The Design of Business

The Design of Business: Why Design Thinking is the Next Competitive Advantage is a 2009 book by Roger Martin, Dean of the University of Toronto's Rotman School of Management. In the book, Martin describes the concept of design thinking, and how companies can incorporate it into their organizational structure for long term innovation and results.

Martin introduces the knowledge funnel as the process followed by leading businesses to innovate more consistently and successfully. The knowledge funnel has three different phases:

The mystery stage comprises the exploration of the problem, this transitions to the rule of thumb (heuristic) stage, where a rule of thumb is generated to narrow work to a manageable size. In the algorithm stage the general heuristic is converted to a fixed formula, taking the problem from complexity to simplicity.

Martin poses that there are currently two forms of business thinking. Analytical thinking is driven by a quantitative process, standardizing to eliminate judgment, bias, and variation. Intuitive thinking focuses more on an instinct to drive creativity and innovation. Analytical thinking has become much more prevalent in organizations, because it is more consistent, easier to measure, and can scale in size. Martin labels the difference between a bias for the two schools of thought as the distinction between 'reliability' versus 'validity'. Organizations are much more likely to favor what is reliable, because their structures motivate analytical thinking. This means that organizations are often poor at achieving valid solutions because they do not fully take advantage of all three areas of the knowledge tunnel, just the two latter stages (heuristics and algorithms).

Design thinking balances analytical and intuitive thinking. It combines an openness to explorative thoughts with an exploitative mentality, striking the balance between innovation and a scalable process. It pulls resources back into the knowledge funnel and allows to progress through all three stages.

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