The Design of Business
Encyclopedia
The Design of Business: Why Design Thinking is the Next Competitive Advantage is a book published in November 2009 by Roger Martin
, a professor at the University of Toronto
's Rotman School of Management
. The book describes the concept of design thinking, and how companies can best incorporate it into their organizational structure for strong long term innovation and results.
stage, where a rule of thumb is generated to narrow work to a manageable size. In the algorithm
stage the general rule of thumb (heuristic) is converted to a fixed formula, taking the problem from complexity to simplicity.
Martin poses that there are currently two forms of business thinking. Analytical thinking, is driven by a quantitative
process, standardizing to eliminate judgment, bias, and variation. Intuitive thinking, focuses more on an instinct to drive creativity and innovation. Analytical thinking has become much more prevalent in our organizations, because it is more consistent, easier to measure, and can scale in size. Martin labels the difference between a bias for the two schools of thought as the distinction between 'reliability' versus 'validity'. Organizations are much more likely to favor what is reliable because their structures tend to incentivize the advantages of analytical thinking. This means that organizations are often poor at achieving valid solutions because they do not fully take advantage of all three areas of the knowledge tunnel, just the two latter stages (heuristics and algorithms).
Design thinking
balances analytical and intuitive thinking. It combines an openness to explorative thoughts with an exploitative mentality, striking the balance between innovation and a systematic
scalable process. It pulls resources back into the knowledge funnel and allows you to progress through all three stages.
Martin argues that business is currently missing abductive reasoning. Abductive reasoning
is the third form of logic (deductive logic and inductive logic are the other two). Charles Sanders Peirce formed the idea of abductive logic, arguing that no new idea could come from inductive or deductive logic. Peirce described the process of discovery as new ideas that arose when thinkers observed data that did not fit with the existing models. The first step of reasoning was not observation but wondering. Designers live in the world of abductive logic, actively looking for new data points and changing the way that things are done. Incorporating this into organizational structures allows firms to become better at the mystery stage of the knowledge funnel.
The way organizations implement these findings depends on the structure and makeup of the organization. CEOs like Mike Lazardis at Research in Motion
, lead the design thinking by example. An alternative is a new corporate structure that incorporates design thinking into the firm DNA
, like the one A.G. Lafley put in place at Procter and Gamble. Similarly, a hybrid model, with a CEO who leads by example but also has a creative structure in place to encourage design thinking, can work well; the best example is Apple under Steve Jobs
.
From a personal development standpoint, Martin advocates using some of the tools discussed in his earlier book, The Opposable Mind
, to develop the design thinking mindset. Stance; positioning yourself with a mindset to acquire the skills to become a successful design thinker. Tools; taking the opportunity to develop skills that will improve your thought process and creativity. Experiences; surrounding yourself with situations that will challenge you, expose you to different variations and reinforce your design thinking. All three combine and influence each other, with the knowledge flowing both ways.
Martin acknowledges that the world often does not like validity and design thinking, so he suggests the following steps to get along with others while practicing it:
Roger Martin
Roger Martin is Dean of the Rotman School of Management at the University of Toronto and an author of several business books. Martin has originated several important business concepts in use today, including integrative thinking...
, a professor at the University of Toronto
University of Toronto
The University of Toronto is a public research university in Toronto, Ontario, Canada, situated on the grounds that surround Queen's Park. It was founded by royal charter in 1827 as King's College, the first institution of higher learning in Upper Canada...
's Rotman School of Management
Rotman School of Management
The Joseph L. Rotman School of Management commonly known as Rotman School of Management is the University of Toronto's business school, located in St. George Street in Downtown Toronto. The school, named after Joseph L...
. The book describes the concept of design thinking, and how companies can best incorporate it into their organizational structure for strong long term innovation and results.
Book summary
Martin introduces the knowledge funnel as the process followed by leading businesses to innovate more consistently and successfully. The knowledge funnel has three different phases: mystery → heuristic → algorithm . The mystery stage comprises the exploration of the problem, this transitions to the heuristicHeuristic
Heuristic refers to experience-based techniques for problem solving, learning, and discovery. Heuristic methods are used to speed up the process of finding a satisfactory solution, where an exhaustive search is impractical...
stage, where a rule of thumb is generated to narrow work to a manageable size. In the algorithm
Algorithm
In mathematics and computer science, an algorithm is an effective method expressed as a finite list of well-defined instructions for calculating a function. Algorithms are used for calculation, data processing, and automated reasoning...
stage the general rule of thumb (heuristic) is converted to a fixed formula, taking the problem from complexity to simplicity.
Martin poses that there are currently two forms of business thinking. Analytical thinking, is driven by a quantitative
Quantitative
A quantitative property is one that exists in a range of magnitudes, and can therefore be measured with a number. Measurements of any particular quantitative property are expressed as a specific quantity, referred to as a unit, multiplied by a number. Examples of physical quantities are distance,...
process, standardizing to eliminate judgment, bias, and variation. Intuitive thinking, focuses more on an instinct to drive creativity and innovation. Analytical thinking has become much more prevalent in our organizations, because it is more consistent, easier to measure, and can scale in size. Martin labels the difference between a bias for the two schools of thought as the distinction between 'reliability' versus 'validity'. Organizations are much more likely to favor what is reliable because their structures tend to incentivize the advantages of analytical thinking. This means that organizations are often poor at achieving valid solutions because they do not fully take advantage of all three areas of the knowledge tunnel, just the two latter stages (heuristics and algorithms).
Design thinking
Design thinking
Design Thinking refers to the methods and processes for investigating ill-defined problems, acquiring information, analyzing knowledge, and positing solutions in the design and planning fields...
balances analytical and intuitive thinking. It combines an openness to explorative thoughts with an exploitative mentality, striking the balance between innovation and a systematic
Systematic
Systematic is an American hard rock band from Oakland, California. They were one of the first signings to Metallica drummer Lars Ulrich's record label, The Music Company, via Elektra Records. The band released two studio albums before disbanding in 2004....
scalable process. It pulls resources back into the knowledge funnel and allows you to progress through all three stages.
Martin argues that business is currently missing abductive reasoning. Abductive reasoning
Abductive reasoning
Abduction is a kind of logical inference described by Charles Sanders Peirce as "guessing". The term refers to the process of arriving at an explanatory hypothesis. Peirce said that to abduce a hypothetical explanation a from an observed surprising circumstance b is to surmise that a may be true...
is the third form of logic (deductive logic and inductive logic are the other two). Charles Sanders Peirce formed the idea of abductive logic, arguing that no new idea could come from inductive or deductive logic. Peirce described the process of discovery as new ideas that arose when thinkers observed data that did not fit with the existing models. The first step of reasoning was not observation but wondering. Designers live in the world of abductive logic, actively looking for new data points and changing the way that things are done. Incorporating this into organizational structures allows firms to become better at the mystery stage of the knowledge funnel.
The way organizations implement these findings depends on the structure and makeup of the organization. CEOs like Mike Lazardis at Research in Motion
Research In Motion
Research In Motion Limited or RIM is a Canadian multinational telecommunications company headquartered in Waterloo, Ontario, Canada that designs, manufactures and markets wireless solutions for the worldwide mobile communications market...
, lead the design thinking by example. An alternative is a new corporate structure that incorporates design thinking into the firm DNA
DNA
Deoxyribonucleic acid is a nucleic acid that contains the genetic instructions used in the development and functioning of all known living organisms . The DNA segments that carry this genetic information are called genes, but other DNA sequences have structural purposes, or are involved in...
, like the one A.G. Lafley put in place at Procter and Gamble. Similarly, a hybrid model, with a CEO who leads by example but also has a creative structure in place to encourage design thinking, can work well; the best example is Apple under Steve Jobs
Steve Jobs
Steven Paul Jobs was an American businessman and inventor widely recognized as a charismatic pioneer of the personal computer revolution. He was co-founder, chairman, and chief executive officer of Apple Inc...
.
From a personal development standpoint, Martin advocates using some of the tools discussed in his earlier book, The Opposable Mind
The Opposable Mind
The Opposable Mind: How Successful Leaders Win Through Integrative Thinking is a book published in December 2007 by Roger Martin, Dean of the University of Toronto’s Rotman School of Management...
, to develop the design thinking mindset. Stance; positioning yourself with a mindset to acquire the skills to become a successful design thinker. Tools; taking the opportunity to develop skills that will improve your thought process and creativity. Experiences; surrounding yourself with situations that will challenge you, expose you to different variations and reinforce your design thinking. All three combine and influence each other, with the knowledge flowing both ways.
Martin acknowledges that the world often does not like validity and design thinking, so he suggests the following steps to get along with others while practicing it:
- 1. Reframe extreme views as a creative challenge
- 2. Empathize with our colleagues on the extremes.
- 3. Learn to speak the languages of both reliability and validity.
- 4. Put unfamiliar concepts in familiar terms.
- 5. When it comes to proof, use size to your advantage; test small first to illustrate successful outcomes, then scale up