The Design of Business
Executive summary
This book discusses the Knowledge Funnel - the concept that business start by taking a mystery (that a customer values), solving that mystery and selling that back to them as a product/service, and finally increasing the efficiency of that product / service (and therefore increasing the profit). This profit should then by invested by going back to the start and looking for a new mystery to solve.
A big theme throughout the book is the difference between reliability and validity. Businesses crave things that are reliable - because they are just that. You can count on a product/service to deliver if it has done so in the past. But over time markets shift, and that product/service will not deliver like it once did - and pushing for more efficiency will only buy you so much time.
Ultimately this book argues for a mixture of using reliable products/services to generate profits, and also innovate to create the reliable products/services of tomorrow. Doing one without the other is a recipe for poor performance.
How do I apply the knowledge in this book?
Look at the way you are structuring your team / organisation and ask “Am I both running the day to day reliable processes, and also leaving room to create tomorrows reliable processes”.
If you do not currently give time to look to innovate and create the products of tomorrow, make you current teams more efficient, and with the time saved, use that to innovate.
Chapter reviews
Chapter 1 - The knowledge funnel
- Introduces the concept of the knowledge funnel
- Analytical thinking vs intuitive thinking
- McDonalds case study - how did they grow so big, yet not see Subway coming?
- Design thinking firms concentrate on both innovation and efficiency
- Administration of business is the exploitation of existing products/services
- Invention of business is the exploration of new products/services
- Abductive logic - the logic of what might be
- Competitive advantage comes from a mix of reliability and validity
Chapter 2 - The reliability bias
- Judgement is not required when making things more efficient
- Businesses favour reliability (predictable and consistent)
- Businesses assume the future will mimic the past
- Computers do not exercise judgement - they are fast because they do not think
- Reliable processes are faster than validity based ones, businesses put pressure on time
- External pressures on businesses promote reliability based thinking
Chapter 3 - Design thinking
- RIM case study
- Introduction to design thinking
- Introduction to abductive reasoning (Charles Sanders Peirce)
- Inefficient organisations have no time to spend looking for new mysteries to solve
- Executives should convert their knowledge to code so that they can spend time at the beginning of the knowledge funnel
Chapter 4 - Transforming the corporation
- Procter and Gamble case study
- How to embed design thinking into organisations
- Case study of P&G’s DesignWorks program
- How to change an organisation’s processes that force reliability based behaviour
- Discussion of wicked problems
Chapter 5 - Balancing act
- Herman Miler case study (Aeron chair)
- If incumbent companies do not innovate, they eventually lose to new competitors
- Fixed job roles favour reliability
- Design thinking organisations gather teams to solve a problem, then disband
- Budgeting cycles favours reliability
- Reward systems favours reliability
Chapter 6 - World-Class Explorers
- Cirque du Soleil case study
- The CEO needs to lead the design thinking effort
- Steelcase & IDEO case study
- Target case study
- Apple case study
Chapter 7 - Getting personal
- References his earlier work The Opposable Mind
- How you choose to view the world affects how you will approach it
- To bring in validity thinking you need to find ways to communicate with reliability thinkers
- Use analogies to help people understand - rather than try to argue your point
- Try using analogous data you do have when working with a reliability focused person