The Design of Business: Why Design Thinking is the Next Competitive Advantage
By: Roger Martin

Head: (4.5 of 5)
Heart: (4.5 of 5)
Leadership Applicability: (4.5 of 5)

One of the biggest challenges facing leaders of established companies is how to embed innovation for brand new products and services into what are already streamlined business practices built around achieving consistently reliable results from existing products. All too often organizations, and the business schools that fill out their top leadership ranks, are too focused on analytical thinking at the expense of intuitive thinking, which means they are asking “why” questions based on data analysis from the past instead of “why not” questions about something that cannot yet be proven.  The most successful businesses however, balance the two in a “dynamic interplay that I call design thinking,” Martin states.

Martin has developed a model called the Knowledge Funnel, which progresses from a quest to solve “mysteries” by researching and/or intuiting a basic hypothesis about some aspect of the industry or customers’ lives, to “heuristics,” which are the basic strategic plans and processes to build or manufacture or supply the product conceived of in the previous stage, and finally to “algorithms,” where the process of production or service fulfillment is streamlined in an easy replicable way so that workers (or even software) can be consistently trained to deliver it. Opportunities exist at each stage, but the most successful companies don’t get stuck at any one stage; they are continually moving new ideas through the funnel. Moving down the funnel provides efficiencies of scale and lower cost labor, allowing the company to grow and ideally, fund more R&D and creative design to add the next new thing to the top of the funnel.

Martin spends time carefully making distinctions between stages of the funnel and between the notions of reliability and validity. Analyses of past and current data tend to focus on reliability-how well an incremental product improvement will satisfy critical feedback from the last version, for example, or whether a political poll can be replicated across different groups of people.  Validity, however-whether a new product will be a hit or whether that poll actually predicts the winner-cannot be determined from past data, and often takes that leap of faith that makes more cautious, logically-oriented types cringe.  All too often a company, based on the culture of its leaders, will favor one at the expense of the other.

Product & Gamble’s stumbles and subsequent recovery and thriving make for an interesting case study of Martin’s points, as well as the usual stars of innovation books such as Apple, Cirque Du Soleil, and Research in Motion.  The book is clear, concise, and easy to understand.   Like the best business books, it doesn’t try to tell you what to do-it provides a model for a new way of thinking about your own business.  Buy it.