Tough Love

Roger Martin, dean of the Rotman B-school, on the three keys to making it work

Forty years ago, Thomas Watson Jr., chairman and chief executive of IBM during its most explosive period of growth, famously proclaimed, "Good design is good business." Corporate America, however, barely looked up from its work. Except for a few mavericks such as IBM, Kodak, and Xerox, it would take years for design to move in from the fringes of business. But today, companies are creating products and services that delight customers with the grace of their fit and finish, and their exacting performance. Design, in short, is becoming an ever more important engine of corporate profit: It's no longer enough simply to outperform the competition; to thrive in a world of ceaseless and rapid change, businesspeople have to outimagine the competition as well. They must begin to think--to become--more like designers.

Even as design gets its due, however, some business types wish the clock could be turned back to a time before all those designers were running around urging people to let their creative juices flow. And they resent that even as design is forced upon them or insinuated into their work, the designers themselves are often not held accountable for meeting firm revenue and profit targets--the primary form of business discipline.

This tension between business-as-usual and business-by-design is not new, of course. Many businesspeople have long regarded designers as mere stylists. More than a few designers see businesspeople as Neanderthals all too willing to forfeit quality for the sake of profit. Their mutual pique springs from a fundamental difference in the way each side thinks about creating value: Corporate types, by and large, seek to fuel growth by building from bulletproof, reproducible systems; designers generally attempt to do so by imagining something new, different, better. That difference can be seen as a trust in reliability on the one hand and in validity on the other.

A reliable process--which tends to attract folks in finance, engineering, and operations--produces a predictable result time and again. This is business as algorithm: quantifiable, measurable, and provable. It hews to that old management adage, "What doesn't get measured doesn't get done." Wal-Mart, Dell, McDonald's --each started out with a novel idea, yet each went on to standardize every aspect of its operation and blow it out across the United States and then the world, creating billions of dollars of wealth along the way.

A valid process, on the other hand, flows from designers' deep understanding of both user and context, and leads them to ideas they believe in but can't prove. They work in a world of variables: the unpredictable, the visual, the experimental. Great designers worry less about replicating a successful process than about producing a spectacular solution. Design leaders like Panasonic, Timberland, and Bombardier have grown exponentially since their inception, yet each continues to put a premium on judgment, experience, and gut instinct.

Valid thinking demands an inspired leap of faith. Before John Mackey launched one of the country's first supermarket-style natural-food stores, for example, nobody could prove that Whole Foods Market would succeed at all, let alone become the most profitable food retailer (in terms of profit per square foot) in the United States. But Mackey did it anyway. As the computer scientist Alan Kay put it so memorably, "The best way to predict the future is to invent it." And that is what design-centric organizations do: They peer into the needs and desires of their customers, identify patterns of behavior, refine ideas that tap into those behaviors, then push into the unknown--or at least the uncertain.

Businesses have to outimagine the competition, to think--to become--more like designers.

If an organization wants to reap the benefits of design, it must do more than just hire "hot" designers or declare itself to be "design oriented." The challenge is to manage the chronic push and pull between a value system premised on what's valid and one based on what's reliable. As the management theorist James March has argued, by focusing on the intuitive and experiential, organizations explore new sources of competitive advantage. By looking to the provable and replicable, organizations better exploit the innovations they've brought to market. To prosper over the long run, a company needs to succeed at both. It must mesh the classical workings of a traditional organization with the prototypical features of a design shop, especially in three key areas: reckoning the future, organizing work, and establishing status and rewards.