McKinsey Explainers

What is design
thinking?
Design thinking is a systemic, intuitive, customer-focused problem-
solving approach that organizations can use to respond to rapidly
changing environments and to create maximum impact.

March 2023
 Design and conquer: in years past, the word How do companies build a design-
“design” might have conjured images of expensive driven company culture?
handbags or glossy coffee table books. Now, There’s more to succeeding in business than
your mind might go straight to business. Design developing a great product or service that
and design thinking are buzzing in the business generates a financial return. Empathy and purpose
community more than ever. Until now, design has are core business needs. Design thinking means
focused largely on how something looks; these putting customers, employees, and the planet at the
days, it’s a dynamic idea used to describe how center of problem solving.
organizations can adjust their problem-solving
approaches to respond to rapidly changing McKinsey’s Design Practice has learned that
environments—and create maximum impact design-led organizations start with design-driven
and shareholder value. Design is a journey and cultures. Here are four steps to building success
a destination. Design thinking is a core way of through the power of design:
starting the journey and arriving at the right
destination at the right time. 1. Understand your audience. Design-driven
companies go beyond asking what customers
Simply put, “design thinking is a methodology that and employees want, to truly understanding
we use to solve complex problems, and it’s a way of why they want it. Frequently, design-driven
using systemic reasoning and intuition to explore companies will turn to cultural anthropologists
ideal future states,” says McKinsey partner Jennifer and ethnographers to drill down into how their
Kilian. Design thinking, she continues, is “the single customers use and experience products,
biggest competitive advantage that you can have, including what motivates them and what turns
if your customers are loyal to you—because if you them away.
solve for their needs first, you’ll always win.”
Makeup retailer Sephora provides an example.
And good design is good business. Kilian’s claim When marketing leaders actually watched
is backed up with data: McKinsey Design’s 2018 shoppers using the Sephora website, they
Business value of design report found that the realized customers would frequently go to
best design performers increase their revenues YouTube to watch videos of people using
and investor returns at nearly twice the rate of their products before making a purchase. Using this
industry competitors. What’s more, over a ten-year information, the cosmetics retailer developed
period, design-led companies outperformed the its own line of demonstration videos, keeping
S&P 500 by 219 percent. shoppers on the site and therefore more likely to
make a purchase.
As you may have guessed by now, design thinking
goes way beyond just the way something looks. And 2. Bring design to the executive table. This leader
incorporating design thinking into your business is can be a chief design officer, a chief digital
more than just creating a design studio and hiring officer, or a chief marketing officer. Overall, this
designers. Design thinking means fundamentally executive should be the best advocate for the
changing how you develop your products, services, company’s customers and employees, bringing
and, indeed, your organization itself. the point of view of the people, the planet,
and the company’s purpose into strategic
Read on for a deep dive into the theory and practice business decisions. The design lead should also
of design thinking. build bridges between multiple functions and
stakeholders, bringing various groups into the
design iteration process.

2 What is design thinking?

3. Design in real time. To understand how and why whether for a start-up, a large organization, or
people—both customers and employees—use society as a whole.
processes, products, or services, organizations
should develop a three-pronged design-thinking User-centered design is great for developing a
model that combines design, business strategy, fantastic product or service. In the past, a company
and technology. This approach allows business could coast on a superior process or product for
leaders to spot trends, cocreate using feedback years before competitors caught up. But now,
and data, prototype, validate, and build as digitization drives more frequent and faster
governance models for ongoing investment. disruptions, users demand a dynamic mix of product
and service. Emphasis has shifted firmly away from
4. Act quickly. Good design depends on agility. features and functions toward purpose, lifestyle,
That means getting a product to users quickly, and simplicity of use.
then iterating based on customer feedback. In a
design-driven culture, companies aren’t afraid McKinsey analysis has found that some industries—
to release products that aren’t quite perfect. such as telecommunications, automotive, and
Designers know there is no end to the design consumer product companies—have already made
process. The power of design, instead, lies in strides toward combining product and service
the ability to adopt and adapt as needs change. into a unified customer experience. Read on for
When designers are embedded within teams, concrete examples of how companies have applied
they are uniquely positioned to gather and design thinking to offer innovative—and lucrative—
digest feedback, which can lead to unexpected customer experiences.
revelations. Ultimately, this approach creates
more impactful and profitable results than
following a prescribed path. What is the design-thinking process?
McKinsey analysis has shown that the design-
Consider Instagram. Having launched an initial thinking approach creates more value than
product in 2010, Instagram’s founders paid conventional approaches. The right design at the
attention to what the most popular features right price point spurs sustainability and resilience
were: image sharing, commenting, and liking. in a demonstrable way—a key driver of growth.
They relaunched with a stripped-down version
a few months later, resulting in 100,000 According to McKinsey’s Design Practice, there are
downloads in less than a week and over two two key steps to the design-thinking process:
million users in under two months—all without
any strategic promotion. 1. Developing an understanding of behavior and
needs that goes beyond what people are doing
right now to what they will need in the future and
What’s the relationship between user- how to deliver that. The best way to develop this
centered design and design thinking? understanding is to spend time with people.
Both processes are design led. And they both
emphasize listening to and deeply understanding 2. “Concepting,” iterating, and testing. First
users and continually gathering and implementing start with pen and paper, sketching out
feedback to develop, refine, and improve a service. concepts. Then quickly put these into rough
prototypes—with an emphasis on quickly. Get
Where they are different is scale. User-centered feedback, refine, and test again. As American
design focuses on improving a specific product or chemist Linus Pauling said: “The way to get
service. Design thinking takes a broader view as good ideas is to get lots of ideas and throw the
a way to creatively address complex problems— bad ones away.”

What is design thinking? 3

 What is D4VG versus DTV? (EV) manufacturers stand to reduce the lifetime
For more than a decade, manufacturers have emissions of their products significantly.
used a design-to-value (DTV) model to design and
release products that have the features needed to To achieve design for sustainability at scale,
be competitive at a low cost. During this time, DTV companies can address three interrelated elements
efforts were groundbreaking because they were at the R&D stage:
based on data rather than experience. They also
reached across functions, in contrast to the typical 1. rethinking the way their products use resources,
value-engineering approach. adapting them to changing regulations, adopting
principles of circularity, and making use of
The principles of DTV have evolved into design for customer insights
value and growth (D4VG), a new way of creating
products that provide exceptional customer 2. understanding and tracking emissions and
experiences while driving both value and growth. cost impact of design decisions in support of
Done right, D4VG efforts generate products with sustainability goals
the features, form, and functionality that turn users
into loyal fans. 3. fostering the right mindsets and capabilities to
integrate sustainability into every product and
D4VG products can cost more to build, but they design decision
can ultimately raise margins by delivering on a
clear understanding of a product’s core brand
attributes, insights into people’s motivations, and What is ‘skinny design’?
design thinking. Skinny design is a less theoretical aspect of design
thinking. It’s a method whereby consumer goods
companies reassess the overall box size of products
What is design for sustainability? by reducing the total cubic volume of the package.
As consumers, companies, and regulators shift According to McKinsey analysis, this can improve
toward increased sustainability, design processes overall business performance in the following ways:
are coming under even more scrutiny. The challenge
is that carbon-efficient production processes tend — Top-line growth of 4 to 5 percent through
to be more complex and can require more carbon- improvements in shelf and warehouse holding
intensive materials. The good news is that an power. The ability to fit more stock into
increased focus on design for sustainability (DFS), warehouses ultimately translates to growth.
especially at the research and development stage,
can help mitigate some of these inefficiencies and — Bottom-line growth of more than 10 percent.
ultimately create even more sustainable products. Packing more product into containers and
trucks creates the largest savings. Other
For example, the transition from internal- cost reductions can come from designing
combustion engines to electric-propulsion vehicles packaging to minimize the labor required and
has highlighted emissions-intensive automobile facilitate automation.
production processes. One study found that
around 20 percent of the carbon generated by a — Sustainability improvements associated
diesel vehicle comes from its production. If the with reductions in carbon emissions through
vehicle ran on only renewable energy, production less diesel fuel burned per unit. Material
emissions would account for 85 percent of the total. choices can also confer improvements to the
With more sustainable design, electric-vehicle overall footprint.

4 What is design thinking?

How can a company become and iterating with users. These practices
a top design performer? increase the odds of creating breakthrough
The average person’s standard for design is higher products and services, while at the same time
than ever. Good design is no longer just a nice-to- reducing the risk of costly missteps.
have for a company. Customers now have extremely
high expectations for design, whether it’s customer 4. User experience (UX). Top-quartile companies
service, instant access to information, or clever embrace the full user experience by taking a
products that are also aesthetically relevant in the broad-based view of where design can make
current culture. a difference. Design approaches like mapping
customer journeys can lead to more inclusive
McKinsey tracked the design practices of and sustainable solutions.
300 publicly listed companies over a five-year
period in multiple countries. Advanced regression
analysis of more than two million pieces of financial What are some real-world examples
data and more than 100,000 design actions of how design thinking can improve
revealed 12 actions most correlated to improved efficiency and user experience?
financial performance. These were then clustered Understanding the theory of design thinking is
into the following four themes: one thing. Seeing it work in practice is something
else. Here are some examples of how elegant
1. Analytical leadership. For the best financial design created value for customers, a company,
performers, design is a top management issue, and shareholders:
and design performance is assessed with the
same rigor these companies use to approach — Stockholm’s international airport, Arlanda, used
revenue and cost. The companies with the top design thinking to address its air-traffic-control
financial returns have combined design and problem. The goal was to create a system that
business leadership through bold, design- would make air traffic safer and more effective.
centric visions. These include a commitment By understanding the tasks and challenges of
to maintain a baseline level of customer the air-traffic controllers, then collaboratively
understanding among all executives. The CEO working on prototypes and iterating based on
of one of the world’s largest banks, for example, feedback, a working group was able to design
spends one day a month with the bank’s clients a new departure-sequencing tool that helped
and encourages all members of the company’s air-traffic controllers do their jobs better. The
C-suite to do the same. new system greatly reduced the amount of time
planes spent between leaving the terminal and
2. Cross-functional talent. Top-performing being in the air, which in turn helped reduce
companies make user-centric design everyone’s fuel consumption.
responsibility, not a siloed function. Companies
whose designers are embedded within cross- — When Tesla creates its electric vehicles, the
functional teams have better overall business company closely considers not only aesthetics
performance. Further, the alignment of design but also the overall driving experience.
metrics with functional business metrics (such
as financial performance, user adoption rates, — The consumer electronics industry has a
and satisfaction results) is also correlated to long history of dramatic evolutions lead
better business performance. by design thinking. Since Apple debuted
the iPhone in 2007, for example, each new
3. Design with people, not for people. Design generation has seen additional features, new
flourishes best, according to our research, in customers, and lower costs—all driven by
environments that encourage learning, testing, design-led value creation.

What is design thinking? 5

 For a more in-depth exploration of these topics, see — “More than a feeling: Ten design practices
Find more content like this on the
McKinsey’s Agile Organizations collection. Learn to deliver business value,” December 8, 2017,
McKinsey Insights App
more about our Design Practice—and check out Benedict Sheppard, John Edson, and
design-thinking-related job opportunities if you’re Garen Kouyoumjian
interested in working at McKinsey.
— “Creating value through sustainable design,”
Articles referenced: July 25, 2017, Sara Andersson, David Crafoord,
and Tomas Nauclér
— “Skinny design: Smaller is better,” April 26,
2022, Dave Fedewa, Daniel Swan, Warren — “The expanding role of design in creating an
Scan • Download • Personalize
Teichner, and Bill Wiseman end-to-end customer experience,” June 6, 2017,
Raffaele Breschi, Tjark Freundt, Malin Orebäck,
— “Product sustainability: Back to the drawing and Kai Vollhardt
board,” February 7, 2022, Stephan Fuchs,
Stephan Mohr, Malin Orebäck, and Jan Rys — “Design for value and growth in a new world,”
April 13, 2017, Ankur Agrawal, Mark Dziersk,
— “Emerging from COVID-19: Australians embrace Dave Subburaj, and Kieran West
their values,” May 11, 2020, Lloyd Colling, Rod
Farmer, Jenny Child, Dan Feldman, and Jean- — “The power of design thinking,” March 1, 2016,
Baptiste Coumau Jennifer Kilian, Hugo Sarrazin, and Barr Seitz

— “The business value of design,” McKinsey — “Building a design-driven culture,” September 1,

Quarterly, October 25, 2018, Benedict 2015, Jennifer Kilian, Hugo Sarrazin, and
Sheppard, Hugo Sarrazin, Garen Kouyoumjian, Hyo Yeon
and Fabricio Dore

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6 What is design thinking?