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Why Design Thinking Might or Might Not Be the Next Competitive Advantage for Corporations

The Design of Business: Why Design Thinking is the Next Competitive Advantage I just finished reading Roger Martin’s The Design of Business: Why Design Thinking is the Next Competitive Advantage as part of my Purpose, Participation and Profits reading list.

Roger Martin’s main premise is that all knowledge goes through four stages: magic, heuristic, algorithm and code.

In the magic stage, we don’t really understand the problem well enough to know where to look for the answers.

In the heuristic stage, we have a rule of thumb that guides us towards the answer, but doesn’t really guarantee the right answer.

In the algorithm stage, we have a predictable formula that reliably produces the right answer.

In the code stage, the formula becomes so predictable that it can be fully automated as a software application.

As entrepreneurs advance knowledge across the stages — from magic to heuristic to algorithm to code — they create substantial value, as productivity increases and costs decrease. However, after the first wave, most corporations focus their energies on the “exploitation” of value in the present stage, instead of the “exploration” of possibilities to advance knowledge from heuristic to algorithm to code, or discover entirely new heuristics. As a result, established corporations are often surprised by upstarts who find new heuristics to solve the same problem.

The problem is that corporations reward their managers for analytical thinking that is based on deductive logic (what is) and inductive logic (what should be), whereas innovation requires intuitive thinking that is based on abductive logic (what might be). Analytic thinking results in reliability, and intuitive thinking results in validity, but corporations need a combination of enough validity and enough reliability.

Roger Martin says that the answer lies in a design thinking approach that enables the corporation to explore new heuristics, advance them into algorithms, then code, and exploit them to create value.

The trick is that deductive logic and inductive logic are concerned with the past, where as abductive thinking is concerned with the future. Therefore,  designers and managers need to work together to “turn the future into the past”, by creating and testing prototypes that prove the validity of a new heuristic without investing substantial time or resources.

Here’s a video of Roger Martin in conversation with Bruce Nussbaum at Parsons on why design thinking might be the next competitive advantage for corporations –

By the way, while managers love the idea of converting intuition into an algorithm, designer insist that it’s a heuristic, if not magic. Here’s a video of Tim Brown in conversation with Bruce Nussbaum at Parsons on why we might need to move beyond design thinking

Interestingly, even though I am trained to be a manager, I’m much better at exploration that exploitation, at intuitive thinking than analytical thinking, at abductive logic than deductive or inductive logic, at asking “what might be”, rather than “what is” or “what should be”.

For many years, this quirkiness has been a mixed blessing at best (a square peg in a round hole etc.). However, as I have become more aware of my squareness, and more intentional in finding a hole that fits my shape, my proclivity to ask “what might be” has become more valuable.

Design thinking might or might not be the next competitive advantage for corporations, but it seems to me that I might be good at “something like design thinking”.

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