Month: March 2005

Recently I was telling an insurance industry executive about Tonik, an affiliate of Blue Cross of California that only offers health insurance to “the young invincibles” — people in their 20’s. At first glance he thought this was niche marketing, nothing new. But Tonik is different, it’s a whole new subsidiary that created new products tailored to their audience. The marketing is important to initially lure prospects in, but relevant products, easy-to-understand forms, and online-based service are more likely to convert prospects to long-term customers. They’re offering more by going beyond marketing-as-facade.

Viewing Tonik as a business rather than a product line (or niche marketing) helps us understand its implications. I think Tonik qualifies as a disruptive attack in the insurance industry, because:

1. It focuses on a low-margin audience other companies are ignoring
2. Through self-service and use of the Internet they keep their costs down
3. As this audience gets older they will naturally look to Tonik for expanded coverage

I don’t think marketing as traditionally understood would be enough to create Tonik, it requires business design skills:

• Traditional disciplines like marketing aren’t holistic enough to address the entire challenge
• Abductive thinking is needed to create something new and better
• There is no discrete problem statement in this projects; tools are needed to prioritize and synthesize variables in the environment, like integrating creative product potential with financial potential

If we take the term Business Design literally — the designing of businesses — we get a sense of the scope of the challenges at hand. Design thinking excels at dealing with “wicked” problems that are complex and ill-defined, requiring abductive and integrative thinking to address the creation of whole businesses.

My colleagues and I realized recently that although designers are (obviously) a primary source of the design thinking at the heart of business design, the proposition that only designers possess the thinking skills required is a little arrogant and even a little separatist. In fact, the most interesting writing on the subject thus far has come from the academic community.

Edward de Bono has argued that our present situation — relying on judgment thinking — began as a matter of ignorance…

Most people, in business and elsewhere, have done very well on judgment thinking. Such people are rarely aware of the need for ‘design thinking’. They find it difficult to conceive that there is a whole other aspect of thinking that is different from judgment thinking. It is not that such people are complacent. It is simply that they do not know that there is another aspect to thinking.

As design thinking enters the business world, I’ll be interested to see the proportion of designers to managers involved.

At the Information Architecture Summit there was a strong thread of interest in business and management (my hypothesis for this centers on two trends: the population bell curve places many IAs at an age where they are rapidly moving into management for the first time, and as a discipline IAs have already invented many of the technical skills they need to get that job done). In this environment many were interested in my new-ish company — Management Innovation Group — and appreciated our approach. Our chats started early and ended late and I heard many helpful ideas and skepticism, especially from the wise and thoughtful Jess McMullin. That’s going to fuel many of my future posts here; you’ve been warned.

The approach has been termed Business Design, though that framing of it isn’t entirely satisfactory. My working definition is The application of design thinking to business strategy and operations. I’ll talk more about what I mean by design thinking in future posts, but for now the best description I know is Jeanne Liedtka’s essay Strategy as Design in the Rotman design issue (.pdf), required reading on the subject.