“Design Thinking”, a term coined by Roger Martin for his latest book The Design of Business, is about the balance between innovative thinking (doing something new; challenging the status quo and delighting your customers with new solutions to their ongoing challenges) and efficiency thinking (doing what you’re already doing in better, cheaper and faster ways to increase profit per unit). Design Thinkers understand the value of each, and work to create a culture that encourages and rewards both.

In any business, there’s a constant drive for reliability; for proof that the actions being taken by staff and supporters are bettering the business. The production of the various iterations of the classic iPod is an example of capitalizing on reliability. The first iPod worked great, therefore small improvements aren’t overly risky. The iPhone, on the other hand, had no track record to prove its eventual success. It was a new device that tackled new issues. It’s easy in retrospect to validate Apple’s decision to delve into the telecom world. Yet at the time of its creation, supporting and producing the iPhone required “logical leaps” on behalf of the executive team and shareholders alike. Apple’s in a unique position – it has built its global empire on the back of design thinking. We’ve come to expect it, and are therefore more encouraging of it.

Sadly, Apple is the exception, not the rule. Think about your business. How readily would your unproven concepts be accepted? Martin’s argument is that innovative thinking – tackling new mysteries and constantly asking “what if?” – should not only be accepted, but encouraged. Innovation is an important half to the puzzle of success. Those companies, large and small, that don’t engage in design thinking are destined to be surpassed by those that do.

Martin (also the Dean at Rotman School of Management, and author of The Opposable Mind) uses a tool called The Knowledge Funnel to illustrate how both innovation and reliability are essential to every business:

Image recreated from
The Design of Business, page 8

When we challenge a new Mystery (think iPod – “How do we simplify the mobile music lover’s life?”) we are faced by a virtually never ending world of options. The process of selection is innovative thinking in its truest form. As we move from the Mystery to the Heuristic phase of the funnel (“We know they like compact and easy to use – ultimately it’s about the music”) we create a rudimentary solution. (Enter the first generation iPod combined with CD manager, iTunes.)

If the Heuristic is a success, we begin to refine it and set parameters to our solution – developing it to see which variations have the most positive commercial results (the iPod shuffle? not so much. The iPod Nano? Absolutely). At this point we are entering the Algorithm stage of development. As we realize success in the Algorithm phase, the temptation of any company can be to sit there indefinitely. After all, this is where our profits are. By spending time tweaking, refining and further developing the process and product in the Algorithm stage we keep everyone happy – our bosses, shareholders, customers.

There is a huge benefit to this style of thinking – by utilizing it, we are able to keep everyone happy… at least for a while. Eventually though someone else – someone who has been revisiting the original problem comes up with an even better solution; one that doesn’t make incremental improvements, but solves the problem in a whole new way. And then we get overshadowed.

The balancing act, as Roger outlines in The Design of Business, is to continue to refine and develop existing algorithms while realizing (and acting on) the importance of constantly innovating – of returning to the mystery portion of the funnel.