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Life after getting swallowed by an $8 billion company

The consulting firm McKinsey acquired Lunar, one of Silicon Valley’s oldest design firms, in 2015. Now, Lunar partner John Edson talks about life after acquisition–and what it means for the future of design.

Life after getting swallowed by an $8 billion company
[Photo: courtesy John Edson]

Lunar was a perennially award-winning design consultancy, known for blurring the lines between art, smart objects, and our real lives, until 2015, when the firm was acquired by the multibillion dollar business consultancy McKinsey. Suddenly, Lunar went from storied to silent. It’s not that the firm’s designers stopped producing work. It’s that they stopped sharing it so publicly.

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John Edson

Former Partner John Edson is a judge of our 2018 Innovation by Design Awards, and I caught up with him for the first time in nearly three years. “It’s been super interesting,” he says of life after acquisition. “In some ways, we’re doing what we’ve always done. In other ways, it’s all completely new.”

Lunar is far from the only design studio to be acquired by a larger company in recent years, as big businesses increasingly bring design expertise in-house, making it harder for independent firms to find work and retain talent. In the past few years, Capital One acquired Adaptive Path, Chinese communication group BlueFocus acquired Fuseproject. The business collective  KYU bought a minority stake in Ideo. And McKinsey alone has snatched up Veryday, Carbon12, and VLT Labs.

In our interview with Edson, we discussed the evolving business of design–and the role of the designer within it. Lunar’s experience hints at the challenges ahead as design becomes further embedded in the corporate world.

Fast Company: How has Lunar changed since the acquisition?

John Edson: Lunar is just one piece of a growing design team. [Combined] we’ve got 350 designers around the world! McKinsey is one of the largest design firms now! Which is still a little shocking to me. So we went to being a mid-sized–just 75 people a few years ago–to many times that. We’re doing all kinds of stuff now. [Before the acquisition], Lunar was mostly product design. Now, we’re doing things around the edges in service design and digital design.

FC: What’s that mean for the day-to-day job?

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JE: We’re still in a consulting environment, helping clients with design. But we’re not being trotted out by our colleagues–nobody says, “Now the designers are here, they’re going to make it pretty!” We’re building joint teams, bringing McKinsey generalists who understand all the business drivers together with teams of designers to create better outcomes.

Case in point, we’re creating products for white space areas [aka totally new, untested markets]. We’ve always done this, but now we can say, “What’s the market size of that white space? What are the trends that are important to think about? What are the business opportunities in terms of scale?” I think of it as re-risking innovation. As designers, we say, we think this is something people need and will think is cool. Now we can say, “Is this something people will pay for?”

In a year we’ll be able to talk about some specific cases where this has happened. The one thing that is true is that McKinsey is quite private and holds client confidentiality quite high.

[Photo: courtesy John Edson]

FC: Is that hard? Under Lunar, your work was so public.

JE: It’s definitely a shift! But we’re also leading the organization in some ways to be more vocal about these things. And we’re in this age where being quiet can create distrust. The new currency is transparency. So the firm is working through what that’s going to mean going forward.

FC: What projects can you talk about?

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JE: We just worked with a cruise line helping them figure out how to be more attractive, and live up to their brand, with a new feature on board. We worked with the TSA–can’t talk much about that, but we worked on the security checkpoint.

FC: So I have you to blame whenever I’m pissed off in line?

JE: Well no! We’re fixing that! (laughs) We’ve recommended a number of things that haven’t been adopted yet. But that’s really interesting. It’s a systems design problem.

The airport owns the line ahead of the checkpoint, then you go through the checkpoint where the TSA is in charge, and past that, the airlines are in charge. Getting all those people through a full-scale prototype of the checkpoint was eye-opening. And that’s the difference of what we can do as part of this large consulting company.

FC: You’re looking behind the curtain of a lot of new companies these days. How are businesses doing with design in general? Have you noticed every company getting the same thing right or wrong?

JE: Broadly speaking, companies understand conceptually the value of design. We can break that down in a lot of ways, but being more customer-centric, or paying more attention to brands and experiences. But at an execution level, we’re still a broad ways from that.

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FC: I’m hearing that a lot. Everyone agrees design is important in theory, but then what?

JE: There’s a lot of inertia. We’ve spent the last 100 years optimizing businesses. There’s a ton of value in, here’s business making things. It’s got customers, and we can make a lot more money by making the machine work better and more efficiently. For a large part, that was what McKinsey’s business was for 100 years.

There’s churn we’re seeing. Especially because of technology, when an Airbnb comes around and upsets the entire industry, the big hotel chains have to sit up and take notice, and figure out what their next move is going to be. That’s why we’re seeing design-led companies be a lot more successful in the market. If you can be a company at scale, and be more agile, that’s where you can win.

FC: How do you overcome the inertia?

JE: There have been a number of different studies trying to wrap some metrics around the value of design. One of the most interesting things we’re working on right is actually trying to put a rigorous study together to say, “Here is the business value of design.” Does being design-led create the value, or are companies that are good at creating value just good at design?

FC: Right we always point to Apple or Airbnb and say, “See, design works!” But there’s not tons of hard evidence it can turn around any company.

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JE: There’s the question of causality or correlation! We’ll be able to talk about the study in a little bit.

FC: What big design trend are you thinking about right now?

JE: We’re in an age of machine, moving into the age of machine learning and artificial intelligence. McKinsey, in addition to design [at large], has been doubling down on advanced analytics. We’ve been buying a number of firms, most notably a firm out of London called Quantum Black. Their claim to fame is they’ve been helping Formula One teams win races with advanced analytics and machine learning.

We’re applying these things in real life projects. As the tools evolve, and we put these things in practice, there will be some really interesting things that come out.

[Photo: courtesy John Edson]

FC: How so?

JE: It’s going to become a bigger play in how we design our next products and services.

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I’m a product guy! So we spend more time getting the [physical] product right because we don’t have the benefit of launching a beta. It’s hard to launch a beta smart thermostat. Having a smart thermostat in someone’s home, we now can see what the patterns are, the usage, and understand what features can go away or be brought forward over time [through services].

FC: You make all this data tracking sound so nice!

JE: It is nice, isn’t it, Mark? It’s just for the user!

But there is lots of good intention around it. Companies are interested in monetizing their data, [sure], but I think from a designer’s perspective, we now will have a lot more insight into what most people are actually doing. We won’t give up on our qualitative research, but we’re going to have tools. One day we’ll be creating [typical users] out of algorithms using data, instead of our gut instincts.

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About the author

Mark Wilson is a senior writer at Fast Company. He started Philanthroper.com, a simple way to give back every day

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