Will Design Thinking Save Us? The Creativity Revolution in Responsible Business.

There is a shift under way in the how some executives are thinking about their relationship to society and the great challenges of our time. If you work in this field, you will have begun to hear more about social enterprise, social innovation, CSR 2.0, a sustainable enterprise economy, and design thinking. This is part of what I call a ‘creativity revolution’ where people awaken to the need for innovation in organisations, sectors, communities and governance to achieve fair and sustainable societies. It’s where people see social and environmental challenges as opportunities, not as mere risks. Because, as we wake up to the frankly scary scale and urgency of the global challenges we face, we could be dumbfounded, or we can get creative. And frankly, if its all going to pot, what’s more fun, more alive, more worth-being-something-worth-saving, than our full unbridled creativity in search of a better world?

The Creativity Revolution in responsible business connects directly to the emerging creative economy, where people’s engagement in new communications technology means we move beyond the information/knowledge economy, to one where personal creativity is empowered and expected, so that people become the co-producers of ideas that shape business, culture, politics. This Creativity Revolution in responsible business is featured in this month’s “Journal of Corporate Citizenship”. Despite the rather uncreative sounding title, it’s full of funky ideas. In a special feature on “design thinking”, which we explain below, Professor David Cooperrider says thinking and practice on a firm’s responsibilities is about to change for good. Then, in a column on global responsible business trends that we at Lifeworth research and write each quarter, we explore the creativity revolution in depth.

Some firms like Virgin are beginning to see the potential. As such they are recruiting more people to work “tackle tough social and environmental problems with an entrepreneurial approach” which we have been to help them with. See: http://www.lifeworth.com/node/19286 [deadline June 4th 2010!]. However, a reality check: the creative approach to a businesses role in society is not yet widespread. In my experience most managers, consultants and academics don’t get it and still think social and environmental issues are just a cost, not a creative force. This is reflected in the codified approaches to responsible business, in things like the new ISO 26000, and most ESG (environmental, social and governance) analysis, where innovation does not feature much, if at all.

To help more executives, their advisers and trainers to get with the creative vibe, and understand the barriers to its mainstream adoption, Ian Doyle and I explored social innovation and design thinking in our column for the journal. It also featured in our annual review of 2009. Here follows sections of the column (for a full copy with references download the pdf, and scan to the final section “sustaining innovation”. Or better still, subscribe to the journal and get to read Prof Cooperriders piece as well).

…What is innovation? According to BusinessDictionary.com, innovation is the “process by which an idea or invention is translated into a good or service for which people will pay. To be called an innovation, an idea must be replicable at an economical cost and must satisfy a specific need. Innovation involves deliberate application of information, imagination, and initiative in deriving greater or different value from resources, and encompasses all processes by which new ideas are generated and converted into useful products.”1 It is in essence a systematic and systemic approach that directs acts of invention towards a shared purpose, this purpose being of public benefit in the case of social, sustainable or responsible innovation.2

[There are some...] deep-seated impediments to sustainable innovation from within businesses themselves [which] were explored in a Boston Consulting Group (BCG) publication in October 2009 entitled ‘The Business of Sustainability.’ The report detailed the results of a global survey of over 1,500 corporate executives and managers which sought to better understand the business implications of sustainability.3 One of the conclusions of the report was that although 92 % of businesses were trying to address sustainability issues, most companies struggled on execution demonstrating a lack of coherence between the desire to act and the ability to implement bold action. The report detailed that one of the major obstacles was the difficulty in modelling a business case for sustainability due to three major factors:

- forecasting and planning beyond the one-to-five year time horizon typical of most investment frameworks;
- gauging the system-wide effects of sustainability investments and;
- planning amid high uncertainty.

Whilst these three points illustrate the ambiguity that businesses face, they also demonstrate the typical decision making mechanisms that businesses use in determining future direction. Expanding upon the third point in particular, the report stipulated that,

‘Strategic planning, as traditionally practiced [sic], is deductive – companies draw on a series of standard gauges to predict where the market is heading and then design and execute strategies on the basis of those calculations. But sustainability drivers are anything but predictable, potentially requiring companies to adopt entirely new concepts and frameworks.’4

In criticising deductive logic, where theories arrived at through past experience are used to predict what will happen in future, BCG were giving voice to other forms of knowledge in a domain traditionally dominated by economics, as illustrated by a range of strategy management journals. Economics is a discipline that is highly reductionist and determinist, meaning that to provide insight into society, it reduces complex interactions into a few key variables (reductionism), and then seeks correlations between the variables as a means of identifying cause and effect (determinism). As such, economics has its limits in revealing insight into complex realities. Beyond economics, many of the tools used to describe major trends in society that inform the fields in which companies focus their innovation, depend on quantitative data, including analysis of the subjective opinions and experiences of individuals through surveys. The reliance on what can be inscribed and aggregated, not only enables some useful macroscopic views of trends, but also means there is a temporal and physical distance between the analyst and the realities studied. The data shows how things used to be, not how they could be, and does not provide insight into the complexity of people’s lived experiences. It is as if by looking for the ‘helicopter view’ of a situation, one has to travel away from the phenomena to look back at it through a telescope. What is lost from this approach is not only an understanding of complex consumer needs and wants, but also the potential for a conversation with consumers about what they might want, and how their expressed behaviours might not actually be how they would wish to behave if they had other choices. For instance, the reason that people spend two hours in traffic everyday might be an observed preference, as it is their behaviour, but it is not necessarily their desired preference.

A key lesson here is that in order to become better at strategy, businesses need to get closer to consumers, which is further discussed below. But the main focus of BCG was on the restrictive effects of business executives requiring “proof” of a business plan, where what constitutes proof is narrowly defined, before making a decision to invest in innovation. This was also the focus in Fast Company magazine in November 2009. In an interview on innovation in business with Mr. Roger Martin, Dean of the Rotman School of Management at the University of Toronto, he explains that

‘Most companies try to be innovative, but the enemy of innovation is the mandate to “prove it.” You cannot prove a new idea in advance…’5

The alternative he suggests requires ‘design thinking.’ A simple definition of design thinking is any process that applies the methods of industrial designers to problems beyond the scope of how a product should look. [Design is a concept that goes beyond the creation of products and is concerned with exploring the role of design in sustaining, developing, and integrating human ideas into broader ecological and cultural environments.] ‘Design thinking’ is a user-based approach that observes people in order to create practical solutions in product design and for social problems. It focuses on the nature of the problem itself. Put this way, such a methodology means that products are created in sync with consumer needs rather than creating a product and pushing it into the market place. Mr. Martin suggests that design thinking is a conduit between the intuition of new ideas and the more structured approaches of analysis that

‘…enables the organization to balance exploration and exploitation, invention of business and administration of business, originality and mastery.’6

This suggests that by thinking like a designer, organisations may be freed up from the burden of proof so that the best solution can be explored rather than the illusion of what can be proven.

A November 2009 special report in Business Week Online highlighted how design thinking is impacting business.7 The article illustrated how companies such as Proctor and Gamble (P&G), GE Healthcare and Philips Lighting use design thinking to solve their problems. At P&G, the number of design facilitators has grown from 100 to 175 since 2008 in an attempt to embed such methodologies throughout the organisation, and judging by their enormous growth between 2000 and 2008 when revenue doubled from $40 billion to $83 billion, it isn’t surprising that their performance is being heralded as a triumph of design thinking.8 GE Healthcare has also adopted design thinking and according to a 2003 report by the Danish Design Center, increased design activity such as design-related employee training boosted the company’s revenue on average by 40% more than other companies over a five-year period.9

These earnings may convince companies that ‘design thinking’ is central to the future of innovation, but what might it imply for the social and environmental performance of business, including the challenge of scaling innovation as rapidly as described above? There are two areas of potential benefit. First, as ‘design thinking’ challenges dominant views of what constitutes proven knowledge in strategic planning, and allows for more complexity and uncertainty in decision making, so investments in innovation may gain more attention. This is because, as BCG noted,

“Decisions regarding sustainability have to be made against a backdrop of high uncertainty. Myriad factors muddy the waters because their timing and magnitude of impact are unknown. Such factors include government legislation, demands by customers and employees, and geopolitical events.”10

Second, ‘design thinking’ could encourage businesses to respond to the needs of consumers, rather than seeking ways of marketing existing things to them. This is closely connected to developing a functional perspective on what consumers do, and why they do it. With this view, a car is no longer just a car, but a means of fulfilling a range of functions to the consumer, such as mobility, status, and fun. With that perspective and recognition of growing resource constraints, changing values and technologies, designers could explore how to serve those needs in different ways. Thus needs for mobility, status and fun could be provided separately, or more sustainable transport solutions infused with characteristics that meet the non-mobility functions of existing cars. Making bicycles cool, for instance, or providing more ticket classes and benefits in public transportation. The importance of taking a consumer need perspective, or ‘functional approach’, and seeking to meet that within resource constraints, was identified by UN Environment Programme as a key sustainability policy paradigm for governments in 2001 and explored in these pages in 2006.11

The shift in mindset in design thinking is from regarding a product as simply a physical thing to regarding it as part of a set of relationships that fulfil various purposes for different people, and so those relationships are as important as the thing in itself. In marketing, this view is often discussed in terms of focusing more on the experience of the consumer. There are also strong resonances here with systems thinking, which emphasises that everything is a set of relationships.

The use of design thinking in business innovation has the potential for encouraging more sustainable design, but it depends on what criteria the observation of users occurs, the choice of their needs to be explored, and the intention of the company. In the case of P&G, when designing cosmetic products for instance, do their designers question their users about the wider consequences of the products, or the reasons why consumers have particular ‘needs’ and tastes? In light of the Environmental Working Group’s cosmetic safety database which details hundreds of P&G products containing potentially harmful toxic chemicals, perhaps user observation needs to be coupled with user education as to avoid certain environmental and social issues.12 Design may be used to support innovation and the bottom line, but there is also the risk that the broader ecological boundaries are deliberately circumvented to the detriment of others. So despite the enormous potential of design thinking as highlighted by the examples of P&G and GE, until environmental and social issues become part of the purpose of the organisation, new products may not necessarily be more sustainable.

That said, P&G is starting to apply sustainability criteria to some of their products. Called ‘Sustainable Innovation Products’ or SIPs, P&G has a goal to deliver $50 billion in cumulative sales of products with improved environmental impact by 2012. SIPs must have an overall use reduction of 10% in the areas of transportation, energy, water or materials, or have replaced non-renewable materials with renewable ones.13

Design thinking is not a panacea for social and environmental effectiveness of corporations, and should not be understood as a new function within business, but just one way of practising a more connected and holistic way of doing business. A Harvard Business Publishing article in October 2009 suggested that the success of design thinking is as much about embracing different points of view as it is design methodologies.14 Although Mr. Peter Holtz, the author of the article, founded his company which is dedicated to experience design, he suggests that the effectiveness of design thinking is that it embraces many different experiences and disciplines. He affirms that,

‘What we must understand is that in this savagely complex world, we need to bring as broad a diversity of viewpoints and perspectives to bear on whatever challenges we have in front of us. While it’s wise to question the supremacy of “business thinking,” shifting the focus only to “design thinking” will mean you’re missing out on countless possibilities.’

His comments supported an article in Fast Company earlier in the year that commented on the role of Claudia Kotchka, P&G’s first ever VP for design strategy.15 The author, Dev Patnaik, CEO and founder of Jump Associates, a firm that helps companies create new businesses and reinvent existing ones was quick to point out that Ms. Kotchka was an accountant by training and spent most of her professional life in marketing and thus had no design experience when she started the role. He insists that what design thinking ultimately embodies is the

‘…conscious blending of different fields of thought to discover and develop opportunities that were previously unseen by the status quo.’

So whilst Ms. Kotchka immersed herself in design thinking, it was combining it with her other experiences that made her such a powerful example of design. As Mr. Patnaik concluded,

‘To walk away concluding that design thinking is what makes P&G great would be like going to the movies and concluding that Indiana Jones is a great hero because he always wears a hat.’

It should be of no surprise that corporations using design thinking are now employing people from the social sciences such as sociologists, anthropologists, ethnologists and the like because they can open up thinking through entirely different points of view. The key here is the need to transcend organisational silos and the single lenses that come from specialisation in marketing, finance, human resources, strategic planning, operations, and so on. The new popularity of design thinking, like systems thinking, reflects how organisations are trying various ways to overcome silos. Having teams of experts from different specialisations is one way that organisations try to overcome these silos, but they are rarely more than the sum of their parts. Instead, if managers develop a competence for trans-disciplinarity or trans-functionality, they can draw upon the expertise in different specialisations, while rejecting certain knowledge claims from those disciplines that they can spot as the result of unhelpful assumptions or preoccupations. Key to this is understanding a knowledge claim in its full context: to distinguish between what it reveals and what is simply a projection of its method, theory, and assumptions. Two of the best underlying factors in developing trans-functional competence are critical discourse analysis, and the philosophy of science, as they enable people to de-construct the truth claims they hear.

Furthermore, the organisational silos are there for a reason – they have helped incumbent organisations to control their activities, and regulate any potentially disruptive changes. As a means to shore-up success, corporations have created organisational structures to maintain their financial commitments. As many large organisations are either financed by debt or equity, there are requirements to ensure that debt is paid back on a predetermined schedule or that shareholders are paid a return and so it is understandable that companies have ordered their organisations to meet these demands.16 According to Mr Roger Martin, the consequences of such arrangements for organisational functions are many, and of note for CR professionals. One, organisations will only take the risks associated with exploring new ideas when there is a clear potential for a significantly enhanced financial return; investments in new approaches that would deliver similar returns to existing practices are not favoured. Two, due to the outflow of money, there are limited resources which can be dedicated to innovation thus, ironically, working against their own long-term interest. Three, as a result, meeting the budget is the first measure of operational success as opposed to, for example, better environmental performance. And four, because the nature of the work environment demands reliability for financial purposes, work itself is secondary to the business of making and selling, often demoting people to machine-like tasks and blocking creative potential.17 A corollary to the last point is that work then becomes a measure of time. The consequence is that performance is measured according to quantity and time rather than quality and objectives, potentially leaving the problem to be addressed unsolved in the interest of rapid turn-around.18

It is not just a top down process that enforces silos in organisations. Rather, to be effective in addressing challenges in ways that integrate insights from various organisational functions one must be highly intelligent and enthusiastic about the organisation’s purpose. If one is tired at work, or not deeply interested in the goal of the organisation, then learning the ropes of a particular discipline, and being satisfied one is a trained practitioner in that discipline, is a natural option. The same is true of management schools, where academics have the added pressure of the expert expectation, so that choosing to put boundaries around one’s expertise is an easier way of life.

Whilst corporate responsibility (CR) professionals are presenting sustainability as a source of business opportunity, little is said about those dominant structural aspects of business that are implicitly opposed to innovation. In the case of business, the requirement to ‘guarantee’ profitability means that businesses depend on mechanisms and processes that have demonstrated reliability in working toward this goal.19 But in the face of climate change, financial crises and continual uncertainty, this raises the question of whether the organisational mechanisms that support profit making are as much hampering as stimulating innovation on challenges such as climate change. For professionals working in CR examining deep-seated impediments to sustainable innovation is important.

Stakeholder dialogue is an area of corporate responsibility where design thinking could have a direct application. Concerns over the effectiveness of stakeholder dialogues in aligning the interests of business and their stakeholders raise the question of why there is little innovation when there is a veritable abundance of differing viewpoints at the table.20 This would suggest that there are tools necessary from a process point of view to create a shared sense of problem, to explore the best solutions and then channel these ideas through to the implementation phase. In light of the diversity parallel with design thinking, perhaps the missing element in innovation through stakeholder dialogue is design facilitation, an admittedly ambitious project. For whilst the design facilitator may be able to unite the stakeholders present to solve a problem, the trickle down effect might be a little less effective if the organisational structures behind them are naturally resistant to innovation. Consequently, the greatest challenge facing the CR movement may not be providing creative ideas for businesses but helping organisations to break free of paradigms that they’ve established in attempts to sure up profitably and returns for shareholders. If business is to unleash its sustainability creativity, the CR movement will need to not only promote more design thinking, but also transform existing organisational structures that have been designed to resist change. This is where public policy could play a role with a few interventions at the root of the problem, such as obliging corporations to retain a certain percentage of profits to be used for innovation to address a public need.
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Some executives do get some of these ideas already, including some in the fields we specialise in in at Lifeworth Consulting. One of these is the traditionally stuffy luxury sector: they have a margin and mandate to innovate… and some recognise that, and work with us or have joined the Authentic Luxury Network we established (http://www.authenticluxury.net). The other area we work on is the non profit and governmental sectors’ strategies on business and finance. Not known for innovation either, some execs get it too.. including some who I worked with at WWF-UK a few years back to conceive of what has become The Finance Innovation Lab, to structure a dialogue about what a fair and sustainable financial systems might look like and how we might create pathways for people in all professions to play a role in those systems’ realisation (http://www.thefinancelab.org).

So will design thinking save us? Not in itself, but its growing popularity creates a space for more creative energy, more holistic thinking and systemic approaches applied to real action. As such it could save us from being such an ‘age of stupid’.

Cheers, Jem Bendell (sections from the JCC co-written with Lifeworth Consulting’s Ian Doyle).

Ps: Thanks to Ian Doyle and Bernise Ang for pushing me last year to explore design thinking more fully!