Why do most companies have no more than one innovative, ground breaking product in its history? How come only a handful of companies (Amazon.com, Apple, IBM and Nokia, to name a few) have been able to invent new business models out of it core business and ultimately transform themselves and their industries? Roger Martin gave a talk and held a panel discussion this week in London about this very topic, which is also the thesis of his new book ‘The Design of Business‘.
According to Martin, the development of innovation follows the growth path of knowledge. All knowledge begins from the discovery of a mystery. Observation and rationalization of phenomena around the mystery creates heuristics. If those heuristics are further developed to make those phenomena repeatable an algorithm, the ultimate solution, results. In the context of a business, the mystery is an unmet need in the market, the heuristic is the business idea and the algorithm is the solution that the business creates. Surprisingly, the ability to follow this path is does not explain why companies do not innovate more often. The answer to our question lies in what companies leave behind along the knowledge development process.
Pushing a body of knowledge from a mystery to an algorithm requires a iterative process of elimination. The process requires an analytical mindset and quantitative data from the past. To innovate, Martin argues, require a process of expansive thinking. To discover ground-breaking ideas requires us to step away from elimination process, observe ambiguity, look at qualitative data and perhaps most controversially, trust our intuition. The future simply cannot be told by the past. This practice is what Martin called ‘Design Thinking‘. The absence of Design Thinking is the reason why innovation is rarely done.
The rest of the panel discussion with editor-in-chief of Monocle (one of my favorite magazines) Tyler Brûlé and Oxford University professor Lucy Kimbell covered how design thinking has successfully help Monocle thrive in the dwindling printed magazine industry and how MBA programmes in Oxford and other universities are blending creative processes traditionally used by designers to creative ground-breaking products and services.
While Martin’s argument brilliantly shines a light on one of the hottest business topic and make a compelling case for new business education programs, I left the talk with a sense of emptiness. Design thinking in business has been discuss, taught and turned into consulting industry since the early part of this millennium. The crux in business innovation today is not the fact that businesses do not understand the need of innovation methods or have innovative ideas. Many design schools and consulting firms are eager to fill those gaps. The fact is that businesses lack the flexibility to shift their company culture and logistics to embrace those methods and turn those new ideas into feasible business models. The fear to let go of their proven (although never future-proof) revenue streams, established (although bureaucracy ridden) org charts and familiar customers (of recent quarters) prevent innovation from making into the market place. That is the challenge of this new decade.
I have yet to read Martin’s book but may be Clayton Christensen’s ‘The Innovator’s Dilemma‘ offers a more practical approach this innovation problem — companies optimize themselves to maximize efficiency in its core business. Any radically new idea that deviates the company from the optimization are routinely repelled and displaced. A truly innovative and ground-breaking idea requires a separate, autonomous entity to take it to the market. The sprout from a new seed, simply needs new soil to grow.