The Design of Business: Why Design Thinking Is the Next Competitive Advantage

The great divide between the practical operational demands of business and the more "loose" work of creativity and innovation comes together in the well structured, and logical flow of thought in Design of Business. The book builds it's premise on the idea of thought stages that businesses go through - a knowledge funnel - that seeks to move the questions of what a business is trying to do down to an algorithm that has repeatable results. The challenge surrounds how individuals move back and forth in the funnel and keeping pace with a predictable structure, but always leaving room for the what could be. The "camps" of thought are well defined by those who cling to the comfort zones of proven algorithms and process (reliability) and those who focus on visualizing what could be and are less worried about the trifles it takes to get there (validity). Martin outlines the cultural norms within organizations and the constraints they apply to bridge the Yin and Yang of design thinking whether its financial structures (what do we track and why), reward systems (can failure be the intent and therefore the reward?) and other day-to-day key operations that focus purely on rational elements and squeeze out any variance. The overlap between analytical and intuitive thinking is where design thinking lives. Martin proves the existence of such a "happy medium" with Proctor and Gamble's R & D approach which was an initiative that did things differently by using outside innovators to integrate in with existing design teams. It helped to shake things up, build a network of knowledge, and catapult earnings and new product designs. Martin offers several methods to bring design thinking into organizations. Practically speaking, the techniques focus heavily on negotiation and clarifying potential outcomes that satisfy some of the reliability needs without crushing the validity orientation. As a guide to help cultures in organizations, Martin's guidance emphasizes the need for proof in endeavors - both from the perspective of taking a risk on something uncomfortable, but also the room to make calculated failures that don't completely disrupt the business. It's the classic tolerance scheme for trial and error and Martin's proposal helps this conversation. While the battle of thinking and approach in the Design of Business may not be a new one, Martin weaves a well crafted narrative to how companies need to rethink their thinking and jumpstart legacies of the past so that organizations can ultimately leapfrog the competition. He backs his assertions with well researched interviews where the change has taken place. It's worth distributing this book to a mix of analytics and visionaries and having a dialogue - it will be worth the debate that ensues.

Roger Martin, Dean of the Rotman School Of Management, University of Toronto, recently released his new book titled, "The Design Of Business - Why Design Thinking Is The Next Competitive Advantage." This book does an excellent job of articulating why innovation in corporations seems to be incredibly difficult and how Design Thinking must co-exist with analytical thinking to lead a business into new opportunities and business growth. Businesses are organized to be a factory, whether they are product or service- focused. Their objective is to maximize efficiencies and produce the highest profits possible on existing creations. Nearly all of the people hired to join an existing organization have been done so to increase the reliability and consistency of the organization. Martin writes that the main reason companies find it difficult to realize innovations is that most people in corporations are trained in analytical thinking and focused on reliability and consistency. They are focused on making the "factory" and related processes better, faster, and cheaper to produce existing offerings. Based on this approach, culture and processes become the biggest killers of innovation. The opposite of reliability is a focus on validity. Martin defines validity as seeking to find the "correct" answer to a complex problem, not the most reliable or predictable, and to find new knowledge that will lead to the development of new markets, new business models, new products, etc. Seeking valid answers to mysteries is the crux of Design Thinking according to the author. The author's basic proposition is that a "knowledge funnel" exists in all companies which takes a complex problem (a mystery) and drives it down to an algorithm (i..e. a process or formula) that allows the company to maximize profit on existing products or services. The issue that evolves is the people in the company then work to protect the existing, known set of processes and suborn or discontinue the search for new knowledge and finding new customer needs that could be met with new solutions. The book describes abductive reasoning (i.e. intuitive thinking) and how it needs to balance against inductive and deductive reasoning (i.e. analytical thinking). In order to be a Design Thinking organization, a company needs to balance exploitation of existing offerings and processes against exploration of unmet customer needs in order to both profit from existing intellectual property but also to find new problems to solve that lead to solutions that create new business value. The goal of reliability is to produce consistent, predictable outcomes by eliminating subjectivity, judgment, and bias. Conversely, the goal of validity is to produce outcomes that meet desired objectives. Over time validity will show that a resulting outcome is correct versus what is consistent. With a persistent view of the past, business managers look backward to prove something is true or false. Daily work is a ser

Every few years I run into a book that I want to give out to many people. The most recent candidates for this have been Peter Drucker's How to Manage Oneself and Cradle-to-Cradle Design by William McDonough and Michael Braungart. Roger Martin's new book one is another. I plan to buy copies for all three of my children, for the CEOs of companies I have shares in, and additional copies to scatter amongst my staff at LeveragePoint. This book is that good. I also hope it will direct people to another of Roger Martin's books, The Opposable Mind. Why does this book matter? It provides a simple way of thinking through the flow of innovation from Mystery through Heuristics to Algorithms in an organization. It then looks at the role of understanding the why (validity) as well as the what (reliability). The stories from companies as varied as McDonalds and P & G to Hermann-Miller, Research in Motion and Cirque de Soleil are fascinating and informative and give a real business context to the general model. The lateral move to include Charles Sanders Pierce and abductive logic is a creative blend (and I use the term in the technical sense of Mark Turner) that is an important piece of design thinking in its own right. I believe that Martin is correct, only companies that embrace design thinking as a core capability have any hope of long-term sustainability and competitive advantage. What he is proposing is an alternative and ultimately powerful solution to Clayton Christensen's Innovator's Dilemma. Some will argue that the book is shallow and that it fails to uncover the essentials of design thinking. This is true, but the book is intended to motivate people to think more deeply about the role of design in business and not to be a primer on design thinking itself. In any case, design thinking is a nascent discipline and it is hard to point to anyone book that really unfolds its power. Candidates would be Bill Buxton's Sketching User Experiences, John Maeda's Simplicity and the book from Bruce Mau's great exhibition Massive Change. People who need to go deeper, anyone engaged in design writ large, will need to read widely and engage in many passionate discussions. My own essential texts on design thinking include various works from the Adolf Loos, the Bauhaus crowd, Baldwin & Clark's Design Rules, Stuart Kaufmann's The Origins of Order, Christopher Alexander's Pattern Language and of course Edward Tufte's books beginning with The Visual Display of Quantitative Information. I am also working to broaden my thinking by bringing in other cultural traditions (Japan and Russia for example have deep design traditions) and disciplines (especially architecture, urban planning and software engineering). More important than reading books, though, is to develop the habit of observing how things are designed and used in the world and uncovering the choices (often unconscious) that the designers made. One way to do this is through conversations, and one place these co

I start by declaring my conflict. Roger martin is a friend. I sit on the RIM board with him. Dr. Martin is Dean of the Rotman School of Business. One of his previous books was Opposable Minds: Winning Through Integrative Thinking. The theory of that book was that the ability to hold 2 opposing thoughts in mind often lead to a third superior view. The Design of Business has some of this "opposable" view thinking. From The Design of Business book: "What is Design Thinking Anyway? Design thinking, as a concept, has been slowly evolving and coalescing over the past decade. One popular definition is that design thinking means thinking as as designer would, which is about as circular as a definition can be. More concretely, Tim Brown of IDEO has written that design thinking is "a discipline that uses the designer's sensibility and methods to match people's needs with what is technologically feasible and what a viable business strategy can convert into customer value and market opportunity." A person or organization instilled with that discipline is constantly seeking a fruitful balance between reliability and validity, between art and science, between intuition and analytics, and between exploration and exploitation. The design-thinking organization applies the designer's most crucial tool to the problems of business. That tool is abuctive reasoning." Dr. Martin is a big advocate of strategy. I have found that good strategy in business can make successful business almost look easy. Of course you need good tacticians to execute but it is the strategy that takes a company to the next level. Design of Business suggests that we do not use enough intuition in business. The book advocates using intuition combined with analytical thinking to devise strategy. (The opposable - intuition and analytics can co-exist to the better good) My experience is that people are more comfortable with neat and tidy analytics but often the more messy intuitive strategy and design works better. Successful business is a bit messy. Martin suggests that Design Thinking can be learned, fostered and developed which is indeed a hopeful thought. I found the book interesting because it uses RIM as an example (among others) and I am close to that one so can see exactly where Martin is saying when he says Design Thinking yields competitive advantage. Dr. Martin argues that time bias - short term thinking (often caused by the public markets) can kill good decision making. I heartily agree. Long term thinking is key. Good book.

In one of his previously published books, The Opposable Mind: Winning Through Integrative Thinking, Roger Martin explains that all great leaders possess "the predisposition and the capacity to hold two [or more] diametrically opposed ideas" in their head and then "without panicking or simply settling for one alternative or the other," were able to "produce a synthesis that is superior to either opposing idea." Integrative thinking is a "discipline of consideration and synthesis [that] is the hallmark of exceptional businesses [as well as of democratic governments] and those who lead them." Great leaders develop a capacity to consider what Thomas C. Chamberlain characterizes as "multiple working hypotheses" when required to make especially complicated decisions. They do not merely tolerate contradictory points of view, they encourage them. In his latest book, Martin explains why "design thinking is the next competitive advantage." In fact, it may well be the most valuable application of integrative thinking, in part because, that successful business innovation is the result of collaboration and proceeds through a "path" or (as Martin describes it) a "knowledge funnel." The model for value creation that he offers in this book requires a balance - "or more accurately a reconciliation - between two prevailing points of view on business today." One is analytical thinking that "harnesses two familiar forms of logic - deductive reasoning and inductive reasoning - to declare truths and certainties about the world." The other is intuitive thinking - "the art of knowing without reasoning. This is the world of originality and invention...Neither analysis nor intuition is enough," however. Martin presents a compelling argument in support of reconciling the two modes of thought, asserting that the most successful businesses in the years to come will balance analytical mastery and intuitive originality "in a dynamic interplay [he calls] design thinking." How so? "Design thinking is the form of thought that enables movement along the knowledge funnel, and the firms that master it will gain an inexhaustible, long-term business advantage. The advantage, which emerges from the design-thinking firms' unwavering focus on the creative design of systems, will eventually extend to the wider world. From these firms will emerge the breakthroughs that move the world forward [because] design-thinking firms stand apart in their willingness to engage in the task of continuously redesigning their business." And, I presume to add, because their leaders have mastered integrative thinking, without which creative and productive collaboration cannot be achieved, much less sustained. So, what is "the design of business"? It is the process by which business leaders apply design thinking within the current knowledge stage and hone and refine what is known so that they can "generate the leap from stage, continuously in a process I call the design of business." Citing the pionee