The book begins by clearly explaining the knowledge funnel concept. The basis of the knowledge funnel is that new business knowledge begins as a mystery – scattered and unorganized. The mystery, when advanced through the knowledge funnel, is refined into a workable and more manageable order called a heuristic. When focused even further, the heuristic becomes an algorithm, which breeds ultimate productivity; a strict, “cookie-cutter” process that produces consistent results. Computer code, for example, is an algorithm which, without thought, can perform at break neck speeds and produce the same results over and over again.

Martin then explains that most companies, whether operating as a heuristic or an algorithm, focus on exploiting their current level of knowledge and focus on gaining mastery of that particular knowledge. Innovative companies, on the other hand, exploit their current knowledge in the same way, however they also dive back into the mystery portion of the knowledge funnel and explore new opportunities to advance and refine new knowledge through the knowledge funnel.

Both exploitation and exploration are equally as important – the companies who successfully balance the two, are design thinking companies. Design thinking companies who pursue innovation in this way will discover new concepts for products and services that could make their competitor’s offerings obsolete – which is why Martin argues that “design thinking is the next competitive advantage”.

Creating a design thinking company, Martin points out, is very much a game of balance. The company which balances exploration and exploitation must also balance Invention of business and administration of business, originality and mastery, and validity and reliability. These are all balanced by the company’s design thinking employees, who themselves use a balance of analytical and intuitive thinking.

At the heart of design thinking, Martin notes, is the use of abductive logic which is best described as “logical leaps of the mind”. Abductive logic is concerned with the future, but it also incorporates deductive and inductive logic which provides reliable proof based on the past. As pointed out by philosopher Charles Sanders Pierce, its not possible to prove any idea in advance: all new ideas can only be validated by the unfolding of future events. However, to advance knowledge and create truly innovative solutions, we must make an “inference to the best explanation” and imagine a heuristic for understanding the mystery. Abuctive logic then, sits in between past-driven analytical thinking and knowing-without-reasoning intuitive thinking.

To become a design thinker, Martin describes that you must develop the stance, tools, and experiences that facilitate design thinking. Stance being your view of the world and your role in it. Tools being the models you use to understand your world and organize your thinking and experiences which develop your skills and sensitivities over time. In the final chapter of the book, Roger explains, in detail, how to develop yourself as a design thinker. Throughout the book he gives real life examples of design thinking in the business world and further explains the advantages of design thinking and how to balance reliability and validity.

The Design of Business is more than just a must read for any design or business professional. Business professionals will gain insight into how to build innovative organizations and design professionals will benefit by learning how to apply their pre-established design thinking to the business world and make a real lasting difference. Roger Martin is at the forefront of the business design world and to have his complete and comprehensible guide about the subject is an absolute pleasure. Design thinking is not just a competitive advantage; its a lifestyle, and a tool that will act as a catalyst to help you design a better future.

I recently went to a seminar where Heather Fraser, from the Rotman School of Business, gave a talk about why business people should see themselves as designers and she listed several design principles integral to design thinking along with some great examples of how each principle was being used in the business world.

Empathy and Deep Human Understanding

The “Keep the Change” product from Bank of America. Bank of America used empathy and deep human understanding to find out that people need an extra push to help them save their money. The idea was that when somebody buys something, using their debit card, the bank would round up the cost to the nearest dollar and transfer the difference from your checking account into your savings. The product helped open 700 000 new accounts because of its ability to deeply understand its consumer.

Multi-disciplinary and Cross Industry Collaboration

When Nike realized the connection between running and mp3 players, they teamed up with Apple to create a product which would benefit both companies. They developed a sensor that you could put into your new pair of Nike+ shoes to track your running distance and have the data sent back to your iPod. Based on the data it receives, your iPod then lists your time, distance, pace, calories burned and whether or not you’ve reached your workout goal. It will even play your most motivating song for you while you’re running over that last hill. In the end, due to the successful multi-disciplinary and cross industry collaboration, the product boosted Nike’s shoe sales and Apple’s mp3 player sales.

Ability to Imagine New Possibilities

Aravind, an Indian eye care hospital, created an entirely new way to treat people with blindness. Dr. G. Venkataswamy, the founder of Aravind, had a vision of eliminating blindness among the poor. In India, many people with blindness are in remote locations and are unable to pay for costly medical procedures so Aravind travels to these rural areas to look for poor patients suffering from cataract, and transfers them, free of charge, to the nearest Aravind hospital where they receive state-of-the-art cataract surgery. Aravind performs 1.7 million surgeries a year, seventy percent of which are performed for free. The fees obtained by the paying minority covers the costs of all the free surgeries performed. The company has expanded by building new hospitals, creating training programs, and manufacturing their own medical equipment and eye glasses. Today, Aravind is by far the number one eye care company in the world and is a paramount example of the ability to imagine, and execute, entirely new possibilities.

Embracing Constraints as a Source of Creativity

IKEA answers the question of how to get a well designed product to the consumer at the lowest possible cost. The products you get at IKEA are of good quality, good design, and are very cheap. The business is also sustainable in that they save themselves and the consumers money on the shipping by keeping the products in their original flat packages and having the consumer assemble the product themselves. By setting constraints to the services they offer, they succeed in providing their consumers with what is most important to them.

Making the Abstract Visually Concrete

Its common in the business world to hear ideas, read proposals and then hear the opinions of everyone at a meeting or over a conference call. Ideas are often kicked around and discussed while they are still abstract, and pictured slightly different in the minds of everyone involved. A common creative principle is to make the abstract visually concrete. Frank Gehry, the infamous architect, is famous for doing this. He’ll publish a scribble of a building that he envisions, and from there, people begin to discuss the scribble. The discussions are focused because each person discussing the scribble is talking about the same scribble, not a different scribble that only exists in their mind. There is not an idea in the world that cannot benefit from immediately becoming visually concrete – which builds onto the next creative principle.

Iterative Prototyping and Co-creation with Users

Iterative prototyping means prototyping rapidly and repetitively, with each prototype getting closer and closer to a functional prototype. Designers commonly create prototypes alongside its consumers to help gain valuable insights which guide the design of the prototypes. Industrial design company IDEO is famous for designing the products and services with the users. They’ve created a deck of cards tagged the “IDEO method cards” which suggest to you fifty-two possible ways to better understand your consumer and have them influence your design. From ethnographic research, to having the user create a camera journal or draw their user experience, these method cards can help guide your design, through the aid of your users, in a much more informed direction.

Intuition and Common Sense

Designers are known to make decisions based on instinct and gut feelings. Business could be a lot more efficient if it would trust its intuition sometimes and trust the people that they work with when making decisions as opposed to gathering tons of data and doing a bunch of research which doesn’t really move anything ahead. Its important to keep a sense of urgency and to always be action oriented. If something can be decided on and moved ahead promptly its almost always worth it to make the intuitive and common sensical decision. The most obvious case of intuition and common sense in business is the decision to start putting wheels on luggage. How we ever went without wheels on our luggage for so long is mind boggling.

Systems Engineering Thinking

One of the best examples of systems engineering thinking is Apple. On the surface, Apple is a clean, simple, and experience friendly. What you don’t see is the complex, exhaustive and fine-tuned innards of the company that make it so successful. Much like an architect who plans every detail of each air duct and electrical wire when designing a building, Apple has thought through each detail of their business systems to help support the vision and design of their products and services.

Drawing Inspiration from a Broad Repertoire

As any designer will tell you, its important to diversify everything in your life so that you have a broad range of experiences to learn from. Diversify the types of projects you work on, the people you hang out with, the books and journals you read, the places you travel, the people you meet, the things you experience and the movies you watch. When you diversify everything you expand your thinking, you make new reference points and are able to make new connections between one subject and another. When you expand your repertoire of experiences, you will be able to draw inspiration from them when you are flexing your creative muscles. A great example of this in business is Virgin. Virgin goes into markets that have become stale or complacent and they use their ability to delight people and win them over as customers to succeed in each avenue. Each project and experience the company has informs the next and they are able to pull inspiration from places that no other company can and, as a result, they generate countless unique ideas.

Vision and Perseverance

Good designers follow through with their visions. When they become inspired to design something, they visualize the design, start working, and they see it through until it is complete. A great business example of perseverance is the story of the Four Seasons Hotel. Isadore Sharp, from Toronto, was working on a construction site building a motel when he developed a vision of building and running a motel of his own. After six years of endless rejections from lenders and developers, Sharp finally gathered enough money from his family and friends to build his first motel. He built his first motel in 1961. It was a motel with a warm atmosphere, friendly service and a personal touch that became very popular with the local businesspeople. Sharp, determined to please his guests, built larger hotels offering more business amenities such as convention centers, fitness centers and teleconferencing facilities however he noticed that these larger buildings caused the hotel to lose its personal touch that was so favoured about his smaller motels. Several hotels later, Sharp developed a hotel which offered all the business amenities while maintaining the friendly and intimate atmosphere which, at the time, was unheard of. Four Seasons is now one of the most prestigious and well known hotel chains in the world all because Sharp persevered with his vision.

The creative practices outlined here are practices found in design methods that can be used to develop new and innovative solutions for business. A shift in thinking like this is important, now more than ever, because the world is in a state of change. Technology, global economies and the urgent need to innovate to help solve today’s challenges are just some of the forces that are causing this shift in thinking in the business world. We need to begin to use these creative principles in everyday business so that we can make the changes necessary to meet today’s challenges and empower ourselves with the tools necessary to continue designing a better future.

1. Agricultural Age (farmers)

2. Industrial Age (factory workers)

3. Information Age (knowledge workers)

4. Conceptual Age (creators and empathizers)

The fourth stage is where Pink focuses and how businesses can be successful.
Pink references three prevailing trends pointing towards the future of business and the economy: Abundance (consumers have too many choices, nothing is scarce), Asia (everything that can be outsourced, is) and Automation (computerization, robots, technology, processes). This brings up three crucial questions for the success of any business:

1. Can a computer do it faster?

2. Is what I’m offering in demand in an age of abundance?

3. Can someone overseas do it cheaper?

When these questions are present, creativity becomes the competitive difference that can differentiate commodities. Throughout the book Pink outlines six essential senses which will help you prevail in the conceptual age:

1. Design – Moving beyond function to engage the senses.

2. Story – Narrative added to products and services – not just argument.

3. Symphony – Adding invention and big picture thinking (not just detail focus).

4. Empathy – Going beyond logic and engaging emotion and intuition.

5. Play – Bringing humor and light-heartedness to business and products.

6. Meaning – Immaterial feelings and values of products.

After each chapter the book points out great resources that can help you develop these senses and further your learning. If you are interested in integrating design and business this book is a must read!

Should an interior designer working on a new restaurant care about the fuel efficiency of the furnace heating the place?

Should an industrial designer of laptop computers be concerned about what happens to these products when they’re discarded by their users?

A few decades ago, the answer to these questions would probably be no. Graphic designers of the day would have been happy to see newsprint get whiter and less ink absorbent, even if that would have required more chemical processing. As for interior designers’ attitudes about heating, ventilating and air conditioning systems, what they wanted was the specified ambience throughout; how this was achieved was someone else’s problem. And the environmental destiny of computers, cellphones and innumerable other electronic gadgets was the last thing on the minds of their designers. They were too busy struggling to keep up with exploding technology that was—and still is—making these products obsolete within ever-shorter lifetimes.

But today, the answer to these questions is probably yes. If you’re a graphic designer working at a publication that doesn’t use recycled paper today, your employer is in even more trouble than most of its competitors. If you’re an interior designer and your unconventional plan will require supplementary heating and cooling units to make it workable, you will probably end up with an unhappy client. And if your industrial designs for electronic devices take no account of their ultimate destiny as toxic junk, your company is being recklessly irresponsible.

With rare exceptions, designers are used to working within constraints that both focus and limit what they do. Usually, this means entering an ongoing process at a certain stage, and advancing it along to another stage. Graphic designers don’t fell trees, grind pulp or make paper. Nor do they formulate inks or run printing presses. Their work fits in between these “before and after” operations. In a similar way, interior designers don’t usually make the carpeting, light fixtures, wall coverings and furnishings that go into their designs, let alone the components of the HVAC and plumbing systems. And laptop designers don’t fabricate microchips, mother-boards, hard drives or flat screens. Designers of all kinds are accustomed to taking all these “before and after” aspects of their jobs for granted. That is now changing.

The limits around what designers need to know to do their jobs properly have broadened, because the purview of design itself has broadened. The design of a newspaper, for example, is not simply a matter of its content and how it looks to its readers. The entire enterprise is also now viewed as a design, one that involves a complex mix of industrial processes like making papers and inks, blended with social processes like promoting community causes and doing investigative reports. To participate in any step in this process is to be part of the whole enterprise, which has a characteristic “footprint” economically, socially and environmentally. In many types of enterprises, to participate as a designer is to assume a larger responsibility than most.

One of the most important functions of a designer is the power to specify. Designers in all fields have always specified how things look, but only a minority also routinely specify how things are to be made. Even fewer have ever paid much attention to how things are unmade when their useful life is over. Now these issues have become important parts of many designer’s jobs.

Package design provides a simple example of how things have changed. Traditional specifications for retail packages were confined to creating visual “shelf presence” and a strong projection of brand identity, often in a tamper-proof, impact-resistant enclosure. Many packages meeting these requirements have short useful lives as they move briskly through the retailing pipeline, followed by stubbornly long lives as waste in landfills and dumps. Today’s designers need to view packages not only as attractions on the retail shelf, but also as instant waste once the sale is made. In selecting materials, they need to consider both the environmental cost of making them in the first place and their environmental destiny when they are discarded.

Many design processes have now expanded to include social and environmental considerations that played no role when design objectives were more narrowly defined. This has shifted preferences and priorities, for example, towards materials made from renewable resources, especially ones that can also be recycled. In most cases, adaptations can be made to achieve these new objectives without compromising the final products.

Of course, many industrial designers have always been involved in the process of actually making the things they design. How something is made can often be crucial to how well it works, or what it costs, or how long it will last. But even designers who have long been involved in the up-front “before” issues of manufacturing the things they design need to broaden their view to include equally important “after” issues of dismantling and recycling at the end of the product’s life. This is especially true today of electronic devices of all kinds, which are particularly difficult to deal with as waste. Replacing ubiquitous plastics with recyclable materials such as aluminum and glass is one important step in the desired direction.

In dozens of different industries, finding more efficient, more sustainable and less environmentally harmful ways to do things has become a top priority. Designers of all kinds have a huge role to play in the search for innovative ways to meet these “before and after” challenges.