Intuition combined with logic push organizations forward
The Design of business: In January, the Strategic Capability Network hosted an event with Roger Martin, dean of the University of Toronto’s Rotman School of Management. He spoke about why design thinking is the next competitive advantage. For more information about the Strategic Capability Network, visit www.scnetwork.ca.
By Shannon Klie
The pharmaceutical industry is facing an especially daunting challenge in innovation. It is an industry rooted in scientific method and analytical thought but, without innovation, the industry will stagnate, according to Roger Martin, dean of the University of Toronto’s Rotman School of Management.
“Every great new scientific insight came from a logical leap that created a new hypothesis,” Martin told a group of HR professionals at a Strategic Capability Network event last month.
The industry has seen growth through marketing generic drugs after patents run out on the brand-name versions and by improving efficiency through mergers, but it is reaching the limits of this exploitation (getting the most out of what you know how to do today), he said.
To move forward, pharmaceutical executives will need to go back to exploration (trying something new to satisfy a new need).
“None of these executives will consider the risks of exploration until they see the limits of exploitation,” said Martin.
This is a problem in many organizations, regardless of sector, he said. Leaders want to innovate and are putting resources into research and development, but a flaw in their thinking means the results are falling short.
“Increasingly, analytical thinking is the dominant way of thinking in organizations,” he said. “They won’t do anything unless it can be proven.”
But no truly new idea can be proven ahead of time, said Martin.
Instead, it is abductive logic, or a hunch, that generates new ideas. Abductive reasoning involves a person who starts with a set of seemingly unrelated facts, armed with the intuition they are somehow connected.
“That kind of thinking is usually stomped out in organizations,” said Martin.
Analytical thinking is good for honing existing knowledge but not for generating new ideas. That is where abductive reasoning comes into play, taking a logical leap to move forward, said Martin.
No organization will ever rely solely on hunches, so it’s best to combine both analytical thinking and abductive thinking, which results in design thinking, he said.
Design thinking is the best combination of analytical thinking (using past data to deduce something to be true) and intuitive thinking (knowing without proof to invent something that does not yet exist).
Many senior executives believe they will be bad executives if they don’t insist on proof before advancing an idea, so design thinking is often killed by a leader saying, “Prove it,” said Martin.
“Unless an organization embraces the notion that some of the most important things in any decision are things that you cannot quantify and for which you will have to use judgment to come to a conclusion, they have no chance for being an innovative organization,” he said.
Changing the dominant way of thinking in an organization can take years because it involves changing the processes and structures in the organization as well as how employees interact with each other, said Martin.
But HR can play a pivotal role in that change, he said. When hiring, HR can look for people who have imagination and are willing to explore the future, instead of just those who are analytical.
HR can also ensure compensation and promotion systems don’t reward employees for doing the same thing, the same way, year after year while failing to acknowledge those who are creative.
Intuitive thinking, a creative capability, exists in every child but often gets drummed out of them in school, said Martin. However, like any other capability, it can be developed.
The way to stay ahead of emerging economies, such as India and China, isn’t by producing more scientists but by developing creative capability, he said.
Rotman has added design thinking to its MBA curriculum and has a summer program, DesignWorks, where students use design thinking to solve problems presented by organizations such as Nestle and SAP.
“Instead of analytical graduates, I want them to think of themselves as designers of better solutions,” said Martin.
An example of an organization following design thinking is furniture manufacturer Herman Miller. The company developed a design for an ergonomic desk chair. But when it showed the design to focus groups, the feedback was mixed, with many people uncertain they would buy such a funny looking chair, said Martin.
The company stuck with the idea, however, and ended up creating one of the bestselling office chairs, he said.
“They launched it despite crummy market research results,” said Martin. “They went against ‘proof’ and stuck with what they believed to be a good idea.”
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Design thinking requires toughness (Strategic capability)
By Karen Gorsline
Roger Martin’s thoughts on design thinking tap into two sides of human potential. In design thinking, both reason and imagination are taken into consideration. Businesses have tapped into imagination for innovation and then codified the outcome into a cost-effective product or service. This is a known cycle of investment and return on investment.
Entrepreneurs are notorious for firmly believing in their offering against all odds. But often businesses become complacent and risk-averse as they mature. They rely on variations or refinements of known products, processes, services or markets, locking themselves into an environment that has provided success in the past.
Martin’s design thinking implies emotional subtlety is required to balance and integrate thinking. It requires equal acceptance of what is valid (known to be true without proof) with what is reliable or proven. While this concept seems obvious at an intellectual level, incorporating it into business decisions requires decision-makers to accept risk.
Many successful businesses occasionally venture into slight variations of an existing business model and “manage the risk.” These forays are so limited they actually amount to risk-averse behaviour. They do not really change the business environment. This behaviour does not demonstrate the toughness required to accept risk and inevitable bumps in the road as necessary parts of managing into the future.
Design thinking may well represent the next competitive advantage. Apple introduced its first hand-held tablet, the Newton, many years ago to a marketplace with little interest. The journey to the iPad had significant risk based on Apple’s previous experience and was not quick, straightforward or easy. How many companies have developed the strategic capability to incorporate imagination and reason, the subtlety to balance these and the toughness to withstand the bumpy journey? How many companies can move from innovation investment to a return on investment in a disciplined way?
As businesses explore how to incorporate design thinking into their organizations, I look forward to more examples of re-invention, more concrete insights on how to make it happen despite the risks and the development of more tools to provide assistance.
Karen Gorsline is SCNetwork’s lead commentator on strategic capability and leads HR Initiatives, focused on facilitation and tailored HR initiatives. She has taught HR planning, held senior roles in strategy and policy, managed a large decentralized HR function and directed a small business. She can be reached at [email protected].
By Tom Tavares
Why are most companies hindered by a low level of innovation? Analytical thinking, according to Roger Martin. Specifically, most business people rely on deductive reasoning rather than design thinking. Analytical thinking is fine for polishing existing practices but seldom leads to breakthroughs in knowledge.
As the pace of technological change continues to accelerate, design thinking will play an increasingly vital role in the survival of companies. Organizations capable of moving fluidly through the knowledge funnel — from mystery to heuristic (design thinking) to algorithm to computerization — will have a competitive edge on less innovative enterprises.
Design thinking has important implications for HR, particularly in talent management. Firms should be assessing this competency in selecting staff, rather than recruiting more run-of-the-mill specialists. Presumably companies with online assessments will have an even bigger competitive edge as change accelerates. Or will they?
Though most firms suffer from a low level of innovation, they are also hampered by weak internal communication, poor teamwork and sporadic performance feedback. These behavioural patterns are strikingly similar regardless of the industry, company or people involved because of focus. The human mind operates like the zoom lens of a camera and companies have the same basic structure — jobs confine attention to a narrow field of activity. When attention is focused, it’s easier for people to break problems down than to connect the dots in new ways and innovate.
Focus accounts for several other common problems. When people work in narrow job compartments, they are isolated from one another, which weakens internal communication, teamwork and performance feedback. Traditionally, these patterns of behaviour have been seen as separate issues requiring different solutions: creativity training, employee surveys, team building and annual performance reviews. Unfortunately, these tools have had no lasting impact on day-to-day behaviour.
However, in unusual cases, a new leader arrives or a team jells and people become more open, innovative and co-operative, which reduces isolation between leaders and staff. Instead of the 10 per cent of minds in management trying to solve all the problems, the intelligence of the other 90 per cent of employees is engaged in solving problems.
The choice of heuristic for organizational performance has important implications. If it is design thinking, HR needs to assess, select and promote individuals with this capability, which still leaves issues with internal communication, teamwork and coaching. If the heuristic is focus, leaders need to manage the quality of interaction within their companies more systematically. As change accelerates, the efficiency of managing one core factor rather than five surface problems translates into a growing competitive advantage.
Tom Tavares is SCNetwork’s lead commentator on organizational effectiveness and a senior organizational psychologist. In addition to managing in large corporations, consulting in varied industries and coaching executives, he has written extensively about the relationship between business performance, behaviour and change. He can be reached at [email protected].
By Trish Maguire
There’s plenty of talk, but no action: Organizations continue to call and strive for innovation but the results are still unrealized. How can that be? In Roger Martin’s opinion, it is not because of a lack of sincerity or funding but purely because of the way corporations think.
Take a typical monthly management meeting where every function has to prepare and deliver a PowerPoint presentation with complex analytics to prove and quantify their team’s value proposition. How many managers leave those meetings demoralized and frustrated new ideas and approaches were rejected because “the numbers couldn’t justify the proposal?” Is it possible this traditional critical analysis model reinforces the fear of failure, of making a mistake or taking a risk?
Is it exploration or exploitation we want to see in workplaces? Think about the barriers to innovation: How do people talk to each other and share ideas? What structures and strategies are stifling the organization? How are HR processes and practices discouraging people from exploring new approaches and ideas? Can leaders afford to continue to promote a critical thinking model that only blocks and filters creative thinking?
The prescribed remedy from Martin requires a radical shift from the corporate critical thinking model to a design thinking model. For the latter to be most effective, it has to be recognized as a process, an action or a verb as opposed to an algorithm. It is a protocol for solving problems creatively and discovering new opportunities.
The challenge is identifying the right problem to solve and then framing the problem in a way that invites creative solutions. No matter how obvious a solution may seem, design thinking advocates the results are far richer by looking at many solutions, seeing them as creative opportunities and judging each equally before making a decision.
How many times do talented teams solve a problem the same way every time, especially if the culture favours short-term solutions? Design thinking proves teamwork is essential because several people working on a problem for one day can achieve more than one person in several days.
Today’s opportunity and tomorrow’s reward is to build organizations that are conducive to growth and experimentation. Organizations can attract innovative talent by building organizations that achieve extraordinary results. If used effectively, design thinking can be the primary approach and lay the foundation for driving a brand or business forward — a much-needed advantage for any organization.
Trish Maguire is a commentator for SCNetwork on leadership in action and founding principal of Synergyx Solutions, focused on developing customized talent management strategies for small entrepreneurial businesses. She can be reached at [email protected].
Would you like to attend one of the upcoming Breakfast Series in Toronto? Here’s a look at upcoming sessions: March: Getting recognition right, with Roy Saunderson, president of Recognition Management Institute, and Elvie Glee of Johnson & Johnson Medical Products. ( March 31.) April: Management is broken - HR's role in fixing it, with Tom Tavares, an organizational consultant and author of The Mind Field: What's Missing in Running Our Organizations, published by Carswell. (April 14.)
Visit www.scnetwork.ca for more information.
