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New Times Call For New Thinking

by Doug Davidoff | Aug 3, 2010 4:18:52 AM

This book review originally appeared in Baltimore and Washington SmartCEO Magazine August 2010 issue.

Running a business used to be about analyzing options, determining a path, and solving the problems that presented themselves along that path.  This approach is no longer enough, as more and more, successfully leading a business means that you must continuously manage what have become known as “wicked problems.”

Wicked problems, as defined by brand strategist Marty Neumeier, are “problems so persistent that they seem insoluble.  Unlike the relatively tame problems found in math, chess or cost accounting, wicked problems tend to shift disconcertingly with every attempt to solve them.  Moreover, the solutions are never right or wrong, just better or worse.”

You know the list:

  • Unemployment

  • The gulf coast oil spill

  • Managing the client experience

  • Determining where to invest your limited resources

  • Growing your company

Albert Einstein once said, “Problems cannot be solved at the same level of awareness that created them.”  As growth-oriented businesses begin to get back to the focus of growing profits, rather than surviving the recession, they must find new ways to attack markets, they must find new methods of thinking, and most importantly they must find new ways to guide planning and execution.

Traditional strategic planning has run its course, and is no longer enough to guide companies through the wicked problems they are sure to encounter.  The fundamental problem with strategic planning as it is most often practiced is that it requires companies, and the people within them, to make a fundamental trade-off decision that kills.  Businesses must choose between:

  • Exploration – the search for new knowledge, and new opportunities.  We typically think of the “great entrepreneurs” as being strong here.  Intuitive thinking is the dominant position here, supported by the philosophy that “no great product was ever created by a comprehensive double blind market analysis.”

  • Exploitation – the maximization of payoff from existing knowledge.  Most large companies focus on exploitation where analytical thinking is the dominant approach.

We tend to view start-up businesses as excelling at exploration, and then we trade exploration for exploitation, in order to scale the business.  The problem with this approach is that it forces executives to chose the “right” type of thinking, when the reality is that neither approach is right – or wrong.

The time has come for a new form of thinking.  A form of thinking that embraces the fact that neither analysis or intuition is enough – the type of thinking applied by the greatest businesses and organizations in the world today.  From Apple and IDEO to Proctor and Gamble and The US Military.  This new form of thinking is called Design Thinking.

Roger Martin’s new book The Design of Business:  Why Design Thinking Is The Next Competitive Advantage addresses these issues as well as any book I’ve come across.  Martin defines design thinking as the space that sits squarely between the past-data driven world of analytical thinking and the knowing-without-reasoning world of intuitive thinking.  The dominant approach here is abductive logic.

Martin argues, and I agree, that most businesses choose exploitation over exploration because they favor reliability over validity.  I’ve lost count of the number of times businesses continue to do the same thing – again and again – only to expect a different result; which is, of course, Einstein’s definition of insanity.  They chose this path, not because they are necessarily insane (though I admit that sometimes I wonder), but because it is “safe” and known.

Businesses must embrace the philosophy of Charles Sanders Pierce, a turn-of-the-twentieth-century philosopher, whose great insight was that it is not possible to prove any new thought, concept or idea in advance.  The only way to validate them is by applying them.  To succeed we must move away from the standard definitions of proof and the false certainty of the past.  We must accept the mysteries and have the courage to ask “what could be?”

Pierce called these decisions “logical leaps of faith.”  Martin uses McDonalds as a clear example of a company that, in its heyday, applied design thinking.  Ray Kroc, and before him the McDonald brothers, had no “proof” that their ideas would work, but they did not lack logic.

With product life cycles shrinking to unimaginable lengths and customer demands increasing every day, businesses have gotten tougher than ever.  When you combine that with unprecedented levels of competition and economic disruption, it should not take an intelligent executive long to realize that there are no past lessons to learn from.

Businesses and their leaders must abandon traditional, linear thinking of yesterday, whether it’s based in analysis or intuition.  Instead, they must replace with the evolving approach of design thinking.  Continuously explore the mysteries of today, hypothesize, trial, error, refine, and explore yet again.  The businesses that do that will have the advantage tomorrow, and Martin’s new book is a great place to start.