The Designful Company

The Designful Company: How to build a culture of nonstop innovation by Marty Neumeier

Here are some of my fave exerpts (until the Kindle advised I had passed my clipping limit for this item):

We’ve spent the last century trying to fill factories and making minor tweaks to the same basic idea of efficiency. The high-water mark in the quest for continuous improvement is Six Sigma, yet THE WALL STREET JOURNAL cited a 2006 Qualpro study showing that, of 58 large companies that have announced Six Sigma programs, 91% have trailed the S&P 500. We’ve been getting better and better at a management model that’s getting wronger and wronger.

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Thanks to unprecedented market clutter, differentiation is becoming the most powerful strategy in business and the primary beneficiary of innovation. So if innovation drives differentiation, what drives innovation? The answer, hidden in plain sight, is design. Design contains the skills to identify possible futures, invent exciting products, build bridges to customers, crack wicked problems, and more. The fact is, if you wanna innovate, you gotta design.

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Never has it been used for its potential to create rule-bending innovation across the board. Meanwhile, the public is developing a healthy appetite for all things design.

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There are only two main components for business success: brands and their delivery. All other activities—finance, manufacturing, marketing, sales, communications, human relations, investor relations—are subcomponents.

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If you can deliver customer delight, you can dispense with the high cost and relationship-straining effects of loyalty programs. Organic loyalty beats artificial loyalty every time.

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The antidote to change is organizational agility. While agility was not a burning issue when business moved at a more leisurely pace, in 2008 it showed up as wicked problem number three. Companies now need to be as fast and adaptable as they are innovative.

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Why does change always have to be crisis-driven? Is it impossible to change ahead of the curve? What keeps companies from the continuous transformation needed to keep up with the speed of the market? A company can’t “will” itself to be agile. Agility is an emergent property that appears when an organization has the right mindset, the right skills, and the ability to multiply those skills through collaboration. To count agility as a core competence, you have to embed it into the culture. You have to encourage an enterprise-wide appetite for radical ideas. You have to keep the company in a constant state of inventiveness. It’s one thing to inject a company WITH inventiveness. It’s another thing to build a company ON inventiveness. To organize for agility, your company needs to develop a “designful mind.” A designful mind confers the ability to invent the widest range of solutions for the wicked problems now facing your company, your industry, your world.

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As a thought experiment, imagine a future in which all companies were compelled to take back every product they made. How would that change their behavior? For starters, they would make their products with parts they could salvage and reuse at the end of their life cycles. This in turn would spawn whole industries dedicated to the design of reusable materials.

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Today we need a broader definition of design in which the key measurement is not styling but performance. As it turns out, the basis for a new definition was put forward 40 years ago by Herbert Simon, a leading social scientist and Nobel Laureate. In THE SCIENCES OF THE ARTIFICIAL he wrote: “Everyone designs who devises courses of action aimed at changing existing situations into preferred ones.” Notice the careful selection of the words “everyone,” “changing,” and “situations.” Notice the careful omission of the words “artist,” “styling,” and “artifacts.” Neither poster nor toaster would have appeared in the illustrated margins of Simon’s dictionary. He believed that design was a powerful tool for change, not just a tool for styling products and communications.

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In its most basic form, the gap is the distance between “what is” and “what could be.” Western thinking has been mostly concerned with “what is,” and as a result we’ve gotten very good at analysis and argument. Traditional business has placed “what is” in the driver’s seat, while strapping “what could be” into the kiddie seat where it can’t disturb the driver. Yet imagine a capitalist society running entirely on “what is” thinking: Nothing would be ventured and nothing would be gained. Companies would look like identical cars with tiny engines and oversized brakes.

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Richard Boland, a professor at the Weatherhead School of Management at Case Western University, says, “The problem with managers today is that they do the first damn thing that pops into their heads.” After spending months studying the design process of architect Frank Gehry, Boland concluded: “There’s a whole level of reflectiveness absent in traditional management that we can find in design.”

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Despite being steeped in serious intent, however, this sequence no more describes the creative process than a wedding describes sex. The actual creative act is much wilder. Those who insist on tidy phases inevitably produce mediocre results, because a too-orderly process rules out random inspiration. Rule-busting innovation requires a sense of play, a sense of delight, a refusal to be corralled into a strict method. Design is a “ludic” process, from the Latin LUDERE, meaning “to play.” You can’t tell a designer to have an inspired idea by 9:30. Instead, the process has to “play” out while the designer bounces around in the space between logic and magic.

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Yet designers don’t actually “solve” problems. They “work through” them. They use non-logical processes that are difficult to express in words but easier to express in action. They use models, mockups, sketches, and stories as their vocabulary. They operate in the space between knowing and doing, prototyping new solutions that arise from their four strengths of empathy, intuition, imagination, and idealism.

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In the making mode, designers never know what the outcome will be. Instead, they learn what they’re doing while they’re doing it. Systems thinker Donald Schön referred to this phenomenon as “reflection in action.” He described it as a “dynamic knowing process” based on a repertoire of skilled responses rather than a body of knowledge.

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When you ask CEOs what keeps them up at night, the answer is usually shareholder value. When you ask them what drives the stock price, the answer is often earnings growth. When you ask what drives earnings growth, the answer may be innovation, or it may be a blank stare. If you probe more deeply into what drives innovation, only a few will understand that innovation comes from company culture. And when you ask what drives that, even fewer will say that visionary leadership is the key to fostering a culture of innovation.

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We play a little card game with our clients called “What do you really want?” It’s a simple tool for prioritizing initiatives by dividing them into visionary, strategic, and tactical initiatives, then arranging them left to right on a timeline. If a client asks us to help with an analyst presentation, for example, we might say, “Okay, but what do you really want—a presentation or a lift in the stock price?”

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Sumantra Ghoshal, a global business leader and author, called corporate business “under-socialized and one-dimensional.” He said that traditional management has only led to resentful customers, dispirited employees, and a divided society. Why would this change? Because it has to. In an era when customers are not only omnipotent but omniscient, when over-production leads to an ecological box canyon, a selfish focus on the bottom line is bad design. Good design, in contrast, is a new management model that deliberately includes a moral dimension. It’s a model that not only serves shareholders but employees, customers, partners, and communities. For the first time since the Industrial Age, successful businesses will be designful businesses.

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Companies don’t fail because they choose the wrong course—they fail because they can’t imagine a better one.

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According to Robert Reich, former U.S. Secretary of Labor and author of SUPERCAPITALISM, the job of leadership is to help people overcome denial and cynicism so they can “close the gap between the ideal and reality.” This is the self-same “dragon gap,” the creative space between “what could be” and “what is.” The leader who can articulate a compelling vision gives people the courage to create. It turns out that painting a vivid picture of the future is a pure design problem. When you infuse a vision with design thinking, you use “making” skills to discover and illustrate a wider set of options. You begin designing the way forward instead of merely deciding the way forward.

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While the role of design manager is important, the role of design persuader may be even more important. What if the internal design department could jump-start design thinking by running educational programs on innovation, design thinking, and brand-building? The company that spreads the gospel fastest wins.

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So let’s say you’ve re-imagined your design department as an independent studio. You’ve acquired design management skills, built a core team of smart design thinkers, developed a professional process for engaging with internal clients, gained a reputation for thought leadership, and knocked down the walls to invite a higher level of creative collaboration. Respect is yours. Now you’re ready for the next big challenge.

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How do you get a bunch of independent-minded professionals to play nice together? By establishing sensible rules of engagement. At Neutron we’ve discovered that strong-willed people love to collaborate when there’s a sharp delineation of roles, an unobstructed view of the goal, and a strong commitment to quality. Conversely, they hate to collaborate if they believe their work will be mitigated by pettiness, confusion, and low expectations.

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A common problem with collaboration is that otherwise smart, well-meaning people disrupt the creative flow by disagreeing. This is not a habit we invented, but one we inherited. The Greeks, including Aristotle, Socrates, and Plato, believed that sound thinking came from discussion rather than dialogue—from finding flaws in the others’ arguments rather than advancing a concept together.

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If you truly want buy-in, give PowerPoint a rest. Substitute more engaging techniques such as stories, demonstrations, drawings, prototypes, and brainstorming exercises. Admittedly, these may require skills that many executives have yet to perfect, but they’re well worth mastering in the interest of a designful company.

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3. KEEP IT MOVING. It’s better to break slides into bite-sized ideas—usually one idea per slide—than to squeeze everything on one slide. Slides are free, so use them freely. It’s preferable to see a hundred slides that move at a fast clip than be forced to stare a single slide for more than a minute.

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If there’s a conceptual error here, it lies in thinking there are two distinct classes of employees: those who come up with ideas, and those who implement them. Naturally, it’s difficult to get employees excited about implementing initiatives they’ve had no hand in creating. You can empower like crazy and never generate enthusiasm among the disenfranchised class.

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CONCEPT COLLECTION BOX. Google also uses an “idea management system” that allows employees to email innovative ideas for products, processes, and even businesses to a companywide suggestion box. Once ideas are collected, employees can then make comments on them and rate their chances for success. This type of open brainstorm is an inexpensive tool that any company can use to build a culture of innovation. Anyone in the company can sift through the resulting ideas to find one or more ideas worth developing further. Companies who adopt this technique will soon discover that good ideas don’t care who they happen to.

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The designful company, to a large extent, is a democratic company. While some organizational experts have suggested the company of the future will look like an “upside-down pyramid,” a more apt description might be a “bottom-up pyramid.” Clearly, leaders must lead. But this doesn’t mean they need to come up with all the ideas. In fact, you could argue that they needn’t come up with ANY ideas, as long as good ideas are flowing up smoothly from the bottom. To make this happen, leaders will need to lighten the reins a bit. As Richard Teerlink said about his remarkable turnaround of Harley-Davidson, “You get power by releasing power.”

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GENIUS TEAMS. In addition to mining the wisdom of the crowd, companies can set up offline teams to crack any number of problems, whether routine or wicked. The advantage of this approach is that it moves a problem from the side of everyone’s desk to the center, where it can command the maximum attention. Genius teams can contain anywhere from five to twenty members—a small enough number so that the effort to collaborate doesn’t overwhelm the effort to solve the problem. To optimize the work of any team, small or large, you’ll need a facilitator to act as referee, coach, and trainer. In some cases it pays to bring in an experienced facilitator from the outside.

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Out of 100 innovative ideas, only 15 may be worth prototyping and testing. Out of those 15, only five may be worth serious investment. Out of those five, one or two may produce game-changing results. It’s a formula venture capitalists rely on, and one that established businesses would do well to adopt if they wish to compete at the speed of the market.

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To help decision makers fight a natural tendency to overvalue the proven and undervalue the new, I proposed a tool called the “good/different chart,” which groups new ideas into four patterns: 1) not good and not different; 2) good but not different; 3) good and different; 4) different but not good.