Journal of Business Strategy 28:4 Design and Business 9781846635298, 9781846635281

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jbs cover (i).qxd

26/06/2007

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ISSN 0275-6668

Volume 28 Number 4 2007

Journal of

Business Strategy Special issue: design and business Artistry for the strategist A design toolkit for strategy Possibility thinking Achieving customer-centered design Design education for business

www.emeraldinsight.com

Table of contents Design and business Guest Editors: Jeanne Liedtka, Roger Martin and dt ogilvie Volume 28 Number 4 2007

Departments Access this journal online Editors’ note

Feature articles 3 4

Design and business: why can’t we be friends?

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Roger Martin Although design is more important in business than ever before, designers and business people often find working together fraught with tension and misunderstandings. The author suggests that the key attributes of validity and reliability can frame a more productive way for designers and business people to work together. He outlines five practical actions that designers can take and five equivalent actions for business people.

Artistry for the strategist

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Hilary Austen Johnson Artistry is not an exclusive talent but rather a learned, emergent capability that allows practitioners to integrate mastery and originality as they work. The problems faced by today’s practitioners often reflect ambiguity, uncertainty and complexity. The author contends that practitioners may not be able to rely on historical solutions. Artistry is an alternative capability that allows practitioners to work effectively with difficult problems.

The second road of thought: how design offers strategy a new toolkit

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Tony Golsby-Smith Organizations are far better equipped with the tools for operational management and defending the status quo than for inventing and shaping new futures. But a new approach to strategy through design thinking can unlock fresh energy and make strategy more innovative and less data-driven. Design opens a door to a new art of thinking that has been suppressed for centuries by the Western world’s addiction to logic and science as the dominant thinking paradigm.

Possibility thinking: lessons from breakthrough engineering

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Robert Friedel and Jeanne Liedtka The ability to see new possibilities is fundamental to creating new innovative designs – but what do we know about state-of-the-art possibility thinking? The authors examine this topic, until now largely ignored by strategists in favor of analytics. They examine a selection of breakthrough engineering projects and, from these, derive eight different ways of illuminating new possibilities.

Abduction: a pre-condition for the intelligent design of strategy

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Nicholas Dew Abduction may be defined as deducing the best possible explanation from information that is surprising or anomalous – both very typical in strategic decision making. Strategists can gain much from knowing how to use abduction well because it is frequently integral to problem defining, which in turn sets the stage for possibility thinking and choosing the best alternative. Good abductive thinking therefore is a pre-condition for intelligent designing in strategy.

Daily life, not markets: customer-centered design

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Vijay Kumar and Patrick Whitney Executives were shocked to find that in six weeks a research team unfamiliar with life in Hong Kong could identify wholly new potential markets through research that revealed unarticulated consumer needs. As companies try to gain a deeper understanding of consumers, they are increasingly turning to userobservation and ethnographic processes. The authors describe a research method that allows companies to conduct observational research for application and reusability on a large scale.

Learning to design: giving purpose to heart, hand and mind

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Sabine Junginger Design thinking is becoming a topic in strategic management. This article offers a glimpse into education in design schools and links it with design education in the business organization to make basic design thinking and methods accessible to managers. Systematic inquiry into the organization through design thinking is an iterative activity that can be launched in almost any environment with few resources.

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The practice of breakthrough strategies by design

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Heather M.A. Fraser By embedding design methods and mindsets into strategic planning practices, an organization can leverage design practices for cultural transformation and strategic growth, moving from a framework of the ‘‘economics of design’’ to the ‘‘design of economics’’. While at first this model may seem either radical or abstract, those who discover its advantages find it surprisingly intuitive and practical – just what the business world needs in the face of high-stakes complexities and change.

Strategizing through playful design

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Claus D. Jacobs and Loizos Heracleous The authors propose a view of strategizing as a playful design practice and illustrate this view by describing a process for fostering effective strategic play. They outline the benefits of the process and how executives can play effectively. Strategizing through playful design is a useful complement to dry, conventional strategic planning processes and helps to open up and orient fruitful debate about an organization’s unique strategic challenges.

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Editors’ note e volunteered to pull together this special issue of JBS because we are passionate believers in the potential that design thinking holds for business and tired of the ‘‘iPOD as icon’’ phenomenon that equates design exclusively with high-end new products. Despite seemingly endless exhortations about the value of design in business, the conversations never seem to recognize that design holds out any promise greater than the creation of sleek, high-end products. But design offers business so much more. To illustrate this, we need to swim upstream from the act of designing to the thinking behind design in order to show how design thinking can help businesses develop better, unique and creative strategies. In this special issue, our goal is to thoroughly explore the concept of design thinking and demonstrate how business can fully exploit its exciting potential.

W

In ‘‘Design and business: why can’t we be friends,?’’ business-school dean and former consultant Roger Martin looks at the schism between designers and executives that exists today despite the rosy promise that design offers the business world. He examines the fundamental tension between the orientation to reliability that characterizes the business world and the validity orientation of designers and offers advice to both parties about how to get along better. A troika of articles examines where the inspiration for invention comes from and finds it in the diverse perspectives of artists, philosophers and engineers. Artist and adjunct management professor Hilary Austen Johnson turns our attention first to artistry in business. In ‘‘Artistry for the strategist,’’ she describes the conditions necessary for the practice of artistry, arguing that the need for artistry is compelling in the field of business strategy. The quest, she asserts, is defined by the search for the ‘‘dynamic balance’’ between the opposing, but equally necessary, forces of mastery and originality. Consultant Tony Golsby-Smith turns to philosophy in ‘‘The second road of thought: how design offers strategy a new toolkit,’’ arguing that our obsession with Aristotle’s analytics has made us lose sight of his other approach, one focused on rhetoric. This ‘‘second road’’ offers breakthrough possibilities for creating new strategic conversations. Professors Robert Friedel and Jeanne Liedtka, a historian and strategist respectively, offer a series of engineering breakthroughs that highlight some of the paths to possibilities thinking in ‘‘Possibility thinking: lessons from breakthrough engineering.’’ Next, we look at the precursors to invention. Here, Nicholas Dew, a faculty member at the Naval Postgraduate School in Monterrey, California, unpacks the often mysterious process of abduction in ‘‘Abduction: a precondition for the intelligent design of strategy.’’ In abduction, the inferences are made that often determine the way the design problem is framed. He examines the key role that abduction plays in design processes and strategic decision-making and suggests a framework for assessing the quality of the resulting hypotheses. In ‘‘Daily life, not markets: customer-centered design,’’ Vijay Kumar and Patrick Whitney of the Illinois Institute of Technology’s Design Institute contribute a hands-on view of the value and practices associated with a true customer connection, still rare in business today despite our illusions of customer centricity. The second half of the special issue looks at design thinking in action. In ‘‘Learning to design: giving purpose to hand, heart, and mind,’’ Sabine Junginger of Lancaster University’s Institute for Contemporary Arts explores how design schools educate their students and offers a starting point for businesses with similar intentions. Two of our articles look at how we plan in organizations and present two very different methodologies for incorporating design thinking into an organization’s strategic planning process. Heather M.A. Fraser, director of the Designworks lab at the University of Toronto’s Rotman School of Management, describes its ‘‘three gear process’’ involving the development of deep user understanding, concept visualization and strategic business design in her article, ‘‘The practice of breakthrough strategies by design.’’ Then, in ‘‘Strategizing through playful design,’’ Claus D. Jacobs, senior research fellow at the University of St. Gallen, and Loizos

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Heracleous, professor of strategy at the University of Warwick, examine the value that play can bring to strategic conversations. The paper describes a group exercise where executives engage with potentially contentious strategic issues through the design of real artifacts that use physical metaphors. The authors argue that their approach spurs better strategy discussions by creating generative dialogue and they discuss the conditions necessary to foster such productive play. Taken together, we believe that these nine articles deepen and enrich our understanding of the business possibilities inherent in design thinking. We hope that you agree. Jeanne Liedtka Darden Graduate School of Business Administration, University of Virginia, Charlottesville, Virginia, USA Roger Martin Joseph L. Rotman School of Management, University of Toronto, Toronto, Canada dt ogilvie Rutgers Business School, Rutgers University, Camden, New Jersey, USA

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Design and business: why can’t we be friends? Roger Martin

Roger Martin is Dean, Rotman School of Management, University of Toronto, Toronto, Canada.

The color of your skin don’t matter to me As long as we can live in harmony Why can’t Why can’t Why can’t Why can’t

we be friends? we be friends? we be friends? we be friends? (War, 1975).

In 1975, the soul band War released this plaintive song that repeated ‘‘Why can’t we be friends?’’ for 47 of the song’s total 61 lines. (War, 1975) It became a Grammy Award nominee but, more importantly, a timeless cult classic of the Vietnam era. Over three decades later, it feels like the right theme song for designers and business executives. Even as design has emerged as a key business theme with business executives broadly wishing for the type of design successes achieved by Apple, Jet Blue, or Herman Miller, the relationship between designers and business executives has remained distant if not downright frosty. Designers make executives nervous by combining what appears to be a lack of interest in rigorous, quantitative analysis with the inclination to propose, with apparently reckless abandon, radical departures from the past. While executives love the promise of creativity and greater attention to design, they find designers hard to take. From the opposite side, designers find executives strangely wedded to mediocre status quos and inclined to apply impossibly high standards of proof to design ideas to make sure they do not go anywhere at all. While designers long for access to the purse strings that executives control, they find executives almost too conservative to tolerate. While it is true that some designers and executives engage in love-fests that extend far beyond the friendship that War asked about 47 times, the dominant mode is a messy shotgun wedding. Why, when executives need designers to revitalize their businesses and designers need executives to bring to market and leverage their design ideas, is it so tough to be friends? The answer lies in a fundamental schism between designers and executives that is poorly understood by both sides but drives all involved to engage in behaviors that make the other side nervous and worried. When designers and executives finally understand the sources and nature of the schism, they can take five steps to overcome the schism and become productive friends, outlined below.

The fundamental schism The reliability orientation of business executives versus the validity orientation of designers creates a fundamental tension. Because the orientation of each is natural and utterly implicit, neither executives nor designers understand the nature of the schism; they only understand that the other side makes them nervous.

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DOI 10.1108/02756660710760890

‘‘ The reliability orientation of business executives versus the validity orientation of designers creates a fundamental tension. ’’

Reliability results from a process that produces a dependable, consistent, replicable outcome. If I were to take a vial of your blood, split it into 100 sub-samples and run them through a testing process for hepatitis, for example, it would be a fully reliable process if it gave the same answer all 100 times. Validity, by contrast, results from a process that produces the desired outcome. If I took the entire vial of blood, ran it through a single test and the test was negative (positive) and you never (actually) developed the symptoms of hepatitis, it would be a valid test because it provided the outcome desired, which is knowing whether or not you have hepatitis. Reliability is demonstrated by past events: we ran the same hepatitis test 10,000 times and got the same result each time, hence we know the process is reliable. Validity can only be demonstrated by future events through the passage of time: we need to watch you to see whether you develop hepatitis in the future to assess the validity of the test procedure. Clearly, you would like both perfect reliability and validity. You would want the test to give the same answer every time you ask whether you have hepatitis, and you want the answer to correctly identify whether or not you have the condition. Therein lies the fundamental problem: after a point, it is not possible to increase reliability without sacrificing validity or vice versa. To enhance the reliability of any process, one has to reduce the number of variables considered and use quantitative, bias-free measurement. If the process uses many variables, some of which are qualitative and require judgment to assess, it will produce different answers depending on who is administering the test. IQ testing is an example of a highly reliable process. If you take the Stanford-Binet IQ test over and over, you will score a nearly identical result each time. The test achieves reliability by defining intelligence very narrowly as the ability to solve simple logical problems, and it measures intelligence via a multiple choice test that can be evaluated with no possibility of bias in measurement or judgment. It can be readily evaluated by running the answer sheet through a computer. The Stanford-Binet IQ test spits out a number that identifies how ‘‘intelligent’’ you are – a number from a normal distribution, the mean of which is 100. But is the actual desired outcome of the intelligence testing process a number? No, the actual desired outcome is the ability to predict your likely future performance. Unfortunately, standard intelligence tests, while not of negligible predictive value, explain at best 30 to 40 percent of variations in future performance. (Higgins et al., n.d.) Arguably, therefore, the Stanford-Binet IQ test is a high reliability, low validity process. In his best-selling book, Emotional Intelligence, Goleman (1995) argues that EQ makes for a much better predictor of success in life than IQ. A close look at EQ reveals that Goleman considers a wider variety of variables that are more qualitative in nature and open to judgment in measurement. This is the path to higher validity: more variables, qualitative measurement and the integration of judgment. IQ testing implicitly sacrifices validity to achieve higher reliability: we can be absolutely sure that we know your exact IQ but we cannot do much that is useful with the information. EQ testing implicitly sacrifices reliability to achieve higher validity: it is harder to get a consistent measure of it, but we know what it means when we get the measure. Up to a point, it is possible to get more of both reliability and validity by being more thoughtful and less sloppy about processes. But in due course, more reliability requires fewer variables while more validity requires considering more. More reliability requires quantitative, judgment-free

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variables while more validity requires considering qualitative, judgment-laden variables. Hence reliability and validity live in fundamental structural conflict. The conflict between reliability and validity plays out in the relationship between business executives and designers because the former are more reliability-oriented on average and the latter are more validity-oriented. At a conceptual level, the world of business people and the world of designers can be represented by the two curves in Figure 1. The left curve places business people at a higher level of reliability while the right curve places designers at a higher level of validity. Business executives live in an ecosystem that rewards meeting budgets, hitting quarterly earnings targets and ‘‘proving’’ in advance that initiatives will succeed. Their number one analytical tool is linear regression because it helps them substantiate reliability on the basis of past results; if it has always happened in the past, therefore it will also happen in the future. That is the primary substantiation for reliability. So the average business executive has the incentive to be more reliability-oriented and will be trained in methodologies that produce reliability. Designers possess an inherent bias toward validity. Great designers seek deep understanding of the user and the context, which entails consideration of many variables. They do not limit their considerations to aspects that can be thoroughly quantified. They worry less about whether they can replicate a particular process and more about producing a valid solution to the problem before them. The only proof that they tend to accept is future-oriented, a design that is shown to work with the passage of time. This reliability orientation causes business executives to say to designers: ‘‘You’ve got to quantify it; you’ve got to prove it.’’ The designer responds, ‘‘Prove it? How can you prove something that can only be substantiated by future events? You can’t! But if you insist on proof, you will never do anything impressive.’’ While the means of the distributions are apart, the curves are overlapping because some designers are highly reliability-oriented and some executives are highly validity-oriented. By and large, all designers long to work with business executives who are the right side of their curve and business executives like to work with designers on the left end of the designer curve. However, these situations, by definition, are not the norm in this dynamic; they are the statistical outliers. So how do business executives and designers need to think and what do they need to do in order to overcome this fundamental schism and be the most productive friends they can be?

Advice for designers and executives I have five pieces of parallel advice for each side. Figure 1 Reliability vs validity

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Designer advice no. 1. Take inattention to validity as a design challenge While designers generally love nothing more than a tricky and complicated design challenge to create a marvelous solution where one does not currently exist, their reaction to the organizational challenge of dealing with the inattention to validity by corporate executives is often quite unproductive. Rather than taking this organizational issue as a design challenge and working on designing a process to solve this problem, they are inclined to simply complain about reliability-oriented executives and dismiss them as philistines who cannot appreciate what needs to be done. As such, they define the reliability-orientation of executives as ‘‘not their problem’’ – just an immovable constraint. If instead, designers treated the actual existence of design unfriendliness/ inattention-to-validity as a design challenge as important and legitimate as their normal job of designing an artifact (i.e. product, web site, corporate identify, user interface), they would be more productive and effective in working with executives. Inattention to validity is and should be treated as just another challenge for the designer and tackled with the same gusto and enthusiasm as they apply to their traditional work. Executive advice no. 1. Take inattention to reliability as a management challenge While executives generally love nothing more than taking the confusing and ambiguous world where they operate and organizing it into a reliable operation, their reaction to dealing with designers’ inattention to reliability is often quite unproductive. Rather than taking this as a management challenge and putting their managerial hats on, they complain about flighty and impractical designers and marginalize their work so that it does not threaten organizational order. The validity orientation of designers then becomes not a legitimate management concern, just a threat to security and stability that should be extinguished. If instead, executives treated the actual existence of inattention to reliability as a management challenge as important and legitimate as their normal management responsibilities, they would be more productive and effective in working with designers. Inattention to reliability is and should be treated as just another managerial challenge for the executive and tackled with the same fervor and enthusiasm they apply to their traditional management challenges. Designer advice no. 2. Empathize with the ‘‘design unfriendly elements’’ The only way to design a compelling solution for a user is to understand the user in a positive way. It is almost impossible to design something compelling for a person who the designer does not respect nor attempt to understand. The filing cabinets full of un-built houses designed for clients whom the architects saw as ‘‘philistines’’ are testament to the limitation of disrespecting your user. The architect consoles himself or herself with the brilliance of the design without having any better explanation of its still-born fate than to maintain ‘‘the client had no appreciation of architecture.’’ In contrast, the effective designer aims for deep understanding of the user in order to uncover the greatest range of options for creating a compelling solution. What are the user’s greatest hopes? What keeps the user up at night worrying? What are the minimum acceptable conditions for the user to embrace a design solution? How much risk is the user willing to absorb? The designer can answer these questions either with empathy or disdain. The ineffective designer sees that what keeps the user up at night is the desire to keep his or her proverbial ass covered. The effective designer sees what keeps the user up at night is the desire to protect his or her employees from the consequences of a reckless decision. In the case of the schism between the world view of the designer and the executive, a better understanding of and empathy for the executive’s point of view enables the designer to probe what constitutes a reckless decision versus a sensibly aggressive decision from the executive’s standpoint. Only with such empathy can the designer forge a solution that meets the executive’s needs in a productive way.

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Executive advice no. 2. Empathize with the ‘‘reliability-unfriendly elements’’ The only way the executive can create an organizational context in which the designers can productively work is to empathize with the designers. They are not being purposefully dangerous and worrisome. They are attempting to make sense of fuzzy data, qualitative insights, and judgment. The designers see things that the executives do not see and are doing their best to deal with the complexity. Only by empathizing with the designers and understanding their concerns and ways of operating can the executive devise managerial structures that take into account both the needs of the organization and the needs of the designers. Designer advice no. 3. Learn and speak the language of reliability To empathize, one needs to communicate. But executives and designers speak different languages. Executives speak the language of reliability because they put a high priority on the production of consistent, predictable outcomes. They frequently use words such as proof, regression analysis, certainty, best practices and deployment. Designers speak the language of validity because they put a high priority on outcomes that delight, whether they are consistent and predictable or not. They frequently use words such as visualization, prototyping, beta-testing and novelty. However, to executives, these words connote danger, uncertainty and guesswork, things that encourage, if not compel, them to say No! In such circumstances, the designer must learn the language of the executive – the language of reliability. Otherwise, designers might as well be speaking Greek to an Italian audience. Just as anybody who takes a job in another country needs to learn the local language in order to function, designers need to learn the language of reliability to be successful in communicating with executives. I know how critical this is. I vividly remember working as a young consultant for a big bank on a private banking strategy for its high net worth customers. My team came up with a breakthrough idea, and in due course we were given an audience to present our proposed strategy to the bank’s chief executive officer and his six direct reports. They listened attentively. At the end, the chief operating officer asked one question: ‘‘Have any of our competitors done anything like this?’’ Reveling in the unique brilliance of our solution, I enthusiastically responded: ‘‘No, not even close!’’ I was too young, foolish, and design-insensitive to realize that my answer put the final nail in the coffin of our idea. That was 1988. It is small consolation indeed that I have observed several banks only recently utilizing the approach we laid out almost two decades ago. Executive advice no. 3. Learn the language of validity By the same token, the executive needs to learn and speak the language of validity. Executives are not going to get productive innovation from designers if they force them to speak only the language of reliability. Both sides need to engage in the exercise and discipline to learn one another’s language. Executives need to learn the language of validity so they can understand what is being said and can actually communicate with designers. Designer advice no. 4: Use analogies and stories What tools can help bridge the language gap? It is difficult to provide ‘‘proof’’ or ‘‘certainty,’’ even if designers appreciate that those words loom large in the executive’s reliability lexicon. When the executive cares primarily about substantiation based on past events while the designer cares only about substantiation based on future events, the designer bears the burden of communicating ideas effectively. The best tool available is analogy: crafting a story that takes an existing idea in operation elsewhere and shows how it is similar to the novel idea being proposed – not exactly the same, but similar enough. Had I had more empathy with my banker clients and understood the language of reliability, I might have responded, ‘‘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

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some time now. It is not exactly the same, but it bears important similarities. And remember that our bank has succeeded in the past in taking an idea from outside our home market and introducing it here.’’ This does not eliminate the apparent risk of an idea, but it presents it in a reliability-oriented framework. An analogy or story helps the executive see that this is not a case of substantiation based exclusively on future events but is also based in part on past events. And in the end, in order to take action, executives will need to convince themselves that the idea falls into an acceptable range of reliability.

Executive advice no. 4. Share data and reasoning, not conclusions The inclination of reliability-oriented executives is to crunch all the data they consider relevant, come to a firm conclusion on the analysis and then impose that conclusion on everyone else, including the designers. When listening to this, the designers will think that what the executive sees as ‘‘all’’ the data are only a small fraction of the relevant data and the executive is overlooking or consciously ignoring plenty of relevant data that are hard to measure and quantify. If executives attempt to impose their conclusions on the designers, they will cause the designers to feel that it is impossible to develop a truly innovative and superior solution because so many of the important design features are being ignored. However, if executives do not share their data and reasoning with the designers, they will not understand what the executives are thinking and feeling. That will make it less likely for designers to create a solution that the executives will find acceptable. Executives who share their data and reasoning, but stop before imposing conclusions, help the designers come up with a solution to which they can say: Yes! While the design they come up with may make the executive nervous on the margin, it will be less likely to be a design that the executive feels compelled to reject out of hand as too scary and dangerous.

Designer advice no. 5. Bite off as small a piece as possible to generate proof Even with careful use of language and analogies, ‘‘proof’’ is the biggest problem. Designers do not traffic in proof of the sort reliability-oriented executives want, which is substantiation based on past events. Designers simply cannot prove in advance that their ideas will work. However, there is both good news and bad news about the future. The bad news is that a year from now is now in the future and from a proof standpoint what happens then is not relevant proof. The good news is that a year from now that year is in the past. This nuance is critical to reliability-oriented executives. Designers can convince executives 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 what will happen’’. If they agree to bite off that chunk and the designer’s predicted results happen over the year, that builds confidence in the executive because what was in the future a year ago is in the past today. The key for designers is to turn the future into the past because ‘‘future’’ is the enemy for a reliability-oriented executive and ‘‘past’’ is a friend. Designers do not love the notion of biting off a little piece because they think any parsing or phasing of the solution will destroy its integrity. Most designers would rather have everything done in one swoop and not look back. They have a problem, however, in this respect with executives and hence they need to develop skills in biting off as small a piece as possible to give themselves a chance to turn the future into the past.

‘‘ Even with careful use of language and analogies, ‘proof’ is the biggest problem. ’’

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Executive advice no. 5. Bite off as big a piece as possible to give innovation a chance From the other side, executives need to stretch to bite off as big a piece as possible to give innovation a chance. Executives have to listen to designers insist that they have to do ‘‘this much’’ of an idea or they will not really know whether it will work. ‘‘This much’’ may be a somewhat frightening notion when not much reliability-oriented proof is offered. However, just as the designer has to stretch to bite off as small a piece as possible, the executive needs to stretch to bite off the biggest piece possible without feeling irresponsible.

Getting along Keywords: Design, Business development, Conflict, Senior management, Conflict management

In many respects, the advice for getting along is quite generic: appreciate the legitimate differences, empathize, seek to communicate on each other’s terms, use tools both camps are familiar with, and stretch out of your comfort zone toward the comfort zone of the other. Getting along has never been and will never be rocket science. But that does not prevent the world from being full of conflicts like the uneasy relationship between designers and business executives. The relationship can be highly productive, though, with attention to a few key pieces of advice by all involved.

References Goleman, D. (1995), Emotional Intelligence, Bantam Books, New York, NY. Higgins, D.M., Peterson, J.B., Lee, A. and Pihl, R.O. (n.d.), ‘‘Prefrontal cognitive ability, intelligence, Big Five personality and the prediction of advanced academic and workplace performance’’, Journal of Personality and Social Psychology (forthcoming). War (1975), Why Can’t We Be Friends?, Warner Brothers, New York, NY.

About the author Roger Martin is Dean of the Joseph L. Rotman School of Management at the University of Toronto and Premier’s Chair in Competitiveness and Productivity. He is a regular design columnist for Business Week Online. He won the 2004 Marshall McLuhan Visionary Leadership Award and was named a 2005 Business Week ‘‘Innovation Guru’’. Roger Martin can be contacted at: [email protected]

To purchase reprints of this article please e-mail: [email protected] Or visit our web site for further details: www.emeraldinsight.com/reprints

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Artistry for the strategist Hilary Austen Johnson

Hilary Austen Johnson is a Consultant in Organizational Learning, Sebastopol, California, USA.

alk into any well-stocked bookstore and you will find books with ‘‘art’’ in the titles. For example, in the business section there are titles including such as The Art of Innovation, The Art of Problem Solving, and Leadership as an Art. In the sports section, you can find books about the art of tennis, golf, football, fencing, horsemanship, juggling and so on. Human performance titles, including the art of possibility, healing, friendship, war, peace, teaching and happiness, abound. Apparently, artistry is possible in just about everything we do.

W

These titles do make a promise. When we take these books in hand, we hope they will explain how to achieve artistry in the activities and professions they discuss. Instead, most raise questions rather than give direct answers. Pick up and thumb through these volumes and what you will not easily find is a clear definition of what this reference to art really means. Few authors take this topic head on. Fewer authors identify the specific artistic features displayed by the work domains their books discuss or make the connection between these features and their analysis and recommendations for action. This is understandable. Artistry is not well understood. While believing that artistry is possible, most writers know more about the specifics of their discipline than they know about intentionally creating the right conditions for artistic practice within that discipline. We expect to find artistry in the fine arts, in painting, dance, photography, music, sculpture and the like. However, artistry does escape these boundaries and most of us recognize it when we encounter it. We can see it in an athlete’s performance, we can taste it in the dishes of a chef, we can feel it in a healer’s hands, and we can hear it in the words of a leader. For many, this recognition leads to appreciation and wonder. For some, it generates a curiosity about how such exceptional and apparently effortless performance is accomplished. For others, it motivates the pursuit of this same kind of accomplishment – these people want to achieve the same in what they do. But this is an elusive goal, as few road maps exist for this effort. While lacking specifics about the accomplishment of artistry, intuitively we do know a few basics. We know that it involves expertise, focus and control because the people who achieve artistry demonstrate mastery in what they do. At the same time, we know that it involves creativity, spontaneity and imagination because the people who achieve artistry create original, often surprising, results, products and performances that can unsettle and even surpass the status quo. At the same time, conventional wisdom tells us about our own prospects. If we do not show an immediate aptitude in a particular discipline, then artistry will probably elude us. Early failures have discouraged many from working toward artistry in their chosen pursuits. This fosters the common belief that artistry is a special and mysterious kind of performance that is achieved by only a small group of gifted people.

DOI 10.1108/02756660710760908

VOL. 28 NO. 4 2007, pp. 13-21, Q Emerald Group Publishing Limited, ISSN 0275-6668

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‘‘ Fewer authors identify the specific artistic features displayed by the work domains their books discuss or make the connection between these features and their analysis and recommendations for action. ’’

Ultimately, artistry remains an attractive if elusive notion. Anyone searching to find the art in what they do does not have a clear path to a clear goal. What, therefore, does achieving artistry in any discipline really mean? And, in particular, what does it mean in a competitive, results-driven endeavor like business strategy? Under what conditions can artistry occur? What set of personal capabilities leads to artistic performance? Is artistry an innate talent or it is a capability that can be taught and learned? If artistry can be developed deliberately, why has this educative process remained elusive? And, most critically, how can learning be accomplished? My research efforts have focused on answering these questions. The following is a summary of my answers, on which the rest of this article will elaborate: B

Artistry is possible, even critical, in any discipline when certain characteristic features exist: uniqueness, complexity, ambiguity, uncertainty, indeterminacy, instability, immediacy and intensity.

B

Artistry is achieved through the active integration of two capabilities, mastery and originality, in response to the features identified above. Either capability employed alone produces fragmented results.

B

The deliberate development of artistry is possible. However, several fundamental misunderstandings about the development of artistry have derailed educative efforts. Resolving these misunderstandings gives those with the goal of developing artistry the information they need to learn.

Artistry in practice What does it mean to say that artistry can escape the boundaries of the fine arts? As a strategist, can you treat the pursuit of artistry as a legitimate goal? There are three major academic writers who speak directly to the importance of artistry across practice disciplines: John Dewey, Donald Schon and Elliot Eisner. While a complete discussion of these writers is outside the scope of this article, a brief inclusion of their ideas will lay ground work. Their ideas about where artistry resides are briefly summarized in the following quotes: The intelligent mechanic engaged in his job, interested in doing well and finding satisfaction in his handiwork, caring for his tools with genuine affection is artistically engaged. The difference between such a worker and the inept bungler is as great in the shop as in the studio (Dewey, 1934). The artistry of painters, sculptors, musicians, dancers and designers bears a strong family resemblance to the artistry of extraordinary lawyers, physicians, mangers and teachers. It is no accident that professionals often refer to an ‘‘art’’ of teaching or management and use the term artist to refer to practitioners unusually adept at handling situations of uncertainty, uniqueness and conflict (Schon, 1983). Artistry is present in all forms of excellent action and action becomes excellent when the form that is created supports and satisfies the purposes for which the action was taken. Artistry is not a quality to be boxed and wrapped with a ribbon, but a process that has the potential to infuse all forms of human action regardless of the material or circumstances in which it is employed (from a 2006 paper given by Elliot Eisner at his acceptance of the Grawemeyer award).

These quotes reinforce my first major point. Artistry does not reside in a limited domain such as the fine arts. Instead, artistry is made possible through a particular kind of interaction that

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unfolds between the practitioner and the situation he or she engages. If the situation has features that allow for an artistic response, then artistry is both possible and critical to working effectively as a practitioner. In short, artistry is possible when both ends and means are open to clarification and shaping by the skills, knowledge and interests of a practitioner in situations where ambiguity, risk, complexity and indeterminacy abound. The development of strategy is certainly representative of this kind of situation. Like the artist, a corporate strategist has the opportunity to define both where he or she wants to go and how best to get there. In this discipline, he or she must formulate this effort while taking into account the complexities of organizational resources, ambiguities of market dynamics, and shifting social values. However, an artistic response to this demanding situation is not the only possible path. Think of a painter setting about to create an image. Simply put, the painter can choose between two very different ways of approaching this activity. The first is to buy a paint-by-number kit and follow the instructions. In the second way, she can take up a brush, paint and canvas and rely on her own knowledge about color, content, composition, style and technique to create a unique image arising from her own interests and motivations. A strategist certainly has this same choice to make, that is, to take and use an existing approach or to create and implement an original one. The first approach is an effort to match an existing situation to a preexisting solution and then progress by following a predetermined set of instructions. While this may be a technically difficult task, it is not an artistic one. The second approach is an effort to use personal capabilities and intentions to generate both a desired outcome and to find a way of achieving this outcome with the materials and resources at hand. Practitioners taking this approach often find that their initial ideas about outcomes must be revised as the action unfolds. This volition and flexibility are the basis for artistic action. When faced with a potentially artistic problem, such as the design and implementation of a strategy, taking the first route is tempting. It often seems expedient, even wise, to find a good recipe and follow it. For instance, finding an example of someone who has dealt with a similar situation and copy what they did as closely as possible. This choice reveals the hope that these prior successes hold the key to resolving the current situation. There are many business books on the development of strategy that are written in this spirit. They chronicle success stories, attempting to derive the critical elements, and then prescribe a sequence of steps for others to follow for similar successes. At the right time and place these protocols can provide insight and help. But as progress is made, the limits of this approach may quickly arise. Immediate situations rarely match history perfectly, events rarely unfold in the predicted fashion, advice about action is often either too generalized, or too specific, to guide action in somewhat different circumstances. When actual events lead away from chronicles, practitioners are left to cope with the uncertainly, ambiguity and risk they were hoping to escape. Dewey, Eisner, and Schon again point us to the importance of the artistic alternative. Schon reminds practitioners to expect real world situations that ‘‘do not present themselves as problems at all but as messy, indeterminate situations.’’ Eisner highlights the importance of the practitioner’s ability to work with surprise, ‘‘Surprise has to do with the discovery of new possibilities, with encountering the unanticipated, with changes in direction that were not planned at the outset.’’ And Dewey identifies a way of working he calls ‘‘flexible purposing.’’ By coining this term, Dewey wanted to highlight the artistic practitioner’s ability to design and

‘‘ Artistry is achieved through the active integration of two capabilities, mastery and originality. ’’

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pursue purposes while simultaneously revising them as both conditions and understandings change, while maintaining the ability to make effective progress. To succeed at this artistic alternative to action, as a strategist or in another role, practitioners must develop a set of capabilities that allow them to work effectively with unavoidable complications: vagueness, uncertainty, surprise and the like. These practice capabilities can be sorted into two categories. The first category is mastery and the second, originality.

Artistry in action Mastery is developed in a particular discipline and is by nature conservative. Having mastery means we have expertise and controlled precision in what we do. Practice, involvement, focus, repetition, attention and responsiveness lead to the skillful and apparently effortless performance that distinguishes masterful activity. Mastery is rooted in a deep familiarity with a discipline that allows practitioners to recognize what is important, to structure situations in a productive way, and to act both effectively and responsively. On the other hand, originality grows out of openness, novelty, flexibility, creativity and surprise. Seeking rather than avoiding the surprising allows practitioners to find what is unique about the situations they face. Seeing what is unexpected or new means practitioners can adjust what they do in specific situations rather than act out of habit, however skillful. Originality is the route to invention and innovation and it is the fuel for progress. The development of both of these capabilities has been given some attention in the literature. But it is the way practitioners integrate these capabilities as they work that creates the special performance that the word artistry indicates. The step of integration is not an easy one and has not been well understood. Using these two capabilities simultaneously can be so tricky that individuals, as well as organizations, tend to specialize in one or the other capability. What complicates matters is that mastery and originality are fueled by opposing impulses, orientations, activities and goals. When they come together in action, they tend to drive each other out of existence. Whether at a personal or an organizational level, this dynamic unfolds in a similar way. Organizational researcher James G. March has written extensively on this dynamic as it occurs in organizations. His work helps explains some of the forces that influence the kind of strategy an organization adopts. In organizations, achieving mastery means having the ability to ‘‘exploit’’ successful ideas; being original means having the ability to ‘‘explore’’ to generate new ideas. In short, the tension between these two capabilities arises because success breeds commitment to current approaches, technology, facilities, and personnel while at the same time the pressures of competition work to stimulate innovation and exploration. Those worried about competitive pressure push for strategies that emphasize innovation (exploration) despite the risks this entails. Those wanting to maximize current performance push for strategies that exploit what is currently working well. March’s work suggests that the limits of time, attention and resources make a strategy that pursues both exploration (originality) and exploitation (mastery) appear unfeasible. In addition, the skill sets and organization systems that support one orientation discourage the other. In fact, efforts at exploitation smother exploration, while efforts at exploration disrupt exploitation. In the face of this conflict, the most common situation ‘‘is one in which exploitation tends to drive out exploration’’ because most want to continue what has worked in the past. A practitioner faces the same potential conflict. The mastery that enables practitioners to make sense of ambiguous situations can lead them to miss, or even fear, the novelty that makes the situation unique. This same mastery can also cause a practitioner to overlook a surprising, potentially better solution. On the other hand, an appetite for novelty can also distract a practitioner from effective options. New approaches, even better ones, are rarely employed with the skillfulness of the tried and true. Creativity and innovation often increase risk of failure in the short run. At the same time, it is hard to deny that in the long run

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innovations large and small can create competitive advantage in any field or discipline. Faced with this dilemma, practitioners often pick one route, often gravitating toward a personal preference and perfecting it in the way that they work. Developing the integrative skills that resolve this tension is at the core of artistry. Successful integration means finding a way to maintain a dynamic balance of mastery and originality in practice. This is achieved through the development of a sophisticated system of knowledge.

The elements of a knowledge system Artistry is not developed while sitting in a chair. It is developed through participation in a discipline as action in that discipline unfolds. Taking action allows us to generate knowledge through time. For the purposes of this learning effort, knowledge can be sorted into three different categories: experiential, conceptual and directional (see Figure 1). Identified and defined, a design for learning can be made for each type of knowledge that is consistent with its nature. Experiential knowledge Experiential knowledge comes directly from doing. In artistic terms, it is achieved through active participation in a medium or discipline, be it strategic planning, managing, cooking, teaching or some other. Experiential learning develops the sensitivity and skill acquired through practice. Practice, practice, and more practice give a practitioner the ability to use skill with accuracy, reliability, and finesse. Practicing well allows a complete immersion in a discipline that can change a practitioner’s quality of thought. This means that a practitioner can become so familiar with his or her discipline that they begin to see the world in terms of this discipline. Achieving this, practitioners will begin to think in the qualities of their discipline rather than think about their discipline. The following quote from a well-known chef illustrates this somewhat obscure notion, ‘‘What happened to me that night as a chef was a milestone. I was able to taste food when I thought Figure 1

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‘‘ Artistry does not reside in a limited domain such as the fine arts. Instead, artistry is made possible through a particular kind of interaction that unfolds between the practitioner and the situation he or she engages. ’’

about food.’’ When using this kind of knowledge, practitioners often refer to it as having ‘‘feel’’ and find it difficult to put into words. A strategist might exhibit a feel for certain industries, an intuition about market directions or an anticipation of emerging customer needs. This unity between practitioner and discipline is the ultimate goal of experiential learning. Conceptual knowledge Conceptual knowledge is abstracted from experience. Examples of conceptual knowledge include theories, mental models, schema, categories, criteria, maps, heuristics, rules-of-thumb and recipes. These conceptual tools summarize and preserve what we understand about things such as salience, relationship, cause, evaluation, organization, and sequence. Many of these tools are made explicit within a field while others remain largely tacit. When explained or displayed, conceptual knowledge rarely has great meaning for the inexperienced. Some examples of conceptual knowledge are highly complex, attempting to capture as much experience as possible. Other examples capture heuristics that, while remarkably simple to state, may be difficult to accomplish. For instance, ‘‘Keep your eye on the ball’’ may roll off the tongue, but may also take many hours of practice for a budding athlete to achieve. A graphic example of conceptual knowledge is an artist’s color wheel that provides information about the relationships among colors. This chart also informs about the influence of one color on another. Another is a team playbook that records the array of play options available in a game, summarizing in graphic terms each player’s sequence of moves. A chef’s recipe captures the ingredients and the sequence of techniques that yield a particular dish. Organizational designs, market dynamics theories and customer profiling methods are examples of conceptual tools strategists might use as they formulate. Conceptual knowledge can be understood standing alone, say in a classroom, but it becomes useful to artistic practice when it can be used to guide perception and the application of skill. While making this connection is a common element of learning any discipline, it is often more difficult than one might imagine. Directional knowledge Finally, directional knowledge provides the orientation for practice. This kind of overarching knowledge includes cultural and disciplinary paradigms, social identities, stance, values, roles and motivations. Directional knowledge is in large part tacit and deeply embedded. It rarely bears scrutiny except in times of transformational change within a personal practice or practice community. Directional knowledge is quietly developed and often taken for granted. Differences in directional knowledge guide a chef creating rustic Italian food to use his ingredients and tools to create a robust stew while guiding a French chef, using the same, to make a subtle and refined consomme´. Two painters with the same paint, brushes and canvas, and the same understanding of color relationships, can use differences in directional knowledge to create images as different as Da Vinci’s Mona Lisa and Van Gogh’s Starry Night. Using the same economic information, two CEOs can point their respective organizations toward different strategic directions, be it ‘‘customer service’’ or ‘‘product design.’’ Musicians with different directional knowledge can use the same notational system to write symphonic music or country western ballads.

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Directional knowledge allows practitioners to position themselves within their field, relative to other practitioners, and to identify purposes, identity and progress as they work. In addition, this knowledge influences a practitioner’s awareness, assessment and evaluation of conceptual knowledge. In sum, learning in each knowledge category is a critical element in the development of artistry. In addition, as Figure 1 illustrates, the connections that a practitioner can forge among categories completes the learning process. These connections must flow both downstream to enhance mastery and upstream to enhance originality.

The emergence of artistry: working downstream and upstream The development of mastery and originality are dependent on two different pathways of connection between knowledge categories. Establishing these connections is the final step in the development of a knowledge system that will give practitioners an effective route to artistry. Developing mastery, or working downstream, is the more familiar of the two learning pathways (see arrows in Figure 1). Working downstream means acquiring currently available knowledge in all three categories. We all do this as we work our way thorough school programs, inhabit apprenticeships, work side-by-side with mentors and gain experience in what we do. The goal is to develop rich content in each knowledge category and forge the connections. Doing this well is demanding work, and it is the effort that established educational systems attempt to support. Working upstream – producing original work – means we depart from shared notions of mastery. I use the term ‘‘upstream’’ because this effort is currently the more difficult part of an artistic practice. After spending time and energy learning to think and act skillfully to achieve meaningful and effective results, we must then have the courage to abandon these accomplishments. Working upstream often leads us away from orthodoxy. Succeeding at this break, we free our perception and can look again to see anew. We question the way we structure and organize our experience, and the principles we use to establish direction and meaning. Elliot Eisner highlights the difficulty and the importance of this effort in the following quote: An artist once commented, ‘‘When I start a painting, I try to lose control.’’ The idea of wishing to lose control is, in our highly rationalized view of procedure, utterly counter intuitive. We want to take control rather than give it up. Yet, in giving it up, new possibilities are likely to emerge. Thus, action embedded in surprise becomes the means through which new ideas are formulated and expressed.

The choice to pursue irrationality is automatically construed as useless foolishness by many, but not by all. March supports Eisner’s view in a recent HBR article where he identifies the tension that exists in this kind of boldness. He says: ’’. . .big jumps are likely to come in the form of foolishness, that against all odds, turns out to be valuable. So there’s a nice tension between how much foolishness if good for knowledge and how much knowledge is good for foolishness’’ (in Coutu, 2006). Testing the value of an apparently foolish loss of control, the artistic practitioner must invest in giving substance to what occurs. This substance can then be discarded or be used to inform, disrupt, update, enhance, refine or ultimately transform current practice.

‘‘ New approaches, even better ones, are rarely employed with the skillfulness of the tried and true. ’’

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Learning artistry Efforts to learn artistry in any discipline are often thwarted by three misconceptions. The first misconception is the most common and most important – believing it leads students of artistry to frustration and discouragement. As discussed, practitioners interested in achieving artistry often try to copy the finished performances of others, hoping this will take them directly to their goal. This is such a tempting path it is repeatedly followed to its discouraging end. This repeated disappointment contributes to the belief that artistry is not for everyone. It turns out that artistry is an emergent capability and nothing you can do can make artistry happen. Instead, it grows out of the highly sophisticated knowledge system described above. Observing an artistic practitioner in action, this knowledge system is essentially invisible. This means that when captivated by finished results and performances, we are distracted away from the real origins of artistic activity. The place where artistry can be explicitly developed is frustratingly distant from the final goal we hope to achieve. This distance can also mean that in any given moment, attempts at artistry may feel like a giant leap of faith. The second learning misconception is that artistry has a final destination. Instead, artistry appears to have no static or final state. Performance expectations advance and the criteria used to evaluate performance reformulate as progress is made. In addition, those working in the field at large influence evaluations of performance as they innovate and refine performance. What constitutes artistry evolves as understanding, ability and preferences evolve. Finally, the third learning misconception is that achieving artistry is a guarantee of success. Rather, working toward artistry means that you are embracing the risks of both originality and increasing degrees of difficulty. And so it is not possible to work in an artistic fashion without experiencing failure. It is important to note that, in this context, failure and success are a bit hard to pin down. When working artistically, today’s success is often tomorrow’s failure, and vice versa. In the moment, evaluations are often uncertain and notions of success and failure inevitably blur. The history of technology development is rich with examples of this kind of ambiguity. In sum, those interested in developing artistry must take the following into account: B

artistry is an emergent capability;

B

what constitutes artistry is progressive; and

B

evaluation of progress and products is often provisional.

Choosing artistry In the end, the important question is: ‘‘Do you want to pursue the practice of strategy as an art?’’ Are the situations you face filled with uncertainty, surprises and complexity that make them candidates for artistic practice? If so, working toward artistry is a choice limited only by your appetite for the implications of this choice. Keywords: Art, Skills, Learning, Thinking styles, Strategic management, Knowledge management

The successful results of artistic efforts are the memorable performances, breakthrough products and revolutionary advancements in thinking that display the captivating and special qualities that we associate with artistry. For an artistically-inclined practitioner, the rewards of artistry also come from the efforts made to generate these effective and uniquely personal results. Artistry is experienced in the making, as well as in the outcomes and creations practitioners produce. For many, this intensity and progress are the true rewards of choosing artistry.

References Coutu, D. (2006), ‘‘HBR interview of James G. March: ideas as art’’, Harvard Business Review, Vol. 84 No. 10, pp. 83-9. Dewey, J. (1934), Art as Experience, Perigee Books, New York, NY.

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Schon, D.A. (1983), The Reflective Practitioner: How Professionals Think in Action, Basic Books, New York, NY.

Further reading March, J.G. (1991), ‘‘Exploration and exploitation in organizational learning’’, Organization Science, Vol. 2 No. 1, pp. 71-87.

About the author Hilary Austen Johnson, a Consultant in Organizational Learning, was a Co-founder of Catalyst Consulting Team, a management education and consulting firm specializing in leadership and team development. Her areas of exploration include organizational learning, the nature of artistic thought in professional practice and qualitative research. Hilary Austen Johnson can be contacted at: [email protected]

To purchase reprints of this article please e-mail: [email protected] Or visit our web site for further details: www.emeraldinsight.com/reprints

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The second road of thought: how design offers strategy a new toolkit Tony Golsby-Smith

Tony Golsby-Smith is CEO, 2nd Road, Chatswood, Australia.

friend of mine with a background in media has just found himself in the role of CEO of a major government department. One of the first things he noticed is how abused the word ‘‘strategy’’ is – everything has to be a strategy in order to get noticed. He was sure someone would have a strategy for visiting the restrooms. But the second thing he noticed was that no one was actually thinking strategically. The more the word was used, the less meaningful it became. It should not be like this. Strategy should be the process that enables organizations to create new futures and engage their people in that exciting task. Instead, it mostly weighs an organization down with more data and inputs. It does not create coherence, it does not create energy and it does not excite people.

A

Arguably the strategy process is one of the weakest processes in most organizations in terms of culture and capability. They are far better equipped with the tools for operational management and defending the status quo than they are for inventing and shaping new futures. There is a good reason for this. Organizations exist at the delivery end of the thinking life cycle, not at the discovery end. Once an organization becomes mature and viable, it stabilizes ideas into structures and efficiency becomes its overriding goal. This is what modern management focuses on. But strategy is not about delivery and efficiency; it is about discovering alternative possibilities. Inherently this will challenge the hypotheses on which the organization is built. Seen in this light, strategy will threaten the organization’s stability so the organization will immunize itself against it. The budget process is a practical example of how this immune system works. It hardwires yesterday’s assumptions about inputs and outputs into plans and commitments, and so habituates organizations into preserving the status quo. We need a new approach to strategy that can unlock fresh energy and make it more innovative and less data driven. This is what design thinking can offer. Design opens a door to a whole new art of thinking that has been suppressed for centuries by the Western world’s addiction to logic and science[1] as the dominant thinking paradigm.

The two roads story The heart of the story is that the western world bought the wrong thinking system from Aristotle. This ranks as one of the worst investment decisions our civilization has made. It has led us into using the wrong toolkits for our enterprises ever since. The thinking system we invested in was Aristotle’s analytics, and we made the choice around the era of the Enlightenment, which ushered in what we today call the Scientific Age. That decision has proved so sweeping that it now monopolizes what most people characterize as ‘‘thinking’’. Thinking processes are dominated by the culture of the sciences, and you get no better evidence of this than our universities, the home of ‘‘thinking’’, where any subject must position itself as a science to be taken seriously[2]. Traditional approaches to strategy sit fairly and squarely at this table of logic and science.

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But what few people realize is that Aristotle conceived two thinking systems, not one. We made the big mistake of just buying one and then allowing it to monopolize the whole territory of thought. We should have bought them both and used them as partners. Instead we have only one thinking tool in our hands and we are using it for all the wrong purposes. Here is how it happened. Aristotle was the first person to codify thinking into a system. He did this for a reason. He lived during perhaps the most dramatic social experiment of human history, the invention of democracy by the Greek leader Cleisthenes around 500BC . This political system did what no other era had tried to do: it delivered decision making into the hands of human beings. Prior to that, all human regimes were governed by the king or the gods. That meant that no matter how sophisticated they might have been in terms of engineering or mathematics, they were not sophisticated about human reasoning, especially where decision-making was concerned. Clearly Cleisthenes’ political reforms created a great need to codify the processes by which humans think and can arrive at ‘‘truths’’. If ever there was a do-it-yourself manual, this was it! Ordinary humans were playing god in Aristotle’s Greece.

The logic road In answer to this demand, Aristotle invented the great ‘‘truth-making’’ machine of logic and he brilliantly described it in his books on the Analytics. The heart of the machine was the syllogism and it dominates the works. If a ¼ b, and b ¼ c, then a ¼ c. This formula could take inputs and compute them into truth claims that were universally true and incontrovertible. In one brilliant essay he laid down the path for deductive reasoning that has dominated the western mind for the last 300 years. With it, we have built what I call the ‘‘logic road’’ and it carries pretty much all our intellectual traffic these days. The reason for its attraction is not so much the method but what it offers – control and certainty. If I can pull apart any system into its working parts and then explain it in cause and effect relations, surely I will be able to fully know the truth about this system. That knowledge will give me control. There will be no surprises and I will be in the box seat. And with control I will also get certainty. I can predict outcomes and guarantee results. The logic road convinced us more than it convinced Aristotle. He was always uneasy about the inputs into the system. He was confident that his inference-making engine worked well, but what if we could not trust the inputs? He never answered that one to his satisfaction (consider the last two pages of his Analytics where he confronts this worry). But centuries later, two great minds conspired to apparently clean up the inputs question. First, Galileo pioneered the use of numbers to represent reality. Rather than represent the data of the universe as fable or story, he turned all its mystery into numbers – cold, hard, concrete numbers. Then Descartes, who hated uncertainty and ambiguity, elevated mathematics to the head of the table as the only true science. Descartes famously hated the ‘‘soft’’ humanities and declared that only numbers were unambiguous and ‘‘true’’. With this they conspired to patch up the inputs question and thus ‘‘logic’’ became apparently water-tight. The logic road underpinned the era of science, the era of science delivered technologies, and technologies made the industrial revolution possible. The industrial revolution delivered untold wealth and capitalism, and sitting at the end of this beneficial trail lie modern management and its strategic processes, deeply indebted to the logic road.

‘‘ Strategy should be the process that enables organizations to create new futures and engage their people in that exciting task. Instead, it mostly weighs an organization down with more data and inputs. It does not create coherence, it does not create energy and it does not excite people. ’’

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‘‘ We need a new approach to strategy that can unlock fresh energy and make it more innovative and less data driven. This is what design thinking can offer. ’’

But the logic road has run into all sorts of trouble, mainly because it has failed to deliver its main promise of control. I ask management groups that I work with, ‘‘We have never had so much information available to us as we have today, so who feels we have never been more in control of our world and our destiny than we are today?’’ No-one does. So what has gone wrong?

The second road For the answer we can begin by going back to Aristotle. He was smarter than we were in rushing in and over-investing in his logic product. He significantly limited the application of his analytics engine to a certain domain of truth. He called this domain ‘‘where things cannot be other than they are’’. By this he meant the realm of natural science. If you have a truth question concerning the realm of nature or any realm where things do not change, by all means use the logic road. But he said that this domain was not the only domain for truth making. There was a second domain which he characterized in the memorable phrase, ‘‘where things can be other than they are.’’ By this he meant the whole domain of human decision making, where we in fact play god and determine alternative futures. For this second domain, Aristotle conceived an entirely different thinking pathway that combined invention, judgment and decision wrapped up in a social process of debate. He called this process ‘‘rhetoric’’ or ‘‘dialectic’’ and I call it the ‘‘Second Road’’ to truth[3]. Aristotle described it just as fully, or even more fully, as his analytic engine, in various books, including the Rhetoric and the Topica. The critical difference between the two roads is always best understood by the different domains of questions that they address rather than by differences in their methodologies. Rhetoric was the road by which humans designed alternative futures. Analytics was the road by which we diagnosed what already exists. As Richard Buchanan of CMU has brilliantly demonstrated in a series of landmark essays[4], design is the modern rhetoric. The significance of all this cannot be over- stated. If strategy is in fact a design process, it has been using an incomplete toolkit[5]. Human beings do not analyze their way into the future. In fact, we cannot analyze our way one inch into the future for the simple reason that the future does not exist yet so it is not there to analyze. Let me demonstrate this to you quite simply. At the heart of the logic road lies the idea of proof and empirical reasoning. This is hard wired into our culture by the common challenge, ‘‘Prove it!’’ If I cannot ‘‘prove’’ a hypothesis, then I am undone. Suppose I propose a dream for our organization in which I imagine an alternative situation, different from and much more desirable than the present situation. Then management challenges me to ‘‘prove it!’’ I cannot do this for the simple reason that my dream lies in the future and thus is beyond proof. Yet if I am so challenged and I reply, ‘‘Sorry I cannot prove it . . . but I believe it!’’ I would feel weak and defensive in most organizational cultures. The reason I would feel so defensive is that our whole paradigm is dominated by the analytic system – and it is out of this dominant thinking system that the challenge to ‘‘prove it’’ flows.

The power of argumentation So if we do not analyze our way into the future, how do we move ahead? The answer is by ‘‘arguments’’ and it is the art of argumentation that lies at the heart of the Second Road. Arguments are the engines by which humans create alternative futures. The great Roman leader, Cicero, was an avid follower of Aristotle and quite possibly the greatest rhetorician of all time. He claimed that all human civilization was built on the pathway of rhetoric. He

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memorably imagined uncivilized tribes arguing their way out of caves and into villages. Picture the first natives to start the argument: We don’t have to keep sheltering high up in these caves forever. I reckon we can live happier lives way down by the river close to the water and our hunting grounds. So how do we do that, pray tell, without freezing to death in the winter months? Well good question but I have this idea – let’s call it a ‘‘hut’’ – which we could make out of the timber from old trees . . . You are always dreaming you fool . . . but the idea of huts has some attraction . . . take it further for me.

In that dynamic of argument lies the whole momentum of progress according to Cicero. If Cicero’s cave dwellers used Aristotle’s logic road to improve their lives, they would still be there today analyzing the rock structures of caves. But they are not, because the human genius for argumentation enables us to craft alternative destinies. Thus every strategy is an argument, every plan is an argument and every design is an argument. The concept of ‘‘argument’’ opens a door onto a new landscape of tools and pathways to craft strategy and make it the ‘‘design’’ process that it naturally is[6]. My firm has designed and facilitated hundreds of strategic conversations that take our clients through a process of building arguments conversationally. Here are three critical elements of the Second Road toolkit that have proved transformational for these groups. I name each of the three with both a classical term of rhetoric and a modern term of management.

1. Agency (corporate intent) The first element of a compelling argument is ‘‘agency’’. In the scientific process, you keep people out of it. We are taught to be ‘‘objective’’ and not bring ourselves into the thinking process. This confines the scientific thinking process to being merely cognitive. In the Second Road, the opposite is the case. We humans become the ‘‘causes’’ that create ‘‘effects’’. We must become ‘‘agents’’ if we want to change things. This repositions strategy as an act of the will, not just of cognition. Strategy crystallizes the corporate will. This fundamentally changes how we view strategy. It is as much a matter of the will as the intellect. However most people do not feel like agents, and the modern organization does not help that feeling with its emphasis on compliance, hierarchy and command/control relationships. If we want to get people to design their futures, our first task is to emphasize their ‘‘agency’’. They must feel that the world is not an accident nor is it ‘‘determinate’’. It is putty in their hands and they are its authors. We make this explicit in our workshops by the ‘‘Reader to Author’’ model (Figure 1). There are two stances we can take into life. We can see ourselves as ‘‘readers,’’ in which case we believe that someone else writes the text of life and our job is to read it. Ironically, the more educated we become, the more we feel like readers since most education is framed in the analytic paradigm and literally enforces a disposition of ‘‘readers’’ on the students. The alternative disposition sees us as ‘‘authors’’. Life is a canvas and our job is to write the story, not read it. Figure 1

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We ran a strategic conversation recently for the leaders of a major newspaper organization with a great past but an uncertain future in the online world. They had pages of analysis before them, and most of it was depressing. We began the workshop by asking, ‘‘Do you believe that this organization has a credible future? Is it worth the effort of creating a strategy or do you feel that long term decline is really inevitable?’’ The question surprised and confronted them. It evoked a spirited and open discussion for two hours. When we finished they agreed that there was a hopeful future, and it lay in nobody’s hands but their own. They had moved from being ‘‘readers’’ to ‘‘authors’’. 2. Possibility (invention) The second element of a compelling argument is possibility. True design is the art of invention, not analysis. You cannot analyze your way to invention. So how do we do it? Whereas analysis is a process that works like a formula, invention is an art that works like a forge. We must melt down fixed ideas and views, allow them to swirl around and then shape them into new combinations. The process is one of immersion and emergence, not analysis[7]. Sound strange to you? Watch a painter paint a landscape or a poet exploring ideas and you will see it happen in practice. This is design thinking at work. It does not work like a spreadsheet. We stimulate this kind of thinking by shifting the dynamic of the strategy process from documentation to conversation. Most strategic processes rely far too heavily on documentation. But documents were not made to generate ideas, they were made to codify and communicate them. Further, documents are primarily an individualistic tool not a social one. People write documents alone and they read them alone. Conversation is different. It is a melting pot of ideas. It is a living, organic process. It is a perfect way to generate possibilities and create arguments. We map the conversation process across this icon which we call the ‘‘Design Wavee’’ (Figure 2). Arguments are developed by advancing topics across this wave. Things start foggy, but then crystallize as we transform confusion into arguments that can mobilize action. But conversations need some structure or they will unravel and achieve nothing. We do this by using the writing process (rather than documents) to structure the dialogue. Good writers explore ideas by sketching them with maps and models. We create virtual design studios where groups start with a blank sheet and ‘‘write’’ their strategy by a process of dialogue. We shape and guide the energy that the conversation creates by mapping and modeling in real time on an electronic whiteboard. This effectively transforms the group into designers who are using heavily right brain tools of visualization, modeling and prototyping ideas[8]. If I could turn on a video camera and show you the strategic conversation that we facilitated recently for instance, you could have watched Australia’s aboriginal leaders design a way forward for our indigenous community that aims to rewrite 200 years of sorry history. You Figure 2

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would have seen the swirl of dialog melt down fixed positions and transform them into new possibilities. Immersion and emergence happened before our eyes. The Second Road is not just theory for us; it is an art of action. And rhetoric was not a theory for Cicero and his friends. It was an art of action and design. Most organizations do not face anything like the 200 years of hurt and dysfunction that these indigenous leaders face. Yet most organizations are similarly dysfunctional in shaping change. If the tools of argumentation could transform how these leaders faced their futures, imagine how effective they are at transforming the narrower challenges of a single organization. 3. Persuasion (community of action) The third element of an argument is persuasion. In the scientific road, persuasion is not the goal – proof (or demonstration) is. In the Second Road, persuasion is the goal because the aim of the argument is to mobilize people to create a new future. Cicero’s cave dwellers had to persuade their colleagues that there was a better way. This has two significant consequences for strategy as design. First, the criteria of a good strategy changes; we cannot look for the ‘‘right’’ strategy, we must instead look for the ‘‘compelling’’ strategy. Good arguments compel belief. The second consequence is that an effective strategy process will not just produce a ‘‘plan’’ it will produce a community of action: that is our real goal. Nothing is stronger than a persuaded community. They will create alternative worlds. A new theory of language Underpinning this whole Second Road of rhetoric/design lies a fundamental new belief about the nature of language. In the analytic paradigm, language is descriptive. It is a tool to put labels on the world. Its role is passive: it merely enables communication. Little wonder that the analytic world has now passed the baton of power to mathematics as the underpinning tool of trade. But the rhetoric road operates from a fundamentally different and emerging belief that language creates new realities, it does not just describe them[9]. If I name a situation as ‘‘hopeless’’, that will create hopelessness. If I name a situation as ‘‘promising’’, that will create promise[10]. In this view, language is the agent of design. I once stood in the center of the huge mining complex of Mt Isa Mines in the deserts of central Australia as my companion, one of the world’s eminent metallurgists, looked around with me at the stunning artefacts of human engineering that surrounded us and said, ‘‘All that steel and structure began as words and conversations.’’ He got it. Design begins with language that creates proxies for alternative futures long before they exist in material form. Viewed that way, language is the raw material we use to create our current and future realities. The Second Road builds arguments or designs out of the playground of language. The first road of analytics has narrowed the whole playground to the skimpy perimeter of empirical reasoning and spreadsheets. Let me finish with a story that gives some texture and pragmatics to this broad sweep of theory and history. Our assignments always take us to groups facing uncertain, often troubled, prospects. They have a choice; keep operating as normal and let the future happen to us or design our world. In every case, a toolkit composed only of analytic tools would have been at least inadequate, or at worst, counter productive.

A case study One such case was the Australian Navy. They played a key role in the massive rescue effort that followed the devastating tsunami of 2004. Tragically, a Royal Australian Navy Sea King helicopter crashed during that rescue effort, killing nine of the 11 people on board. In the subsequent months, a board of inquiry was set up and began to rigorously analyze the cause of the crash. Its proceedings made regular daily news across the country. Imagine the morale for the squadron involved as they watched their problems broadcast across the nation’s media. The situation in the squadron became so demoralizing that it threatened their operational effectiveness. This is not to mention the personal grief and trauma people were

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‘‘ The logic road has run into all sorts of trouble, mainly because it has failed to deliver its main promise of control. ’’

grappling with over the deaths. The problem reached what we could call ‘‘strategic’’ proportions because of the potential impact on the Navy’s broader capabilities. What did these people need? Think how useless an analytic-based strategic process would have been for them. They had analysis in spades. Every day top lawyers pored over their procedures and culture. Internally they had rigorous reviews and surveys. None of these things were going to help this group do what they needed to do; design a new future. In Simon’s words, they had to ‘‘devise courses of action aimed at changing existing situations into preferred ones’’. Together with the Maritime Commander Australia, Rear Admiral Davyd Thomas AM CSC RAN, we designed and facilitated a series of strategic conversations that enabled the whole squadron to do just that. In a remarkable display of leadership, the Admiral laid aside the hierarchical culture of the Navy and workshops were attended without uniform or rank to allow people to speak freely. A total of 100 people, from the Admiral to the most recent teenage recruit, participated in the process of creating an argument for a new future and a new way forward. We created a feeling of agency in all 100 by the reader/author model and by giving everyone a voice through the conversation process. We (i.e. us as facilitators and the Admiral and his team) created a zone of possibility by a combination of broad authorization and exploratory dialogue that allowed new designs to emerge. The whole squadron became a persuaded community of action that is now actively rebuilding itself at all levels – from the frontline to the command level. The squadron’s commanding officer, Commander Tim Leonard RAN, recently asked a senior journalist to visit the base to observe the changes first hand. This journalist had covered the whole board of inquiry and had been scathing in her attacks on the Navy. She was so impressed with the changes that she wrote a front page article in our major morning broadsheet entitled ‘‘Squadron learns to be kings again.’’

Keywords: Design, Conversation, Corporate strategy

So design does indeed offer the next horizon for strategy. But to unlock that potential we need to recover the first principles of ‘‘design thinking’’ and we do that in the stunning story of the two roads. Viewed that way, design offers organizations a new paradigm of thought and a whole set of practices that can revolutionize how we do strategy, and more ambitiously, how we build great organizations. This toolkit does not stop there in its implications. It applies to the world of education, social design and human enterprise everywhere.

Notes 1. I need to make a cautionary point here. Do not read what follows as an attack on science or analysis as useful thinking tools. They have benefited the world immeasurably. What I will criticize is the way we have accepted them as the dominating paradigms for thought and action. They have become a ‘‘sociology of thought’’ rather than mere methods. With that cultural dominance, comes misapplication, and with misapplication comes a damaged reputation. We have over-used the marvelous toolkit of science, and not only have our society and organizations suffered as a result, the brand of science has taken an unnecessary battering as well. 2. The inexorable decline of the humanities in most universities is telling evidence of this power play. I recently advised a young lecturer at a major university who is ambitiously proposing to set up a Center for Rhetoric and Composition at the University. She was told by the vice chancellor that this was a great idea but she would first have to find funding from private benefactors and then he would match their gifts. This restriction applies to all humanities projects. No such restriction applies to projects from the schools of engineering, science or business.

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3. I have coined this metaphorical naming for a number of reasons. The term ‘‘rhetoric’’ is misleading today because its meaning has degraded into the cosmetic of communication and persuasion, rather than an art of thought. Alternatives like ‘‘design’’ or ‘‘creative thinking’’ are already cliche´s that do not carve out new territory of meaning very well. They also miss the social dimension that distinguishes ‘‘rhetoric’’. Aristotle’s alternative term of ‘‘dialectic’’ is probably closer to the meaning we want to create but it suffers from being fairly obscure. Hence I have abandoned all easy alternatives and turned to a metaphor to do the work. 4. See for instance, ‘‘Rhetoric, humanism and design’’ in Buchanan and Margolin (1995). 5. Rhetoric offers a new toolkit to many fields other than strategy. For instance, rhetoric was art of leadership in the ancient world. Leaders were not analysts, they were rhetoricians who could take whole communities with them. Abraham Lincoln was superbly trained in rhetoric. 6. I am not arguing that we displace analytics entirely in favour of tools of argument and invention. Rather I recommend that we synthesise these two paradigms of thought into a new partnership. In this partnership, argument provides the architecture, and analytics provides part of the toolkit. 7. Nietzsche famously typified this dynamic as the paradoxical forces of Dionysian energy and Apollonian aesthetics. 8. This process needs to be skillfully facilitated. The facilitator is a new breed of facilitator who is trained in the art of design rather than group dynamics. They are therefore able to guide what amounts to a social design process rather than a private design process. They bring the design skills and methodology; the group brings the design problem and the design instincts. This proves a golden partnership. Mainstream managers become a de facto design group without needing to have the design skills necessary to do it on their own. 9. See for instance Austin (1975), or Lakoff and Johnson (1980). 10. This view of language opens up a new Pandora’s Box around ethics and delusion. Do we create new realities or just mirages? And whatever the answer to that question, what about the ethics of design? Arguably the swastika was one of the greatest acts of brand creation in the twentieth century, and it certainly helped create a new reality for millions of unhappy people. Clearly I cannot explore these issues in this paper. I note them, and acknowledge that the power of language and design is a two-edged sword. Insofar as I introduce an answer to this question, I would do so by moving from rhetoric to dialectic as my archetypal thinking method. Dialectic addresses values and general truths that liberate people in contrast to the pragmatics of rhetoric. Our strategic conversations are more a dialectical exercise than a rhetorical exercise, because they are heavily based in a dialogue around noble purpose and foundational values. I can do no more in a footnote than put this intriguing toe into that massive ocean.

References Austin, J.L. (1975), How to Do Things with Words, Oxford University Press, Oxford. Buchanan, R. and Margolin, V. (Eds) (1995), Discovering Design: Explorations in Design Studies, University of Chicago Press, Chicago, IL. Lakoff, G. and Johnson, M. (1980), Metaphors We Live by, University of Chicago Press, Chicago, IL.

About the author Tony Golsby-Smith is a designer and facilitator of strategic conversations that allow groups of people to think more powerfully together. Most recently he has been working with the Australian Tax Office as an advisor to introduce design thinking and methods into the tax system, constituting the first major attempt in the world to design huge national systems actively using design methodologies. Tony Golsby-Smith can be contacted at: [email protected]

To purchase reprints of this article please e-mail: [email protected] Or visit our web site for further details: www.emeraldinsight.com/reprints

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Possibility thinking: lessons from breakthrough engineering Robert Friedel and Jeanne Liedtka

Robert Friedel is Professor, Department of History, University of Maryland, College Park, Maryland, USA. Jeanne Liedtka is Executive Director, Batten Institute, Darden Graduate School of Business Administration, University of Virginia, Charlottesville, Virginia, USA.

ne of the tenets of design theory is that great designs occur at the intersection of possibilities, constraints and uncertainties. This article focuses on possibilities, the all-important front end of design. Business strategists, both in academia and practice, tend to be well-versed in the identification and analysis of constraints. Similarly, interest in managing uncertainty has received significant attention of late and methodologies such as scenario planning and options theory have been developed in response. But what of possibilities? If the ability to see new possibilities is fundamental to creating innovative designs, whether of products or cities or business strategies, what do we know about state-of-the-art possibility thinking? Not much, it seems.

O

Business strategy has historically been seen as a largely analytic endeavor, with relatively little attention paid to the creative aspects of strategy formulation. Other articles in this special issue turn to art and rhetoric as inspiration for possibility thinking. In this paper, we turn to engineering to look at lessons from a selection of breakthrough engineering projects whose designers devised new ways of solving problems and new approaches to making the best use of the resources available. We look at eight different ways of illuminating new possibilities taken from the engineering stories – challenging, connecting, visualizing, collaborating, harmonizing, improvising, re-orienting, and playing – and discuss what each of these might look like if applied to business strategy.

Challenging Challenging assumptions and defying convention are often the first steps in creative engineering. To produce something original, the engineer raises questions about the way things are done and entertains doubts about what is assumed to be necessary, natural or customary. Seismic base isolation is a system of protecting buildings from earthquake damage by using ‘‘bearings’’ or supports, typically made of layered rubber and steel pads, to separate buildings from the ground on which they sit. The bearings allow a building to move freely on shaking ground. This approach challenges the customary view that we make a building stable by fixing it firmly to the earth. In describing the traditional method of limiting earthquake damage in The Seismic Design Handbook (Naeim, 1989), Mayes wrote: The vocabulary of seismic design is limited . . . The basic approach has not changed [over the years]: construct a very strong building and attach it securely to the ground. This approach of arm wrestling with nature is neither clever nor subtle . . .

The new technology breaks from this radically by allowing a building to move, but to move without destruction. Putting ‘‘bearings’’ underneath a building’s foundations separates the building itself from a potentially moving earth. One ambitious application has been the work of Eric Elsesser and his associates in retrofitting the San Francisco City Hall following the

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DOI 10.1108/02756660710760926

‘‘ One of the tenets of design theory is that great designs occur at the intersection of possibilities, constraints and uncertainties. ’’

Loma Prieta earthquake of 1989. This building is now separated from the earth by hundreds of steel and rubber isolation bearings, making it the largest base-isolated structure in the world. In the realm of business strategy, we see much the same process at work when managers challenge mental models and industry assumptions. New possibilities emerge when they refuse to accept existing paradigms and constraints. The potential opportunities revealed when managers look through a different lens can be enormous. Consider the incremental value created at Raytheon with the development of the new ‘‘Vigilant Eagle’’ anti-terrorism device, designed to protect commercial airliners from over-the-shoulder missiles. Conventional wisdom (based on military experience) decreed that each plane be outfitted with its own protection device at a cost of approximately $1 million per plane. With estimates for protecting all US commercial aircraft running to $20 billion, creative managers at Raytheon hit upon a new possibility – that of protecting airports, rather than individual planes. They estimate that 70 percent of US air traffic can be protected for less than $2 billion. Challenging existing approaches became the path to a cost-effective solution.

Connecting Making connections between seemingly unrelated ideas is also often at the heart of creative engineering. Novelty can result from going outside a single field or discipline and bringing together diverse concepts, tools, capabilities and ways of thinking. Tissue engineering is a new specialty that creates usable human tissues for repairing or replacing damaged ones. Engineers have tackled this problem by relating medical and biological approaches to those of chemical engineers, materials scientists and engineers, and mechanical and electrical engineers. Some of the basic approaches of tissue engineers borrow from civil engineering. ‘‘Scaffolds,’’ for example, provide biodegradable structures on which tissue cells can grow. Another key device used by some tissue engineers is the ‘‘bioreactor,’’ a vessel especially designed for the cultivation of living tissue. Tissue engineering is now emerging from the laboratory into medical applications and producing experimental products including skin, cartilage, and liver tissues. Connecting can be equally powerful in the business environment. The use of analogies that connect different fields can provide a window of insight into new possibilities for value creation. While adhering to the mental models of one’s own industry is limiting, trying on the mental models of someone else’s can surface intriguing new opportunities. The story of Ethel M. Candies demonstrates the power of connecting across business boundaries. John Haugh, Ethel’s new president, faced the daunting challenge of growing the high-end Ethel business in a confectionary market suffering from slow growth and consumers who preferred Godiva – despite Ethel’s superior quality in blind taste tests. Rather than continue to pursue the existing packaged-goods strategy, John combined his own career experiences in retail with close observation of the success of Starbucks. If Starbucks could do it with coffee, why couldn’t Ethel create a similar experience around chocolate? Thus was born the Chocolate Lounge.

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Visualizing Making something new, for an engineer, often means first thinking about how it might look – picturing it in the mind’s eye. Engaging the senses beyond what words describe sometimes opens new paths to engineering creativity. Visual thinking is a key element in many kinds of engineering, particularly those dealing with large structures. In some projects, however, the visual element is particularly striking and the creative act appears to be tightly bound to thinking about problems pictorially. One recent example is the Gateshead Millennium Bridge, carrying foot traffic across the River Tyne between the cities of Newcastle and Gateshead, in northern England. This remarkable structure was envisioned as a ‘‘blinking eye;’’ it opens to allow river traffic not by lifting up, but by pivoting. The movement of its supporting arch and its curved foot surface creates a remarkable sight, enhancing the visual aspect of the engineering both while stationary and while in motion. The successful execution of visually unconventional and dynamic engineering projects has been considerably aided by the creation of new tools for visualizing, such as complex computer systems that apply mathematical techniques like ‘‘finite element analysis’’ to create accurate renderings of structures while they are still only speculative ideas. Visualizing is perhaps the most challenging concept to transfer from the world of engineering to the world of business strategy. After all, strategies represent ideas, not concrete objects – they are composed of numbers and of words – how can they be made visual? Yet there is significant value in pushing our thinking along this dimension. Designers, we are told, ‘‘think with their pencils’’ – allowing the emerging visual images they sketch to deepen their understanding of what they are designing as it unfolds. If strategists, on the other hand, think only with their spreadsheets, how much use of imagination can we expect? Trader Publications, a producer of free classified product guides, has taken the dictum to use visuals to heart. As part of their strategic planning process, managers not only describe competitive publications, they obtain copies of them. These copies are aggregated at corporate where managers array them in conference rooms for examination. This experience, the visual and visceral experience of handling these publications, according to Trader executives, produces far richer possibility discussions than reading reports about them. In a similar vein, organizations have begun to experiment with creating strategy maps, which act as pictorial guides that use analogies to portray both their own and competitors’ strategies. The act of creating these maps often triggers profound new insights.

Collaborating Many engineering innovations are the product of cooperative effort and could not be developed any other way. A group of people brings together a range of talents and capabilities, applying them to generate results that reflect both individual skills and a collaborative creativity that is more than the sum of the separate endeavors. Boeing 777: a case study A jet airliner is one of the most complicated products designed by modern engineers. It contains literally millions of individually designed parts that must work together to meet the highest standards of performance, reliability and safety. The Boeing Company’s 777 jet is a model of collaborative creativity on an extraordinary scale.

‘‘ The potential opportunities revealed when managers look through a different lens can be enormous. ’’

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‘‘ The use of analogies that connect different fields can provide a window of insight into new possibilities for value creation. While adhering to the mental models of one’s own industry is limiting, trying on the mental models of someone else’s can surface intriguing new opportunities. ’’

The collaboration behind the Boeing 777, however, is interesting not simply for its scope, but also for the pioneering communication methods it relied on. This was the first major aircraft designed using extensive computer networking – more than 2,200 work stations linked by eight mainframes – to bring together thousands of engineers working on every phase of the project at the same time. Although many never met in person, the computer system promoted a collaborative process so central to the project that the 777’s slogan was ‘‘Working Together.’’ At the heart of the system was software developed by IBM and Dassault Syste`mes, called CATIA, for ‘‘Computer-Aided Three-dimensional Interactive Application.’’ Boeing extended this with EPIC, ‘‘Electronic Pre-assembly In the Computer,’’ allowing engineers in disparate locations to design and test ‘‘virtual’’ prototypes of crucial components of the airplane. Interestingly, in Boeing’s design of its newest product, the 787, the firm has pushed collaboration beyond groups of engineers to collaboration with customers as well; creating special web portals which solicit their input on likes and dislikes to incorporate into the design process. These examples of collaboration with suppliers and customers represent just two of many ‘‘white space’’ possibilities. At United Technologies, collaboration between in-house technical talent at two separate divisions, jet engine designer Pratt & Whitney and cooling specialist Carrier, created the breakthrough Purecycle product with virtually no new components needed. Purecycle converted waste heat to electricity, an opportunity that went unrecognized until engineers who thought in terms of power met up with engineers skilled at using heat exchange to produce cold air. Crossing such functional and business unit boundaries can provide rich sources for enhanced value creation.

Harmonizing In every area of human effort, creativity is intimately associated with the quest for beauty. This is most obvious in the fine arts, but it is no less true in the practical arts like architecture and engineering. Here, especially, there is an aesthetic quality that often lies in harmony, in fitting the products of human ingenuity agreeably into their environment. Bridges are among the largest and most imposing engineered structures. In the past great bridges were built to call attention to themselves and to the engineers’ ability to overcome enormous obstacles. As a result, bridges can reshape their environments: Who can today think of the magnificent natural opening of San Francisco Bay, dubbed ‘‘the Golden Gate’’ by early explorers, without thinking of the great bridge set across it in the 1930s? Sometimes, however, it seems best that a structure should not so much reshape our perceptions of a space as enhance them. In Colorado’s Glenwood Canyon, a key link in the nation’s interstate highway system required the construction of a viaduct to carry the road over a narrow, curving, and beautiful stretch of the Colorado River. The Hanging Lake Viaduct fits aesthetically and satisfyingly into this precious natural setting while providing an efficient and reliable transportation link. Meeting the challenge in Glenwood Canyon involved not only designing a structure that would harmonize with its environment but also minimize harm to the river and its surroundings. The builders used a giant gantry and crane to set the pre-cast concrete box girders into place from above. The number of piers supporting the road was reduced by

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producing spans as long as 300 feet. Bridge members were designed with straight lines to blend with the striations of the canyon walls. In business strategy, we have a long history of paying attention to the ‘‘fit’’ of an organization’s strategy, both in terms of its internal consistency and in its appropriateness for its larger environment. Good strategies, we know, are aligned along many dimensions. We have an equally long history in business, however, of largely ignoring aesthetics, of treating these as trivial adornments to high-end products and services. In fact, it is somewhat difficult to even describe what the ‘‘aesthetic’’ dimensions of a strategy might be. What makes a strategy more than merely functional and makes it a thing of beauty? The origin of the word ‘‘aesthetic’’ lies with the Greek ‘‘aisthetikos’’ meaning ‘‘of sense perception.’’ Thus, we might conjecture that it relates to ideas, strategies that appeal to the senses, rather than merely to cognition – new possibilities that have an emotional appeal, a ‘‘presence’’ that commends attention and invites engagement. We know that the most successful innovations combine the familiar with the novel to produce something interesting. Yet consider how banal and cliche´d so many corporate missions are – no wonder they fail to command even attention, much less emotion. Then consider instead the emotional engagement the Body Shop evoked from its clientele when it committed to natural products and no animal testing coupled with a recycling ethic. These simple aesthetics created a unique and compelling value proposition for targeted customers who shared their values. Change, psychologists tell us, is primarily driven by desire – it is in that sense of the term aesthetic that we can learn from designers how to make business strategies more compelling and new possibilities more evident.

Improvising Engineers, like most of us, are sometimes at their most creative when they are forced to be. Circumstances may require solving problems quickly or may place overwhelming constraints on what seems possible. To improvise is to create ‘‘on the fly,’’ and the results can be most ingenious. Outer space exploration is one of the last places we expect engineers to improvise. Few activities appear to be so thoroughly planned from start to finish. But in space, improvisation becomes essential to the creative engineer’s contribution. Whether planning and executing repairs on a device millions of miles away or devising clever ways to extend the work of multimillion dollar instruments, the spacecraft engineer may work with the most extreme constraints of all. The most public side of the space engineer’s improvisation takes place in fixing damaged spacecraft or instrumentation, such as the Hubble Space Telescope or the troubled Apollo 13 craft. But even more creativity may be shown by the engineers and scientists who work to make space devices launched years ago and now located millions of miles away do things their original builders never imagined. The Voyager 2 space probe was launched in August 1977, primarily as a back-up for the Voyager 1 flight to Jupiter and Saturn. Designed to operate for five years, it ended up carrying out important missions for more than 12 and is still sending data back to earth. Now from far beyond the most distant planet, its most important achievements were the transmission of pictures from Uranus and Neptune. Voyager 2 has been constantly re-engineered, repaired, reprogrammed, and reconfigured by earth-bound engineers working with the constraints of a device which receives its communications in a dead language minutes after the commands are sent.

‘‘ The collaboration behind the Boeing 777, however, is interesting not simply for its scope but also for the pioneering communication methods it relied on. ’’

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‘‘ In every area of human effort, creativity is intimately associated with the quest for beauty. ’’

In the business context, limitations to action are often seen as ‘‘stop signs,’’ signals to give up the quest for an innovative solution. For designers, the response is the opposite; constraints act as triggers, rather than barriers, to seeing new possibilities. Some of the most successful business strategies were not the result of careful forethought. Instead, they were the products of improvisation, created out of necessity when familiar options were unavailable. IKEA, the well-known Swedish furniture innovator, offers a case in point. Nearly every element of IKEA’s now famously harmonized strategy, which is based on furniture packed flat in pieces, customer home assembly, and self-service in their warehouses, was a clever response to an unanticipated problem. Customer self-service, for instance, originated with the opening of the Stockholm store, which was so unexpectedly popular (and hence understaffed) that frustrated customers grew tired of waiting for scarce warehouse personnel to bring their purchases to them, and went in search of them themselves. What distinguishes IKEA is not that such problems developed, but that IKEA was able to find new possibilities inherent in them and to build these serendipitous discoveries into their strategy.

Reorienting New possibilities can emerge from new formulations of problems rather than new solutions. When people change goals or revise notions of what is important and what is not, different priorities and approaches may be more appropriate. New knowledge can lead to a reevaluation of results and a reorientation of effort. Engineers’ goals and priorities may shift for a variety of reasons. Changes in fashions, markets or politics may make approaches that were once considered desirable or necessary seem unattractive or inappropriate. Or engineers and society at large may learn new things that lead to a reevaluation of results and a reorientation of efforts. Few better examples of this can be found than the re-engineering of South Florida’s rivers and wetlands. The Kissimmee River begins near Orlando and flows southward for about 100 miles into Lake Okeechobee. Historically, it meandered through a one- to two-mile wide flood plain, covering all but a small portion of the land for most of the growing season. In periods of large storms or hurricanes, waters from the Kissimmee and other rivers would destroy homes and crops over a wide area. To reduce flooding, the US Army Corps of Engineers straightened the river in the 1960s and drained much of the nearby wetlands. Even before the project was completed in 1971, however, it was clear that this effort had resulted in devastation of wildlife habitats and the displacement of many animal and plant species. State and federal agencies decided that engineers’ efforts needed to be reoriented toward undoing the damage. Recovery of the Kissimmee River became one of the most ambitious restoration projects ever undertaken. Slowly the Corps of Engineers and the South Florida Water Management District are returning major portions of the Kissimmee from a canal back into a meandering river, to make the environment of South Florida once again hospitable to its historic inhabitants. Re-examining the definition of the problem holds great potential for generating new possibilities in the business realm. One of our favorite stories is that of P&G’s creation of the Swiffer mop. After decades of focusing on the problem of producing more effective detergents, P&G re-oriented its thinking to focus on creating a cleaner floor, as well. This led to the realization that the detergent was only part of the solution, and that significant opportunities existed in producing a better mop.

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A similar shift occurs, at a generic level, whenever business strategists move from focusing on the problem of ‘‘How do we sell more of product X?’’ to ‘‘What need is the customer trying to satisfy?’’ For, as one of the fastest growing companies in the traditionally staid construction air compressor market explained to us, it was the realization that ‘‘nobody needed an air compressor – what they needed was efficient, reliable compressed air’’ that allowed customers to complete their projects on time and budget. This reorientation caused them to rethink their entire portfolio of products and services and to see the possibilities inherent in offering energy efficiency monitoring and a host of other services that complemented their traditional product offerings and drove dramatic new growth.

Playing To an extent that is often unrecognized, even by engineers and designers, play is a key element of the creative act. Many significant technical achievements have their origins in playful experimentation. Think of the architecture of Frank Gehry. His famous flowing curtain walls, as in the Bilbao Guggenheim Museum or the Walt Disney Concert Hall in Los Angeles, are the product of the highest order of structural engineering, but channeled in ways directed by playful experimentation. Gehry comes from an architectural tradition of modeling, and this tradition itself has a core element of play attached to it. Playful engineering, as it has been called, revolves around the capacity to simulate and model wide varieties of possible approaches. So Gehry’s firm, for example, applies the most advanced computer modeling to facilitate enormous variation in possible forms and structures. These variations, in turn, are generated by a playful approach to the problem, allowing the mind to range over possibilities that may at first glance seem unlikely or even foolish, but which, given the opportunity to explore, model and prototype, can become exceptional moments of creativity. Play may also become part of the structure of design and engineering organizations. Perhaps the best known example is the design firm IDEO, which stocks each of the firm’s offices in North America, Europe and Asia, with an identical ‘‘tech box.’’ As the firm’s web site describes it, ‘‘each Tech Box has several drawers holding hundreds of objects, from smart fabrics to elegant mechanisms to clever toys, each of which are tagged and numbered. Designers and engineers can rummage through the compartments, play with the items, and apply materials used by other designers and engineers within the company to their current project.’’ Computer and database linkages allow sharing of tech box play among the firm’s offices, and each box has a ‘‘curator’’ who constantly updates the contents. The idea of play may appear ill-suited to the business environment. After all, business is a serious endeavor, and the pursuit of efficiency and rationality seems at odds with notions of play. Architects and designers may play – but strategists? Yet the single-minded pursuit of efficiency and optimization can leave little room for the emergence of new possibilities, a situation that in the long run may cost organizations far more than some ‘‘waste’’ in the name of play. Play invokes a number of themes that we have already touched upon: play is social, involving collaboration (or competition), it is iterative and improvisational, open to surprise and unexpected opportunities. Play is also manifestly experiential. To play is to try, to do something, not merely to think about it. With many strategy-making activities primarily cognitive, play does us the great service of calling attention to the value of the experiment, the willingness to forfeit certainty in the name of learning. The limitations of analysis, when the endeavor is about inventing something new, become quickly apparent. Indeed, ‘‘analysis paralysis’’ is a well-recognized problem in strategy processes. New opportunities sometimes appear only when we engage in the ‘‘doing.’’ Business organizations good at finding new possibilities are quick to conduct the low-cost experiment rather than conduct the detailed market feasibility study. Consumer product companies are increasingly likely to talk their key retailers into just a small amount of shelf space in a few stories to test new ideas, preferring to fail early and on small volume rather than do major roll-outs based on predictions of consumer behavior that often prove incorrect. Other organizations prefer to make small ‘‘window pane’’ acquisitions or partnerships to play with new technologies before investing more heavily in their own

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production capacity. This kind of ‘serious play’’ is likely to pay big dividends in opening up new possibilities. As we look across these eight approaches to uncovering new possibilities derived from the engineering world, their applicability to business strategy is clear. Engineers have long viewed design as a core activity. As managers – particularly strategists – come to share this view, we would be wise to turn to engineering for creative inspiration. We suggest that business strategists begin by asking themselves a simple set of questions that draw on these engineering approaches and provide a warm-up for the possibility thinking muscles of our strategic brains. Consider:

Keywords: Design, Thinking styles, Management strategy

B

Creating a challenge. Take an absolute industry ‘‘truth’’ and turn it on its head. Ask ‘‘what if anything were possible?’’ instead and look at the new opportunities that appear.

B

Connecting outside the dots. Look outside the boundaries of your usual world. Ask ‘‘what if we were operating in an industry quite different than ours – what would we be doing instead?’’

B

Visualizing. Put the numbers aside and get some images down on paper. Try using a napkin. What emerges?

B

Collaborating across boundaries. Find a partner and go forth and co-create. Ask ‘‘what can we do together that neither of us can do alone?’’

B

Harmonizing mind and soul. Push yourself beyond the ‘‘workable.’’ Try to get to ‘‘intriguing.’’ Ask ‘‘what is really worth doing – what can I get excited about?’’

B

Improvising. Act as if necessity truly was the mother of invention and make surprises work for you instead of against you. How can we turn an unexpected development into an asset instead?

B

Reorienting your perspective. Try on a different definition of the problem. Step away from your product and ask ‘‘What is the problem my customers are really eager to solve?’’.

B

Playing a round. Go out and conduct some low-cost experiments instead of forming a committee. What can you do today to move a new possibility forward?

And give an engineer a hug if they help.

Reference Naeim, F. (Ed.) (1989), The Seismic Design Handbook, Van Nostrand Reinhold, New York, NY.

About the authors Robert Friedel, a Professor at the University of Maryland, has written several monographs in the history of technology (Pioneer Plastic, Edison’s Electric Light, and Zipper: an Exploration in Novelty). Jeanne M. Liedtka is a Professor of Business Administration and Executive Director of the Darden School’s Batten Institute, a research center that develops thought leadership in the areas of entrepreneurship and corporate innovation in thinking creatively about the design of powerful futures. Jeanne Liedtka is the corresponding author and can be contacted at: [email protected]

To purchase reprints of this article please e-mail: [email protected] Or visit our web site for further details: www.emeraldinsight.com/reprints

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Abduction: a pre-condition for the intelligent design of strategy Nicholas Dew

Nicholas Dew is an Assistant Professor of Strategic Management at the Naval Postgraduate School in Monterey, California, USA.

division manager explores possible explanations for some unexpected news about competitor and customer behaviors. A criminal investigator examines the evidence from the crime scene and a psychologist’s report about the accused person, seeking as she goes an explanation that fits all the facts. An archeologist sifts through fragments of pottery trying to find an explanation that would tie all the ancient pieces together in a coherent way. A commander attempts to devise the best explanation for conflicting reports of recent enemy behavior. United Nations investigators attempt to explain facts collected about the weapons development programs of a nation.

A

What do these situations have in common? They are all examples of working from a limited set of data or evidence to come up with the best possible explanation, a kind of thinking that is known to psychologists and philosophers as abduction[1]. Abduction is about making inferences from information that is surprising or anomalous, which are both very typical in strategic decision making. Strategists can gain a lot from knowing how to use abduction well. Great decision making is based to a significant degree on skills that are not commonly recognized. One misconception, for instance, is the belief that the art of good decision making lies in the exercise of choosing – but the final choice is only as good as the set of alternatives chosen among. Designing a good set of alternatives to choose from, and seeing new possibilities, is foundational, as the article in this issue of Journal of Business Strategy by Friedel and Liedtka (2007) demonstrates. Abduction goes even deeper. Conjuring up solutions to design problems is a well-recognized skill of great designers, but their ability to devise new ways of looking at the problem in the first place is key as well. This is where abduction comes in. The genesis of new designs, whether industrial, architectural or strategic, lies in the initial guesswork that designers do about the nature of the problem they are facing. It lies in making inferential leaps from a collection of raw data about a design situation to some plausible hypothesis about the underlying issue. Detecting what the problem ‘‘really’’ is – this is the starting point for creative design. This guesswork is important because it informs which range of solutions is considered and sets the boundaries for the kind of option ultimately chosen. Abduction, it turns out, plays a critical role in design thinking and is a process frequently integral to problem defining. Problem defining, in turn, sets the stage for possibility thinking. Therefore, good abductive thinking is a pre-condition for intelligent designing. Strategists, then, need to pay much more attention to the process of abduction and how they come up with tentative guesses about the problem situations they face because these guesses are a vital part of the process of designing strategy. Without high quality explanations about the bloomin’ buzzin’ confusion of information we face today, there is no ground on which to build strategy for a new future.

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DOI 10.1108/02756660710760935

What exactly is abduction? Strategists spend a lot of time and effort trying to understand data – new facts about competitors, about customer buying trends, about how stakeholders are reshaping the strategic environment and so on. Some of this data fits into existing explanations about behavior, but when all the facts do not fit, strategic decision makers have to get busy building new theories that explain what they see. This is abduction – making guesses about the best way to explain a collection of surprising or anomalous facts. One of the easiest ways of quickly grasping the concept of abduction is by comparing it to two other very common modes of logical reasoning: deduction and induction. With deduction, your conclusions follow from your premises. For example, all roses have thorns; this is a rose; therefore it has thorns. Induction works in the opposite direction, from cases to general principles. For example, these plants are all roses; they all have thorns; therefore all roses probably have thorns. Abduction is less like these logics and more like inspired guesswork. It describes the operation of making a leap to a hypothesis by connecting known patterns to specific hypotheses. For example, all roses have thorns; this plant has thorns; therefore it might be a rose. Decision makers make these kinds of hypothetical leaps all the time. Much of this abducing process happens unconsciously. Because human beings in general are superb pattern recognizers and adept at dealing with imperfect and partial knowledge, they tend to abduct quite readily. There are times we even abduct too readily, a phenomenon commonly referred to as ‘‘leaping to conclusions.’’ Abductions have three characteristics: plausibility, defeasibility, and presumption. First, plausibility. Consider the classic Sherlock Holmes murder scene and the conjecture, ‘‘It must have been the butler who did it.’’ What makes this a plausible explanation for the dead body found in the kitchen? Plausibility just means that something seems to be true based on appearances. What’s plausible depends on the data we have to hand. Are there prima facie reasons to support the claim? Does the conjecture reasonably account for all the facts we are taking seriously? At minimum, plausible conjectures must be live possibilities – they could be true. Of the available hypotheses, some will be immediately rejected; but ones that appear plausible may be conjectured. Then we use the ‘‘compared to what?’’ test. We ask which of the available hypotheses seems the most plausible? We test our confidence in an explanation by past experience with similar situations or based on our imagination, and when we conclude that we cannot think of a better explanation, then we have settled on what we think is the most plausible alternative. These guesses are tentative and temporary. We doubt that we have considered all of the alternative hypotheses. This brings us to the second characteristic of abductions: they can be said to be defeasible, which is a fancy way of saying they are subject to further considerations. So an abductive conjecture is one that can be abandoned if the strategist identifies a more promising hypothesis. Consider a fictional example of market research on consumer eating habits. Based on the available data, we might abduce that the candy market is generally growing. But then new evidence emerges which suggests that it is really just a sub-segment of the market that is growing – say the retiree candy market. We instantly drop the previously preferred hypothesis in favor of a new one. What defeasibility underlines is that because the essence of abduction is moving forward based on a hypothesis which is merely plausible, we are obligated to give up that hypothesis should we come up with a

‘‘ Great decision making is based to a significant degree on skills that are not commonly recognized. One misconception, for instance, is the belief that the art of good decision making lies in the exercise of choosing. ’’

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‘‘ One of the easiest ways of quickly grasping the concept of abduction is by comparing it to two other very common modes of logical reasoning: deduction and induction. ’’ .

better one. Guessing is allowed, even if there is little support for the initial best guess, on the basis that it will be given up later if the burden of proof shifts. In a sense, we can think of abduction the way biologists have taught us to think of the coral reef: each abduction is like a layer of coral that in turn dies off and provides the foundation for the next one. For the strategist, the best explanations are built on dead reef of prior conjectures. A third characteristic of abductions is that they are presumptive. This means that future decision-making stages rely on them – we presume that our abductions are true. To illustrate, let’s say problem solving proceeds in three steps: first, the problem is found; second, alternative solutions are developed; and third, the best solution is selected. Designers often play with many different solutions, but all of them are framed by how the problem was defined in the first place. This framing usually has a basis in abduction – that is, the problem statement itself is a guess, arrived at using the data which the strategist has at hand. Framing matters because the particular frames people use influence how they formulate problems, what alternatives they perceive, generate and attend to, which constraints they accept, reject, and/or manipulate and how and why they heed certain criteria rather than others in fabricating and implementing new solutions. In the market research example, the list of viable strategic responses to market growth depends on why you think the candy market is growing: is it really being powered by growth in retiree consumption? The strategist has to argue for the appropriateness of a particular response, arguments shaped by what is presumed to be the best explanation for the data. Ultimately, abduction is a very pragmatic mode of reasoning. It is concerned with the practical need to take action, which motivates us to provisionally accept a hypothesis upon which we can base our next steps. Abduction allows the decision-maker to move forward in the absence of complete evidence or certainty. In business, the urgency to move forward – to make an assumption and ‘‘go with it’’ – is often high. There is just not enough time or resources to come to complete resolution: decision-makers have to make their best guess and move to the next stage of problem solving. Abduction helps us to act in the face of ignorance and uncertainty. Our abductions stand in for what we do not or cannot know. They allow us to get on with things.

Where do abductions come from? The stimulus for abduction is surprising information or a persistent anomaly: either of these phenomena can motivate us to start building (abducting) new hypotheses to explain them. However, compared to deduction and induction, how these stimuli lead to abductions is something of a mystery to psychologists, cognitive scientists and philosophers. We know how deduction and induction work well enough to be able to program it into computers. Computers are very good at inductive and deductive calculation, which involves a lot of logic and number crunching. However, computers struggle to do abduction well. By comparison, people are lousy at logic and number crunching, but they are superb intuitive pattern recognizers. This pattern recognition is intuitive because the vast majority of it takes place at a subconscious level. In fact, cognitive scientists use a rule of thumb that at least 95 percent of brain activity is subconscious, and only 5 percent conscious[2]. Because abduction relies on these pattern recognition capabilities, this means most of the time people are not aware where their abductions come from. This is why the concept of abduction has always had an air of mystery about it and has been something of a black hole in the vast literature about reasoning.

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Strategic decision making is no different. While many people know that abductions play an important role in strategic decision making, no one has been able to pin down precisely where abductions come from because the design of these new conjectures seems to be mostly hidden in the subconscious. Much of this activity may be multimodal, i.e. occurring visually as well as verbally. Because novel conjectures involve strategists drawing on a store of subconscious patterns that is a product of each individual’s idiosyncratic life experiences, it should come as no surprise that abduction may be a rather subjective phenomenon: different people will tend to make different abductions (compare Holmes and Watson, for example). Also, given that experience ranges all over the place with much of it occurring at school, in the home, in leisure environments, etc., it should not be at all surprising that many abductions have some element of analogy in them. Patterns recognized in non-strategy environments will get imported into strategic decision making. And if much of this mental activity is subconscious, then individuals may not even be aware of the intuitive analogies they are using.

Using abduction in strategy Abduction gets used in thinking about a wide variety of strategic issues: explaining competitors’ strategies, designing new business models, revising beliefs about the environment and identifying new market opportunities.

Using abduction to explain the strategies of competitors There is perhaps no realm where strategists make more wide-ranging guesses than in the realm of competitor behavior. What the strategist observes is data – the launch of new products, entry into alliances, the efforts to develop a new market, reports of plans to add capacity at some plants but not others, etc. Figuring out what is going on is like detective work. Explanations for competitor actions have to be guessed at. Therefore, generating hypotheses about the behavior of competitors is one aspect of strategic thinking where decision-makers rely heavily on abductive thinking. Consider for a moment the onset of a price war between two competitors – say General Motors and Ford Motor Company. Who started it? Each accuses the other of ‘‘firing the first shot’’ and the observer has to abduce a hypothesis about who is telling the truth. Does it seem plausible that Ford, the smaller competitor, would assault General Motors, the larger and stronger firm? If it seems implausible, then we have at least shifted the burden of proof to one side, i.e. the abductive process leads us to look for stronger evidence that GM was innocent of starting the price war; we require less evidence from Ford. The more general point about using abduction in competitor analysis applies to the assumptions we make about the motivation of competitors. We forget that many of the explanations we routinely offer for the behavior of competitors – profit maximization, executive hubris, pursuit of market share – are merely plausible guesses based on the data we have to hand. These guesses are defeasible and we drop them instantly if the data points to changes in motivation or the original guess just appears wrong. They are also classic examples of presumption because they frame the choices we go on to make about viable design solutions. So we use abduction extensively in explaining motivation. The catch is that we all too easily forget that these are only hypotheses. We can see actions; but we have to abduce motivation. And because the incentives for deception are sometimes great, we may make mistakes. We therefore need to exercise caution.

‘‘ So an abductive conjecture is one that can be abandoned if the strategist identifies a more promising hypothesis. ’’

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‘‘ The strategist has to argue for the appropriateness of a particular response, arguments shaped by what is presumed to be the best explanation for the data. ’’

Using abduction to design new business models Peter Drucker used to say that, for every business, managers have a theory of the business which is held either explicitly or implicitly. Nowadays we often refer to ‘‘business models’’. These models or theories are an important part of the strategic decision maker’s toolkit because they are explanations of how the organization will make money or survive on its budget. In many ways they resemble the way architects and other designers use models as opportunities to play with alternative design hypotheses without actually breaking dirt. Particularly needed when business models are just forming (such as in emerging industries) or transitioning (during periods of industry transformation), the challenge is to come up with a good guess about what the underlying business model will turn out to be. A good example of an abduced business model comes from Intel’s use of Moore’s Law. Moore’s Law started life as an abduced hypothesis about the development path of semiconductors and later proved to be a good explanation for how a firm could make money in the chip business. Because the power of semiconductors doubles every 18 months, there is a predictable life cycle for every new semiconductor product that results in a predictable pattern of revenues and costs, i.e. a basic model on which the business is based. Another interesting example comes from online grocery retailing. Take the case of Webvan. In July 1999, prominent venture capitalists Benchmark Capital and Sequoia Ventures placed a $122 million bet on internet grocer Webvan. In essence, they hypothesized that there was a viable business model for home-delivered groceries. This hypothesis was based on data from Webvan’s launch period, including initial consumer response and data on the economics of delivering groceries directly to the home from large automated distribution centers. The hypothesis seemed entirely plausible at the time, but with hindsight we know that Webvan failed spectacularly and that internet grocery delivery models have seen very limited success in the USA. Using abduction to revise beliefs about the environment In devising a new strategy for the future of their organization, the strategist has to start somewhere, even though their starting point may include several unproven or unverifiable assumptions about the environment. The strategist relies on plausible explanations of why the environment is behaving in particular ways. These hypotheses provide the logical framework within which strategic decision making occurs. Belief revision is the process of adapting beliefs to accommodate new information. Abduction is one starting point for revising beliefs because revisions can only occur if the decision-maker is willing to consider at least one alternative hypothesis that might be true based on the data they take seriously. When strategists do not pay adequate attention to abduction, things can go very wrong. This is one explanation for what happened to Royal Dutch Shell in the Brent Spar affair. Shell managers were caught flat-footed by rapid changes in the stakeholder environment. In these circumstances, one of the first things these managers badly needed were the tools of abduction to help them begin to revise their diagnosis of their predicament and start designing their way out of their deteriorating situation. In some senses, abduction looks like a kind of real-time scenario planning: some fast abductions would have helped Shell managers rethink their strategic alternatives. The main problem with belief revision is that new information may be inconsistent with the body of beliefs held by decision makers. These inconsistencies are especially high in times of dramatic environmental change. Therefore these are precisely the times that abduction

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has its highest value. It is during periods of revolutionary change when the old patterns of data go up in the air that the strategist cannot rely on predictable continuity in the data. Instead, he/she has to get busy designing new hypotheses that plausibly explain what is going on. Based on these abductions, new strategies can be created. Using abduction to find new market opportunities A fourth area of strategic decision making where abduction is used extensively is on the demand side. Here abduction is a reasoning method that may be used by decision-makers who seek out new opportunities to serve the market. The strategist sometimes conjectures or guesses at the emergence of some previously unobserved aspects of the market, such as new consumers tastes or trends in where and when consumers prefer to make their purchases. Based on data they collect about the marketplace – everything from large-scale market research projects to personal observations and intuitions – decision-makers formulate hypotheses about new market opportunities that might be exploited by their firms. Good examples of this abductive approach to market opportunities can be found in the histories of major consumer goods companies. Take the well-known history of Proctor & Gamble’s creation of the mass market for disposable diapers. For a long time, diapering was a strictly household activity. Then, in the 1930s disposable diapers were introduced but – being expensive – were a niche market (they were used for road trips where convenience was highly valued). In the 1950s P&G managers scrutinizing changes in household consumption patterns hypothesized that the market for disposable diapers might be a lot bigger than anyone had previously thought. They realized that an opportunity existed to convert the small niche market into a mass market if they could produce diapers at the price right. Thus ‘‘Pampers’’ was conceived. Not surprisingly, parents have never looked back. In the case of Pampers, P&G’s conjecture brought rich rewards, but many novel guesses about what market data are ‘‘really’’ indicating end in losses. When thought of this way, competitive markets provide an environment for testing conjectures. Changes in market data and their implications are ambiguous and strategists do better when they recognize that knowledge about tastes, technologies and resources is always to some extent conjectural – many plausible guesses about the market will turn out to be mistaken.

Improving abductive thinking If you are reading this and your job involves strategic thinking, by now you will probably have realized that abductive reasoning is an approach that strategists have been using all along. Many new strategies start with an abductive leap: some conjecture or hypothesis which explains a change in data about the environment. The strategist’s initial task is to identify plausible explanations for what appears to be happening. These initial hypotheses then become the foundations on which strategic alternatives are designed and selected. Abduction is key because the quality of your abductive reasoning processes can determine the quality of your design alternatives, and therefore the quality of your strategic choices. Novel thinking in strategy begins with novel hypotheses about the meaning behind the available data. Data about a situation do not speak on their own: they has to be deciphered, underlying patterns have to be guessed at, plausible hypotheses have to be conjectured. To design great strategies, strategists have to invest in the initial detective work that is done on the problem situation. Great designers have to be first and foremost great detectives who carefully study the evidence and then creatively conjure up the best explanation for ‘‘what is really happening in the market’’ or ‘‘what our main competitor is really up to.’’ Great strategic

‘‘ However, computers struggle to do abduction well. By comparison, people are lousy at logic and number crunching, but they are superb intuitive pattern recognizers. ’’

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decision making relies in some important ways on abductive reasoning, even though much of the process of abduction is hidden in the cognitive unconscious. If abduction is so key, how do we get better at it? First, examine where you might get the most leverage from abductive thinking in your own strategy, such as explaining the behavior of competitors, designing new business models, revising beliefs about the environment and perceiving new market opportunities. Second, we want to pass along a framework, derived from studies in artificial intelligence[3], for evaluating abduced hypotheses. It uses the following six criteria: 1. Consider how decisively your hypothesis bests alternative explanations. It is advisable to proceed boldly only when a hypothesis is decisively advantaged. 2. Consider how plausible your hypothesis is as an explanation of the facts by itself, independent of considering alternatives. Does it make sense given all the data you think are important? For instance, Moore’s Law started life as a conjecture about the path of semiconductor development. One of the biggest things this hypothesis had to recommend it was that it was not contradicted by any data that were known about semiconductor development at the time. It therefore had the ring of plausibility about it. 3. Consider how much confidence you have that all plausible explanations have been canvassed. Make a judgment call: is it too early to have much confidence in your hypothesis or have you covered just about everything? For instance, the disposable diaper market had existed for two decades before P&G entered it and the firm had a lot complementary knowledge and data about emerging household consumption patterns based on other products they marketed. P&G had grounds to be reasonably confident in its hypothesis. 4. Consider the costs of being wrong and the benefits of being right; these influence when it is right for you to stop searching for alternative hypotheses and take your preferred hypothesis as the best explanation. In the case of Shell’s debacle with the Brent Spar, given the stakes, was it sensible for Shell managers to have planned the sinking based on the hypothesis that Greenpeace would not react decisively? Shell’s implicit hypothesis seemed to be that Greenpeace had not launched a major campaign for several years and its support base was dwindling. Shell failed to adequately examine the alternative hypothesis that the Brent Spar might present Greenpeace with an opportunity to revive itself, and that is exactly how Greenpeace used the situation. When there is a high price for being wrong, it is advisable to search a portfolio of hypotheses rather than chose the first plausible alternative. 5. Consider how reliable the data are on which your hypothesis is based. Take the case of Benchmark and Sequoia’s bet of $122 million on Webvan. Although their hypothesis about emerging consumer trends was plausible, it was by far not the only reasonable hypothesis given the quantity and quality of the data available at the time. Venture capitalists know they are doing this – that is why they make a portfolio of bets rather than just one.

Keywords: Management strategy, Design, Thinking styles

6. Consider how strong the need is to come to a conclusion at all. You might want to keep your options open by seeking further evidence before deciding on a hypothesis. If there is no strong need to reach a conclusion, consider whether new data sources might offer the opportunity to abduct new conjectures that might fuel the development of design alternatives in your firm. The message is clear: much of the practice of strategic decision making, rather like detective work, is less about ‘‘knowing’’ and more about ‘‘guessing.’’ Learning how to guess well – abductive thinking – is core to good designing.

Notes 1. The philosopher Charles Sanders Pierce is credited with introducing the term abduction. For an accessible recent review of abduction, see Walton’s (2005) book Abductive Reasoning. Other books

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of interest are Magnani’s (2001) Abduction, Reason, and Science: Processes of Discovery and Explanation and Josephson and Josephson’s (1994) Abductive Inference. Harman’s (1965) article ‘‘Inference to the best explanation’’ is also regarded as seminal. 2. See Lakoff and Johnson’s(1999) Philosophy in the Flesh. 3. These criteria are based on Josephson and Josephson (1994, p. 14).

References Friedel, R. and Liedtka, J. (2007), ‘‘Possibility thinking: lessons from breakthrough engineering’’, Journal of Business Strategy, Vol. 28 No. 4, pp. 30-7. Harman, G. (1965), ‘‘Inference to the best explanation’’, The Philosophical Review, Vol. 74 No. 1, pp. 88-95. Josephson, J.R. and Josephson, S.G. (Eds) (1994), Abductive Inference: Computation, Philosophy, Technology, Cambridge University Press, New York, NY. Lakoff, G. and Johnson, M. (1999), Philosophy in the Flesh: The Embodied Mind and Its Challenge to Western Thought, Basic Books, New York, NY. Magnani, L. (Ed.) (2001), Abduction, Reason, and Science: Processes of Discovery and Explanation, Kluwer Academic/Plenum Publishers, New York, NY. Walton, D. (2005), Abductive Reasoning, University of Alabama Press, Tuscaloosa, AL.

About the author Nicholas Dew is an Assistant Professor of Strategic Management at the Naval Postgraduate School in Monterey, Califonia. He has published in several academic journals, including Strategic Management Journal, the Journal of Business Venturing, the Journal of Business Ethics, the Journal of Evolutionary Economics and Industrial and Corporate Change. Nicholas Dew can be contacted at: [email protected]

To purchase reprints of this article please e-mail: [email protected] Or visit our web site for further details: www.emeraldinsight.com/reprints

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Daily life, not markets: customer-centered design Vijay Kumar and Patrick Whitney

Vijay Kumar is Associate Professor and Patrick Whitney Steelcase/Robert C. Pew Professor and Director, both at the Institute of Design, Illinois Institute of Technology, Chicago, Illinois, USA.

The illusion of being ‘‘customer-oriented’’ ‘‘Customer-centered,’’ ‘‘user experience,’’ ‘‘delighting customers,’’ and ‘‘user-friendly’’ have become mantras for many businesses in recent years. They describe important goals that, if achieved, can lead to competitive success. But the goals are rarely realized and these phrases are acquiring an unintended irony, or worse, the empty ring of a marketing slogan representing no tangible benefit to users at all. Why has it been so difficult for companies to actually achieve great customer experiences that lead to above-average growth in market share, profit margin and customer loyalty? If it is so obvious that paying attention to customers is important, why are there not more examples of success? Our contention is that ‘‘customer-centered’’ strategies normally fall short because marketing and development teams miss what is fundamentally important to their consumers. They make the mistake of thinking they can achieve customer delight simply by refining research on markets. Companies do market research using as a starting point their current offerings, which are defined by product, distribution, promotion and price. The problem is that the first three are all company-centered, not customer-centered. This leaves price as the only factor that both the company and the customer care about. Companies who do not want to compete on price alone need to find factors that are important to consumers. Discovering these factors will enable companies to create true innovations that fulfill needs and desires before they are expressed by customers. The central focus of this type of research is not the product a company makes, but what activities the customer is trying to accomplish with the product. This is directly related to the argument made by Theodore Levitt in 1975: (Good companies) have succeeded not primarily because of their products or research orientation but because they have been thoroughly customer-oriented also. It is constant watchfulness for opportunities to apply their technical know-how to the creation of customer-satisfying uses which accounts for their prodigious output of successful new products (Levitt, 1975).

How companies acted on Levitt’s idea three decades ago no longer works because of a tectonic power shift in the relationship between companies and consumers. New methods of being ‘‘customer-oriented’’ are needed now.

The power shift

See http://www.id.iit.edu/ideas/ gclm.html for additional information.

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There has been a power shift from producers to customers caused by decreases in production costs and increases in customer choice. In decades past, production capability was a key strategic advantage. Creating efficient factories making large numbers of similar products was the way for a company to win. During the period, investments in more powerful

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DOI 10.1108/02756660710760944

and exotic production processes were the ones that paid off. With an emerging middle class delighted by the abundance of new and affordable products, the way for a company to create value was to produce new things at reasonable prices; do this and people would buy. In the early stages of that era, the kings of production could say, as Henry Ford did, ‘‘Give them any color they want as long as it’s black’’ and it would work. As the market grew and basic needs were fulfilled, Alfred Sloane’s strategy of creating a portfolio of products that offered a car for every need and income replaced Ford’s imperial approach. Still, production innovation was the key to success as GM developed product platforms permitting product variation with the efficiency of mass production. As the middle class grew, marketing, advertising, public relations and other new fields were invented to promote the things companies made. In this ‘‘push’’ model, marketing theory and methods became powerful means to help companies sell. Models that focused on ‘‘product, distribution, promotion and price’’ were refined and grew because they worked. Demographic factors such as gender, age, income, zip code, education and others were added to the equation to make ever more sophisticated segmentation models. Every day there are more examples demonstrating the tectonic shift in power from producers to consumers. Today’s iconic phrase is not from a kingpin industrialist but from the anonymous consumer, saying ‘‘Give me what I want, when I want it, through the channel I want, and, I want it at a lower price than I paid before.’’ Consumers are in control because they have unprecedented choice. Ironically, the growth in choice has come about because producers built sophisticated and flexible manufacturing processes that increase variations in a production line and the out-sourcing business models directing manufacturing to high-quality, inexpensive factories in other countries. Consumers have so much choice that they have developed ways of shopping, managing family life, working, traveling, keeping healthy, and other modes of living that are almost impossible to predict. In the age of mass production and mass markets, consumers’ choices could be predicted in part because they had so few. We have moved from a scarcity in production ability and adequate information about consumers to the polar opposite: now we possess a deep knowledge of how to make things and an inadequate understanding of how people are living their lives. This leaves corporate leaders knowing how to make anything but not knowing what it is they should make (see Figure 1). The patterns of how people live, work, learn, and play, along with most other activities central to daily life, are becoming increasingly complex. This is partially due to the growth in the number of choices they have for products, services and information that are available. Two major forces cause this variety of options. New technologies are more flexible, both at the manufacturing stage and in the internal functioning of products, which enables customers to buy things that more closely match their individual needs. Second, companies have an increasing number of business models, ranging from global alliances to using the service associated with a product as the main driver of differentiation. Increased knowledge about technology and management gives business leaders the knowledge of how to make almost any innovation they can imagine. However, because consumers are less predictable in how they are living their lives, organizations have decreased knowledge.

‘‘ Why has it been so difficult for companies to actually achieve great customer experiences that lead to above-average growth in market share, profit margin and customer loyalty? ’’

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Figure 1 Innovation gap

Trying to get closer to customers Sophisticated companies know they need to understand how consumers decide to purchase a product and how they feel about using that product. To do this, companies usually focus on consumers’ reactions to the product. This product-focused research typically uses surveys, focus groups, interviews, home visits, and usability tests to quiz customers about existing or prototypical products, asking about the way they are distributed, promoted and priced. Researchers will ask questions like: ‘‘What other products did you consider?,’’ ‘‘What would make it better?,’’ ‘‘What was your buying experience like?,’’ ‘‘What else did you buy with it?,’’ ‘‘Did it fulfill the promise in the advertisements and packaging?,’’ and ‘‘What improvement would cause you to pay more?’’ This type of research leads to specific insights about current offerings that will enable the company to make specific improvements. In the case of a prototype or a new offering, such questions can show whether consumers have a problem with the product. The trouble with this research is that it almost never leads to insights that could translate into surprising improvements or entirely new products. In the 1970s Sony showed consumers a prototype of a new category of wearable product that would let individuals listen to music privately. Consumers said they thought the idea was weird and they all said they would not buy it. In 1996 Toyota bet a billion dollars on research on hybrid engines even though all market

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research showed consumers wanted big cars and did not put high value on fuel efficiency. In the same year GM listened to consumers and spent a billion dollars to buy Hummer. Because product-focused research usually does not help a company discover big opportunities, they often turn to culture-focused research in order to look at broader forces and trends gathered from demographic data on general patterns of daily life, including value systems, new social structures and relationships among friends and relatives. This sort of research can lead to surprising discoveries about a culture. A company can learn, for example, that over the last few years in the USA the number of single person households has surpassed the number of two- and three-person households to become the largest category; that we are putting more value on the privacy of their personal information; or that the average household income in Guangzhou is $8,000 per year. This research can give insights into behaviors, beliefs, and goals, which can in turn be used to think, in a general way, about the products a company is planning to launch. The findings from this type of research, however, are seldom specific enough to help a development team improve the offering they are trying to create. Because this research is time consuming, while development time for companies only gets shorter, it is difficult to use efficiently. It is easy to see the dilemma here. Which type of research is more useful: the one that is more practical but often does not lead to new insights, or the one that leads to major new insights that are nevertheless too general to apply?

Activity-focused research and discovering new opportunities Focusing consumer research on the activity that they are trying to accomplish with the product can lead to surprising innovations that are grounded in their daily lives. For example, a food manufacture could look at ‘‘eating and drinking at home,’’ a maker of laundry products could look at ‘‘taking care of clothes’’, or a maker of cosmetic products could look at ‘‘improving personal appearance.’’ Looking at activities that surround the product, rather than getting reactions to the product (and related distribution, promotion and price) leads to breakthrough ideas that are grounded in how people are living. The research described below reflects this approach (see Figure 2). Hong Kong Telecom, Gold Peak Industries and Motorola supported a research team from the Illinois Institute of Technology’s Institute of Design to develop innovations related to interactive homes. The executives and our team knew there would be opportunities for new products and services in the areas of home control, entertainment and security. However, we knew if we were investigating existing products related to these three areas we would only develop ideas related to the known opportunities. And we knew that if we researched cultural and demographic trends taking place in Hong Kong we would find it difficult to tie this general information to areas of business the companies cared about. We focused on people’s daily activities related to life in Hong Kong homes. Thousands of photographs and hours of video were taken of people cooking, talking on the telephone, helping children with homework after school, blending work life into the home and many other activities of daily life. As is always the case with ethnographic data, it first seemed completely chaotic. However, the analysis soon showed that in addition to the three predicted areas ripe for innovation, there were six additional areas the companies were not even considering. Of these, the three that interested the executives the most were families staying in touch with each other, buying fresh food, and parents helping kids with homework. The executives were shocked to find that in six weeks a research team unfamiliar with life in Hong Kong could identify wholly new potential markets. Of course, market sizing was still necessary, but the executives would never even have considered these markets if it were not for the research that revealed unarticulated consumer needs. What is more, the six new markets were still free of competition, while the three predicted markets were already dense with contestants.

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Figure 2 Results from activity-focused research lead to innovations that are both practical and based on new insights

How does activity-focused research work? Ethnographic research methods commonly practiced in the social sciences and anthropology can be valuable for companies to conduct activity-focused research. It can be most beneficially done through observing what people are doing rather than asking people about what they are doing. There are many ethnographic methods available for doing observational research, such as video ethnography, disposable camera studies, day-in-the-life studies, shadowing, and others. Some of these methods have a clear advantage of being able to capture user activities in a non-intrusive and casual way so that the results of the research are less researcher-biased and more consumer-initiated. For activity-focused research, this is important because we need to learn about consumer activities as they naturally happen in daily life to be able to elicit the most useful insights. Observing people’s activities through techniques like video ethnography has become very popular among researchers in companies. But the problem is that researchers or their video camera presence in the consumer’s environment can be intrusive. Continuous video shooting in the background can make it somewhat less intrusive, but will require much effort and time to extract useful insights from long hours of recordings. One effective and efficient way to address this issue is to empower the consumers to capture their activities themselves. Disposable or digital cameras provided to the consumers, allowing them to capture their activities, can be an effective method for non-intrusive consumer-initiated research. A structured ethnography method using disposable or digital cameras for doing activity-focused research is elaborated in the following discussion. It has some key steps during the research process. Define the topic for research Even if the intent for innovation is to develop a new offering (product, service, message, environment), in activity-focused research the focus is not primarily on the offering, but on

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the general activities that surround the use of the offering. For example, consider a situation in which the innovation intent is to develop a new hair care product. In activity-focused research, the focus is not on the offering – a shampoo or conditioner. The focus is on a set of activities, or the overall experience that surrounds the use of the product; for example, ‘‘putting on a party,’’ ‘‘preparing to dine out’’ or ‘‘looking good.’’ Defining the topic for research will need a thoughtful exploration of the overall experiences people care about; use of a specific hair care product is only a part of that overall experience. Select research subjects Once the set of activities or the overall experience for research is defined, the next step is to find candidates to study. Here a determination of what types of consumers will be good as subjects will need to be made. To ensure a good coverage of activities by different consumer profiles, several screening criteria ought to be used for selecting subjects for study. For example, for the topic of hair care products, the screening criteria could be frequency and extent of use of hair care products, family size, family composition, income level, geographic location, cultural and ethnic background, and other similar filters of interest for the research team. Brief research subjects Once the subjects for research are selected, the next step is to provide them with disposable or digital cameras and instruct them to take as many pictures as possible about their activities surrounding the topic of enquiry. The subjects are requested to take photos of those activities that they think are most important about the topic from their perspective. It is beneficial to suggest to them that they cover many aspects of their activities for a comprehensive picture. For this, we find the use of a framework called POEMS very valuable (Figure 3). We request that the subjects include in their pictures people, objects, environments, messages, and services. As an example, for research on ‘‘cooking at home,’’ the subjects are requested to pay attention to the following: B

People. Who is involved in the activity? (Mother, daughter, TV personality.)

B

Objects. What things are used in the activity? (Utensils, sink, bottle.)

Figure 3 POEMS framework is used to gather and organize user observations

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B

Environment. What is the setting where the activity happens? (Store, kitchen.)

B

Messages. How is the information transferred? (Store front, food package.)

B

Services. What systems or people enable the activity? (Cleaning, delivery.)

Organize photos and prepare to describe them Photos taken by the subjects are actually ‘‘observations’’ about their activities from their perspective. These observations are collected and assembled into manageable segments that are helpful for recording useful information about them and sharing them with members of the innovation team. In this regard, organizing and describing the observations using common frameworks is valuable for consistency and coverage. There are four frameworks that we find valuable for this purpose. One of them is the POEMS framework discussed earlier. The second is the ‘‘User Experience’’ framework, which relates to five human factors – physical, cognitive, social, cultural, and emotional. If the observations show problems associated with any of these human factors, these are described and recorded. The goal is mainly to capture the human values subjects associate with the observations. The third framework is ‘‘Modes and Activities’’. Here, each of the observations is described as belonging to a defined mode of activity, for example, eating and drinking, shopping, entertaining, traveling, and learning. The fourth useful framework is ‘‘Motivations’’. This is intended to capture the reasons that prompt people to do the activities shown in the observations. Some of the components of the motivations framework are to be in control, to be safe, to serve others, and to distinguish oneself. The photos taken by the subjects are organized in field notebooks to capture additional information about them. These field notebooks include the various frameworks discussed above. They also include space to capture other information about observations, such as descriptions, comments from subjects, insights gained, and needs recognized (Figure 4). Interview subjects and fill-in field notebooks Interviews with subjects complement the observational research done through subjects taking photos. From interviewing the subjects about the photos they took, researchers can find out a lot about their activities, preferences, needs, habits, difficulties, work-arounds and other important aspects about their daily life. During these interviews, the focus is on the stories subject tell about the photos, why they took these specific photos, and why those Figure 4 Two pages from the field notebook showing how structured notes are taken during the interview with subjects about photos they have taken

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‘‘ Every day there are more examples demonstrating the tectonic shift in power from producers to consumers. ’’

things shown in the photos are important about the topic from their perspective. Capturing these stories in a disciplined way is a great way to gain surprising insights that researchers would have missed if they have not engaged the subjects in a conversation. It is important that the interview be treated as an informal conversation rather than a question and answer session. In this conversation, the researchers need to have the mind-set of a student, and the subject must be considered as a teacher. To learn about people’s lives as told through their stories, the interviewer needs to be a great listener more than a prudent questioner. Interviewers should listen intensely to the stories subjects tell and learn the most they can about their daily life activities in the limited time available. The most common questions the interviewer may ask are ‘‘Why did you take this picture?’’ and ‘‘Tell me more.’’ Leading questions, including questions about specific opinions, attitudes, and views, ought to be avoided. In this way the conversation remains unbiased and valuable insights can naturally evolve. While the initial parts of the interview session are characterized by the subjects telling stories about the photos they took, as the conversation reaches a conclusive stage in which most of the learning has already happened, it is appropriate to ask more focused and detailed questions. It is beneficial to conduct the interviews in the subject’s environment/home since it is likely to make them feel comfortable while they talk about the photos they took. It even allows them to point to actual things in their surroundings in reference to the photos while they tell their stories. Usually two researchers participate in an interview session; one person who asks questions and facilitates the conversation while the other person captures the conversation. The information pertinent to the research is captured both as structured notes under the frameworks in the field notebook, and as free-form notes. It is also good practice if the interviews are videotaped for later reference and detailed study. For later reference, video cameras should be pointed at the photos and the audio should pick up the conversations. During conversations, and even at other stages of the research process, it is common that product or other concepts pop up. Capturing such concepts as they emerge is a good idea. These early concepts can be a source of inspiration during the later more organized concept generation stage of the design process (Figure 5).

Enter gathered information into a database For teams doing activity research, it is common practice to use databases to organize their findings. Considering the ease with which valuable analysis can be done once the data are organized in these databases, innovation projects benefit substantially from them, despite the extra initial effort needed to create them. The photos and the data captured from the interviews are uploaded into a database tool, such as one we are developing called ‘‘User Insights Tools’’. Reference information, such as researcher’s identity, subject’s identity, time, date, and place are entered for each observation. A short title for the observation, a description, and even quotations or comments from the subject about the observation are also entered in a structured way. More than these, the key field to be filled at this stage is the ‘‘insights’’ field. Based on what the researcher learned from the subject about a particular observation, the researcher’s interpretation of what they learned is entered as an insight statement. An insight statement is usually a short phrase that

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Figure 5 Researchers interview subjects in their homes

Figure 6 User Insights Tool screenshot shows how observations about people’s activities are gathered and organized in a structured way – this is taken from a project ‘‘Cooking at Home’’

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captures the learning as concisely as possible. Any of these fields of data can later be searched, accessed and analyzed by all users of the database tool (Figure 6). Tag observations to frameworks Each of the four frameworks – POEMS, User Experience, Modes and Activities, and Motivations – has specific keywords associated with them. These keywords are used as tags for qualifying observations. For example, POEMS tags for an observation about ‘‘cooking at home’’ that shows a woman cooking might be woman, oven, kitchen, recipe, and delivery service. The benefit of tagging observations with keywords is that the database can be easily searched, larger activity patterns found, and more valuable insights gained. Two kinds of keywords can be tagged to observations: global and local. Global keywords are selected from a pre-existing list for tagging. This pre-existing list contains keywords that are commonly understood, standard, and general in nature and is applicable to multiple projects. Global keywords need to be regularly refined and updated as we learn more from research projects that use the User Insights Tool. Local keywords are very specific to an observation or a project. For example, a local keyword for ‘‘People’’ in the POEMS framework for a specific observation might be ‘‘temporary cooking instructor.’’ Global keywords can be searched on observations across multiple projects, whereas the local keywords are used only within the context of a particular project (Figure 7). Analyze and find patterns through querying Once the database is populated with observations we can move to the analysis mode to find patterns in people’s daily activities and gain insights. Since the observations are tagged and organized under the four frameworks, searches can be done by sending tailored queries to the database. For example, a useful search query might be ‘‘show me all the observations that have women cooking in the kitchen watching television and referring to recipes.’’ Here the words woman, kitchen, television, and recipes are all tags from the POEMS framework. Figure 7 User Insights Tool screenshot shows how keywords from frameworks like POEMS are tagged to observations for later search and analysis

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An analysis of the resultant subset of observations might reveal activity patterns in which recipes and televisions are used in interesting and surprising ways for cooking. A query-based analysis like this can reveal interesting and useful insights about people’s daily life. It is also possible to save these query results as collections of observations for later referencing and sharing among project team members (Figure 8).

Analyze through clustering insights Another powerful way to analyze the observations is by clustering the insights. All the insight statements for a project are first normalized to make sure that they use a consistent language style. For example, insight statements might be expressed as short phrases such as ‘‘cooking is a time to spend time with kids’’ or ‘‘families often spend quality time together after dinner.’’ The next step in this analysis is the creation of an interaction matrix in which each insight statement in the list is scored against each of the others – high score if the insight statements are similar and low score if they are not. Then this scored matrix can be sorted to reveal clusters of related insights. We try to discuss in teams why these clusters of insights are formed and try to understand a common logic that connects them. We also name these clusters with a short descriptive title. These clusters and the common logic behind them reveal higher level patterns of people’s daily life. The collection of insight clusters can be used as a framework to help think about concepts. In Figure 9 insights gained from the user observations are listed, normalized, scored against each other, and sorted to reveal clustering patterns as dark-colored patches. A matrix diagram is used to visualize this. The clusters are named, defined, and described to form an activity-focused model for generating innovations. The model that emerged from the project on ‘‘Cooking at Home’’ is shown here.

Figure 8 This screenshot shows a comparison between results from two searches using tagged keywords

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Figure 9 Insights gained from the user observations

Create criteria and develop concepts The clusters of insights are also used as a basis for generating criteria. Criteria are forward-looking statements that link insights to innovations. They are short statements with a brief explanation that describes what a possible innovation should do. Here is an example: empower children – innovations should help kids share responsibility with food preparations. It is through these criteria that we can move from the descriptive part of the process to the prescriptive part, from analysis to synthesis. Now we can move on to the next stages of the design process in which concepts are explored, systemized, prototyped, and implemented. What we gain from activity-focused research – observations about people’s daily activities, insights, insight patterns, and the criteria – becomes a reliable human-centered basis for developing concepts for the future. With this basis, innovation conception becomes practical, novel, and reliable.

Scale and reuse advantage It is common practice for companies doing ‘‘activity-focused research’’ to use databases. That way they can amass findings from the field in one place for comprehensive analysis. Innovation projects benefit substantially from these databases despite the added effort needed to create them. A study of the current practices in using such databases has revealed several problems. For example, researchers working on a specific project use project-specific categories and frameworks to organize the data. Because of this, these databases can seldom be used for a second project, even if the project is similar in nature. Even different teams working on the same project tend to use their own team-specific frameworks and languages. This makes it

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difficult to share the data easily among teams. This problem is more pronounced when the teams are from different parts of the world.

Keywords: Design, User studies, Ethnography, Customers, Innovation

The four frameworks that we discussed earlier that organize and describe the observations in a structured way are an effective solution to make the database scalable and reusable. This is because these frameworks are designed to be generic enough to address diverse consumer situations. They are broad, comprehensive, and consistent enough to be applied to many types of activity-focused research projects. Because of these common frameworks, growing the database project after project using the same organizing structure is easy. Companies can use valuable information from their previous projects for their new innovation initiatives. Such databases for activity-focused research evolve over time and have the tremendous advantage of scalability and reusability.

Reference Levitt, T. (1975), ‘‘Marketing myopia’’, Harvard Business Review, Vol. 53, September-October, pp. 26-44, 173-81.

Further reading Kumar, V. (2004), ‘‘User insights tool: a sharable database for global research’’, Proceedings of the 6th International Workshop on Internationalization of Products and Systems, Vancouver, Canada, 2004, pp. 115-27, available at: www.id.iit.edu/papers/kumar_iwips2004.pdf Kumar, V. and Whitney, P. (2003), ‘‘Faster, cheaper, deeper user research’’, Design Management Journal, Spring, pp. 50-7, available at: www.id.iit.edu/ideas/papers.html

About the authors Vijay Kumar is the Head of the Design Planning Program at the Institute of Design, Illinois Institute of Technology and consults with organizations around the world for planning innovations. Vijay Kumar is the corresponding author and can be contacted at: [email protected] Patrick Whitney is the Director of the Institute of Design and a Professor of Design. He focuses on the link between design and business strategy, designing for emerging markets, and methods of understanding user experience.

To purchase reprints of this article please e-mail: [email protected] Or visit our web site for further details: www.emeraldinsight.com/reprints

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Learning to design: giving purpose to heart, hand and mind Sabine Junginger

Sabine Junginger is Lecturer in Product Design and Design Management, Lancaster Institute for Contemporary Arts, Lancaster University, Lancaster, UK.

here are many different approaches to teaching design. Disciplines such as graphic design, industrial design and architecture, for example, have roots in their own traditions and histories. Each design program tends to promote and emphasize specific skills and qualities in their students’ work. It is then somewhat awkward to attempt a brief summary of these diverse efforts at design education in a way that is both general enough and yet specific. To complicate matters, design education itself is experiencing a shift that is challenging still predominant conceptions of ‘‘good design’’ which centers on the beauty and function of a product in itself[1]. To arrive at ‘‘good design’’ today, designers have to get involved in a systematic inquiry beyond aesthetics and functions. There is no simple way for design students to explore what is ‘‘useful, usable and desirable in products’’[2]. But every student brings with him or her three essential tools for inquiry that, if they make use of them, allow them to succeed. These three elements are often referred to as heart, hand, and mind. Heart implies a love and passion for participating in a process of making and creating. Yet heart is also a reminder of the need to feel with the people one designs for. heart allows a student to ‘‘stand in someone else’s shoes,’’ to empathize with others to see and experience the world through their eyes and situations. Hand, of course, reminds us of the aspects of making. Possessing heart and compassion will not result in any practical solutions. Engaging in sketching, prototyping, testing, evaluating and refining ideas in two- or three-dimensional form, however, translates ideas into actions. Finally, a curious mind generates ideas but also carefully inquires and reflects on an ongoing design process. From the beginning, designers learn that a random or arbitrary solution is a poor outcome and speaks of a poor design approach. Too much is left to chance, too little is being explored, too many opportunities arise for unintended consequences that can be annoying or outright dangerous. The challenge for design education is to enable students to set up their own, independent inquiries into a situation that allows them to discover new insights and invent novel solutions. And because designers continue to design products for people, these skills are being developed around the purpose of useful, usable, and desirable products. A few examples will show how the concept of heart, hand and mind can contribute to a student’s ongoing inquiry. The design methods and techniques described in the following examples must not be viewed as a complete ‘‘curriculum’’ for learning to design. Instead, they serve the purpose of providing a glimpse into design thinking in design education.

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Developing the heart Learning to empathize is a key skill for designers: Unless one can see and experience situations from the vantage point of the person in this situation, much of the discussion remains subject to speculation. And while speculation has a role in generative research, there is also a great need to find out directly from people who are engaging or have engaged in a particular experience. This area of design research is part of user research. Among several tools useful to empathize with other people are Immersion and Task Analysis. Patricia

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‘‘ To arrive at ‘good design’ today, designers have to get involved in a systematic inquiry beyond aesthetics and functions. ’’

Moore’s research into the world of the elderly is now a design classic and a prime example of immersive user research. For a period of time, she turned into an elderly woman and traveled the country to discover the world of the elderly[3]. She first studied the cognitive and physical ailments typical for an old woman. She then immersed herself in this world, put on a wig, donned big glasses to reduce her eyesight, and boarded a bus to tour the country. She took careful notes of her experiences, commenting on accessibility issues and other difficulties that the elderly face. The elderly she empathized with were caught in this situation and struggled with mastering their environment. Those people who were capable of ‘‘seeing’’ the need for better products and services for the elderly – the young and healthy – were blinded by their own sight. But her immersion and subsequent task analysis (in which she detailed all the steps necessary to accomplish a particular task, adding comments on what each step required in terms of knowledge and capability) offered a key for new product development. It is not necessary to go through the lengths Patricia Moore went to in order to emphasize. While her example remains one of the most vivid in explaining the need for and the path to empathy, students might try to find their way around a local hospital or supermarket. They can try to fill out an income tax form or apply for public services. In each case, they will temporarily have to become ‘‘one’’ with the person they are studying. This is when they ‘‘feel the pain’’ of a taxpayer or share the frustrations of not having the right information at the right time in the right form. This is how students generate ideas for new product opportunities and improved services.

Developing the hand Visualizing and prototyping play a significant role in designing. Early sketches and mock-ups, however rough or rugged, allow ideas to be shared and discussed. One of the goals of design education is for students to ‘‘get their ideas out of their heads and onto paper.’’ Making skills are often confused with artistic abilities. Of course, it is necessary for design students to eventually produce work up to professional industry standards. However, these sophisticated techniques are acquired over time and serve the presentation of an accomplished inquiry (as in ‘‘done’’) more than the inquiry itself (as in ‘‘doing’’). In fact, one of the common misperceptions design students bring to their early studies is that the goal is to produce beautiful drawings and models. This fallacy prevents the student from exploration and discovery and needs to be corrected immediately. The goal is therefore to introduce thumbnailing, sketching, drawing, diagramming, prototyping and other methods as tools for inquiry. The first exercise freshmen at the College of Architecture at the Georgia Institute of Technology engage in is a blind contour drawing. They choose a setting on campus, sit down and let their pencil on their paper follow the edges, curves, twists and turns that their eyes trace on the object. Without lifting the pencil off the paper and without ever looking onto the paper, this is for most students a new experience of drawing. The results, predictably, are not beautifully depicted objects or straight lines but shifting and intermeshing lines, curves and zigzags. This exercise accomplishes several pedagogical goals at once. First, it shifts the importance from producing a beautiful drawing to seeing and capturing what one sees. This takes the pressure off students who are self-conscious and lack confidence in their drawing abilities. Second, through the experience, students get a first understanding of how things can be different from what they seem. We all have our own ideas about how something looks but when we look closely, we are prone to find dissonances in our view and in the thing or situation in itself.

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Developing the mind To conduct an inquiry, students need to learn what it means to inquire. This involves an understanding of the role of assumptions. As we have seen implicitly in the previous two sections, designers constantly encounter assumptions and many initial exercises aim to challenge common assumptions. Rousseau (1995) describes fundamental assumptions as ‘‘the often unconscious beliefs that members share about their organization and its relationship to them.’’ They have a stabilizing effect on the organization and form the core of an organization’s culture around which behavioral norms, values, behavior patterns and artifacts or products evolve. Ott et al. (2003, p. 4) point out that ‘‘assumptions are more than beliefs or values: they are givens or truths that are held so strongly that they are no longer questioned nor even consciously thought about.’’ Unexamined fundamental assumptions can lead scientists to build ‘‘category systems’’ around themselves that then perpetually reinforce their existing assumptions (Weinberg, 2001, p. 33). If we believe Simon’s (1996, p. 111) famous statement that ‘‘everyone is a designer who improves an existing situation into a preferred one,’’ we also accept that designers always deal with change. In order to instill or effect change, however, it is necessary to unearth the fundamental assumptions that drive an existing situation. Students’ own fundamental assumptions about a problem or task are questioned and challenged during regular review sessions of their work. In these presentations, they report on the origin, status and progress of their ongoing inquiry to peers. They make use of visualization, story telling and other techniques to communicate their understanding of the problem and their approach to a solution. At the same time, they invite other students, faculty and often external visitors with various backgrounds to comment on their ideas, concepts, methods and solutions. The value in such peer critiques is multi-fold. Students who present get a chance for a ‘‘reality-check.’’ Are they overlooking something? Have they become too ambitions? Critiques are meant to be a dialogue, and questions can be asked by anyone involved, including the presenter. Other students, who typically work on the same or a similar problem, take notes and chime in with their own insights and experiences. In the end, it is a great opportunity for shared learning. Students receive direct feedback on how to improve their abilities to communicate verbally, visually and conceptually (for example: ‘‘I could better understand your map if you would use consistent color coding’’). In preparing the presentation, students revisit what they set out to do, why they thought this was a worthwhile exploration and how they went about doing what they wanted to do. They have to narrate a story. Often, in this process, students realize that the ending is not what they thought it would be. Other opportunities emerged in their work; problems turned out to be insurmountable and made them rethink their approach. Something might have happened that led them to adopt a completely different concept of the problem. What have they learned? How did this influence their research and thinking? The skill in a design inquiry is for the design students to develop their own framework for research. Decisions have to be made when to pursue a new idea and how far. Unless a student has identified and articulated the purpose for his or her inquiry, it will be nearly impossible to develop a research framework. Without it, an inquiry remains random and arbitrary.

Familiarizing your organization with design Organizations interested in employing design thinking and design methods face a wide range of questions. What is there to be learned? Who can teach us? How and where? Who can learn? What resources need to be in place? How long will the education and/or training take? When will we see results? Will this interfere with our ongoing operations? The list can grow long and overwhelming. Fortunately, there is no need to tackle everything at once. Instead, you can carefully nurture design thinking and design methods over time. The purpose of the remainder of this article is to aid you in launching your own platform for human-centered designing. The similarities of employees and beginning design students are greater than their differences. Both bring with them some idea what design is or is not. Both have acquired assumptions about the world and themselves. And being human, both tend to be much more

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comfortable within the framework of existing procedures, rules, and routines and uncomfortable with ill-defined problems for which there are no guidelines. Like incoming students, people in an organization, too, possess the basic tools for designing – heart, hand and mind. The question then is how can these assets be developed and around which purpose? Managers can employ rather simple design exercises to launch the topic of design with their colleagues and staff.

Three exercises Here are three exercises that originated in design schools but have shown to be effective in design practice with organizations. Each exercise has been tested in the field with students and employees of organizations learning about design[4]. They are simple and can be done in a short amount of time and with very few resources, either by an individual or in a team. The exercises build on participants’ innate abilities for heart, hand and mind. At the same time, each exercise encourages people to discover, create, visualize, and communicate. It would be interesting to discuss the role assumptions play in each task. Identify design around you (heart and mind) This first exercise can be done by anyone, anytime, anywhere. It aims to train the senses and the mind to question what we take for granted and to discover new aspects of design, its forms, functions, history and purpose. In many ways, this exercise echoes Nicolaı¨des’ (1941, p. 1) drawing exercises that highlight ‘‘the necessary relationship between thought and action.’’ However, when it comes to design, this ‘‘necessary’’ relationship focuses on the relationship between people and how symbols, things, actions, and environments shape and support these relationships.

Exercise 1 (needed: eyes, notebook, pen) When you look up from the paper right now, what do you see? Surely you can recognize a number of ‘‘designed’’ objects – but what about the more subtle aspects of design? If design is ‘‘all that is around you,’’[5] the question is, when, how, where and why do you notice? You can begin by observing carefully what people do in the space you are currently in. Where are they going? Are they going anywhere? What are they doing? Do they interact? How? Can you guess what any of the men or women you see is intending to do? If so, can you see how your environment supports their efforts or adds difficulty? Can you recognize items where design has failed? A phone book nobody uses but that makes a great doorstopper? A chair that really is a bookshelf? Or maybe it is an invoice you received from one of your service providers that makes you feel like studying FCC rules? Design dysfunctions that render products useless, unusable and undesirable point to opportunities for redesign. Discover design hierarchies and structures (heart and mind) The second exercise takes a few minutes to prepare and about an hour to accomplish, reflect, and discuss. It is best done in small groups of five to eight participants. Its purpose is to discover the purpose of organizing. Whenever we design, we deal with some form of structure of organization. Chapters in a book give structure to its content and suggest how we read – from beginning to end, from chapter to chapter or from keyword to keyword. The display options on an automated teller machine structure how we go about withdrawing

‘‘ From the beginning, designers learn that a random or arbitrary solution is a poor outcome and speaks of a poor design approach. Too much is left to chance, too little is being explored, too many opportunities arise for unintended consequences that can be annoying or outright dangerous. ’’

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money. Bars or handles on a door structure our behavior: we either push or pull the door open. Depending on the task, we either step forward or take a step back to allow the door to swing open. From each of these structured experiences (which are designed, deliberately or unintended), we can see how people, resources, structure and purpose interact. The aim of Exercise 2 is to develop a sensitivity and awareness for these interactions between kinds of organizational structures, resources and purpose.

Exercise 2 (needed: small objects, large paper, marker) 1. At home or wherever convenient, gather as many small objects as you can. Take out the contents of your toolbox, add pieces from a hobby kit, rummage through your kitchen and yard to include pieces, parts and bits of familiar and unfamiliar objects. 2. In your office, gather a group of colleagues and staff. Sit them around a table and empty your items in the middle of the table. Ask your group to sort the items so that they make sense. Instruct them to document the criteria they are using to organize the objects (the most intuitive ones are material, color, use, or function). Provide no further details or instructions. Let them sort for 15 to 20 minutes. Once finished, ask your group to come up with at least two more different ways to organize the items. 3. Discuss your results. How do the solutions differ? Why? What is the link between the people who organize (your internal group) and the people who will end up looking for a particular item in the set (people you do not know)? Can anyone find anything in this structure? Is it geared towards certain people? Are there any implications for how your own organization is ‘‘organized?’’ What are the organizing principles? What drives the organization? Who might access products and services easily? Who might not? Have an experience (heart, hand and mind) Buchanan (2004) suggests we focus on ‘‘the pathways of individual human experience’’ rather than on the ‘‘massive totality of the system’’ when dealing with complex organizations. The third exercise, while building on exercises one and two, asks you to observe and document your own experiences at every step while you attempt to complete a task. This research method of tracing a task step-by-step is called task analysis[6]. One of the goals of this exercise is to raise general awareness for the assumptions people make when they design for others. This exercise can take anywhere from one to several hours, depending on how you set up the task and how far away you are sending your team(s). This exercise can also be done on an individual level, though the learning and observations are usually greater in a group. In this sense, Exercise 3 also works well as a team-building exercise.

Exercise 3 (needed: a document to be copied, a location with a copy machine, paper and markers) Hand each of your team(s) a document with the request to get a photocopy of it from a copy machine. Do not tell them which photocopier to use or where to go. But do ask them to make careful notes of all the actions they are taking in order to complete the task successfully. This includes taking notes of questions they encounter, crossroads they are facing, and so on. Have the team(s) return after a reasonable time. Ask them to visualize their findings in a way that communicates their steps and experiences to the other teams. How did they find out about their copy machine? How did they get there? What did they need to do to get the machine to work? What was working well? What did not? (In a second pass, this exercise can turn into a form of role-play where participants work with a specific product or service from your organization but are looking at it with the eyes of someone who lacks the expert knowledge of an organization insider.)

Next step: the organization as purpose In completing the three exercises, you will discover some of the key human-centered design principles. Perhaps you feel that you have not made anything yet, but you will have already created first prototypes of pathways. More importantly, you have begun the exploration into your organization. An organization that employs design thinking and design methods

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‘‘ One of the common misperceptions design students bring to their early studies is that the goal is to produce beautiful drawings and models. ’’

inquires into the organization’s problems from a user’s point of view – from the perspective of someone who has little understanding about the complexities involved but who needs to have a clear path of action. If you have not done so yet, you might want to repeat the exercises with a particular focus on your own organization. Your discoveries along the way will become the foundation for a more structured inquiry and form the basis for directed change. At this point, you are working to create a culture of design research. Congratulations, you have already passed through the first loop of iterative and participatory design! You are using your skills and insights and are applying them immediately to the problems of your organization, all the while honing and refining them. The organization has become the purpose of your design activities. Now is the time to articulate how your design process aligns with your organization’s design principles. What are these principles? What are the current processes? How would the processes need to change to become iterative and participatory? Articulate and visualize both principles and process. At this point, you might want to connect with design professionals and/or educators to set up skill workshops and design seminars. They can also help you identify an initial project to generate design principles and a development process in line with your vision. While you have been engaging in design in sort of an instance-by-instance approach until now (conducting a few exercises that are not necessarily connected to one another), now is the time to think of your design strategy as a systematic inquiry: Where do you want to go? Why? Consider your first project as a prototype for your organization. This prototype can be changed, evaluated, tested and changed again. This prototype is also your key to learning about all the factors that play into your design strategy. It is crucial to identify a project that is relatively small in scope. This allows the design team to focus on the process, continue to learn about design and produce a concrete outcome in a short amount of time that demonstrates the principles at work.

Keywords: Design, Thinking styles, Education

First case studies show that organizations successful in developing and establishing design capabilities use an iterative and participatory design approach to develop them[7]. Ideally, the success of the first, quick project generates the momentum for a second project that tackles issues that have emerged in the first project. Learning to design is an ongoing and evolving process for anyone who engages in it. To establish design thinking and design methods within your organization, the individual skills need to go hand in hand with creating an environment supportive of a design approach (Zimmerman, 2003). This includes prototyping, evaluating and testing early and often[8]. Learning to design is learning to learn in, with and for the organization.

Notes 1. For a critical discussion of ‘‘good design’’ see Buchanan (2000). 2. Quoted from Buchanan (2000). Elizabeth ‘‘Liz’’ Sanders is widely credited with having coined the terms ‘‘useful, usable and desirable’’ products. See Sanders (1992). 3. The story of Patty Moore is much more complex than I offer here. Details on the story can be found online, for example at newstatesman.com www.newstatesman.com/199905170038 4. I have participated in the development and execution of Exercises 2 and 3 as part of the DMM Transformation Project, conducted by the United States Postal Service with the School of Design from Carnegie Mellon, Pittsburgh 2001-2005. Carnegie Mellon Professor Karen Moyer originally developed the tool sorting exercise to teach information design. The idea for the Photocopy Task

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Analysis came from Angela Meyer, project manager of the DMM Transformation Project, in an effort to familiarize new project members with the problems of human-centered design. 5. The slogan ‘‘Design – it’s all around you’’ was part of Cooper-Hewitt National Design Museum’s marketing campaign for the National Design Week 2006. For more details see www.cooperhewitt. org 6. One of the early resources on contextual design research methods, which also details task analysis, is provided by Beyer and Holtzblatt (1998). 7. See, for example, my comparative case studies on the Internal Revenue Service, The United States Postal Service and the Australian Tax Office in Junginger (2006). 8. Useful resources in this context include: Nelson and Stolterman (2002) and Laurel (2003).

References Beyer, H. and Holtzblatt, K. (1998), Contextual Design: Defining Customer-centered Systems, Morgan Kaufmann, San Francisco, CA. Buchanan, R. (2000), ‘‘Good design in the digital age’’, GAIN, Vol. 1 No. 1, pp. 30-3. Buchanan, R. (2004), ‘‘Management and design: interaction pathways in organizational life’’, in Boland, R. and Collopy, F. (Eds), Managing as Designing, Stanford University Press, Stanford, CA, pp. 54-63. Junginger, S. (2006), ‘‘Change in the making – organizational change through human-centered product development’’, doctoral dissertation, Carnegie-Mellon University, Pittsburgh, PA, May. Laurel, B. (Ed.) (2003), Design Research, MIT Press, Cambridge, MA. Nelson, H.G. and Stolterman, E. (2002), The Design Way, Educational Technology Publications, Englewood Cliffs, NJ. Nicolaı¨des, K. (1941), The Natural Way to Draw, Houghton-Mifflin, Boston, MA. Ott, S.J., Parkes, S.J. and Simpson, R.B. (2003), Classic Readings in Organizational Behavior, 3rd ed., Wadsworth/Thomson Learning, Belmont, CA. Rousseau, D.M. (1995), Psychological Contracts in Organizations: Understanding Written and Unwritten Agreements, Sage Publications, Thousand Oaks, CA. Sanders, B.-N. (1992), ‘‘Converging perspectives: product development research for the 1990s’’, Design Management Journal, Vol. 3 No. 4, pp. 49-54. Simon, H.A. (1996), The Sciences of the Artificial, 3rd ed., MIT Press, Cambridge, MA. Weinberg, G.M. (2001), An Introduction to General Systems Thinking, Silver Anniversary ed., Dorset House Publishing, New York, NY. Zimmerman, E. (2003), ‘‘Creating a culture of design research’’, in Laurel, B. (Ed.), Design Research – Methods and Perspectives, MIT Press, Cambridge, MA, pp. 185-92.

About the author Sabine Junginger is a Lecturer in Product Design and Design Management at Lancaster University. She received a PhD in Design in 2006 from Carnegie Mellon University, where she also received a Master in Communication Planning and Information Design in 2001. She studies the various roles and relationships of design and the organization, especially in the context of organizational change. Sabine Junginger can be contacted at: [email protected]

To purchase reprints of this article please e-mail: [email protected] Or visit our web site for further details: www.emeraldinsight.com/reprints

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The practice of breakthrough strategies by design Heather M.A. Fraser

Heather M.A. Fraser is Director of the Design Initiative and the designworkse Strategy Innovation Lab, Rotman School of Management, University of Toronto, Toronto, Canada.

n an environment where the challenge for businesses to stay ahead of the curve calls for new ways of strategizing for future success, design holds some important clues. By broadening the definition of ‘‘design’’ and expanding the application of design methodologies and mindsets to business, enterprises can move beyond mere survival and incremental change, and open up new possibilities for breakthrough growth strategies and organizational transformation.

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Drawing from a number of wide-ranging projects, case studies and executive education initiatives at Rotman designworkse we have gleaned some promising insights into how to achieve breakthrough strategies for success, by design. This article articulates how to embed design methods and mindsets into an organization’s strategic planning practices. It articulates how to unearth new and breakthrough opportunities to strengthen business strategies and create sustainable competitive advantage in a competitive marketplace.

Design as a catalyst for growth What forces in the marketplace are driving the need for new methods to create strategies for growth? A number of significant game-changing forces are at play. Here are just a few of the seismic shifts that set the scene today: B

Global access to new markets and expanded sources of people and components are breaking down barriers and creating new opportunities for some and threats to others.

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Technology has profoundly changed the way people connect and business gets done locally and globally. Virtual access, interactions and transactions have transformed the physical world and created new ways to connect and compete.

B

Marketplace demands are increasing as consumers have come to expect better, more sophisticated offerings and greater customization within the plethora of goods and services. The ‘‘category walls’’ are breaking down as consumers look for more integrated solutions to meeting their needs across products and services, demanding more from manufacturers and service providers than ever before. This expectation transcends all markets – it is now believed that all people in all markets should have access to life-enhancing solutions of all kinds.

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Social values are shifting, with higher expectations on good citizenship and the corporation’s social and environmental role and responsibilities. The ‘‘green movement’’ will radically change future expectations of corporations and governments.

Within this context, many companies are slow to respond to these forces because their historically successful models and infrastructures are making it challenging to shift organizational cultures and evolve rigid business models.

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In the face of these dynamic forces of change, companies are searching for better, faster, more effective means of reinvigorating their human capital to get ahead of the curve. The aim: to create new economic and human value.

Economics of design versus design of economics Herein lies the opportunity to leverage design practices for both cultural transformation and strategic growth, moving from a framework of the ‘‘economics of design’’ to the ‘‘design of economics’’. The economics of design are indisputable: good design of products and service experiences creates satisfaction, connections, desire and value to the ultimate user, taking a commodity product to a premium position. A smart redesign can also yield economics rewards through greater operational efficiencies. No one can debate that. But where design has its highest value is in applying design thinking to strategy and business modeling – in designing the sustainable competitive advantage of an enterprise. By embracing design methods and mindsets, an enterprise can not only design new products, services and experiences, but they can also fundamentally drive the design of economics in support of dramatic new growth strategies. While this is not yet a broadly embraced interpretation of ‘‘design’’ it is one where the evidence for success is mounting. While at first this model may seem either radical or abstract, those who discover its advantages find it surprisingly intuitive and practical – just what the business world needs in the face of high-stakes complexities and change.

How it works – the methods Drawing from of the many tools and techniques used in both the design world and the business world, this methodology can be distilled into what we call the ‘‘three gears of design’’ (see Figure 1) that drive strategy and business design: empathy and deep user understanding, concept visualization and multiple-prototyping, and strategic business design. This is not a 1-2-3 linear process, but rather an iterative process anchored in the needs of the user or ultimate customer target. By cycling through these three gears, work teams can get to bigger breakthroughs faster – applying user insights to stimulate high-value conceptual solutions and extracting strategic intent from the concepts to reform strategic business models.

Setting the foundation Before beginning the design journey, it is beneficial for the business team to frame up its current operating strategy, articulating what the organization is doing today that is driving current business results. Understanding the current business models, operational focus areas and market challenges and opportunities helps to get everyone grounded in the same view of the current state. Furthermore, not only does this help frame up the current business model, but also the team’s mental model that is conditioned by the ongoing, well-entrenched Figure 1

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‘‘ Marketplace demands are increasing as consumers have come to expect better, more sophisticated offerings and greater customization within the plethora of goods and services. ’’

activities of an organization. These are the points of reference for the business team that are both valuable and limiting in driving business. Knowing one’s working model, organizational competencies and strategic focus areas keep an enterprise moving forward productively. At the same time, if the current framework is viewed as a fixed model, this ‘‘mental model’’ can also be a source of constraint in exploring future possibilities outside current practices and capabilities. The limiting forces: a drive for ‘‘narrow perfectionism’’ and a reliance on current capabilities and measurements to squeeze more out of the current activity system which may yield diminishing returns over time. Often we hear executives discount opportunities because ‘‘We’re not in that business. We’re a manufacturer, not a service provider.’’ The position that ‘‘that’s not what we do today’’ is not a reason for not doing it in the future. Consider where Apple would be today if they had subscribed to old school thinking of ‘‘sticking to their knitting’’; we would never have witnessed the revolutionary success of a computer company introducing iTunes and iPod, and setting up for another potential step change with the iPhone. Apple does not live within the constraints of their current business model; they follow their user to new opportunities, which is what the first gear of design is all about.

The three gears of design First gear The first step is to reframe your business wholly through the eyes of the user. This may sound like Marketing 101, but companies are so often consumed by their current development initiatives, business challenges, budgets, deadlines and quarterly plan delivery that they find it difficult to really turn the telescope around and view their business entirely through the eyes of their end-user in a holistic manner. To broaden the lens, it is important to look beyond the direct use of a company’s product or service and explore the activity surrounding it to gain deeper insight and a broader behavioral and psychographic perspective on the user’s life. It is also critical to understand the ‘‘whole person’’ in the context of a given activity – not just what they do, but how they feel and how their needs surrounding the activity link to other parts of their life in terms of other activities, other people, and other cues to their needs. As an example, Nike’s focus on its deep understanding of the runner goes way beyond the utility of the running shoe. The runner is deeply motivated by their drive for ‘‘personal best’’, achievement of personal goals, the achievements and standards set by winning athletes, and their need to ascribe to a ‘‘winning mindset.’’ A perfect example of the manifestation of this deeper understanding is the Nike þ offering: a chip in a specialized running shoe that measures and motivates personal performance and connects you to a community of runners. In this example, everyone wins. The avid runner wins through a new means of motivating personal performance, and Nike wins because they have established a deeper and more engaging relationship with their consumer than ever before. To gain a deeper understanding of the user, we leverage one of the tools mastered by one of our academic partners, the Institute of Design at Illinois Institute of Technology (Whitney and Kumar, 2003), as presented in this journal. In applying their POEMS ethnographic technique, users bring photographs of people, objects, environments, messages and services of

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significance in an activity. Through a non-directive interview, the photographs are used as triggers to stories that ultimately reveal surprising insights. Interviewers on the business team get a much deeper sense of what the design world calls a persona, the ‘‘whole person’’ as defined by their intellectual, emotional and practical needs surrounding the activity of interest, and in the in the context of their everyday life. Through this exploration, the team discovers a broader range of adjacent needs that can serve as a springboard for innovation and strategic opportunities that go far beyond an incremental product upgrade or direct line extension. Furthermore, against conventional wisdom rooted in a culture of surveys and focus groups, studies have shown that by conducting a relatively small number of in-depth, holistic interviews with the appropriate cross-section of users, we can glean more than 90 percent of the insights we would gather through a much larger sample (Griffin and Hauser, 1993). So this methodology is an accessible, cost-effective means of discovering unmet needs early in the strategic planning process. To illustrate the power of deep user understanding, a hospital that is focused on objective operational improvements to enhance efficiencies may discover that the ‘‘healing process’’ is enhanced by a multitude of factors beyond the essential medical expertise and ‘‘patient flow.’’ The patient’s need for reduced anxiety may be rooted in many dimensions – their connection to the outside world (physical cues to nature and spirituality), the physical design of the hospital (the width of the halls, the flicker rates of the florescent lighting or the artwork on the walls) or a sense of control or empowerment (the information they receive in communications before, during and after their hospital visits) or the practices and manner of the people on staff. All of these cues – people, objects, environment, messages and services – can enhance or hinder the healing process. A beautiful example of this deeper understanding of patient needs is brought to life by the success of the North Hawaii Community Hospital (available at: www.northhawaiicommunityhospital.org). This is a case where medical acumen and ‘‘patient flow’’ were successfully complimented by a holistic design of the patient experience based on physical and emotional needs. All of this resulted in a better patient experience, operational effectiveness and, most importantly, better patient outcomes and community wellness. Second gear With a renewed empathy and broader set of criteria for innovation as the springboard, we move into gear 2 – concept visualization through the process of ideation and multiple-prototyping. Through a number of these workshops and projects, we have seen that user empathy unleashes creativity. We have seen more ideas emerge when a health care organization wholly shifts from an operational focus to a patient focus, or a technology company shifts its focus from wireless infrastructures and revenue-per-unit to community or cultural needs. In another health care example, Toronto’s Princess Margaret Hospital Breast Cancer Centre looked beyond the treatment of cancer to the more holistic needs of the breast cancer survivor. They created a beautiful ‘‘unhospital-like’’ setting resembling a high-end salon, a program for ‘‘beauty’’ in which survivors can get counsel on how to feel and look their best, and a community for women to enhance their emotional well-being through counsel and support. In the world of packages goods, a number of companies have thought beyond their manufacturing products to serve deeper needs. One example is the Kraft Food & Family Program – a multi-channel customer relationship program with customizable solution-based

‘‘ Companies are searching for better, faster, more effective means of reinvigorating their human capital to get ahead of the curve. ’’

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‘‘ Where design has its highest value is in applying design thinking to strategy and business modeling. ’’

meal ideas (versus straight product push). This program delivers to meet the needs of time-starved consumers, helping them get meals on the table quickly, skillfully, nutritionally and creatively. Another example is Dove’s multi-layered ‘‘self esteem’’ initiative which not only reframes ‘‘beauty’’ in its advertising, but extends their support for young women by offering mother/daughter dialogue content on the subject and sponsoring altruistic programs to fight against the emotionally-damaging media stereotyping of ‘‘unachievable beauty.’’ All of these initiatives have been inspired by a deeper understanding of human needs. And what better way to leverage the discovery of new needs and capture the creativity of an organization than through ideation and prototyping, generating possibilities of how to meet those human needs in a more imaginative and compelling way before locking down a tightly-defined strategy? By using consumer needs as a point of departure to explore multiple solutions, one can generate a wide range of possibilities outside one’s current repertoire of solutions and business framework to expand horizons. In a recent workshop with 180 executives from the Professional Convention Management Association, participants followed this methodology to think beyond how to perfect logistics and delivery of a well-run convention. In teams, this seasoned group of professionals prototyped 36 breakthrough ideas for better meeting convention-goers needs. For the conventioneer who needed to be alert at all times, they created an on-site ‘‘brain food’’ service. For the time-starved participant they created a technology-driven ‘‘personalized scheduling program’’. For the ambitious professional who is looking to advance his career, they created a ‘‘personal advancement coaching’’ program to help the participant get the most out of the convention and set himself on a path to personal success. All of these concepts were outside their previous set of considerations. All of them were multi-dimensional and richly constructed around the deeper needs of their user. And all of them were new and valuable to the market they serve. Whether or not they got the concept perfect in two days is not important. What is important is that they discovered new needs and new strategies to meet those needs that had previously not been pursued. These and many other experiences demonstrate that making solutions tangible is an intuitive and risk-free way to ‘‘quick test’’ ideas as the basis for strategy. Strategy therefore becomes the summation of tangible concepts that satisfy user needs. Through rapid-prototyping and iteration, teams build solutions that facilitate a more concrete basis for discussion, which can be later translated into strategic intent. This is in contrast to conventional practices that analyze and build off existing knowledge and frameworks to lock down strategies before exploring possible expressions of those strategies. Executive teams frequently say that they have sometimes bought into a strategy that makes sense on paper, only to discover that their leadership team all had different interpretations of how that strategy would actually manifest itself much later in the game, when it can be more difficult and costly to reconcile. This is a function ‘‘domain perspective’’ – seeing the strategy through each individual’s base of functional expertise and experience. This occurs naturally even in the most collaborative teams – one person’s view of ‘‘reality’’ is different from another’s. Anchored in a common understanding of the end user’s deeper needs, the prototyping process becomes a ‘‘thinking and communication tool’’ for making the abstract concrete and stimulating productive dialogue within business teams and with users. In addition, when prototyping is done by multi-disciplinary teams early on in the process, both the solutions and the buy-in are more complete, fueling greater momentum down the development path. The design approach is about discussing strategy in the spirit of asking ‘‘What if it looked like

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this? How would that better serve our user’s needs and what would that mean to our business? What would we need to do to in order to bring that to life in terms of our capabilities and our organization’s activities?’’ That leads into the third gear of business design. Third gear With defined user-driven solutions in hand, the next step is to align strategic concepts with future reality through strategic business design. In this third gear, we explore and define what it would take in order for the ‘‘big idea’’ to become both viable and valuable by articulating the strategies and capabilities required. One useful visualization and development tool for this step is Porter’s (1996) ‘‘activity system.’’ Applying the activity system tool against a new solution, we define the core strategies that would be critical in bringing this concept to life – the strategic hubs and the mutually reinforcing activities of the self-standing activity system. For example, a health care company may decide that their patients need more personalized and responsive support. In order to deliver that in real-time, they may need a significant investment in database systems, access and management. It may require new channels of communication to proactively and reactively support patient needs. It will also impact organizational structure and operating procedures. Further, each of these components will cost money, save money and generate stronger revenue and retention – all at the same time. While at first glance this may seem like a tall order with a high price tag, through iterative integration it can be designed to be a net gain for the enterprise. Like the prototyping process in gear 2, this phase entails prototyping the business model to integrate the parts and assess the impact of the activity system as a whole. What is critical is to identify what will strategically drive the success of the solution, prioritize which activities an organization must undertake to deliver those strategies, define the relationship of those parts strategically, operationally and economically, and determine what net impact the new model will have. With the ‘‘stand-alone’’ model defined, the final step of business design is to integrate this stand-alone system back into the current operating model, always asking: What can we leverage in our current activity system? What tensions (barriers, issues, conflicts) must be resolved in our current activity system? For each tension point, what are possible strategies and tactics for resolution? How can we lock up this system so it is proprietary and sustainable to our enterprise, therefore justifying the investment required to support this breakthrough strategic plan? Through several iterations will come an ownable working model that can deliver value to all stakeholders (the end user and the enterprise) and do so responsibly with a well-planned build-and-transition plan. To illustrate this point, we can imagine how the iPod activity system may look: a complex network of interrelated strategies and tactics that redefine the game rules of an industry while leveraging and extending Apple’s equities in design (beyond just the aesthetics, and including the entire user experience), a distinct and intuitive interface and the brand’s reputation for ‘‘radical innovation’’ and breakthrough marketing. In Figure 2, the dark blue hubs represent the base of equities and capabilities Apple used to build iPod. The mid-blue hubs represent the new hubs of activity which build on Apple’s historical foundation to create a new system of competitive advantage. Specific initiatives and supporting activities are indicated in light blue. What is critical in this particular case is the leveraging of current equities and capabilities and the creation of new activities and capabilities both within the company (iTunes as an intuitive interface to content and an enhanced retail presence) and through partnerships (content alliances and peripherals integration). So while the parts of this activity system may not be entirely proprietary to Apple, the business design is locked up by an interrelated set of activities and partnerships that are not only pre-emptive, but also sustainable in that they cannot be easily replicated within a period of time for the plan to get traction and pay out the investment.

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Figure 2

Through this iterative process, prototyping (first on a conceptual solution, then on the strategic business model) and constant assessment of user value (based on the identified user needs and considerations) along with the potential to create sustainable competitive advantage for the enterprise, one can formulate a strategy for a new level of innovation and competitive advantage. By challenging the current model and exploring new ways to drive success, one can find the strategic and operational point of sustainable equilibrium – what is unique and good for the user can be good for the enterprise.

Mindset matters With that as a methodological framework, the make or break ingredient is the mindset of both the individual and the team. The following are some of the most important emotional conditions that allow design thinking to flourish. Open-minded collaboration Everyone on the team not only needs to be committed to ‘‘working together’’ but must also be receptive to new insights and ideas, whether they fit one’s preconceived paradigm or not. Business designers feed off new insights and effectively build off the ideas of others, embracing both the friction and fusion that comes with intense collaboration. Abductive thinking and the license to explore possibilities In gathering new user insights and moving from what is ‘‘known’’ to the exploration of alternative solutions, an important capability is ‘‘abductive thinking’’, as defined and explored in this journal. What is critical is to allow for the ‘‘leap of inference’’ in tackling new opportunities and designing new possibilities. A perfect example of this: Swiffer – a phenomenon that revolutionized the market not as a conventional household cleaner ‘‘line extension’’, nor as a better version of the traditional mop. It signaled a leap into a new category of cleaning and became part of the cleaning vernacular (with a loyal franchise moving from ‘‘I’ve never seen anything like that’’ to ‘‘I’ll just Swiffer that before they arrive.’’). To take the leap toward game-changing solutions, it is vital to think beyond what is immediately observable and provable and imagine what could be possible as a radically new solution to unmet needs. Great design does not come without risk-taking and trying new things, with the very strong possibility of failure. There are countless stories of where a really

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‘‘bad’’ or ‘‘crazy’’ idea became the germ of a brilliant concept or strategy. How often have we heard someone shut down an idea by saying ‘‘That’s never been done before. What if it doesn’t work? I may get fired.’’ For those who need to mitigate risk, this method allows for consumer needs to ‘‘legitimize’’ far-out thinking and prototyping to provide a zero-risk way of exploring the otherwise seemingly extreme ‘‘what if’’ concepts. Imperfection and iteration early in the process This is not a clean and linear process; it is as messy as finger-painting. What is important early in the process is to explore lots of possible solutions, not perfecting a prototype so it becomes difficult to evolve it or even kill it. Iteration and constant change are necessary and good through every part of the process. That keeps the cost of failure low and the rewards of possible breakthrough high. Challenge constraints toward creative resolution No great design is realized without the absolute unwillingness to give in to constraints and obstacles, and that is doubly true for business design. Roger Martin, Dean of the Rotman School of Management at the University of Toronto, has long claimed that one of the single biggest attitudinal drivers in breakthrough success is a mindset of ‘‘no unacceptable trade-offs’’ (Martin, 2002). Good strategy involves making choices. Great strategy includes not making compromising trade-offs. Those who find ways to create new models instead of making unacceptable trade-offs find themselves ahead of the game, as shown be many model-changing successes like Southwest Airlines, Red Hat Software, Four Season’s Hotels, and Apple’s iPod, to name but a few. That is where the design method can help in resolving model conflicts – keeping the user at the centre and prototyping various ‘‘what if’’ strategic business models to ultimately deliver both value to the user and viability, operationally and economically – the point of equilibrium noted before.

The design way Whatever the sector or the nature of the business, any organization can benefit from the ‘‘design way.’’ It naturally taps into team intelligence, creativity and the ambition to make a meaningful impact in the customer’s life, both functionally and emotionally. The process itself is easy to follow, but should be embedded into an organization’s strategic planning practices to realize the full potential of design thinking. At its core, the design approach is about combining the essential three gears of design with a ‘‘design mindset,’’ and allowing an organization to discover opportunities to capitalize on new and unmet needs, exploring possibilities outside their activity system and then setting the strategies to evolve their business model (see Figure 3). A true ‘‘design organization’’ asks three questions of every opportunity: What is the need driving this initiative? Have we pushed out on the possibilities to best serve that need? How we can we embed that into our business model to create a sustainable advantage? It is the power of all three gears that drive breakthrough strategies.

Keywords: Management strategy, Design, Innovation, Thinking styles

Once embedded into an organization’s DNA, design methods can help generate ongoing possibilities for growth and evolution, recognizing that as the marketplace evolves, the needs of the user evolve and thus the business model must evolve to avoid extinction. The more an enterprise sees its business model or ‘‘activity system’’ as a living organism rather than a fixed model, the more a company will be poised to respond to ongoing opportunities to meet new needs. A company that views ‘‘design thinking’’ not as a one-shot vaccination but rather an ongoing fitness program for strategic growth will be better conditioned to stay ahead of the curve in an increasingly competitive global marketplace. The result: bigger breakthroughs in thinking, more innovative strategies for success, and development of new business models to better meet user needs and create greater economic and human value.

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Figure 3

References Griffin, A. and Hauser, J.R. (1993), ‘‘The voice of the customer’’, Marketing Science, Vol. 12 No. 1, pp. 1-27. Martin, R. (2002), ‘‘Integrative thinking: a model takes shape’’, Rotman Magazine, Fall, pp. 6-11. Porter, M. (1996), ‘‘What is strategy?’’, Harvard Business Review, November/December, pp. 61-78. Whitney, P. and Kumar, V. (2003), ‘‘Faster, cheaper, deeper user research’’, Design Management Journal, Vol. 14 No. 2, pp. 1-9.

About the author Heather M.A. Fraser is Director of the Design Initiative and the designworkse Strategy Innovation Lab at the Rotman School of Management, University of Toronto. She leads the development of design-related initiatives, including collaboration with design schools and practitioners, course development and teaching of design principles in the MBA curriculum, and development of executive/corporate design workshops. She can be contacted at: [email protected]

To purchase reprints of this article please e-mail: [email protected] Or visit our web site for further details: www.emeraldinsight.com/reprints

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Strategizing through playful design Claus D. Jacobs and Loizos Heracleous

Claus D. Jacobs is Senior Research Fellow, Institute of Management, University of St Gallen, St Gallen, Switzerland. Loizos Heracleous is Professor of Strategy, Warwick Business School, University of Warwick, Coventry, UK.

trategic planning has been associated with a rational, objective, structured, analytical and convergent mindset that most executives consider abstract and distant from their daily work. Strategic thinking on the other hand has often been seen as complementing planning by involving a creative, divergent and synthetic mindset and associated practices (Heracleous, 1998). While the technologies and frameworks of strategic planning have been highly developed and refined over time, the creative processes of strategic thinking remain a fragmented group of approaches with diverse conceptual homes.

S

A view of strategizing as a process of design is in essence an analogical process, the use of metaphor where knowledge from the source domain (in this case design thinking), is mapped onto the target domain (in this case the strategy process), with the aim of gaining insights that would have been difficult to gain otherwise. If the two domains are sufficiently different for a creative tension to exist, as in this case, the insights are likely to be more fruitful. We propose a view of strategizing as a playful design practice and illustrate this view by describing a process for fostering effective strategic play. We next outline the benefits of the process and finally address how executives can play effectively. Our overall message is that strategizing through playful design can be a useful and productive complement to dry, conventional strategic planning processes that helps to open up and orient fruitful debate about an organization’s particular strategic challenges.

Design thinking and strategic practice According to architect Bryan Lawson, there is little consensus in the design field about what the term ‘‘design’’ means and there is by no means a universal design model (Lawson, 2006). Both a noun and a verb, design can both refer to an end product as well as to the processes involved. Thus the source domain of architectural design is itself fragmented. Nevertheless, Lawson’s attempt at an integrated model suggests that one of the most effective means for designers to provide structure to ill-structured problems is by generating narratives or stories to reframe these problems. They also employ various techniques and materials to externalize their ideas and thoughts through models, sketches or prototypes. These physical two- and three-dimensional representations are not simply outcomes of an abstract thought process, but pivotal inputs that provide a physical stimulus for conversations about the emergent ideas they embody; and in turn workable, creative solutions to the relevant design challenges. These models and prototypes provide designers with a basis for developing initial ideas about solutions very early on in the process, sometimes even before they have fully understood the problem. Evaluating alternative design options requires designers to integrate objective/technical as well as subjective/aesthetic judgments in making choices among competing prototypes.

DOI 10.1108/02756660710760971

VOL. 28 NO. 4 2007, pp. 75-80, Q Emerald Group Publishing Limited, ISSN 0275-6668

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This is facilitated by the models and prototypes that integrate the emergent ideas into a relatively coherent story. Thus, design processes rely fundamentally on the practice of creating models or prototyping as a process of recursively stabilizing and elaborating a physical artifact while the narrative or story triggered by it unfolds.

Playful design as a practice of strategizing: an example A technique that exemplifies ‘‘strategizing through playful design’’ is the crafting of embodied metaphors. The technique combines a facilitated playful mode of interaction with the emergent, group-oriented design of three-dimensional models to assist in strategic sense making. In other words, individuals explore their strategic issues through a group process of sense making that involves the design of real artifacts that are metaphors in the flesh. These designs tell stories that become explicit when the structures are decoded and made sense of by the group that built them. The stories spur conversations and generative dialogues about the strategic challenges that the group faces. In early 2003, for example, the CEO of a Swiss-based private banking group planned to launch a major strategic initiative for the group’s overall go-to-market strategy (Jacobs and Heracleous, 2006). The initiative, labeled ‘‘I know my banker,’’ aimed to fulfill the bank’s aspiration to provide a more customer-focused private banking service that would differentiate the bank’s positioning and customer interaction but would be serviced behind the scenes with standardized banking products, as was the norm. To kick off the initiative, and as a prelude to implementation, the CEO invited department heads and their direct reports to a one-day retreat to familiarize them with the concept of ‘‘I know my banker’’ and to align management thinking with this concept. The workshop was designed to let participants explore dialogically, creatively and in an emergent fashion this concept and its consequences in more detail so that by the workshop’s conclusion, shared mental maps on this theme would develop and coordinated actions would take shape. Aided by the process of playful strategizing, the participants started designing what they thought the concept ‘‘I know my banker’’ meant to them. During the design process they engaged in intense debates; while some for example had assumed that aspects of the private banking service could potentially benefit all of the bank’s customers, others kept emphasizing that this initiative should only be applied to a carefully selected segment of the organization’s customer base. Further, while some participants took the concept at face value and speculated on ways that would encourage customers to actually get to know their bankers better, and what that might mean for them as bankers, others followed a more traditional, instrumental path along a ‘‘know your customer’’ logic. Finally, while some participants argued that ‘‘I know my banker’’ was all about technical systems, customer relationship marketing or data mining, others viewed the concept as a way to build closer relationships and trust with clients. The designs, or ‘‘embodied metaphors’’ built were a potent way to surface and debate these assumptions. For example, a construction presenting the bank as a complicated machine bigger than the client’s space and the banker-client relationship as the need to match offerings to clients’ demands (Figure 1) contrasted with a construction portraying the banker-client relationship as a progressively closer, developmental process ultimately leading to deep mutual understanding (Figure 2). The former was a technocratic, mechanistic, transactional interpretation of the strategic initiative ‘‘I know my banker’’ while the latter was an anthropocentric, developmental, relationship-oriented understanding.

‘‘ We propose a view of strategizing as a playful design practice and illustrate this view by describing a process for fostering effective strategic play. ’’

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Figure 1 Mechanistic design prototype of the concept ‘‘I know my banker’’

Figure 2 ‘‘Evolving relationship’’ design prototype of the concept ‘‘I know my banker’’

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These strategic conversations occasioned through a process of strategizing through playful design had a significant impact on subsequent bank strategic actions. The CEO acknowledged the lack of shared understandings and subsequently requested the head of marketing to postpone the launch of the initiative and to reconsider and redesign the entire ‘‘I know my banker’’ program – this time within a more inclusive process, through close collaboration with the heads of departments as well as some workshop attendees. After a few months, the initiative was introduced more smoothly than would otherwise have been the case. What we have seen in this workshop that used the technique of producing emergent designs or crafting embodied metaphors as we have elsewhere described this practice (Jacobs and Heracleous, 2006; see also Heracleous and Jacobs, 2005) illustrates and manifests several aspects of strategizing as playful design. The process revealed that the new go-to-market strategy, on the surface a simple concept, when examined more deeply was in fact a complex problem with contradictory perspectives and interpretations giving rise to different narratives. What is interesting from a practice point of view is that these diverse interpretations of the concept would likely lead to implementation problems as the action-oriented implications of the understandings would either implicitly support or challenge the officially sanctioned implementation plan. Further, the projective technique of crafting embodied metaphors employed alternative media to represent the strategic issues. While initially participants might have been reluctant to use construction toy materials to represent their ideas, the playful process facilitated a smooth uptake of the unusual material. This in turn enhanced the expressive spectrum of participants. Further, the process rendered different viewpoints and narratives literally visible and made them accessible to further critical exploration. The variety of interpretations in the different models show evidence of parallel lines of thinking that do not lead immediately and in a linear fashion to a preferred or ideal solution but rather triggered further debate and helped participants ask the right questions. Since one of the aims of the workshop had been to transcend metric, convergent strategic thinking, such a process invited and educated participants in the practice of holistic, aesthetic judgment. Rather than conventional, analytical skills, the designed models call for synthetic, divergent readings of the metaphors they embody and the stories they tell. Finally, the intervention allowed participants not only to metaphorically develop their vision of ‘‘I know my banker’’ and of their organization’s desired future state, but also to actually take the three-dimensional designs to their organization as prototypes to help them critically reflect on their past actions as well as principles and understandings that should guide their future actions.

Benefits of strategizing through playful design Strategizing through playful design allows companies to address a wide range of strategic challenges, which are built into the brief for the process. For instance, when a mobile telephony’s strategy team reviewed the implications of their recently having been acquired by a main state-owned competitor, they realized thus far neglected, impending competitive threats, which in turn triggered a critical reflection on the firm’s brand positioning. When engaging in playful design processes after being split over the strategic relevance of their company’s after-sales activities, the senior management team of a food packaging firm appreciated their relevance and subsequently discussed strategic options for developing world-class after sales processes. Finally, a newly formed regional management team of a global software firm that was not well integrated was able to start defining a shared identity and platform for debating differences as a basis for improving future lateral collaboration. What all the above examples have in common is that the process of playful design enabled them to address pressing strategic issues in a productive manner. Thus, strategizing through playful design can deliver insights and potential shifts in managers’ mind sets by providing a context where senior teams can surface and debate

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‘‘ Evaluating alternative design options requires designers to integrate objective/technical as well as subjective/aesthetic judgments in making choices among competing prototypes. ’’

contentious or critical management issues, by ‘‘concretizing’’ these issues into ‘‘embodied metaphors’’ that are imbued with meaning and that can be debated from a variety of perspectives. It is precisely its potential to induce rich imagery and stories triggered by the models that facilitates the development of a memorable shared language for the future and that can even feed into and inform more formalized forms of strategizing. Furthermore, strategizing through playful design creates a sense of involvement and ownership that not only facilitates effective team building among senior managers but also aids implementation of the directions that emerge from the debates. Such a process can also help in identifying necessary revisions in strategy, in the implementation plan, or even highlight the need to garner political support before any initiatives. Since the process tends to surface dissonances rather than (false) consonances, strategizing through playful design helps to identify potential road-blocks to effective strategy implementation.

How to play effectively Given the potential benefits, how then can organizations effectively engage in strategizing through playful design? We should stress at this stage that strategizing through playful design complements rather than substitutes for conventional practices of strategizing. Clearly, after the creative strategizing, there is the need to diverge to a more planning-oriented mindset and develop an implementation plan with the relevant features (actions, timescales, critical success factors, accountabilities). Strategizing through playful design on the other hand is particularly suited to early stages of strategy development as well as strategy review processes where more exploratory, divergent and synthetic processes and thinking modes are needed, rather than more formal, convergent and conventional ones. It is important that if the CEO or other individuals from the top team are involved in the process, they should role-model the inclusive philosophy of strategizing through playful design by being mindful of any defensive or dominating behaviors that they exhibit. Participants may be sub-consciously picking up cues about what the CEO wants to hear, therefore producing corresponding designs that would not take full advantage of the potential of the process. A skilled facilitator can help to foster healthy and productive discussions in this respect by ensuring balanced participation in the design process and encouraging a meaningful, yet critical probing into the designs. To play effectively, resources such as adequate space and time are essential since rushed sessions lose their impact dramatically. We found that anything less than a full day does not allow participants to get in a productive, creative play ‘‘zone,’’ to debate the issues in depth, and to allow for a robust discussion of actions and other future directions. For specific aspects of strategy to be addressed (such as the level of integration of a regional team or the relevance of after sales service), one to two days would be needed. To address an organization’s whole strategy (that would include issues of positioning, growth avenues, product/market choices, resource and capability development), three to four days would be needed, with a significant part of this time at the end of the workshop period devoted to discussion of implications and action planning (the more convergent and conventional modes of strategy making). Turning to process design features, strategizing through playful design follows four iterative stages that operate at both individual and collective levels and gradually build up to detailed conversations on the core strategic issues and challenges as perceived by participants. First, participants are invited to construct and then debrief their individual constructions on

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the goal of the workshop. Second, the groups are invited to integrate their individual constructions into an initial collective prototype to eliminate redundancies but retain differences and diversity. This latter step represents the central part of the process since consonances and dissonances in terms of the strategic issue are exchanged and negotiated – much like iterative, recursive industrial design processes. Third, in a recurring cycle of steps one and two, individual then collective models of key stakeholders and their relationships to the core construction supplement the emergent strategic prototype. Finally, the overall construction is debriefed and probed by means of ‘‘what-if’’ scenarios suggested by participants themselves, which in turn generate narratives that help participants make sense of the issues and challenges facing them and explore strategic options. A further key element of playing effectively is the clarity and adequacy of the design assignment of the group. This should be broad enough to address an issue of strategic relevance while also being specific enough so that designs can draw on participants’ practical experience and subsequently inform this experience. The process can be carried out with a variety of materials, ranging from mundane office objects to plasticine to construction toy materials. Some of the materials might be considered more ‘‘neutral’’ than others. In view of time considerations, their connectivity, and their potential for constituting elaborate and meaningful designs, however, we have preferred in the past to employ construction toy materials (including those with preconfigured meaning such as animals, bridges or person figures).

Keywords: Management strategy, Management games, Design

Thus, strategizing through playful design, when appropriately structured and resourced, gives strategists an effective means of exploring their strategic challenges and agreeing on desired directions. It complements the structured, rationalist flavor of strategic planning by enabling participants to engage in creative, generative, divergent thinking about issues that keep them awake at night and gives them the opportunity of coming up with different answers from their competitors, an essential prerequisite to competitive advantage.

References Heracleous, L. (1998), ‘‘Strategic thinking or strategic planning?’’, Long Range Planning, Vol. 31 No. 3, pp. 481-7. Heracleous, L. and Jacobs, C. (2005), ‘‘The serious business of play’’, MIT Sloan Management Review, Fall, pp. 19-20. Jacobs, C. and Heracleous, L. (2006), ‘‘Constructing shared understanding – the role of embodied metaphors in organization development’’, Journal of Applied Behavioral Science, Vol. 24 No. 2, pp. 207-26. Lawson, B. (2006), How Designers Think – The Design Process Demystified, 4th ed., Architectural Press, Oxford.

About the authors Claus Jacobs is Senior Research Fellow in Strategy and Organization at the Institute of Management, University of St Gallen, and a Visiting Scholar of Templeton College, Oxford. Claus D. Jacobs is the corresponding author and can be contacted at: [email protected] Loizos Heracleous is Professor of Strategy at the Warwick Business School and Associate Fellow at Templeton College, Oxford.

To purchase reprints of this article please e-mail: [email protected] Or visit our web site for further details: www.emeraldinsight.com/reprints

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