What is design thinking?
Design and conquer: in years past, the word “design” might have conjured images of expensive handbags or glossy coffee table books. Now, your mind might go straight to business. Design and design thinking are buzzing in the business community more than ever. Until now, design has focused largely on how something looks; these days, it’s a dynamic idea used to describe how organizations can adjust their problem-solving approaches to respond to rapidly changing environments—and create maximum impact and shareholder value. Design is a journey and a destination. Design thinking is a core way of starting the journey and arriving at the right destination at the right time.
Simply put, “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,” says McKinsey partner Jennifer Kilian. Design thinking, she continues, is “the single biggest competitive advantage that you can have, if your customers are loyal to you—because if you solve for their needs first, you’ll always win.”
Get to know and directly engage with senior McKinsey experts on design thinking
Tjark Freundt is a senior partner in McKinsey’s Hamburg office, Tomas Nauclér is a senior partner in the Stockholm office, Daniel Swan is a senior partner in the Stamford office, Warren Teichner is a senior partner in the New York office, Bill Wiseman is a senior partner in the Seattle office, and Kai Vollhardt is a senior partner in the Munich office.
And good design is good business. Kilian’s claim is backed up with data: McKinsey Design’s 2018 Business value of design report found that the best design performers increase their revenues and investor returns at nearly twice the rate of their industry competitors. What’s more, over a ten-year period, design-led companies outperformed the S&P 500 by 219 percent.
As you may have guessed by now, design thinking goes way beyond just the way something looks. And incorporating design thinking into your business is more than just creating a design studio and hiring designers. Design thinking means fundamentally changing how you develop your products, services, and, indeed, your organization itself.
Read on for a deep dive into the theory and practice of design thinking.
Learn more about McKinsey’s Design Practice , and check out McKinsey’s latest Business value of design report here .
How do companies build a design-driven company culture?
There’s more to succeeding in business than developing a great product or service that generates a financial return. Empathy and purpose are core business needs. Design thinking means putting customers, employees, and the planet at the center of problem solving.
McKinsey’s Design Practice has learned that design-led organizations start with design-driven cultures. Here are four steps to building success through the power of design:
Understand your audience. Design-driven companies go beyond asking what customers and employees want, to truly understanding why they want it. Frequently, design-driven companies will turn to cultural anthropologists and ethnographers to drill down into how their customers use and experience products, including what motivates them and what turns them away.
Makeup retailer Sephora provides an example. When marketing leaders actually watched shoppers using the Sephora website, they realized customers would frequently go to YouTube to watch videos of people using products before making a purchase. Using this information, the cosmetics retailer developed its own line of demonstration videos, keeping shoppers on the site and therefore more likely to make a purchase.
- Bring design to the executive table. This leader can be a chief design officer, a chief digital officer, or a chief marketing officer. Overall, this executive should be the best advocate for the company’s customers and employees, bringing the point of view of the people, the planet, and the company’s purpose into strategic business decisions. The design lead should also build bridges between multiple functions and stakeholders, bringing various groups into the design iteration process.
- Design in real time. To understand how and why people—both customers and employees—use processes, products, or services, organizations should develop a three-pronged design-thinking model that combines design, business strategy, and technology. This approach allows business leaders to spot trends, cocreate using feedback and data, prototype, validate, and build governance models for ongoing investment.
Act quickly. Good design depends on agility. That means getting a product to users quickly, then iterating based on customer feedback. In a design-driven culture, companies aren’t afraid to release products that aren’t quite perfect. Designers know there is no end to the design process. The power of design, instead, lies in the ability to adopt and adapt as needs change. When designers are embedded within teams, they are uniquely positioned to gather and digest feedback, which can lead to unexpected revelations. Ultimately, this approach creates more impactful and profitable results than following a prescribed path.
Consider Instagram. Having launched an initial product in 2010, Instagram’s founders paid attention to what the most popular features were: image sharing, commenting, and liking. They relaunched with a stripped-down version a few months later, resulting in 100,000 downloads in less than a week and over two million users in under two months —all without any strategic promotion.
Learn more about McKinsey’s Design Practice .
What’s the relationship between user-centered design and design thinking?
Both processes are design led. And they both emphasize listening to and deeply understanding users and continually gathering and implementing feedback to develop, refine, and improve a service.
Where they are different is scale. User-centered design focuses on improving a specific product or service . Design thinking takes a broader view as a way to creatively address complex problems—whether for a start-up, a large organization, or society as a whole.
User-centered design is great for developing a fantastic product or service. In the past, a company could coast on a superior process or product for years before competitors caught up. But now, as digitization drives more frequent and faster disruptions, users demand a dynamic mix of product and service. Emphasis has shifted firmly away from features and functions toward purpose, lifestyle, and simplicity of use.
Looking for direct answers to other complex questions?
McKinsey analysis has found that some industries—such as telecommunications, automotive, and consumer product companies— have already made strides toward combining product and service into a unified customer experience . Read on for concrete examples of how companies have applied design thinking to offer innovative—and lucrative—customer experiences.
Learn more about our Operations Practice .
What is the design-thinking process?
McKinsey analysis has shown that the design-thinking approach creates more value than conventional approaches. The right design at the right price point spurs sustainability and resilience in a demonstrable way—a key driver of growth.
According to McKinsey’s Design Practice, there are two key steps to the design-thinking process:
- 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 how to deliver that. The best way to develop this understanding is to spend time with people.
- “Concepting,” iterating, and testing . First start with pen and paper, sketching out concepts. Then quickly put these into rough prototypes—with an emphasis on quickly. Get feedback, refine, and test again. As American chemist Linus Pauling said : “The way to get good ideas is to get lots of ideas and throw the bad ones away.”
What is D4VG versus DTV?
For more than a decade, manufacturers have used a design-to-value (DTV) model to design and release products that have the features needed to be competitive at a low cost. During this time, DTV efforts were groundbreaking because they were based on data rather than experience. They also reached across functions, in contrast to the typical value-engineering approach.
The principles of DTV have evolved into design for value and growth (D4VG), a new way of creating products that provide exceptional customer experiences while driving both value and growth. Done right, D4VG efforts generate products with the features, form, and functionality that turn users into loyal fans .
D4VG products can cost more to build, but they can ultimately raise margins by delivering on a clear understanding of a product’s core brand attributes, insights into people’s motivations, and design thinking.
Learn more about our Consumer Packaged Goods Practice .
What is design for sustainability?
As consumers, companies, and regulators shift toward increased sustainability, design processes are coming under even more scrutiny. The challenge is that carbon-efficient production processes tend to be more complex and can require more carbon-intensive materials. The good news is that an increased focus on design for sustainability (DFS), especially at the research and development stage , can help mitigate some of these inefficiencies and ultimately create even more sustainable products.
For example, the transition from internal-combustion engines to electric-propulsion vehicles has highlighted emissions-intensive automobile production processes. One study found that around 20 percent of the carbon generated by a diesel vehicle comes from its production . If the vehicle ran on only renewable energy, production emissions would account for 85 percent of the total. With more sustainable design, electric-vehicle (EV) manufacturers stand to reduce the lifetime emissions of their products significantly.
To achieve design for sustainability at scale, companies can address three interrelated elements at the R&D stage:
- rethinking the way their products use resources, adapting them to changing regulations, adopting principles of circularity, and making use of customer insights
- understanding and tracking emissions and cost impact of design decisions in support of sustainability goals
- fostering the right mindsets and capabilities to integrate sustainability into every product and design decision
What is ‘skinny design’?
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 by reducing the total cubic volume of the package. According to McKinsey analysis , this can improve overall business performance in the following ways:
- Top-line growth of 4 to 5 percent through improvements in shelf and warehouse holding power. The ability to fit more stock into warehouses ultimately translates to growth.
- Bottom-line growth of more than 10 percent . Packing more product into containers and trucks creates the largest savings. Other cost reductions can come from designing packaging to minimize the labor required and facilitate automation.
- Sustainability improvements associated with reductions in carbon emissions through less diesel fuel burned per unit. Material choices can also confer improvements to the overall footprint.
Read more about skinny design and how it can help maximize the volume of consumer products that make it onto shelves.
Learn more about McKinsey’s Operations Practice .
How can a company become a top design performer?
The average person’s standard for design is higher than ever. Good design is no longer just a nice-to-have for a company. Customers now have extremely high expectations for design, whether it’s customer service, instant access to information, or clever products that are also aesthetically relevant in the current culture.
McKinsey tracked the design practices of 300 publicly listed companies over a five-year period in multiple countries. Advanced regression analysis of more than two million pieces of financial data and more than 100,000 design actions revealed 12 actions most correlated to improved financial performance. These were then clustered into the following four themes:
- Analytical leadership . For the best financial performers, design is a top management issue , and design performance is assessed with the same rigor these companies use to approach revenue and cost. The companies with the top financial returns have combined design and business leadership through bold, design-centric visions. These include a commitment to maintain a baseline level of customer understanding among all executives. The CEO of one of the world’s largest banks, for example, spends one day a month with the bank’s clients and encourages all members of the company’s C-suite to do the same.
- Cross-functional talent . Top-performing companies make user-centric design everyone’s responsibility, not a siloed function. Companies whose designers are embedded within cross-functional teams have better overall business performance . Further, the alignment of design metrics with functional business metrics (such as financial performance, user adoption rates, and satisfaction results) is also correlated to better business performance.
- Design with people, not for people . Design flourishes best, according to our research, in environments that encourage learning, testing, and iterating with users . These practices increase the odds of creating breakthrough products and services, while at the same time reducing the risk of costly missteps.
- User experience (UX) . Top-quartile companies embrace the full user experience by taking a broad-based view of where design can make a difference. Design approaches like mapping customer journeys can lead to more inclusive and sustainable solutions.
What are some real-world examples of how design thinking can improve efficiency and user experience?
Understanding the theory of design thinking is one thing. Seeing it work in practice is something else. Here are some examples of how elegant design created value for customers, a company, and shareholders:
- Stockholm’s international airport, Arlanda, used design thinking to address its air-traffic-control problem. The goal was to create a system that would make air traffic safer and more effective. By understanding the tasks and challenges of the air-traffic controllers, then collaboratively working on prototypes and iterating based on feedback, a working group was able to design a new departure-sequencing tool that helped air-traffic controllers do their jobs better. The new system greatly reduced the amount of time planes spent between leaving the terminal and being in the air, which in turn helped reduce fuel consumption.
- When Tesla creates its electric vehicles , the company closely considers not only aesthetics but also the overall driving experience .
- The consumer electronics industry has a long history of dramatic evolutions lead by design thinking. Since Apple debuted the iPhone in 2007, for example, each new generation has seen additional features, new customers, and lower costs—all driven by design-led value creation .
Learn more about our Consumer Packaged Goods and Sustainability Practices.
For a more in-depth exploration of these topics, see McKinsey’s Agile Organizations collection. Learn more about our Design Practice —and check out design-thinking-related job opportunities if you’re interested in working at McKinsey.
Articles referenced:
- “ Skinny design: Smaller is better ,” April 26, 2022, Dave Fedewa , Daniel Swan , Warren Teichner , and Bill Wiseman
- “ Product sustainability: Back to the drawing board ,” February 7, 2022, Stephan Fuchs, Stephan Mohr , Malin Orebäck, and Jan Rys
- “ Emerging from COVID-19: Australians embrace their values ,” May 11, 2020, Lloyd Colling, Rod Farmer , Jenny Child, Dan Feldman, and Jean-Baptiste Coumau
- “ The business value of design ,” McKinsey Quarterly , October 25, 2018, Benedict Sheppard , Hugo Sarrazin, Garen Kouyoumjian, and Fabricio Dore
- “ More than a feeling: Ten design practices to deliver business value ,” December 8, 2017, Benedict Sheppard , John Edson, and Garen Kouyoumjian
- “ Creating value through sustainable design ,” July 25, 2017, Sara Andersson, David Crafoord, and Tomas Nauclér
- “ The expanding role of design in creating an end-to-end customer experience ,” June 6, 2017, Raffaele Breschi, Tjark Freundt , Malin Orebäck, and Kai Vollhardt
- “ Design for value and growth in a new world ,” April 13, 2017, Ankur Agrawal , Mark Dziersk, Dave Subburaj, and Kieran West
- “ The power of design thinking ,” March 1, 2016, Jennifer Kilian , Hugo Sarrazin, and Barr Seitz
- “ Building a design-driven culture ,” September 1, 2015, Jennifer Kilian , Hugo Sarrazin, and Hyo Yeon
Want to know more about design thinking?
Related articles.
Skinny design: Smaller is better
The business value of design
More than a feeling: Ten design practices to deliver business value
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The 5 Stages in the Design Thinking Process
Design thinking is a methodology which provides a solution-based approach to solving problems. It’s extremely useful when used to tackle complex problems that are ill-defined or unknown—because it serves to understand the human needs involved, reframe the problem in human-centric ways, create numerous ideas in brainstorming sessions and adopt a hands-on approach to prototyping and testing. When you know how to apply the five stages of design thinking you will be impowered because you can apply the methodology to solve complex problems that occur in our companies, our countries, and across the world.
Design thinking is a non-linear, iterative process that can have anywhere from three to seven phases, depending on whom you talk to. We focus on the five-stage design thinking model proposed by the Hasso Plattner Institute of Design at Stanford (the d.school) because they are world-renowned for the way they teach and apply design thinking.
What are the 5 Stages of the Design Thinking Process
The five stages of design thinking, according to the d.school, are:
Empathize : research your users' needs .
Define : state your users' needs and problems.
Ideate : challenge assumptions and create ideas.
Prototype : start to create solutions.
Test : try your solutions out.
Let’s dive into each stage of the design thinking process.
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Hasso-Platner Institute Panorama
Ludwig Wilhelm Wall, CC BY-SA 3.0 <https://creativecommons.org/licenses/by-sa/3.0>, via Wikimedia Commons
Stage 1: Empathize—Research Your Users' Needs
Empathize: the first phase of design thinking, where you gain real insight into users and their needs.
© Teo Yu Siang and the Interaction Design Foundation, CC BY-NC-SA 3.0.
The first stage of the design thinking process focuses on user-centric research . You want to gain an empathic understanding of the problem you are trying to solve. Consult experts to find out more about the area of concern and conduct observations to engage and empathize with your users. You may also want to immerse yourself in your users’ physical environment to gain a deeper, personal understanding of the issues involved—as well as their experiences and motivations . Empathy is crucial to problem solving and a human-centered design process as it allows design thinkers to set aside their own assumptions about the world and gain real insight into users and their needs.
Depending on time constraints, you will gather a substantial amount of information to use during the next stage. The main aim of the Empathize stage is to develop the best possible understanding of your users, their needs and the problems that underlie the development of the product or service you want to create.
Stage 2: Define—State Your Users' Needs and Problems
Define: the second phase of design thinking, where you define the problem statement in a human-centered manner.
In the Define stage, you will organize the information you have gathered during the Empathize stage. You’ll analyze your observations to define the core problems you and your team have identified up to this point. Defining the problem and problem statement must be done in a human-centered manner .
For example, you should not define the problem as your own wish or need of the company: “We need to increase our food-product market share among young teenage girls by 5%.”
You should pitch the problem statement from your perception of the users’ needs: “Teenage girls need to eat nutritious food in order to thrive, be healthy and grow.”
The Define stage will help the design team collect great ideas to establish features, functions and other elements to solve the problem at hand—or, at the very least, allow real users to resolve issues themselves with minimal difficulty. In this stage, you will start to progress to the third stage, the ideation phase, where you ask questions to help you look for solutions: “How might we encourage teenage girls to perform an action that benefits them and also involves your company’s food-related product or service?” for instance.
Stage 3: Ideate—Challenge Assumptions and Create Ideas
Ideate: the third phase of design thinking, where you identify innovative solutions to the problem statement you’ve created.
During the third stage of the design thinking process, designers are ready to generate ideas. You’ve grown to understand your users and their needs in the Empathize stage, and you’ve analyzed your observations in the Define stage to create a user centric problem statement. With this solid background, you and your team members can start to look at the problem from different perspectives and ideate innovative solutions to your problem statement .
There are hundreds of ideation techniques you can use—such as Brainstorm, Brainwrite , Worst Possible Idea and SCAMPER . Brainstorm and Worst Possible Idea techniques are typically used at the start of the ideation stage to stimulate free thinking and expand the problem space. This allows you to generate as many ideas as possible at the start of ideation. You should pick other ideation techniques towards the end of this stage to help you investigate and test your ideas, and choose the best ones to move forward with—either because they seem to solve the problem or provide the elements required to circumvent it.
Stage 4: Prototype—Start to Create Solutions
Prototype: the fourth phase of design thinking, where you identify the best possible solution.
The design team will now produce a number of inexpensive, scaled down versions of the product (or specific features found within the product) to investigate the key solutions generated in the ideation phase. These prototypes can be shared and tested within the team itself, in other departments or on a small group of people outside the design team.
This is an experimental phase, and the aim is to identify the best possible solution for each of the problems identified during the first three stages . The solutions are implemented within the prototypes and, one by one, they are investigated and then accepted, improved or rejected based on the users’ experiences.
By the end of the Prototype stage, the design team will have a better idea of the product’s limitations and the problems it faces. They’ll also have a clearer view of how real users would behave, think and feel when they interact with the end product.
Stage 5: Test—Try Your Solutions Out
Test: the fifth and final phase of the design thinking process, where you test solutions to derive a deep understanding of the product and its users.
Designers or evaluators rigorously test the complete product using the best solutions identified in the Prototype stage. This is the final stage of the five-stage model; however, in an iterative process such as design thinking, the results generated are often used to redefine one or more further problems. This increased level of understanding may help you investigate the conditions of use and how people think, behave and feel towards the product, and even lead you to loop back to a previous stage in the design thinking process. You can then proceed with further iterations and make alterations and refinements to rule out alternative solutions. The ultimate goal is to get as deep an understanding of the product and its users as possible.
Did You Know Design Thinking is a Non-Linear Process?
We’ve outlined a direct and linear design thinking process here, in which one stage seemingly leads to the next with a logical conclusion at user testing . However, in practice, the process is carried out in a more flexible and non-linear fashion . For example, different groups within the design team may conduct more than one stage concurrently, or designers may collect information and prototype throughout each stage of the project to bring their ideas to life and visualize the problem solutions as they go. What’s more, results from the Test stage may reveal new insights about users which lead to another brainstorming session (Ideate) or the development of new prototypes (Prototype).
It is important to note the five stages of design thinking are not always sequential. They do not have to follow a specific order, and they can often occur in parallel or be repeated iteratively. The stages should be understood as different modes which contribute to the entire design project, rather than sequential steps.
The design thinking process should not be seen as a concrete and inflexible approach to design; the component stages identified should serve as a guide to the activities you carry out. The stages might be switched, conducted concurrently or repeated several times to gain the most informative insights about your users, expand the solution space and hone in on innovative solutions.
This is one of the main benefits of the five-stage model. Knowledge acquired in the latter stages of the process can inform repeats of earlier stages . Information is continually used to inform the understanding of the problem and solution spaces, and to redefine the problem itself. This creates a perpetual loop, in which the designers continue to gain new insights, develop new ways to view the product (or service) and its possible uses and develop a far more profound understanding of their real users and the problems they face.
The Take Away
Design thinking is an iterative, non-linear process which focuses on a collaboration between designers and users. It brings innovative solutions to life based on how real users think, feel and behave.
This human-centered design process consists of five core stages Empathize, Define, Ideate, Prototype and Test.
It’s important to note that these stages are a guide. The iterative, non-linear nature of design thinking means you and your design team can carry these stages out simultaneously, repeat them and even circle back to previous stages at any point in the design thinking process.
References & Where to Learn More
Take our Design Thinking course which is the ultimate guide when you want to learn how to you can apply design thinking methods throughout a design thinking process. Herbert Simon, The Sciences of the Artificial (3rd Edition), 1996.
d.school, An Introduction to Design Thinking PROCESS GUIDE , 2010.
Gerd Waloszek, Introduction to Design Thinking , 2012.
Hero Image: © the Interaction Design Foundation, CC BY-NC-SA 3.0.
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