McKinsey: Demystifying the agile innovation hackathon

24 December 2015

As a result of the rapidly changing business environment, established companies are finding themselves left behind as smart competitors use newly available technologies to disrupt markets. Traditional companies have the potential to be innovative, with various techniques now available. From picking up promising start-ups early to running a hackathon. In a recent McKinsey article, the benefits of a hackathon are considered, with several characteristics identified that make for a successful hackathon.

The hackathon
Businesses are in a period of flux. Disruptive technologies from a wide range of industry and cross industry players, as well as new entrants, have the potential to redefine traditional boundaries and sweep the value of old propositions from the minds of customers. The ‘hackathon’ is a recently in vogue innovation technique that provides large corporations with a means of developing radical new ways of creating valuable propositions for customers in a short timeframe. The events are designed around the idea of digital disruption, and place eager entrepreneurs and software developers into a confined space for a day or two, challenging them to use digital to create a new app or online process.

Four stages of a hackathon

According to a recent analysis by McKinsey & Company, the potential for hackathons to create disruptive innovation within companies is being under rated by management. Hackathons have been shown on a number of occasions to create opportunities for large businesses to accelerate organisational change and fostering a quick-march, customer-centric, can-do culture. According to the firm, a well-designed hackathon can cut 25% to 50% from the time it takes to bring a service or product to market.

As part of its investigation into the phenomenon, McKinsey highlights a number of characteristics of successful hackathon events that have the potential to rapidly generate tangible value for corporations. This includes:

Cantered on the customer: Events need to be focused on a single business case aspect of the customer journey – for example, speed, revenue growth, or breakthrough customer experience. IT starts with identifying the ideal customer experience, and then considers the various organisational and process steps that come into play to deliver on that interaction and the complete customer journey.

Deeply cross-functional: The hackathon needs to be a pressure cooker of various departments, not just a pet IT project. While senior management involvement is critical, the event itself needs to involve a range of functional areas, including frontline personnel, brand leaders, user-experience specialists, customer service, sales, graphic designers, and coders. By providing a range of perspectives, the dangers of ‘group think’ can be overcome.

The hackathon

Starting from scratch: Productive hackathons seek to undermine old ways of engaging customers and processes, through radically reimaging the situation from an ideal. By identifying how best to service customers or run processes, the back-end development possibilities can be considered in light of the new digital possibilities understood from the software engineering side of the table.

Concrete and focused on output: A successful event ends with a concrete working prototype that people can see and touch. The value chain of the new product is also considered, such that its mass production is tangible, in light of the various aspects and bodies that will be affected by the new development. Once the idea has been given form, a presentation is given to senior leaders, with a roadmap for the new product design part of the preparation.

Iterative and continuous: There is an iterative development of the new product within the hackathon, designers and coders go to work creating a virtual model that the group vets, refines and re-releases in continual cycles until the new process or app meets the desired experience criteria. Following the completion of the hackathon, policies need to be in place to show the various departments involved in the process how the newly designed product is moving through the higher development stages within the company.


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