While discussions of Web 2.0 in the popular press center around the cool technology — and it is pretty cool — the more interesting aspects for me are the changes we’ll see in how people relate to information in fundamentally different ways as companies move from creating products to creating tools.
One ubiquitous software app at the heart of our systems is the database, and along with it is the ubiquitous understanding that mere mortals do not create databases, we need database programmers to do that. Along comes Dabble to change that, at least (for the time being) at the simpler end of applications. Watching their demo video it’s easy to imagine the day when any business person will create database-backed web applications as easily as we set up spreadsheets today.
At Overlap there was a running side conversation about using real options to evaluate product investments. Eric Beinhocker explores a similar idea on the scale of business plans in Creating Strategy in an Unknowable Universe, a summary of his book
Rather than thinking of strategy as a single plan built on predictions of the future, we should think of strategy as a portfolio of experiments, a population of competing Business Plans that evolves over time… an example will help illustrate what a portfolio of strategic experiments looks like…
Rather than try to predict the future, [Bill] Gates created a population of competing Business Plans within Microsoft that mirrored the evolutionary competition going on outside in the marketplace. Microsoft thus was able to evolve its way into the future. Eventually, each of the other initiatives was killed off or scaled down, and Windows was amplified to become the focus of the company’s operating-system efforts.
Of course the idea of thoughtfully managing multiple businesses has been around at least since BCG’s matrix, but Beinhocker describes this at the innovation phase rather than the maturity phase. This requres a less analytic, more opportunistic approach that simultaneously relies on the creativity needed to generate new businesses and the discpline to gently tweak investments over time.
Beinhocker providers a hard look at the difficulties in pursuing a strategy that appears to outsiders like a jumble of half-baked ideas. We’ve been facing these issues in our client engagements, helping companies think beyond the traditional financial business case and reframe investment decisions through an evolutionary lens. I’ll have to read the book to see how much of this he’s already addressed.
“You can’t make somebody understand something if their salary depends upon them not understanding it.”
In our exploration of design thinking some people assume that it is the kind of thinking that designers do, but unfortunately this isn’t usually the case. For several reasons designers are predisposed against integrative ways of thinking.
To explain I’ll cite the example of the internal effort to fix the horrendous user interfaces of SAP’s software. A Wall St Journal article ($) this week quoted people at the company admitting to the poor design quality and describing their in-house effort to educate SAP’s engineers to be more sensitive to users’ needs. This is the designer’s goal: to design better products. A design thinker on the other hand might look at the whole system, observe that SAP has been so bad at designing UIs for so long that a massive culture change would need to take place before managers allocated the kind of resources needed to achieve significantly better designs. While this would be great, the design thinker would explore the option that UI design is not a capability that SAP should develop. One would ask if partners and customers are better equipped to design the UIs, and if SAP should simply build APIs into all the products. Would a director of design at SAP come to this conclusion? Maybe, but designers aren’t looking in this direction; doing so jeapardizes their ability to create interesting artifacts as well as the security of their jobs.
Another example is the revived discusion about working on spec, which rarely gets beyond a binary judgement of for or against. If one looks at the entire system, we see that clients have many options these days regardless of how designers like to structure engagements, presenting market forces that could ‘creatively destroy’ old transaction models. The design thinker would recognize this new reality, generate new approaches, and start experimenting. In the BusinessWeek case the job was relatively simple. Why not, for example, split the budget into three parts and commission three designs from three different firms? Each firm would have to invent a process that was profitable but is assured of being compensated, and the client still has a number of artifacts to choose from. This approach doesn’t heap glory and profit upon any one design firm so they probably wouldn’t suggest it, even if it could be better for the system overall.
“The Institute for the Future couldn’t get clients to read its trend forecasts. So it started giving away prescient product ideas instead.”
These are great examples of the tangible part of what we’ve been calling Tangible Futures. The IFTF objects seem like good ways to, as they say, ‘start conversations’ about alternate futures. The intention behind our Tangible Futures is a little different. We want to help change the way organizations think about their capabilities and identity so they’re more capable of innovating. The one key difference is that instead of making the artifacts ourselves we think these artifacts are more likely to result in actual innovation if we help companies create their own artifacts. More on this in a moment.
In either case, the conundrum is that we need the tangible artifacts to stimulate the imagination, but then we need to immediately focus away from the artifact to what is required internally for an organization to produce it.
Why? Because innovative companies make innovative products. That sounds obvious, but some companies want to ignore the company part and jump right to the products. To illustrate the difference, consider (surprise) the iPod. Is the difference between the iPod/iTunes ecosystem that Apple had a better idea than everyone else? No. Other companies had already released components of this system, such as hard drive-based mp3 players and online music stores. Sony in particular was the logical one to lead the way, since they possess significantly more portable electronics design, manufacturing, distribution, and retail expertise than Apple. Sony also happens to own a handful of record companies. Apple’s advantage comes down to management innovation. They took smart risks and created effective collaboration across disciplines and groups, where is one place Sony definitely failed. Regardless of which was the better product, the more innovative company won.
Artifacts from the future are highly useful to inspire us into action, but ultimately the challenge is managing people to execute on the innovative ideas. How do we get beyond the focus on the artifact? One approach could be to embed the artifact within a strong story. To use a classic example, we can conjure the story of Adam & Eve using the apple with two bites taken from it. The apple is an artifact that represents a wealth of concepts, and yet our focus is not on the apple, it’s on the people and events.
To develop a corporate vision, scenario planning is a great way for groups to co-create stories about the future. If at the same time the groups create artifacts that conjure those stories, they possess a tangible conveyance, communicating the vision necessary for others to align their work in the same direction. That’s what Tangible Futures is all about.
Iterating on paper? Cheap.
Iterating in software? Still pretty cheap.
Iterating the Airbus A380? Not so cheap: “Airbus said Tuesday that it would produce only 9 of its giant new A380 jets next year, not the 25 planned, because of numerous design changes…. Small changes, like moving small pieces of equipment, were cascading through the system and creating the need for additional adjustments in wiring…”
This simple idea, illustrated in painful penalties and time-to-market costs for Airbus, is elegantly expanded upon in Austin and Devin’s book Artful Making. The authors — one a business professor and the other a theater professor — contrast the cost of iteration with the cost of exploration, look at its use in industrial and knowledge work, and how the iteration cost curve changes over a project.
In general the book is a wonderful look at applying “artful” (i.e. design or craft) ways of working to knowledge work, which is what business design is in large part all about. I’ve been recommending it to everyone.
We overlapped and now my mind is too busy sorting things out to write. More later.
The chief executive of Cognizant Technology Solutions, an outsourcing company that is based in Teaneck, N.J., but has most of its employees in India, says it can compete against giants like I.B.M. and Accenture partly by borrowing American-style management techniques.
If you follow Edward de Bono’s writings, you already know about his drive to improve the quality of thinking. It’s an important message he continues in Why so stupid? “There is always some risk with design…. Judgment and routine behaviour is low risk so it is the preferred method of thought… You can analyse the past, but the future has to be designed.“
A completely nascent idea: are big companies more successful when they are organized as collections of small units, as opposed to bigger, less personal, hard-to-manage large units?
I asked this question while commiserating with a friend whose medium company was swallowed up by their giant competitor last year after a prolonged and contentious aquisition period. What is the future for this smaller business unit? As a thought experiment I conjured up Wal-Mart. While not the poster child of PR these days, they are extremely good at many things. And we could think of them as a collection of many small units, each store being one unit.
And then I looked at the rest of the Fortune 10…
1 Exxon Mobil
2 Wal-Mart Stores
3 General Motors
5 Ford Motor
7 General Electric
9 American International Group
10 Intl. Business Machines
Let’s disregard the oil companies since they sell an expensive commodity we’re addicted to. Let’s also disregard the auto companies who have decades of growth on which to coast and aren’t doing well lately. That leaves us with Wal-Mart, GE, Citigroup, AIG, and IBM. Each of these is broken into many smaller units. In fact, in AIG’s case there are so many units working autonomously from the corporate hand they actively compete with one another. These companies seem to go beyond the modern corporation structure to become cluster corporations.
The Spring/Summer 2006 Rotman Magazine (.pdf, 5.3MB) is out with design-happy articles by Richard Florida, Jeanne Liedtka, Roger Martin, and more.
Lance Carlson, president and CEO of the Alberta College of Art and Design, is — somewhat ironically — one of the only art and design colleges incorporating design thinking into the curriculum in a comprehensive way…
“Our new Institute will explore and foster work in these areas, and provoke internal dialogue at the college as well. The reaction from the corporate community has been encouraging. We have been in discussions with several companies exploring pilot projects and the provincial government and community-based groups have been supportive. Who doesn’t want to nurture innovation and creative action?“
You know, I think the phrase design thinking is an oxymoron. The design mindset is synonomous with making and doing; it’s more action-oriented than merely talking and thinking. This is yet another reason to reframe design thinking.
A friend of mine studying psychology says many in that field have physics envy: they want the capability of massively sophisticated quantitative methods. I think that however I end up reframing design thinking should still inspire design envy.
Dr. Rudi Webster, a sports psychologist, is striving to improve the relationship between the West Indies cricket board and the players association prior to the 2007 Cricket World Cup to take place there. He’s advocating for a generative approach:
…I feel that the time has come to use a new paradigm to resolve this problem. If we use the current paradigm and stay in the same thinking box, the outcome will almost certainly be a win/loss situation, with West Indies cricket being the big loser. All stakeholders need to abandon their adversarial thinking and approach and engage in design thinking to find a win/win solution.
Recognizing this kind of relationship is usually filled with the kind of tension that can, in extreme cases, lead to violence, he calls for a third party to step in and help transform the way participants perceive the situation…
The goal of the third party is to convert a two dimensional fight into a three dimensional exploratory exercise, leading to the design of a win/win outcome. The real purpose of the third party is to create the concept of “triangular thinking”, where the third party is an integral part of the process, not an addition or an aid. What the third party is after is not compromise or consensus. Nor is it after negotiation in the usual sense of the word. It is not after arbitration, nor bargaining. It is not about showing who is wrong. It is simply about changing beliefs and perspectives and designing an optimal solution. Remember, it is beliefs that determine the limits of your achievements.
I find this fascinating as I see many effective organizations either avoiding unionization, as with Japanese auto manufacturing in the U.S., or turning unions into a competitive advantage.
This interview (.doc) with Dr. Webster explores his views on psychology.