Quick, what's your IQ? No, not your intelligence quotient -- your imagination quotient. In this turbulent, get-real economy, the advantage goes to those who can outimagine and outcreate their competitors. So says Roger Martin, who has devoted his professional life to the study of competition -- first as a director at Monitor Co., the Boston-based consultancy, and now as dean of the University of Toronto's Rotman School of Management.

Martin believes that the North American economy is radically transforming. As the production of goods and services increasingly becomes routinized, the cost advantages across a growing array of industries accrue to China and India. Scale alone is not enough to thrive in a world where markets are rapidly globalizing; incremental improvement won't deliver a decent ROI. Our companies will continue to prosper only if they push to the higher ground of innovating and creating "elegant, refined products and services" -- which might well be produced elsewhere.

The upshot, says Martin, is nothing less than the emergence of the design economy -- the successor to the information economy, and, before it, the service and manufacturing economies. And that shift, he argues, has profound implications for every business leader and manager among us: "Businesspeople don't just need to understand designers better -- they need to become designers."

In a global economy, elegant design is becoming a critical competitive advantage. Trouble is, most business folks don't think like designers.

In a recent interview in Toronto, Martin asserted that real value creation now comes from using the designer's foremost competitive weapon, his imagination, to peer into a mystery -- a problem that we recognize but don't understand -- and to devise a rough solution that explains it. "For any company that chooses to innovate, the foremost challenge is this," Martin says. "Are you willing to step back and ask, 'What's the problem we're trying to solve?' Well, that's what designers do: They take on a mystery, some abstract challenge, and they try to create a solution."

The trouble is, when confronted with a mystery, most linear business types resort to what they know best: They crunch the numbers, analyze, and ultimately redefine the problem "so it isn't a mystery anymore; it's something they've done 12 times before," Martin says. Most don't avail themselves of the designer's tools -- they don't think like designers -- and so they are ill-prepared for an economy where the winners are determined by design.

And that, Martin claims, means traditional organizations must reinvent themselves to perform more like design shops. In this new world, there are fewer fixed, permanent assignments. Instead, work flows from project to project, and people organize their lives around their projects, just as in a design shop. Accenture, for example, is more efficient in part because it's a project-based organization -- it doesn't staff up for things that aren't projects, and it doesn't allow projects to become permanent.

Design-influenced companies also understand their customers at a profound level and mobilize around that insight. The Four Seasons Hotels and Resorts' detailed study of customers led it to conclude that it could win by offering first-class service, and so it invested enormously in recruitment and training. The chain visualized the desired outcome -- "make people feel great" -- and reinvented itself to deliver an exceptional "user" experience.