Prioritizing privacy, sustainability, and inclusion will soon be essential to successful tech development. For product managers to make responsible innovation a core discipline, companies must first lay the foundation.
Product managers are no strangers to transformation. Over the past two decades their role has evolved, first to accommodate the shift to cloud, then to take on a more comprehensive, “mini CEO” portfolio of integrating customer-led design and more agile DevSecOps (development, security, and operations) practices. Now product managers need to adjust the contours of their role yet again. In recent years, growing societal concerns about privacy, sustainability, and inclusion—the three factors associated with responsible stewardship—have taken on unprecedented importance. Customers and regulators demand it, and ultimately, corporate bottom lines require it.
The cross-functional, linchpin role of product managers makes them particularly well-positioned to navigate these complex issues. But McKinsey research has found that privacy, sustainability, and inclusion are not major areas of strategic focus. All three areas trail behind performance when it comes to how much product managers prioritize them (Exhibit 1). According to one product leader we spoke with: “There’s a lack of alignment, agreement, and urgency among people in the product space about how to create responsible tech.”
To understand current attitudes and approaches, McKinsey conducted interviews and focus groups with several dozen senior product leaders and surveys with more than 50 others. The responses show that each dimension of responsible stewardship presents its own challenges and opportunities.
Privacy is important but often subjective
Privacy is the most developed area of responsible innovation and the one that product managers are prioritizing most. But designing privacy into product development gets complicated quickly. For instance, the only way some companies can avoid targeting customers with irrelevant information or advertisements is to use customer data as a filtering aid. And while customers may want a seamless, personalized experience, they also get irritated when data protection measures require them to enter the same basic information every time they make a purchase. Getting the balance between customer experience and data protection right has become a matter of “existential reputational risk” for many of the product managers with whom we spoke.
These issues have changed how product managers approach privacy. While adoption of General Data Protection Regulation (GDPR) practices is high—with 80 percent of those we surveyed using GDPR compliance to track success on privacy—only 20 percent of product managers say they view data privacy from a strictly regulatory/GDPR lens. Would you like to learn more about our Technology, Media & Telecommunications Practice?
To help balance the often conflicting demands of usability and privacy, 75 percent of product managers say they employ “differential privacy frameworks.” This approach defines a maximum allowable level of privacy loss while ensuring that resulting data sets are still accurate and usable. Companies such as Google and Facebook have made their differential privacy frameworks publicly available to developers to support consistent standards. In addition, 40 percent of companies are using “federated learning” approaches, which allow them to run machine-learning analyses while keeping data resident on customer devices. Samsung is one of the companies that have begun deploying federated learning.
Sustainability unleashes value but requires new techniques
More customers are using—and are willing to pay a premium for—goods and services that are made in a sustainable way. Businesses and investors feel similarly. A global survey conducted in separate McKinsey research found that 83 percent of the more than 500 C-suite executives and investment professionals polled believed strong performance on environmental, social, and governance (ESG) issues is correlated with higher shareholder value. These leaders indicated they would also be willing to pay a 10 percent median premium to acquire a company with a positive record on ESG.
Product managers have taken note of such trends. Among those who ranked sustainability practices high on their list of priorities, 58 percent pointed to customer demand, 53 percent cited ability to attract capital, and 47 percent cited regulatory pressures. However, most cited a lack of capabilities and a standard definition of what good sustainable design looks like as key barriers to making meaningful advances (Exhibit 2). In addition, few organizations have mapped clear policies and performance incentives related to sustainable design. As a result, product managers are only scratching the surface when it comes to sustainability. In our survey, for example, all respondents said they use Greenhouse Gas Protocol Scope 1 and 2 metrics to monitor carbon output, but none have gone beyond this.
That’s a missed opportunity. Life-cycle assessment accounting, which tracks the environmental impact of products from cradle to grave, could help product managers turn sustainability into a source of customer value. By incorporating carbon footprint analytics into its software, for example, SAP helps business customers assess the carbon intensity of their products. Similarly, Google is using analytics to build a comparison feature in its Maps app that will help consumers see which routes have the lowest carbon impact. For life-cycle assessment accounting to become widespread, organizations will need to help product teams gain transparency into industry supply chains. A challenge for many is gaining sufficient transparency into industry supply chains to chart product life cycles and emissions projections accurately.
Inclusion matters but is hard to measure
Despite the attention given to issues of racial and gender inequity in recent years, underrepresented individuals still face persistent bias. Smartphone biometrics and cameras can struggle to perceive and render the skin tones of non-White individuals. Skewed data in payments and banking products can result in Black applicants being denied credit at higher rates than White applicants. And individuals with visual impairments or mobility constraints often have to wait months or years for accommodations to be built into applications and devices so they can use them.
However, only 17 percent of product managers rated inclusion as a top design priority. Among this subset, the most popular methods employed were “perspective hats” and “another lens.” 1 These techniques prompt developers to consider the needs of specific underrepresented populations in their design work. Some product-management functions also perform algorithm audits to test for bias, frequency, and harm. For those yet to act on inclusion, the biggest challenges are collecting relevant and specific user metrics and devising reliable tools that can help them to evaluate inclusivity.
Examples from a few tech leaders show that these issues are surmountable: several online payments companies have working capital products that use nontraditional risk-scoring methods to allow businesses that lack traditional financial histories to receive funding in minutes without a credit check, while Microsoft and Google have both developed publicly available AI playbooks to give development teams guidance on ethical, responsible design.
Organizations must help product managers adapt
Our research shows a growing need for frameworks, standards, and capabilities that can help product managers and their organizations approach responsible innovation in a repeatable, scalable, and effective fashion.
In 2018, we wrote that despite the central role that product managers play, the talent-management practices associated with this function are surprisingly underdeveloped. Several years and a pandemic later, our research suggests this is still the case. Although the demands on product managers have grown significantly, many organizations have yet to adapt their talent-development model.
To make meaningful progress, organizations need to invest in product-manager capability building and enablers to support responsible innovation. To start, leaders could consider this sample action plan:
- Elevate one (or more) responsibility dimension to a strategic priority. We recommend aligning on a well-defined set of “responsible” product success metrics and linking progress against these targets to performance evaluations. Doing so would help to drive accountability and progress.
- Update prioritization approach and product-development life cycle (PDLC). Prioritization matrices should add responsibility as a criterion in addition to impact and feasibility. Responsible innovation principles should be designed into software from the beginning. For this to happen, organizations need to integrate responsible design criteria directly into the PDLC, starting at the lab phase.
- Roll out training and frameworks. A number of standardized artifacts and frameworks can be deployed relatively quickly to help product managers and their teams acquire needed skills. Perspective hats and other low-tech frameworks are a good starting point, since they are relatively simple to deploy and can give teams a visceral sense of how the user experience they’re offering needs to adapt along different responsibility dimensions.
- Take advantage of off-the-shelf tools. Equip product-development teams with well-vetted tools and development frameworks (for example, federated machine-learning techniques)—sparing product managers and their teams from the time and research effort of developing these tools themselves—to enable faster, consistent, and at-scale adoption of these practices across the product organization.
Building responsible products will soon be as core as delivering a product that customers love. Customer value and shareholder value both depend on it. But hardwiring something as intangible as stewardship is not how product managers have been conditioned to work. This is the time for organizations to lean into capability building and provide the tools, training, and resources for product managers to turn responsible innovation from an emerging discipline into an essential, ubiquitous one.
This article first appeared in www.mckinsey.com
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