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

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Most companies today have innovation envy. They yearn to come up with a game-changing innovation like Apple's iPod, or create an entirely new category like Facebook. Many make genuine efforts to be innovative-they spend on R&D, bring in creative designers, hire innovation consultants. But they get disappointing results.

Why? In The Design of Business, Roger Martin offers a compelling and provocative answer: we rely far too exclusively on analytical thinki... More >> The Design of Business: Why Design Thinking is the Next Competitive Advantage

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5 Responses to “The Design of Business: Why Design Thinking is the Next Competitive Advantage”

  • It’s unfair that some individuals can write so well about topics that can be a bit esoteric. Roger Martin, who is dean of the Rotman School of Management at the University of Toronto, has produced yet another good book about thinking differently. His first book, The Opposable Mind, captured how good business leaders can see past the traditional “either-or” alternatives to create “both-and” options.

    In The Design of Business, Martin offers a view that suggests that design should be the centerpiece or the starting point for much of the work we do in business, and why design is so important. He’s not the first to suggest the importance of design, and a number of firms, such as IDEO, have been in the vanguard of the design-led forces. What Martin does well is to describe why design led thinking is important, and give examples of how to do it well.

    Martin argues that all knowledge moves through three stages – a mystery, a heuristic and an algorithm. Mysteries are about discovery of new opportunities or research into solving intractable problems. Heuristics are rules of thumb that narrow the size and scope of mysteries and make them more manageable. Algorithms reduce the heuristics into repeatable processes.

    This leads to two schools of thought in most businesses: exploration and exploitation, according to Martin. Most businesses are structured to exploit the algorithms, refining the way they do business and becoming highly effective and efficient, while neglecting the exploration of mysteries. Martin calls this the reliability-validity tradeoff. The vast majority of businesses want “reliability” – clearly defined processes that are easily repeatable and produce the same results. What he argues they need is more “validity” – creating the right and best outcomes through more exploration and less reliance on reliability. Three powerful forces emphasize reliability over validity: the demand for proof of the correctness of a new idea, an aversion to bias and time/resource constraints. These factors reinforce the bias toward reliability and repeatability over exploration and validity.

    Once Martin has described his ideas, he then proceeds to use a few good examples to demonstrate the transition from a reliability driven organization to a validity and design driven organization. One chapter is devoted to the transition Lafley and Kotchka made at P&G, well documented in other places. Another chapter is devoted to Herman-Miller and the development of the Aeron chair. One of my favorite quotes from that chapter came from the Chairman of Herman Miller. He quizzed the design team about who they interviewed and received feedback from about the Aeron chair. When told they had not asked the sales force for feedback, the chairman said “That is right. You never ask the sales force what they think of a design. Their job is to sell it.” Note that the designers spent hundreds of hours with actual customers, watching them work at their desks and understanding the strengths and weaknesses of existing seating options.

    The book offers up a few more examples, ones that unfortunately have been used by others to demonstrate innovation and design, including Apple, RIM, Target and Cirque de Soleil. The weakness of many books about innovation and design is that they either have too few examples and must return to the same well, or that design thinking simply isn’t widespread, so the same examples are used over and over. What’s not clear is whether or not these firms are bellwethers or just happy accidents.

    On the whole, this is a well-conceived and well-written book. In what could be a very esoteric topic, Martin keeps the concepts moving and introduces a lot of examples. He puts his finger on many of the challenges that those of us in the innovation and design space constantly face: too much short term thinking, too much demand for proof of an idea based on historical norms, too little time and too few resources for innovation and design.

    This is a great book, and an easy read. It belongs on the desk of any executive or manager who is tasked with introducing more design thinking into an organization.

    Rating: 4 / 5

  • M. McDonald says:

    The Design of Business by Roger Martin is a thought-provoking book that seeks to probe the reasons behind the current state of business and the new ways of thinking needed to change that state for the better. The book in my opinion is miss-titled as it is more about thinking than design. This does not make it a bad book, but one that will disappoint readers looking for design techniques based on the title.

    Martin’s thesis centers around a few key concepts including:

    The knowledge funnel where ideas and innovations move from exploring mysteries of business and customers, to defining heuristics and finally developing algorithms. While the funnel looks like a traditional innovation process, Martin applies it to aspects of organizational design, behavior and innovation to good effect.

    Martin points to the difference between managing businesses for reliability and seeking validity. Reliability concentrates on managing predictable performance, financials, reducing process variance and establishing control. Validity concentrates on learning what is right based more on heuristics and qualitative than quantitative methods. Martin’s conjecture is that we need both, but probably need more validity to generate the creativity and innovation needed to survive in a dynamic market.

    Design thinking, here Martin borrows Tim Brown of IDEO’s definition and makes the connection between design thinking and abductive reasoning which centers around observing data that does not fit with existing models or patterns. Abductive reasoning is in sharp contrast to deductive and inductive thinking that dominant business management.

    The case studies on P&G, RIM, Cirque du Soldier are predictable and read more like narrative stories of executive actions rather than an analysis of what these companies did to redesign and innovate in their company. Frankly I have read other authors case studies of these companies and found them more valuable.

    The combination of all of this gives me the impression that the book is a set of ideas in search of an application. Now that may sound harsh, but I kept looking for support on how I can apply these ideas by learning from others.

    Martin does include a discussion about a personal knowledge system that consists of the way you view the world, the tools you use to organize your thinking and understanding and finally the experience that you need to build your sensitivity skills. The Personal Knowledge system is an example of what I am talking about, good ideas, presented in a clear fashion but without a particular set of next steps or examples of how mere mortals have transformed themselves.

    Using Martin’s terminology I get his ideas and see them as valid, but I was looking for a little reliability based tools and approaches to turn valid ideas into action and results.

    The book presents its ideas in a fairly academic context, discussed more as ideas than recipes or a framework for designing a business. That is a disappointment as the book was recommended to me as a design book.

    I recommend the book for people who want to explore the way of thinking and deep systems behind design thinking. I cannot recommend the book for people who are looking to learn about how to apply design thinking. If you are looking for a good design thinking book go to the source Tim Brown’s new book Change by Design which has a greater focus on understanding design thinking at an actionable level.
    Rating: 3 / 5

  • 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 pioneer insights of Charles Sanders Pierce, Martin duly acknowledges that it is not possible to prove any new thought, concept, or indeed in advance. In fact, “proof” must be redefined. “the answer, Pierce said, would come through making a `logical leap of the mind’ or an `inference to the best explanation’ to imagine a heuristic for understanding the mystery.”

    Although all this may sound highly theoretical and hypothetical, in fact the bulk of the material that Martin provided in this book addresses two separate but related questions: How to master design thinking? And How can it help to create a decisive competitive advantage? He focuses on a number of exemplary companies those initiatives help to provide an answer to each of these two questions, especially to the second. They include Cirque du Soleil, Research in Motion (RIM), Procter & Gamble, Steelcase, IDEO, Apple Inc., Toronto’s Hospital for Sick Children, Herman Miller, and Target. Led by an enlightened and determined, when necessary tenacious CEO and management team, each of these companies embraced design thinking and overcame three major forces of resistance whose objectives were to “enshrine reliability and marginalize validity”: the demand that an idea be proved before it is implemented, an aversion to bias, and the constraints of time. There can also be cultural barriers, the result of what James O’Toole characterizes as “the ideology of comfort and the tyranny of custom.” One of the less-recognized benefits of integrative thinking is that it is more inclined to respect, perhaps even welcome dissent. At least some of those who oppose change will be less inclined to do so if they and their concerns are treated with what they perceive to be appropriate respect.

    Readers will appreciate Martin’s focus on what works, what doesn’t, and why. His own mastery of integrative thinking is reflected by the scope and diversity of different perspectives on how to achieve and then sustain successful business innovation. He reminds his reader that the key tools of design thinkers are observation that is “deep, careful, and open-minded,” imagination that consists of “an inference and testing loop,” and configuration that enables translation of an idea into “an activity system that will produce the desired outcome.” In the previous chapters, he had discussed dozens of real-world examples of effective applications of these tools. the critically important challenge of enlisting the active support of those who are “reliably-driven analytical thinkers who dominate the hierarchy and the validity-driven intuitive thinkers who are often brought in to `get the organization out of the box,'” Martin suggests and then discusses five specific initiatives (Pages 168-177). With all due respect to the power of integrative thinking, Martin correctly stresses the importance of what is generally referred to as “emotional intelligence.” That is, being willing and able to appreciate legitimate differences between and among groups as well as individuals; to empathize; to seek to communicate on others’ terms, not one’s own, using tools with which they are familiar; and to stretch out of one’s comfort zone to those of others.

    In this brilliant book, Roger Martin has shared all he has learned about what design thinking is and can do; also, he has suggested specific initiatives that can help to enable his reader to become an effective design thinker while maintaining an appropriate balance by gaining “fluency in both the allusive poetry of intuitive discovery and the precise prose of analytical rigor”; and finally, while creating value for a business, his reader is urged to discover how design thinking can create meaning for one’s life. Bravo!
    Rating: 5 / 5

  • Jim Estill says:

    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.
    Rating: 5 / 5

  • A. C. Ekin says:

    I was interested in learning more about “design thinking” and how it applied to businesses and purchased the book. After all, Martin had a strong reputation in the field and I wanted to read what the best in the field had to say about the subject.

    The first chapter whetted my appetite; I was able to get a glimpse of what design thinking could offer. In the subsequent chapters I learned about a few more pieces of the puzzle as the author seemed to remove some veils. But the more veils removed the more it looked the same: cloudy with some allure of the beauty hiding behind the veils. Most salient attributes, repeated over and over again, are “reliability vs validity,” “traditional vs. design thinking,” “backward looking vs. forward looking,” “inductive and deductive reasoning vs. abductive reasoning.”

    The fundamental argument set forth is this: Reliability oriented managers of the traditional organizations try to find comfort in reliability based on historical data. Future does not necessarily a repeat of the past; ergo, reliability based thinking is old fashioned and traditional. Contrary to this, validity based thinking seeks validity in the unfolding future. Now, all this is very attractive thoughts to me. But …

    The writing has far too many examples of how successful design thinking worked for P&G, Herman Miller, RIM, and others. The amount of explanation of what design thinking is, how abductive reasoning works, or how design thinking can be learned or taught is generally missing. Ironically, despite the forward looking strength of design thinking, most of the narrative is the backward looking evidence seeking in nature, and thus, one could argue that it leans towards the antithesis of design thinking: reliability orientation.

    You will leave this book somewhat frustrated and not really understanding what design thinking is. The author spends much more time making a case against reliability oriented, traditional thinking than for forward looking design thinking.

    Now, some will likely say that if I don’t get it design thinking is not for me. Who knows, maybe they are right. But I would have expected a book with a stronger presence in the domain of design thinking rather than in the backward looking traditional thinking, and make the core idea clearly presented rather than talking around it by way of examples. Read chapter 7 (the last chapter) first, that may help alleviate the above problems to a small extent.

    The book succeeds, however, in getting you read more about design thinking and abductive logic, and is entertaining.

    Rating: 3 / 5


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