Strategy. Innovation. Brand.


Design As A Competitive Weapon

Design thinking

Design thinking

When we think of design, we often think of things. We can design a phone, a car, a coffee maker, or a house. We can make them simple or complex or modern or traditional but, ultimately, it’s a thing, a physical object.

Many business and organizational leaders are now arguing that we’re thinking too narrowly when we define design as for-things-only. Roger Martin, the former Dean of the Rotman School of Management, sums it up nicely, “…everything that surrounds us is subject to innovation – not just physical objects, but political systems, economic policy, the ways in which medical research is conducted, and complete user experiences.”

Two things, in particular, attract me to design thinking:

It starts with a solution – in design thinking, we first imagine what could be. Then we work backwards. What might a solution look like? What would it need to include? Who would need to be involved? Many business leaders start with the problem and focus on what went wrong. Design thinkers focus on the solution and what could go right. It’s a refreshing change.

It includes both the rational and irrational – I studied a lot of economics and I was always a bit uncomfortable with the starting assumption: we’re dealing with economically rational individuals. But are we really economically rational? The whole school of behavioral economics (which evolved after I graduated) says no. As Paola Antonelli points out, design thinking involves “the complete human condition, with all of its rational and irrational aspects….”

In past articles (here, here, and here), I’ve followed Paul Nutt’s lead and written about decision-making that leads to debacles. I’ve recently re-analyzed Nutt’s case studies of several dozen debacles and – as far as I can tell – none of them used design thinking. The debacles resulted from classic decision-making processes driven by successful business executives. Would those executives have done better with design thinking? It’s hard to say but they could hardly have done worse.

Is design thinking superior to classic business decision-making? The absence of design-driven debacles in Nutt’s sample is suggestive but not definitive. Are there positive examples of design-driven business success? Well, yes. In fact, close readers of this website may remember Roger Martin’s name. He was the “principal external strategy advisor” to A.G. Lafley, the highly lauded CEO of Procter & Gamble. According to a report from A.T. Kearney, “During Lafley’s tenure, sales doubled, profits quadrupled, and the company’s market value increased by more than $100 billion”.

Does one success – and the absence of debacles – prove that design thinking is superior to classic business thinking? No … but it sure is intriguing. So, I’m trying to unlearn years of system thinking and teach myself the basics of design thinking. As I do, I’ll write about design thinking frequently. I hope you’ll join me.

(By the way, the quotes from Roger Martin and Paola Antonelli are drawn from Rotman on Design: The Best Design Thinking From Rotman Magazine, which I highly recommend).


Strategy: Five Components

Oil of Old Lady is now a market leader.

We turned Oil of Old Lady into a market leader.

A.G Lafley is justifiably famous for taking over Procter & Gamble (P&G) and converting an insular company into a customer-centric, outward-looking culture known for a string of successful innovations. When Lafley became CEO in 2000, innovation was driven by thousands of in-house R&D designers, researchers, and engineers. They created neat stuff and “pushed” it to customers. Partially as a result, P&G’s success rate with new products and brands hovered around 15%. The R&D teams focused internally; only about 10% of new products came from outside the company.

Lafley essentially turned the company inside-out by putting the customer at the head of the innovation process. P&G called it Connect + Develop and emphasized collaboration with other departments, customers, and even outside research organizations. Lafley changed the culture from “not invented here” to “proudly found elsewhere”. P&G signed more than 1,000 collaborative agreements with outside organizations. It was a fundamental cultural change and the results were spectacular. According to a report from A.T. Kearney, “During Lafley’s tenure, sales doubled, profits quadrupled, and the company’s market value increased by more than $100 billion”.

Now Lafley has written a book, Playing to Win: How Strategy Really Works, with Roger Martin, the Dean of the Rotman School of Management at the Univeristy of Toronto. Martin was Lafley’s “principal external strategy advisor”. In addition to Martin, Lafley built a brain trust of outside thinkers including designers and business professors. The eclectic nature of the group created many different “idea collisions” that generated process innovations as well as product innovations.

I’m sure that I’ll write a lot about the book in the future but it’s not quite out yet. It debuts in February. Today, I’m depending on the report from A.T. Kearney and a lengthy review from The Economist. One of the key insights is that P&G followed a strategy composed of five elements, each designed to help managers make the right decisions. These are:

  • What does winning look like? What are we aiming for and what information do we look for along the way to help us understand if we’re making progress? Do we seek global domination, regional, or local?
  • Which markets should we play in? Of course, this also implies another question: which markets should we ignore (or exit)? How do we determine which is which?
  • How do we win? What’s our distinctive strategy in each market and category?
  • What are our strengths and weaknesses and how do we deploy them in each market, against each competitor?
  • What needs to be managed for the strategy to succeed? Of course, the inverse of this question is what doesn’t need to be managed?   The Economist reports that one of Lafley’s “most important innovations was a slimmed-down strategy-review process … [that] replaced needlessly sprawling bureaucratic meetings….”

It’s a good story and an intriguing look at strategy. Unfortunately, it doesn’t have an entirely happy ending. The Economist reports that P&G has “stumbled badly” since Lafley left in 2009. Similarly, Martin’s consulting firm “got into financial difficulty and has been sold at a discount.” Still, the questions are relevant to any company’s strategy and the story is intriguing. I’ll report more soon.

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