strategy and decision making. Very quickly, some key points that come to mind, are:

Comfort with ambiguity and chaos – we don’t know what we’ll find or what we’re going to make and we’re okay with this not knowing long enough to figure out what to do.

Experimental & Iterative – “Let’s see what works” is the unspoken yet universally understood mantra when there are enough design enthusiasts in the room. You don’t have to be guy who makes it to understand we might have to break it a few times to see what happens. Ask Dyson.

Flexible, Responsive, Nimble – The very nature of the design process, with its multiple iterations and lack of attachment to the one right answer implies that design teams tend to be flexible, nimble and responsive to results, data or shifts in the environment.

Willing to leap first and look later – which brings us to this last point since innovation, or even a new toothbrush design, often means there aren’t any citations or numbers available to point the way. The much maligned inarticulate concept sketches that emerge from the gut of an industrial designer (and especially award winning ones, like Lunar) often can’t justify their existence with metrics, measurements and excel forecast sheets though they could probably craft a well reasoned argument for a particular design direction.

Will this chaotic creativity be integrated into McKinsey’s offering and deliverables or will it be one more service to be discretely sold?

This is the make or break question. McKinsey’s current state of mind can be inferred from this snippet taken from their new book:

Our intuition has been formed by a set of experiences and ideas about how things worked during a time when changes were incremental and somewhat predictable. Globalization benefited the well established and well connected, opening up new markets with relative ease. Labor markets functioned quite reliably. Resource prices fell. But that’s not how things are working now—and it’s not how they are likely to work in the future. If we look at the world through a rearview mirror and make decisions on the basis of the intuition built on our experience, we could well be wrong. In the new world, executives, policy makers, and individuals all need to scrutinize their intuitions from first principles and boldly reset them if necessary. This is especially true for organizations that have enjoyed great success.

Does this questioning of the underpinnings of their traditional methods and conventional frameworks imply greater integration, in an effort to catch up with the leapfrogging of innovation as peterme would have it?

There is an urgent imperative to adjust to these new realities. Yet, for all the ingenuity, inventiveness, and imagination of the human race, we tend to be slow to adapt to change. There is a powerful human tendency to want the future to look much like the recent past. On these shoals, huge corporate vessels have repeatedly foundered. Revisiting our assumptions about the world we live in—and doing nothing—will leave many of us highly vulnerable. Gaining a clear-eyed perspective on how to negotiate the changing landscape will help us prepare to succeed.

Or, is this just an attempt to buy ‘cool’ more than a decade after the fact? Only time will tell.

 

Postscript: There’s another post here which needs to look at what this means for the design industry.

“No Ordinary Disruption” – Africa’s Transformation

McKinsey consultants have released a new book – No Ordinary Disruption – looking at global mega trends and market forces that are forcing a rethink of the foundations of their intuitive knowledge. Assumptions are to be challenged and questioned, they say, as these changes impact a deeper transition in the way the world works. Even as all eyes are on Asia, the fastest growing region on the planet, it behooves us not to overlook the second fastest growing and often overlooked opportunities of the African continent.

“Well, there was a reason why: growth has moved elsewhere—to Asia, Latin America, the Middle East.”

B6vtjfTIYAAq1mfLet’s look at their key points and reflect upon Africa’s transformation.

McKOneThe first trend is the shifting of the locus of economic activity and dynamism to emerging markets like China and to cities within those markets. These emerging markets are going through simultaneous industrial and urban revolutions, shifting the center of the world economy east and south at a speed never before witnessed. […] Perhaps equally important, the locus of economic activity is shifting within these markets.

FG-Seizing-Africas-Retail-Opportunities-2Numerous reports are pointing out the immense potential inherent in African urbanization and population growth, for retail, for real estate and for opportunity. Not all 54 countries on the continent are seeing economic growth as its unevenly distributed, just like in Europe. Some points of note:

Nigeria became the largest economy last year, surpassing South Africa the traditional leader, after their economy was re-based. Kenya has just been ranked as the 3rd fastest growing economy. Rwanda is also expected to show similar growth – both are in the 6 to 7% range. Ethiopia is making strides in infrastructure and industrialization – attracting manufacturing as well as high street brands like H&M and Primark. China has been looking closer at the lower costs of labour on the African continent.

What is notable is that instead of the usual sources of wealth like oil or other natural resources, most of this emerging  economic growth is coming from modern sectors like telecom and services. Entirely new industries such as mobile gaming are gaining traction and e-commerce is another fast proliferating area. Cote D’Ivoire has gained visibility with its embrace of online marketplaces while the Nigerians’ penchant for shopping has captured attention at home and abroad.

All this urbanization means a boom in construction – transportation infrastructure, power plants, dams, houses and malls – cement magnate Dangote has already invested over a billion dollars across the entire continent while competition hasn’t dented LaFarge’s healthy profits.

mckTwoThe second disruptive force is the acceleration in the scope, scale, and economic impact of technology. Technology—from the printing press to the steam engine and the Internet—has always been a great force in overturning the status quo. The difference today is the sheer ubiquity of technology in our lives and the speed of change.
[…]
Processing power and connectivity are only part of the story. Their impact is multiplied by the concomitant data revolution, which places unprecedented amounts of information in the hands of consumers and businesses alike, and the proliferation of technology-enabled business models, from online retail platforms like Alibaba to car-hailing apps like Uber.[…]Entrepreneurs and start-ups now frequently enjoy advantages over large, established businesses.

hubs-overview-large

Source VC4Africa

The impact of the democratization of technology has already made itself visible. Incubators and tech hubs are popping up across the African continent. New startups are emerging almost every other day. One of my favourites is Cladlight –  a safety jacket with indicator lights to be used by motorcycle taxis.

Whether its Uber or grocery delivery in Lagos and Kampala – apps that leapfrog the lack of adequate infrastructure and distribution systems are disrupting their local markets. Technology, both at the front end and the back is expected to change the face of retail and service delivery.

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This is the Ethiopian capital’s new light rail system.

And its not just computers and smartphones – a variety of solar powered products, distinguishing themselves with payment methods and business model innovation, are lighting up the formerly dark continent, while China’s ambitions in high speed rail will soon connect the unconnected.

mck3The human population is getting older. Fertility is falling, and the world’s population is graying dramatically. While aging has been evident in developed economies for some time—Japan and Russia have seen their populations decline over the past few years—the demographic deficit is now spreading to China and soon will reach Latin America. For the first time in human history, aging could mean that the planet’s population will plateau in most of the world. […] But by 2013, about 60 percent of the world’s population lived in countries with fertility rates below the replacement rate. This is a sea change
Euromonitor-populationCall it the demographic dividend or the African youth bulge, but the cradle of mankind remains the youngest continent on earth. This is one of the reasons why Africa matters for the emerging future.
mck4The final disruptive force is the degree to which the world is much more connected through trade and through movements in capital, people, and information (data and communication)—what we call “flows.” […] “South–south” flows between emerging markets have doubled their share of global trade over the past decade. The volume of trade between China and Africa rose from $9 billion in 2000 to $211 billion in 2012. […]the links forged by technology have marched on uninterrupted and with increasing speed, ushering in a dynamic new phase of globalization, creating unmatched opportunities, and fomenting unexpected volatility.

aftzIncreasing regional integration for trade and commerce are changing the economic landscape of the continent. At the forefront is the East African Community, who have already issued a single tourist visa for Kenya, Rwanda and Uganda whilst pushing forward with infrastructural development and various trade related initiatives to tighten their financial and commercial links.

smdc-silkroad-21st-mapFlows of information mean increasingly connected consumers, as smartphone penetration and mobile subscription growth puts the internet in the hands of even the nomadic pastoralists. Social media use is moving beyond friends and family to become platforms for informal trade and banking. And mobile money’s ability to provide financial inclusion profitably is driving the continent’s telcos to overcome their competitive nature and join hands in interoperability.

CDV_KdpWIAAiT23.jpg large

Afropolitan, Africapitalist, Afro futurism – all of these are ways to name the basic trend that Africans are finally reaching out to grab their turn on the global stage. Most recently Credit Suisse named Tidjane Thiam, originally from Ivory Coast as their new CEO. Africa’s future is being transformed by the global forces shaping the world and cannot afford to be overlooked.

As the authors conclude:

The fact that all four are happening at the same time means that our world is changing radically from the one in which many of us grew up, prospered, and formed the intuitions that are so vital to our decision making.[…] Yet we work in a world in which even, perhaps especially, professional forecasters are routinely caught unawares. That’s partly because intuition still underpins much of our decision making.[…] If we look at the world through a rearview mirror and make decisions on the basis of the intuition built on our experience, we could well be wrong. In the new world, executives, policy makers, and individuals all need to scrutinize their intuitions from first principles and boldly reset them if necessary. This is especially true for organizations that have enjoyed great success.