The Design of Business

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The Design of Business: Why Design Thinking is the Next Competitive Advantage is a 2009 book by Roger Martin, Dean of the University of Toronto's Rotman School of Management. [1] In the book, Martin describes the concept of design thinking, and how companies can incorporate it into their organizational structure for long term innovation and results.

Contents

Book summary

Martin introduces the knowledge funnel as the process followed by leading businesses to innovate more consistently and successfully. The knowledge funnel has three different phases:

Mystery → Heuristic → Algorithm

The mystery stage comprises the exploration of the problem, this transitions to the rule of thumb (heuristic) stage, where a rule of thumb is generated to narrow work to a manageable size. In the algorithm stage the general heuristic is converted to a fixed formula, taking the problem from complexity to simplicity.

Martin poses that there are currently two forms of business thinking: Analytical thinking and Intuitive thinking. Analytical thinking is driven by a quantitative process, standardizing to eliminate judgment, bias, and variation. Intuitive thinking focuses more on an instinct to drive creativity and innovation. Analytical thinking has become much more prevalent in organizations, because it is more consistent, easier to measure, and can scale in size. Martin labels the difference between a bias for the two schools of thought as the distinction between 'reliability' versus 'validity'. Organizations are much more likely to favor what is reliable, because their structures motivate analytical thinking. This means that organizations are often poor at achieving valid solutions because they do not fully take advantage of all three areas of the knowledge tunnel, just the two latter stages (heuristics and algorithms).

Design thinking balances analytical and intuitive thinking. It combines an openness to explorative thoughts with an exploitative mentality, striking the balance between innovation and a systematic scalable process. It pulls resources back into the knowledge funnel and allows to progress through all three stages.

Martin argues that business is currently missing abductive reasoning, the third form of logic (deductive logic and inductive logic being other two). Charles Sanders Peirce formed the idea of abductive logic, arguing that no new idea could come from inductive or deductive logic. Peirce described the process of discovery as new ideas that arose when thinkers observed data that did not fit with the existing models. The first step of reasoning was not observation but wondering. Designers live in the world of abductive logic, actively looking for new data points and changing the way that things are done. Incorporating this into organizational structures allows firms to become better at the mystery stage of the knowledge funnel.

The way organizations implement these findings depends on the structure and makeup of the organization. CEOs like Mike Lazaridis at Research in Motion, lead the design thinking by example. An alternative is a new corporate structure that incorporates design thinking into the firm, like the one A.G. Lafley put in place at Procter and Gamble. Similarly, a hybrid model, with a CEO who leads by example but also has a creative structure in place to encourage design thinking, can work well; the best example is Apple under Steve Jobs.

From a personal development standpoint, Martin advocates using and combining some of the tools discussed in his earlier book, The Opposable Mind , to develop the design thinking mindset.

Martin acknowledges that design thinking may meet criticism, so he suggests the following steps to get along with others while practicing it:

  1. Rephrase extreme views as a creative challenge
  2. Empathize with colleagues on the extremes.
  3. Argue in terms of reliability and validity.
  4. Put unfamiliar concepts in familiar terms.
  5. When it comes to proof, test on small scale first to illustrate successful outcomes, then scale up [1]

Reaction

Reviews have generally been positive, citing the book as "easy reading, because he is an excellent storyteller, and illustrates his thesis with memorable examples". [2] He has also been praised for the practical approach he takes, grounding his ideas in the reality of the system, with reviewers calling it a "must-read for people who want to bake into their corporate cultures ingredients such as research, design and innovation." [3] Others have praised it as cutting-edge and a necessary approach for modern companies. [4]

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The scientific method is an empirical method for acquiring knowledge that has characterized the development of science since at least the 17th century It involves careful observation, applying rigorous skepticism about what is observed, given that cognitive assumptions can distort how one interprets the observation. It involves formulating hypotheses, via induction, based on such observations; the testability of hypotheses, experimental and the measurement-based statistical testing of deductions drawn from the hypotheses; and refinement of the hypotheses based on the experimental findings. These are principles of the scientific method, as distinguished from a definitive series of steps applicable to all scientific enterprises.

<span class="mw-page-title-main">Abductive reasoning</span> Form of logical inference which seeks the simplest and most likely explanation

Abductive reasoning is a form of logical inference that seeks the simplest and most likely conclusion from a set of observations. It was formulated and advanced by American philosopher Charles Sanders Peirce beginning in the last third of the 19th century.

Deductive reasoning is the mental process of drawing deductive inferences. An inference is deductively valid if its conclusion follows logically from its premises, i.e. it is impossible for the premises to be true and the conclusion to be false.

<span class="mw-page-title-main">Problem of induction</span> Question of whether inductive reasoning leads to definitive knowledge

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Inferences are steps in reasoning, moving from premises to logical consequences; etymologically, the word infer means to "carry forward". Inference is theoretically traditionally divided into deduction and induction, a distinction that in Europe dates at least to Aristotle. Deduction is inference deriving logical conclusions from premises known or assumed to be true, with the laws of valid inference being studied in logic. Induction is inference from particular evidence to a universal conclusion. A third type of inference is sometimes distinguished, notably by Charles Sanders Peirce, contradistinguishing abduction from induction.

Inductive reasoning is a method of reasoning in which a general principle is derived from a body of observations. It consists of making broad generalizations based on specific observations. Inductive reasoning is distinct from deductive reasoning, where the conclusion of a deductive argument is certain given the premises are correct; in contrast, the truth of the conclusion of an inductive argument is probable, based upon the evidence given.

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An argument is a series of sentences, statements or propositions some of which are called premises and one is the conclusion. The purpose of an argument is to give reasons for one's conclusion via justification, explanation, and/or persuasion.

<span class="mw-page-title-main">Analytical skill</span> Crucial skill in all different fields of work and life

Analytical skill is the ability to deconstruct information into smaller categories in order to draw conclusions. Analytical skill consists of categories that include logical reasoning, critical thinking, communication, research, data analysis and creativity. Analytical skill is taught in contemporary education with the intention of fostering the appropriate practises for future professions. The professions that adopt analytical skill include educational institutions, public institutions, community organisations and industry.

<span class="mw-page-title-main">Psychology of reasoning</span> Study of how people reason

The psychology of reasoning is the study of how people reason, often broadly defined as the process of drawing conclusions to inform how people solve problems and make decisions. It overlaps with psychology, philosophy, linguistics, cognitive science, artificial intelligence, logic, and probability theory.

Opportunity management (OM) has been defined as "a process to identify business and community development opportunities that could be implemented to sustain or improve the local economy".

Data thinking is a product design framework with a particular emphasis on data science. It integrates elements of computational thinking, statistical thinking, and domain thinking. In the context of product development, data thinking is a framework to explore, design, develop and validate data-driven solutions. Data thinking combines data science with design thinking and therefore, the focus of this approach includes user experience as well as data analytics and data collection.

As the study of argument is of clear importance to the reasons that we hold things to be true, logic is of essential importance to rationality. Arguments may be logical if they are "conducted or assessed according to strict principles of validity", while they are rational according to the broader requirement that they are based on reason and knowledge.

References

  1. 1 2 Roger L. Martin (November 2009). The Design of Business. Harvard Business Press. ISBN   978-1422177808.
  2. "Schachter, Harvey. "A new way of thinking to propel businesses forward." Globe and Mail 11 Nov 2009: <https://www.theglobeandmail.com/report-on-business/a-new-way-of-thinking-to-propel-businesses-forward/article1376540/>.
  3. Francis, Diane (9 Dec 2009). "Martin's gift of analysis". National Post . Archived from the original on 2 Sep 2012.
  4. https://gbr.pepperdine.edu/book-corner/the-design-of-business-why-design-thinking-is-the-next-competitive-advantage-by-roger-martin/