The Design of Business

“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.

The Big Idea

The Big Idea: The biggest takeaway from the book

Trial, Error and the Logical Leap

"At the time a heuristic is first tentatively proposed, no one can prove whether it is useful or valid at all."
- The Design of Business, page 25

That’s really the scary notion behind design thinking for a lot of people; by definition, you’re tackling an unknown as one half of your balancing act. You’re diving back into a mystery with no true sense of potential profit, timeline, or eventual product or service. It’s daunting for those of us who have spent most of our lives in a more “execution-style” business world. As such, many businesses end up unintentionally spending a disproportionate amount of time in the algorithm phase – refining, cost cutting and making incremental improvements.

As the one exception in most companies, true designers have no problem in the world of the unknown, the unproven. In fact, they live for it. Giving a designer a big hairy question to solve, a budget and a timeline is to make a designers day. For the rest of us, though, we need to realize the importance of embracing this style of thinking and incorporating it into our daily functions. We need to proactively work to embrace our innovative tendencies.

Insight #1

An actionable way to implement the Big Idea into your life

Be a Noticer

"The design thinker, in the words of novelist Saul Bellow, is 'a first-class noticer.'"
- The Design of Business, page 30

The best ideas for your industry may already exist. They may be thriving (or flopping) outside of your industry. Have you seen the commercial on innovation where the guy gets an idea for a new drilling machine from his son’s bendy-straw at a fast food restaurant? The best ideas come from ones outside your day to day experience. They come from keeping your eyes open and truly ‘seeing’ the world around you – for all its possibilities and insights. What are you learning today from the world around you?

Insight #2

An actionable way to implement the Big Idea into your life

Ask the Right Question

"Because it is so well suited to satisfying the organizational demand for proof, reliability almost always trumps validity."
- The Design of Business, page 45

The question to ask is not “Why?” Hugely innovative ideas do not come from statements like “show me forecast projections for the next 30 years.” The question to ask is “Why not?” Don’t get caught up in what’s worked in the past. If you rely on past data to drive all your decisions, you’ll end up with variations of past results (incremental improvements at best). When P&G launched Pampers, the product was revolutionary. Pampers “Cruisers” was incremental progress. Small gain in market share, nothing revolutionary. Tide2Go, on the other hand, was a radical innovation for P&G. The rewards matched the impact. Innovation = truly new. It comes from going back to the beginning of the knowledge funnel and asking, “Why didn’t we explore this path? What’s might be down there?” It’s saying, “The market’s changed a bit since we originally created ‘product x’. Do you think the needs/desires of our customer base have changed since then?”

Don’t be afraid to question. Yes, it’s more work to innovate. Yes, it takes more mental power, more resources, more funding. Yes, it’s uncertain and there is an element of risk involved. But it’s also the only way to create change; real change. A true design thinker doesn’t run foolhardy into extra costs and new challenges. But she doesn’t shy away from them either. Find the balance, and you will be a rock star in your organization.

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Chris Taylor

ABOUT Chris Taylor

Founder of Actionable Books, Chris Taylor is a writer, entrepreneur and speaker. He spends his daylight hours helping consultants and employees alike find meaning in their work and discover rich team relationships through his company, Actionablebooks...
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