Other abductive thinkers fail to address Brown’s second requirement: that the innovation must make business sense. Looking back on the dot-com crash, Michael Dell, founder of Dell, argues that little has changed. “Still today in our industry, if you go to a trade show, you walk around and you will find a lot of technology for which there is no problem that exists,” he says. “It’s like, ‘Hey, look at this, we’ve got a great solution and there is no problem to solve here.’ ” 6 Think of the Apple Newton, the world’s first portable data assistant. Launched in 1993, it utterly flopped. According RIM’s Lazaridis, it was a failure of abduction. “It had no future,” he argues. “What problem did it solve? What value did it create? It was a research project. What could you do with it that you couldn’t do with a laptop? Nothing. And everything you could do with it, you could do better with a laptop.” Apple Computer (as it was known then) wasn’t wrong when it inferred that customers would value a small, portable, digital assistant, but it didn’t ultimately deliver a solution that matched the insight.
Why You’ve Never Heard of Charles Sanders Peirce
by Jennifer Riel
Bertrand Russell called him “beyond doubt … one of the most original minds of the later nineteenth century and certainly the greatest American thinker ever.” 4 So why is Charles Sanders Peirce at best an obscure footnote, while other nineteenth-century American philosophers like William James, Ralph Waldo Emerson, and Henry David Thoreau are still widely read today?
Peirce has been characterized as a prickly misanthrope, which may help explain his low profile. He acknowledged it himself, contrasting his own personality with that of his friend William James: “He is so concrete, so living; I a mere table of contents, so abstract, a very snarl of twine.” 5 Many intellectuals have had cranky dispositions, yet have gone on to great acclaim. Unfortunately, Peirce compounded his prickly demeanor with a serious transgression of Victorian propriety.
Peirce’s father was a well-respected professor of astronomy and mathematics at Harvard. Peirce, on the other hand, struggled to get any academic appointment, due to a somewhat lackadaisical work ethic. It took more than fifteen years after his graduation from Harvard to gain a nontenured position as a lecturer in logic at Johns Hopkins University. The appointment would be short-lived. Early in his career, Peirce married Melusina Fay, daughter of a prominent Cambridge family. While still married to Fay, Peirce took up with Juliette Froissey, a young French girl, openly living and traveling with her. When he and Fay were finally divorced a few years later, he married his mistress just six days after the decree. Puritanical Boston society was aghast. He was thereafter fired by Johns Hopkins and largely shunned by the academic community for the rest of his life.
Peirce had transgressed against the strict rules of a highly religious, morally rigid community. His punishment was swift and far-reaching. He was reduced to poverty for the rest of his life, unable to afford heat in winter and subsisting on charity from local merchants and his old friends from Harvard. He lived in enormous pain, as the result of a nerve disorder diagnosed as facial neuralgia. The pain made him more moody and unpleasant still.
For these reasons, we do not have a sustained body of work from which to get a true sense of his contribution to philosophy and logic. Rather than consult a concise set of abridged works, the Peirce scholar must delve into thousands of handwritten, unpublished manuscripts. So, he remains the tormented, secret hero of American philosophy.
So the prescription is not to embrace abduction to the exclusion of deduction and induction, nor is it to bet the farm on loose abductive inferences. Rather, it is to strive for balance. Proponents of design thinking in business recognize that abduction is almost entirely marginalized in the modern corporation and take it upon themselves to make their companies hospitable to it. They choose to embrace a form of logic that doesn’t generate proof and operates in the realm of what might be—a realm beyond the reach of data from the past.
That’s a risk many leaders won’t take. Making Peirce’s logical leaps is not consistent or reliable; nor does it faithfully adhere to predetermined budgets. But the far greater risk is to maintain an environment hostile to abductive reasoning, the proverbial lifeblood of design thinkers and the design of business. Without the logic of what might be, a corporation can only refine its current heuristic or algorithm, leaving it at the mercy of competitors that look upstream to find a more powerful route out of the mystery or a clever new way to drive the prevailing heuristic to algorithm. Embracing abduction as the coequal of deduction and induction is in the interest of every corporation that wants to prosper from design thinking, and every person who wants to be a design thinker.
Solving the Paradox at RIM
Thinking abductively to dive into a mystery is part of the culture at RIM, though Lazaridis uses different language to describe it. Rather than mystery, he prefers the term paradox. “It’s this whole idea of solving the paradox,” he says. “How do you solve a paradox? Well, you have to know what the paradox is.” In order to advance knowledge, the design thinker has to get comfortable delving into the mystery, trying to see new things or to see things in a new way.
In the early days of the BlackBerry, Lazaridis saw that laptop users were demanding smaller and smaller devices, while the industry was bumping up against the size limitations of small keyboards and display screens. A standard QWERTY keyboard can only get so small before it becomes awkward and uncomfortable to use. A screen displaying all the information a user expects can be reduced only so much before it becomes unreadable or painfully cluttered.
Staring at this paradox—this mystery—Lazaridis stepped back and asked what could be true. What if users didn’t use all their fingers to type? What if the information we think must be displayed actually gets in the way of understanding? How could reducing size create a better and more usable product? He worked through the paradox. “When is a small keyboard better?” he asked. “When you can use your thumbs. When is a small display better? When it draws your attention to something important.” By moving to a handheld device with a thumb-operated keyboard, RIM changed the game on size. By thinking very carefully about what information actually is essential to the end user, RIM reframed the user interface to be simple and clean.
RIM thought about what could make its device truly delightful to the customer. When it came to e-mail, that meant making sure that the device alerted the user that a new e-mail had arrived only when the message was ready to be displayed: “It’s fundamental, but every developer we’ve ever hired to do this project or rewrite the code makes the same mistake,” Lazaridis explains. “They signal you as soon as the e-mail arrives.” In that case, the user would be prompted by a buzz, pull out her BlackBerry, and have to wait several seconds for the message to be displayed on the screen. Instead, Lazardis insisted that the message pop onto the screen the moment the device is removed from its holster. “Why should you sit there and wait?” he asked.
Delighting the customer also meant thinking about what the device was really meant to do. Looking back, Lazaridis notes that the BlackBerry’s key value wasn’t in receiving and sending e-mail. Rather, it was in quickly giving users enough information to decide if they needed more. So RIM designed the display screen on the BlackBerry to give users just enough information to make that determination. When a message arrives on your BlackBerry, he says, “There’s a dividing line. You know who it’s from, you know the title, and you know a little bit about the message. Everything else is above and below. What we’re trying to say is, ‘This is what you need to know, without touching anything.’ You need to know who it’s from, what’s the subject, and a little bit of the text to decide if you want to keep reading it or put it away. The value is that it gives you the information you need to decide whether you need to respond or whether you don’t need to deal with it right now.”
Notifying the user only when the message is ready to be displayed, combined with giving just enough information to allow the user to make
a quick assessment of what to do with it, is the BlackBerry breakthrough. “We understood that value,” Lazaridis says, “and then everything we did was about that—immediate delivery, the quick keyboard response, all the shortcuts. Making that loop so tight and so easy to form muscle memory around, that’s what made it addictive. We worked on that loop and everything else was irrelevant. The browser, who cared? Everyone else was working on how do we put paging systems into this, how do we come up with messaging services so we can charge them and send them alerts and all this. We didn’t care. All we wanted to do was get you enough of the e-mail that you could respond. That’s all that mattered.”
Later on, during RIM’s high-growth phase, Lazaridis continued to display the attributes of the design thinker, including a willingness to explore new questions for which there is no time-tested solution. Originally, the BlackBerry was an e-mail device with no voice capability. It was so popular that RIM could have successfully exploited that one product for years. Demand was growing by leaps and bounds in RIM’s original market, as corporate IT departments bought BlackBerrys by the bushel for company executives. RIM knew exactly what and how to sell to them. But rather than rest on his laurels, Lazaridis looked back along the knowledge funnel to the next mystery and caught a glimpse of what might come next: a handheld device that merged voice and data.
Consider, too, the evolution in RIM’s definition of its core business. Initially, RIM sold its BlackBerrys with a package of minutes of data usage. But eventually, Lazardis and Balsillie realized RIM’s strengths lay in designing, building, and marketing communications devices for busy people, not in selling minutes, which was the expertise of wireless carriers such as Verizon and Vodafone. Lazaridis and Balsillie redesigned the distribution model to treat carriers as partners rather than competitors, which in turn opened a powerful new distribution channel for RIM’s products.
More recently, Lazaridis wanted to extend the BlackBerry to a rich new market: consumers. He foresaw a day when a competitor in “smart” phones (phones with voice, e-mail, and Web-surfing capability) for the consumer market would gain enough scale to tackle RIM in the corporate market. To head off that unknown rival, Lazaridis went to work creating a new suite of consumer-friendly products (smaller, with a camera and music-handling capabilities). He asked his staff to build the best and smallest Black-Berry they could imagine; he said to his staff, “Define for me what the ultimate BlackBerry is.” 7 They came back with smaller and smarter consumer-friendly designs. Soon, these models, the Pearl and the Curve, became RIM’s biggest-selling products.
Just as important, the Pearl and the Curve hit the U.S. consumer smart-phone market ahead of Apple’s iPhone, establishing a leading market share for the BlackBerry. So rather than having that market to itself, Apple has had to battle with an established consumer player, RIM. Interestingly, RIM’s other competitors have had less success in the move to smart phones. “Apple realized the same thing we knew about Nokia and Motorola and all the others, which is that they were too successful and focused on feature phones (without e-mail and Web capability). They weren’t betting on the future,” says Lazaridis. “They were betting on their engine—their low-cost, high-volume, global supply chain juggernaut. They were missing the point. There will be no feature phones in the future. It will all be smart phones.”
Long before the iPhone was even a rumor, Lazaridis was back to work creating the 3G Bold with a dramatically enhanced screen and the media-handling capabilities of an iPod. Next came the touch-screen Storm. Lazaridis recognized that a set of his customers wanted a touch-screen device, but felt that existing touchscreen technology lacked an essential element of the BlackBerry experience—the ability to separate navigation (scrolling to the desired message) from confirmation (opening the message). Lazaridis again applied abductive logic, driving for a breakthrough technology that allowed the user to separate navigating from confirming on a touch screen while simultaneously providing the positive feedback of a click—the distinctive feature of the Storm.
What makes RIM exceptional is that its leaders make a conscious and overt effort to rebalance the organization against the natural tilt toward reliability, actively pushing knowledge down the funnel. Most businesses stress the overriding importance of continuity and consistency. A concerted effort to balance reliability with validity can appear to threaten those values. But RIM’s success demonstrates how validity need not undermine reliability. By embracing both design thinking and abductive thinking, RIM amplifies and extends the strength of reliability, creating a competitive advantage far greater and more lasting than validity or reliability alone. It is both more innovative and more efficient than its competitors. Its competitive advantage isn’t based on cost leadership or differentiation or a particular resource. The basis of advantage is its speed of movement through the knowledge funnel, which produces perpetual advantage in both cost and innovation.
To understand the source of its advantage, we have to look at the cost dynamics of activities as they move through the knowledge funnel from mystery to heuristic to algorithm. The dynamics can be summarized as an axiom: as knowledge moves through the funnel, costs fall.
Navigating the Knowledge Funnel
Delving into mysteries is the most expensive activity along the knowledge funnel, because you literally don’t know what you are doing. The high cost helps explain why so much research into mysteries is conducted in universities, government-funded labs, and other not-for-profit entities. Research professors spend their entire careers staring into the mysteries of their particular field. Most of their work is not economically viable. It doesn’t conform to any particular schedule, budget cycle, or planning document.
When first encountering a mystery, design thinkers have to look at everything, because they don’t yet know what to leave out. The danger is that what’s omitted might be the key to the mystery. With little to go on, the design thinker employs abductive reasoning to discern a pattern in what to others is still an amorphous whole. Of course, the search for patterns is typically marked by repeated false starts and blind alleys; many abductive inferences to the best explanation will be wrong. But with experience, design thinkers learn to spot handholds where others see only a sheer cliff face.
Mysteries, then, are expensive, time consuming, and risky; they are worth tackling only because of the potential benefits of discovering a path out of the mystery to a revenue-generating heuristic. The benefits of moving knowledge to the heuristic stage derive from the process of omission. Instead of having to consider every facet of a mystery, the creator of a heuristic need consider only a subset, which yields results more quickly.
But a heuristic takes advanced skill and judgment to operate. The operators of the heuristic form a cognitive elite in their organization, highly valued for their skill, training, and experience in applying the heuristic. But the organization pays a high cost for their elite capabilities. Driving down those costs provides the motivation for applying abductive reasoning once again, toward moving knowledge to the next stage—the algorithm.
The algorithm generates savings by turning judgment—a general way of getting toward the desired solution—into a formula or a set of rules that, if followed, will produce the desired solution. Having removed further variables and variation from the equation, an algorithm is even more efficient than a heuristic. Algorithms can be run by less experienced and less expensive personnel than can heuristics.
Computer code—the digital end point of the algorithm stage—is the most efficient expression of an algorithm. The unit cost of data entry by a modestly trained clerk in Bangalore is already low, but the cost of a computer to scan an invoice and enter the data into the appropriate cells on a spreadsheet is essentially zero. All that’s needed is for someone to operate and monitor the computer. At the code stage, knowledge has been narrowed to the extreme. But with it comes lightning speed and infinitesimal costs, the ultimate efficiency. Code takes the cost dynamic of knowledge to its logical limit.
The analysis of cost dynamics seems to imply that the most profitable course for any company that solves a mystery is to drive it to a heuristic and then to an algorithm so tight it turns to code. Then it should give up on design thinking and run that code forever, making heaps of money for shareholders. But that approach is shortsighted, because, as I discussed in chapter 1, it fails to capitalize on the option that the company created—at sizable human and economic cost—as it pushed knowledge quickly through the knowledge funnel. To exploit that opportunity, a company can choose to redeploy its design thinkers. By putting them to work on new mysteries, the company both defends its current position and goes on the offensive, like RIM’s Lazaridis, who has continually reinvented both products and strategy by tackling new mysteries and revisiting heuristics and algorithms that grew out of answers to older mysteries.
Roadblocks en Route to Design Thinking
To be sure, there are impediments to effectively ingraining design thinking in an organization. The main roadblock is the corporate tendency to settle at the current stage in the knowledge funnel. Companies often let mysteries remain mysteries, declaring them unsolvable. A studio executive might insist that it’s impossible to forecast which movies will hit it big and which will go straight to DVD. A consumer-products executive might declare that it’s impossible to accurately predict consumers’ changing tastes or how they will react to a price increase. Instead of delving into the mystery, they just create coping mechanisms. The current fad for “emergent strategy” is one mechanism, being nothing more than a clever way to blame a confusing environment for a company’s inability to plan ahead. Companies that leave important mysteries as mysteries not surprisingly find themselves with no resources available to solve mysteries, precisely because the companies are so very inefficient.
The Design of Business: Why Design Thinking Is the Next Competitive Advantage Page 7