Infusing your organization with a design-driven culture that puts the customer first may provide not only real, measurable results but also a distinct competitive advantage.

Here is a brief excerpt from an interview of Hugo Sarrazin and Jennifer Kilian conducted by Barr Seitz for the McKinsey Quarterly, published by McKinsey & Company. To read the complete transcript, check out other resources, learn more about the firm, obtain subscription information, and register to receive email alerts, please click here.

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Experience design is all about meeting customers where they want to be and creating products that improve the process of getting there. In this episode of the McKinsey Podcast, Hugo Sarrazin, a McKinsey director, and Jennifer Kilian, a digital vice president of McKinsey Digital Labs, talk with McKinsey’s Barr Seitz about what design means, how it can drive change in an organization, and what companies stand to gain from making it a priority. An edited transcript of their conversation follows.

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Barr Seitz: Hello, and welcome to the McKinsey Podcast. I’m Barr Seitz, global publishing head of McKinsey’s Marketing and Sales and Digital Practices, and I’m very happy to introduce our two guests today. First, Jennifer Kilian, a digital VP of McKinsey Digital Labs in our New York office.

Jennifer Kilian: Hi, Barr, thanks, it’s great to be here.

Barr Seitz: Thanks, Jennifer, for joining us. We also have Hugo Sarrazin, a director in our Silicon Valley office and global leader of McKinsey Digital Labs. Hey, Hugo.

Hugo Sarrazin: Hey, Barr, nice to be here.

Barr Seitz: You two were the authors of “Building a design-driven culture,” which was one of the top articles published in 2015 on McKinsey.com. We’re going to be addressing how to get beyond the hype around design, what design means to an organization trying to become more digital, and where design is going. So let’s kick off the conversation. Jennifer, the first question is for you.

In preparing for this podcast, I was struck by how broad the definition of design can be. You have product design, industrial design, design systems, and graphic design. When you talk to a CEO, how do you explain what design is and what its value is in a business context?

Jennifer Kilian: 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. We do this with the end user or the customer in mind, first and foremost.

The reason that it matters for business is because it’s 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. As a former CEO of IBM stated, very insightfully, “Good design is good business.”

Hugo Sarrazin: Jennifer described it nicely. It is a broad term, it does mean a lot of things for different disciplines, from industrial design to experienced service design to digital design. The reason I think it’s becoming so important today is we’re seeing the limitation of traditional ways of approaching problems.

Historically, we were perhaps not fully thinking about the customer experience or thinking through the level of interactions. I’m generalizing a bit, as there have been some fantastic products and services that have been built and designed over many, many years. But I think right now it’s coming of age. We have a new generation of designers who were trained to understand how to blend technology and business, and they’re a lot more agile in moving from these different spheres. So instead of having siloed conversations, now we can have an integrated conversation. And that’s why design thinking and everything associated with it is now more central to even business strategy, marketing strategy, marketing execution, operations, and product design.

Barr Seitz: So, as you say, Hugo, design has made it to the big leagues now. But as with any topic that comes into the media glare, hype can quickly take over, and you can certainly see that when it comes to design these days. Can you help to explain where the hype stops and the reality kicks in when it comes to design?

Hugo Sarrazin: We’re certainly at a point where the hype is exceeding the capability, and in no way do I want to suggest that there’s not more to be done around design and bringing that to the forefront of a lot of business activities.

For design, where the boundary can be set is not very clear. It will vary by industry, and it will vary by function. But I can make a few suggestions. The first one is, historically, strategy was all about where to compete and how to compete, and there were traditional ways of defining where to compete. You could define the customer segment, you could define the geography, you could define the channel, and you could define the products. All of it was trying to beg some sustainable, competitive advantage.

With the advent of some really different technologies, we are now able to engage the customer in a very, very, very different way, on an ongoing basis, with relevant information, in real time. Experience design is now a source of competitive advantage. If you think about some of the iconic products—and not to be too cliché with Apple or Uber or even Airbnb—some of the different ways of bringing the user experience into the forefront, it is a way to fundamentally compete.

That’s the reality today. If you’re a strategist, if you’re a CEO, and you’re thinking about how to differentiate your company, your services, and you’re not thinking about that experience, you’re probably missing out on a very, very important lever. That’s one.

The second piece, as I hinted at earlier, is we have a new generation of business schools who are training all the students on design thinking. That brings many new capabilities into the market. We’re seeing more technologists, who have a greater appreciation of design and use design earlier in the process in an integrated way.

We’re also seeing designers who go to design school being trained to be both technologists and business leaders. We are at a point where the talent model has changed, and you have more talented individuals who can work across all three places, which were historically siloed.

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Jennifer Kilian is a digital vice president in McKinsey’s New York office, and Hugo Sarrazin is a director in the Silicon Valley office. This interview was conducted by McKinsey Digital and Marketing and Sales Practices’ Barr Seitz.