Roger Martin -- The Design of Business

Roger Martin, Dean, Rotman School, June 4, 2004, 1:45 p.m.

These participant's notes were created in real-time during the meeting, based on the speaker's presentation(s) and comments from the audience. These should not be viewed as official transcripts of the meeting, but only as an interpretation by a single individual. Lapses, grammatical errors, and typing mistakes may not have been corrected. Questions about content should be directed to the originator. These notes have been contributed by David Ing (daviding@systemicbusiness.org) at the IBM Advanced Business Institute ( http://www.ibm.com/abi).

This is not about the management of design, managing designer types.

• Interested in a different question

How does our understanding of things evolved over time?

• Things come into our understanding as mysteries, that we don't understand.
• • e.g. gravity
  • • Yet birds don't fall to the ground.
    • Leaves fall slowly.
  • Music:  what makes people sad?
• At some point, enough thought goes into the question at hand, to get a first-level of understanding.
• • A heuristic:  rules of thumb, an organized way to understand things.
  • e.g. playing the blues.
  • Mastering a heuristic is the difference between Don McLean "American Pie" )as a one hit wonder) and Bruce Springsteen or a Bob Dylan (that have a way with a song, over and over again).
  • Artists:  first understand perspectives.
  • Heuristics don't guarantee success, but they do increase the probability to getting to the right answer.
• Increased understanding can create an algorithm:
• • Logical / arithmetic way to get from one place to another.
  • e.g. Brian Eno, songs with an electronic heartbeat (all the way to Milli Vanilli)
  • Can paint by numbers
• Eventually, algorithms get coded into software
• • Reduction to binary code.
  • e.g. algorithm 9.8 m/sec**2, becomes a code to allow the space shuttle to fall in a way we like.
  • Typesetting:  how to express words in a aesthetic way.
  • • As late as 1981, student had to use letraset.
    • Practice with letraset was to get the spacing between characters correct.
    • But eventually would be replaced by computers, as a finite number of combinations of letter
    • Then Adobe Illustrator and Quark
  • In the late 20th century, all algorithms go to code.

More speculative, from now ...

The focus of 20th century value creation was the conversion of heuristics into algorithms.

• e.g. Ray Kroc figured out how Californians like to eat hamburgers:  an algorithm for a fast food chain.
• Same for Ford and the assembly line, or EDS taking college kids to learn COBOL.
• Turning judgement into a formalism.

Towards the end of the 20th century, a lot of things creating value by driving algorithms to code.

• Adobe.
• Honeywell guidance systems for planes.
• Is this a good thing or a great thing?
• • Increase in effectiveness and efficiency in code, but no longer have judgement.
  • No soul or artistry.
  • Even though Adobe says D and E should be a certain distance, need to do some kerning.
• Extreme of 20th century life is soul-less numbers.

Are we going to continue to see more of the same?  The move to algorithm codes?

Speculative:  no, don't think the world is going that direction.

The new focus of value creation will be a movement back to taking mysteries, and moving them to become heuristics.

• The drive to efficiency and effectiveness is producing stuff.
• • Reaching to get economies of scale, but accepting standardization and soullessness in exchange.
• Think that the 20th century will become the century of producing "stuff"

Hope that in the 21st century, will be seen as a century of providing elegant stuff, with a minimal environmental impact.

New mysteries:

• How to cities work?
• • How do they maintain their sense of community?

If more right than wrong, what are the implications for business?

• All have something to do with design.

1.  Design skills and business skills will be hard to distinguish.

• Design skill, at his heart, is to reach into the mystery of a given situation (an intractable problem), apply some innovation and mastery to make something other than a mystery.
• • A heuristic, a way of knowing
• Bill Buxton says that this is wrong:  business people will never be designers.
• Think business executives will have to become masters of heuristics rather than managers of algorithms.

2. Will drive a new business enterprise, more like a design shop.

• Form of work life:
• • Instead of ongoing tasks ...
  • ... projects with defined terms, like a classic design shop, with defined terms, some longer and some shorter.
• Source of status:
• • From managing big budgets and large staffs ...
  • ... to solving "wicked problems" -- the more wicked, the more challenging, the more status.
  • • See toys in their offices.
    • May not have huge budgets, but it doesn't reduce their status.
• Style of work:
• • From defined roles, and waiting until it's right ...
  • ... to collaborative and iterative.
  • • Lots of prototyping
• Mode of thinking (from Jeanne Liedtka)
• • From deductive and inductive logic ...
  • ... to deductive and inductive, plus abductive.
  • • Imagining or suggesting something that might be or could be.
• Dominant attitude:
• • From "we can only do what wehave the budget to do", and constraints as the enemy, ...
  • ... to "nothing can't be done" and "constraints increase the challenge and excitement".
  • • Constraints are your friends, when status comes from solving wicked problems.

This transition from "traditional form" to "design shop" will be significant.

• P&G working on a shared services organization, and outsourced 7500 jobs.
• This tends to be demoralizing, because budget goes down and people go down.
• Can recast the outsourced as a design shop:  unburdened.
• • Huge transformation, now halfway through, and this has revitalized the organization.

3. The business of design will become the design of business

• Need to think about designing elegant products and experiences in the most elegant manner.
• • To do this, need to take the attitude of designers.
  • Moving this direction, with the Rotman School.
  • More Masters of Business Design than Masters of Business Administration

[Questions]

Logic of mystery --> heuristic --> algorithm --> code, or moving to another level?

• Might be a semantic thing.
• If heard McLuhan talk, this might be a reversion.
• In the integrated thinking agenda, to have a heuristic for staring into mysteries, is better than just staring without knowing what to do.
• Some logic.

Moving towards algorithms means more efficient, but moving back means less efficiency?

• To get the next generation of efficiencies, have to stop playing with algorithms we know, and have to go to bigger mysteries.
• Counter-argument:  some things we've pushed so far, gone to code, that pushing back maybe helpful.

Continuing circle?

• As a linear, there's stuff that we're averting our eyes to, that is coming back.
• e.g. environmental issues.
• Health care is unique:  this is something with infinite demand.
• Where and when is the desire to live longer going to ameliorate?

Every paradigm / school has a way of looking at mysteries, as heuristics.  All probably need to circle back.  What would you change in the business school curriculum?

• Change the way they see the world, as models.
• e.g. a McLuhan-esque model.
• Want students to become better builders of models, better users, and better refiners.

Larger issues in environment and health care, but not much money there.  How to deal with that.

• Externality problems.
• Corporations are huge users of resources.
• They need to take responsibility.
• • Electorate is keeping more focus on them.
  • Will think about the environment.
• If not thinking about the problem, then may have massive re-regulation.
• Not a simple solution.

Drive to code.  Huge regulatory burden, Sarbanes-Oxley.  Why would anyone want to go back to mystery, so that CFOs and CEOs go back to jail.

• Sarbanes-Oxley is a crummy design.
• • Doing something without understanding the phenomena.
  • Misunderstanding of the phenomena.
  • Doesn't solve the problem.
• Evolution of widely owned corporations
• • Nearly impossible for independent directors to protect external shareholders.
  • Filling more papers isn't going to solve this.
• Best job:  National Football League
• • As soon as anyone makes an innovation, change the rules:  move the hash lines out, in, etc.
  • Ensures the game has a balance of defense and offense.

Is this a change of focus?

• Different people enjoy different jobs.
• There's been an overfocus on pieces of the puzzle.
• Maybe don't shift the pendulum too far.

Moving from product to humanity?  Biotech binary code as the efficient conclusion of management?

• Manuel Buckwald:  Would make a parallel argument over the human genome.
• Now that we've mapped the genes, there are so many interactions.
• Problems are all in the mysteries, and all of the research skills are focused on the code.

1970s film, Logan's Run.

Shift from traditional firm to design shop.  Style of work as more collaborative.  See the opposite.

• Not sure that it's more or less.  Know people who could argue both sides.
• More technologies to collaborate at distance.
• Yet, possible that technology will create a lower-quality collaboration, than is required.
• Agree with Jeanne Liedtka, that chopping things down into meetings where the first 20 minutes is review and last 20 is planning the next meeting is not collaboration.