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

by Roger L. Martin

  Like anyone else who takes a job in another country and needs to learn the local language in order to function, design thinkers need to learn the language of reliability to be successful in communicating with reliability-driven colleagues and the language of validity to communicate with validity-driven colleagues. If the design thinker comes from a business training and background, the need will likely be to learn the language of validity. If the design thinker comes from design training, the need will likely be to learn the language of reliability. And what is the best way to learn another language? It is to spend time with those who speak the language you wish to acquire, in their environment. Just listen, as if it is truly important and with empathy, and you will learn the language in no time.

  4. Put Unfamiliar Concepts in Familiar Terms

  When a reliability-driven colleague cares primarily about substantiation based on past events and a validity-driven colleague cares only about substantiation based on future events, both face a challenge in communicating ideas compellingly. What tools can the design thinker use to bridge the gap? To help the reliability-driven colleague, the best tool for the design thinker to encourage is analogy: for the design thinker to craft a story that takes an existing idea in operation elsewhere and show the analytical thinker how it resembles the novel idea being proposed—not exactly the same, but similar enough. That helps the reliability-driven analytical thinker see the idea as less threatening and problematic.

  I learned the hard way as a strategy consultant that if I didn’t use analogy to help a reliability-driven client I would fail to be convincing. My lesson occurred some years ago, when the Canadian banking industry was undergoing radical change. New regulations allowed the big retail banks to buy up the independent brokerage firms. The result was a boon for the consulting industry, as the big banks tried to integrate the structure and culture of their new brokerage arms. One such bank asked me to develop a strategy for its high-net-worth customers. Previously, the bank had been limited to providing these customers with checking accounts, guaranteed investment certificates, mortgages, and traditional retail banking products. Now that it could offer brokerage services to these same customers, the bank wanted an integrated strategy for serving this lucrative segment.

  When they thought about the bank’s high-net-worth customers, the bank executives visualized customers who looked a lot like themselves: corporate execs, lawyers, and partners at the biggest professional service firms. The initial strategy of the bank focused on these customers and served them in its biggest downtown branches with special, splendidly appointed “private banking” offices.

  As my team and I dug into the data, it became clear to us that this group, though undeniably affluent, were not a desirable set of customers. They selected a limited and quite vanilla-flavored suite of services, and they were picky, demanding, and price sensitive. But there was another group of high-net-worth individuals who were underserved and seemed willing to pay for a broader array of services. They were entrepreneurs and partners from small legal and accounting firms, often living and working in the suburbs that ringed Canada’s larger cities. These folks had a much more complex set of needs and refused to observe any dividing line between their personal and business finances. They wanted mortgages for their homes and for their investment properties, they wanted to co-invest with clients and partners, and they didn’t want to have to bounce from one narrow specialist in the bank to another to get a deal done. They also did not want to have to drive into the city to a fancy main branch filled with high-backed chairs and woodpaneled walls, all bought with their service fees. Instead, they wanted highly integrated, personal service in their own neighborhood, with no divide between their commercial and personal banking services. None of the Canadian banks had a compelling service package to offer this potentially valuable market. I crafted a strategy that focused on serving this dynamic segment.

  At the final presentation, I proudly presented our radical new strategy. At the end, the CEO nodded solemnly and asked, “Have any of the other banks done this?” I answered brightly, “No, you would be the very first.” I was certain that this news would seal the deal. It didn’t. The meeting was over. The risk-averse CEO could not imagine gambling on an unproven and utterly unreliable idea.

  My mistake was to speak to the CEO in the language of validity, which practically invited him to reject my argument out of hand. Had I had more empathy with my client and understood the language of reliability, I might have responded to his query using an illustrative example. I might have said, “None of our domestic competitors have done this. But a variant of this approach has been used by some of the best-performing European private banks for some time. It isn’t exactly the same, but it bears important similarities. And recall, our bank has succeeded in the past when it has taken an idea from outside our home market and introduced it here.” Bridging the language gap will not eliminate the apparent risk of an idea, but it presents the unfamiliar in a familiar, reliability-oriented framework. An analogy or story helps reliability-driven colleagues see that you are not substantiating your argument based exclusively on future events but in part on past events.

  To help the validity-driven colleague, the best tool for the design thinker is to encourage the sharing of data and reasoning, but not conclusions. Reliability-oriented thinkers are inclined to crunch all the data that they see as relevant, come to a firm conclusion on the analysis, and then impose that conclusion on everyone else. Intuitive thinkers, though, are likely to object that their analytical-thinking colleagues have considered only a small fraction of the relevant data; they are overlooking or consciously ignoring plenty of relevant data that is hard to measure and quantify. If analytical thinkers attempt to impose their conclusions on their validity-driven colleagues, they will cause them to feel that it is impossible to develop a truly innovative solution because so many important design features are being ignored.

  However, if the reliability-driven colleagues don’t at least share their data and reasoning with their intuitive-thinking counterparts, the two cannot hope to understand each other. That gap will make it much less likely that the design thinker will be able to forge a design solution that both the analytical and intuitive thinkers will find acceptable. For analytical thinkers, sharing their data and reasoning, but stopping short of imposing conclusions, helps the design thinkers come up with a solution to which all parties can say yes. While the end design may make their reliability-driven colleagues nervous on the margin, it will be less likely to be a design that they feel compelled to reject out of hand as too scary and dangerous.

  5. When It Comes to Proof, Use Size to Your Advantage

  Even with careful use of language and employment of analogies, proof is the biggest problem. Validity seekers don’t traffic in proof of the sort that reliability-seeking colleagues want, which is substantiation based on past events. Validity seekers simply can’t prove in advance that their ideas will work.

  There is good news and bad news about the future. The bad news is that a year from now is the future and, from a proof standpoint, what happens then is irrelevant. The good news is that a year from now, that year is the past. This nuance is critical to reliability-driven colleagues. Design thinkers can convince their colleagues to bite off a piece of what they would like to do and say, “Here is my prediction of what will happen. Let’s watch next year to see whether it does or not.” If they agree to bite off that chunk and the design thinkers’ predicted results happen over the year, the reliability-driven colleague will gain confidence in them and their ideas. What was in the future a year ago is in the past today. The key for design thinkers is to turn the future into the past, because the reliability-driven colleague sees the future as the enemy and the past as a friend.

  Validity seekers resist biting off a little piece because it feels to them that any parsing or phasing of the solution will destroy its integrity. Most would rather have everything done in one swoop and not look back. But because that sort
of uncertainty is anathema to analytical thinkers, design thinkers, if only out of self-interest, need to develop skills in biting off as little a piece as possible. That affords them the best chance to turn the future into the past.

  When dealing with intuitive thinkers, on the other hand, design thinkers need to stretch to bite off a piece that is big enough to give innovation a chance. They have to listen to an argument from their validity-seeking colleagues that they will have to realize some significant portion of the whole to know whether the design will in fact work.

  From the middle, the design thinkers need to develop their skills in helping both reliability- and validity-driven colleagues to design right-sized experiments that productively turn the future into the past.

  Getting Along

  In many respects, the advice for getting along is quite generic: appreciate the legitimate differences; empathize; seek to communicate on their terms, not yours, using tools with which they would be familiar; and stretch out of your comfort zone toward those of others. Getting along has never been and will never be rocket science. But the world is full of conflicts, including the uneasy relationship between intuitive thinkers and analytical thinkers, between the forces of validity and reliability. The relationship should be highly productive, and the design thinker can help make it so.

  Developing your design-thinking capabilities is a continuous exercise in balance. The exploration of valid solutions will find its counterweight in the ability to exploit those solutions efficiently. The inner-directed work of developing your stance, tools, and experiences as a design thinker will be integrated with the outer-directed work of communicating and collaborating with colleagues who tilt strongly toward reliability (or, less often, validity). The exciting pursuit of solutions to wicked problems will alternate with the sober calculation of the business value of solving the problem. As you grow more sure-footed and adept at maintaining the design thinker’s balance, you will gain fluency in both the allusive poetry of intuitive discovery and the precise prose of analytical rigor. And as you learn the many ways in which design thinking creates value for a business, you will also discover that design thinking creates meaning for your life.

  Notes

  Chapter 1

  1. Information on McDonald’s was drawn from a number of sources, notably Michael Arndt, “The Creator of McWorld,” BusinessWeek, July 5, 2004, 18; Lewis Lord, “The McHistory of America,” U.S. News & World Report, December 27, 1999, 53; http://www.time.com/time/time100/builder/profile/kroc.html; http://www.aboutmcdonalds.com/mcd/our_company/mcd_history.html

  2. Bono made this remark while accepting Record of the Year at the 43rd Annual Grammy Awards, February 21, 2001.

  3. http://www.metacritic.com/music/artists/u2/allthatyoucantleavebehind.

  4. See James March. “Exploration and Exploitation in Organizational Learning,” Organization Science (February 1991): 71–87.

  5. In 2007, Steelcase agreed to sell controlling interest in IDEO to IDEO’s management team, transitioning ownership over a five-year period.

  6. Saul Bellow, The Actual (New York: Viking, 1997).

  Chapter 2

  1. For more on Dr. Stephen Scherer, see http://www.tcag.ca/scherer/.

  2. All of the quotes from Dr. Stephen Scherer in this chapter come from a discussion with the author, November 6, 2008.

  3. For more on the Human Genome Project, see http://www.ornl.gov/sci/techresources/Human_Genome/home.shtml and https://www.celera.com/celera/history.

  4. Ian Davis and Elizabeth Stephenson, “Ten Trends to Watch in 2006,” The McKinsey Quarterly ( January 2006).

  5. Historical stock prices retrieved from http://finance.yahoo.com/. Other details from: David Friend, “Research In Motion Shares Drop 26 Per cent after Missing Analyst Expectations,” The Canadian Press, September 26, 2008, and Matt Hartley, “RIM Has Its Bell Rung,” Globe and Mail, September 26, 2008.

  6. Daniel A. Levinthal and James G. March, “The Myopia of Learning,” Strategic Management Journal (Winter 1993): 105.

  7. “We shape our buildings, and afterwards our buildings shape us;” Winston Churchill, British House of Commons, October 28, 1943.

  Chapter 3

  1. Unless otherwise indicated, all quotes from Mike Lazaridis in this chapter come from a discussion with the author, April 2, 2009.

  2. “Research In Motion Reports Fourth Quarter and Year-End Results for Fiscal 2009,” Research In Motion press release, April 2, 2009.

  3. Tim Brown, “Design Thinking,” Harvard Business Review, June 2008, 86.

  4. Bertrand Russell, Wisdom of the West (London: Macdonald, 1959).

  5. Cheryl Misek, The American Pragmatists (London: Oxford University Press, forthcoming).

  6. Michael Dell, in conversation with the author as part of the Rotman School of Management’s Integrative Thinking Experts Speaker Series, September 21, 2004.

  7. Brian Banks and Mark Evans, “Two Men and Their Baby,” Financial Post Business, November 2006, 32–38.

  Chapter 4

  1. Historical stock prices retrieved from http://finance.yahoo.com/.

  2. Marian Stinson, “Procter and Gamble Awash in a Sea of Selling,” Globe and Mail, March 29, 2000, B18.

  3. Daniel Eisenberg, “Trouble in Brand City,” Time, March 20, 2000, 47.

  4. Patrick Larkin and Ken Stammen, “Investors agonize over P&G stock slip; Analysts: Recovery could take 3 years,” Cincinnati Post, March 17, 2000, 5C.

  5. Per the Financial Times Global 500 rankings.

  6. All of the quotes from Claudia Kotchka in this chapter come from a discussion with the author and Jennifer Riel, November 20, 2008.

  7. See Bill Buxton, Sketching User Experiences: Getting the Design Right and the Right Design (San Francisco: Morgan Kaufman, 2007), 63.

  8. C. West Churchman, “Wicked Problems,” Management Science, vol.14, no. 4 (December 1967).

  9. Bill Buxton, correspondence with the author, October 17, 2008.

  Chapter 5

  1. http://www.hermanmiller.com/CDA/SSA/Product/1,1592,a11-c1639-p60,00.html.

  2. Joseph Hooper, “The Air Chair,” Esquire, April 1997, 106.

  3. Malcolm Gladwell, Blink: The Power of Thinking Without Thinking (New York: Little, Brown and Company, 2005).

  4. http://www.hermanmiller.com/CDA/SSA/Product/1,1592,a10-c440-p8,00.html.

  5. All of the quotes in “The De Prees of Herman Miller” box are from a Hugh De Prees speech given at the Rochester Institute of Technology (Rochester, NY), 1965.

  6. As related to the author in conversation, 1993.

  7. David Kelley, correspondence with the author, October 30, 2008.

  8. Roger Martin, “Tough Love: Business Wants to Love Design, But It’s an Awkward Romance,” Fast Company, October 2006.

  9. Tim Brown, correspondence with the author, October 9, 2008.

  10. Julia King, “Getting the Message Out,” Computerworld, February 19, 2007.

  11. As quoted in Roger Martin, “Tough Love: Business Wants to Love Design, But It’s an Awkward Romance.”

  12. Jack Welch, in conversation with the author as part of the Rotman School of Management’s Integrative Thinking Experts Speaker Series, September 12, 2005.

  13. Sohrab Vossoughi, correspondence with the author, October 20, 2008.

  14. U.S. Department of Education, National Center for Education Statistics, 2003–04 Integrated Postsecondary Education Data System (IPEDS), Fall 2004.

  15. John Maeda, correspondence with the author, October 31, 2008.

  Chapter 6

  1. Information on Guy Laliberté and Cirque du Soleil was drawn from a number of sources, notably: Benoit Aubin, “Disney of the New Age,” Maclean’s, June 2006, 22; David Dias, “Entrepreneur of the Year,” Financial Post Business, December 2006, 56; Konrad Yakabuski, “The Greatest Canadian Company on Earth,” Report on Business Magazine, August 2007, 56; Linda Tischler, “Join the Circus,” Fast Company, July 2005, 52.

  2. As quoted in Dias, “
Entrepreneur of the Year.”

  3. As quoted in Aubin, “Disney of the New Age.”

  4. Ibid.

  5. Information on Bob Ulrich and Target was drawn from a number of sources, notably: “Business: On Target,” The Economist, May 5, 2001, 1; Mike Duff, “End of an Era, Beginning of a Legacy,” Retailing Today, April 14, 2008, 16; Jennifer Reingold, “Target’s Inner Circle,” Fortune, March 31, 2008, 74; Julie Schlosser, “How Target Does It,” Fortune, October 18, 2004, 100; http://sites.target.com/site/en/company/page.jsp?contentId=WCMP04-032391.

  6. Reingold, “Target’s Inner Circle.”

  7. Ibid.

  Chapter 7

  1. Roger Martin, The Opposable Mind (Boston: Harvard Business School Press, 2007), 91–106.

  2. John Maeda, correspondence with the author, October 31, 2008.

  3. Sohrab Vossoughi, correspondence with the author, October 20, 2008.

  4. Tim Brown, correspondence with the author, October 9, 2008.

  5. Bill Buxton, correspondence with the author, October 17, 2008.

  About the Author

  A best-selling author, Roger Martin is dean of the Rotman School of Management at the University of Toronto as well as a senior adviser to CEOs of large global companies. He is a columnist for BusinessWeek Online’s Innovation and Design Channel and a regular contributor to the Financial Times Judgment Call column and to the Washington Post On Leadership blog. In 2007, BusinessWeek named him one of the ten most influential business professors in the world.