For the majority of large businesses today, strategy is executed on the basis of several presuppositions:
- Refining process and consistent optimization is the clearest route towards competitive advantage. Unfortunately this just isn't true. As Roger Martin explains in The Design of Business, scientific management is moving from a skill that creates competitive advantage to an ante that gives companies the right to play the game. The bottom line is that it’s no longer a viable tactic for a long term competitive edge. There are many reasons for this that many have already considered in depth. Dan Pink did a great job unpacking this in his book A Whole New Mind.
- The best toolkits for process refinement and optimization are rooted in deductive and inductive logic, regressive analysis, big data, and the pursuit of reliability (think Six Sigma and other management principles). While most Ivy League and upper crust business schools are still spitting out MBAs with this outdated toolset, some have realized that the future of business, the global economy, and Western society are dependent on the exploration of the unknown, not the exploitation of the familiar (or 0 - 1, not 1 - N as Peter Thiel would put it). Stanford has founded d.School, MIT has a long operating design lab, Rotman School of Management at the University of Toronto has built an entirely new curriculum called DesignWorks, Carnagie Mellon has a design oriented MBA, Harvard Business School has entered the conversation, and dozens of others around the world are beginning to merge traditionally analytical coursework with creativity, design, and innovation classes with the knowledge that more and more analytical thinking is being replaced by technology and outsourcing.
- Strategists and analysts must prove the validity of ideas before they are implemented and remove bias from decision making. Esther Meek writes beautifully in her book A Little Manual for Knowing that to go about the process of knowing (that is, knowing what to do next in business) this way is detrimental to what it means to be human - imagination and bias as shaped by personal experience are intrinsic to the beauty of who we are as humans. About separating analysis from imagination she writes “It has a lot of appeal, because it [analysis aside from imagination] is quantifiable, measurable, assessable, and commodifiable. It offers control and power. But we’ll see that the knowledge-as-information vision is actually defective and damaging. It distorts reality and humanness, and it get in the way of good knowing.” If business strategy is “knowing” how to do business, then in Meek’s eyes pitting what is against what could be is destructive. To sum this up, it will be necessary for tomorrow’s enterprises to embrace the unknown and bring intuition back to decision making if they are to make a dent of any kind in our universe.
Strategy and Innovation Rooted in Design Thinking
When building strategy practices upon the presuppositions above, the future that will be predicted will closely resemble the past, differing in degree but not in kind. Innovation and strategy based in Design Thinking on the other hand constantly seeks a fruitful balance between reliability and validity, between science and art, between intuition and analytics, and between exploration and exploitation. Abductive logic posits that the origins of new ideas do not emerge from the conventional forms of declarative logic, but by logical leaps of the mind. The first true step of reasoning is not observation but wondering and imagination, looking for new data points, challenging accepted explanations, and inferring possible new worlds.
Roger Martin writes in The Design of Business:
"A business that is overweighted toward reliability will erect organizational structures, processes, and norms that drive out the pursuit of of valid answers to new questions. It fails to balance its pursuit of reliability with the equally important pursuit of validity, leaving it ill-positioned to solve mysteries and move knowledge along the funnel. Such organizations inevitably come to see the maintenance of the status quo as an end in itself, short circuiting their ability to design and redesign themselves continuously. This wouldn’t be such a big problem if the world never changed."
He goes on a bit further...
"...embracing a form of logic that doesn’t generate proof and operates in the realm of what might be is a risk that many leaders won’t take. Innovation is not consistent or reliable, and does not faithfully adhere to predetermined budgets. But the far greater risk is to maintain an environment hostile to adductive reasoning, the proverbial lifeblood of design thinking and the design of business. Without the logic of what might be, a corporation can only refine it’s current algorithm, leaving it at the mercy of competitors that look upstream to find a more powerful route out of the mystery or a clever new way to drive the prevailing heuristic to algorithm."
It’s understandable this approach to strategy scares the hell out of business people. But embracing strategy and innovation rooted in Design Thinking is in the interest of every business who wants to prosper in a future economy built on qualifiables not quantifiables.