The Designful Company Read online

  The Designful Company

  How to Build a Culture of Nonstop Innovation

  Marty Neumeier

  THE DESIGNFUL COMPANY

  How to Build a Culture of Nonstop Innovation

  A Whiteboard Overview By Marty Neumeier

  New Riders

  1249 Eighth Street

  Berkeley, CA 94710

  510/524-2178

  510/524-2221 (fax)

  New Riders is an imprint of Peachpit, a division of Pearson Education

  Find us on the World Wide Web at: www.peachpit.com

  To report errors, please send a note to [email protected]

  Copyright © 2009 by Marty Neumeier

  Project Editor: MICHAEL J NOLAN

  Production Editor: DAVID VAN NESS

  Book Designer: CLAUDIA FUNG

  Proofreader: LIZ WELCH

  Indexer: REBECCA PLUNKETT

  Notice of Rights

  All rights reserved. No part of this book may be reproduced or transmitted in any form by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. For information on getting permission for reprints and excerpts, contact [email protected].

  Notice of Liability

  The information in this book is distributed on an “As Is” basis without warranty. While every precaution has been taken in the preparation of the book, neither the author nor Peachpit shall have any liability to any person or entity with respect to any loss or damage caused or alleged to be caused directly or indirectly by the instructions contained in this book or by the computer software and hardware products described in it.

  Trademarks

  Many of the designations used by manufacturers and sellers to distinguish their products are claimed as trademarks. Where those designations appear in this book, and Peachpit was aware of a trademark claim, the designations appear as requested by the owner of the trademark. All other product names and services identified throughout this book are used in editorial fashion only and for the benefit of such companies with no intention of infringement of the trademark. No such use, or the use of any trade name, is intended to convey endorsement or other affiliation with this book.

  ISBN 13: 987-0-321-58006-1

  ISBN 10: 0-321-58006-0

  9 8 7 6 5 4 3 2 1

  Printed and bound in the United States of America

  TO MY DESIGNFUL DAUGHTER SARA

  Table of Contents

  Introduction

  The Age of Wicked Problems

  A One-Track Mind

  Go Ask Alice

  Design, Design, Where Art Thou?

  Brand and Deliver

  Agility Trumps Ownership

  Next, Eco-Everything

  Traditional Business Is Design Blind

  Part 1. The Power of Design

  A New Definition of Design

  Simon Says, Be a Designer

  How Is Creative Thinking Different?

  Designing the Way Forward

  Knowing, Making, and Doing

  The Organic Drivetrain

  The Ladder of Design Leverage

  Part 2. The Rebirth of Aesthetics

  A Language for the Senses

  Beauty in Nature Is Never Arbitrary

  What Is Good Design?

  Designing in Depth

  Part 3. Levers for Change

  A Flywheel of Innovation

  1. Take on Wicked Problems

  2. Weave a Rich Story

  3. Establish an Innovation Center

  4. Bring Design Management Inside

  5. Assemble a Metateam

  6. Collaborate Concertina-Style

  7. Introduce Parallel Thinking

  8. Ban Powerpoint

  9. Sanction Spitballing

  10. Think Big, Spend Small

  11. Design New Metrics

  12. Institute Branded Training

  13. Learn Through Acquisition

  14. Add a Seat to the Table

  15. Recognize Talent

  16. Reward with Wicked Problems

  A Sufficiently Advanced Culture

  Take-Home Lessons

  Wicked Solutions

  Recommended Reading

  Acknowledgments

  Index

  About the Author

  Preface

  Welcome to the future of business. Whether you’re the CEO of a global firm or the newest employee in a startup, the principles in these pages will help you ride powerful currents of change. It’s too late to label this book a manifesto—the revolution has already begun. Instead, I hope THE DESIGNFUL COMPANY will serve as your personal guide to the challenging world of nonstop innovation.

  In my first whiteboard book, THE BRAND GAP, I showed how to bridge the distance between business strategy and customer experience with five interconnected disciplines. In my second book, ZAG, I drilled down into the first and most strategic of these five disciplines, radical differentiation. Now, in THE DESIGNFUL COMPANY, I’ll show you how to transform your company by unleashing the full potential of creative collaboration.

  I know your time is valuable, so once again I’ve compressed my thoughts into an “airplane book”—a quick read designed to deliver solid insights for years to come. I’ll be watching as you design an exciting future for yourself, your company, and the small community we call Earth.

  —Marty Neumeier

  Introduction

  BEAUTY EMERGES FROM ANY DESIGN THAT IS WORKING.

  —BUCKMINSTER FULLER

  The Age of Wicked Problems

  Industrial Age thinking has delivered some dazzling capabilities, including the power to churn out high-quality products at affordable prices. Yet it has also trapped us in a tangle of what social planner Horst Rittel labeled “wicked problems”—problems so persistent, pervasive, or slippery that they seem insoluble. Unlike the relatively tame problems found in math, chess, or cost accounting, wicked problems tend to shift disconcertingly with every attempt to solve them. Moreover, the solutions are never right or wrong, just better or worse.

  The world’s wicked problems crowd us like piranha. You know the list: pollution, overpopulation, dwindling natural resources, global warming, technological warfare, and a lopsided distribution of power that has failed to address massive ignorance or Third World hunger. In the world of business, managers face a subset of these problems: breakneck change, omniscient customers, balkanized markets, rapacious shareholders, traitorous employees, regulatory headlocks, and pricing pressure from desperate global competitors with little to lose and everything to gain.

  2008 Survey of Wicked Problems[*]

  Sponsored by Neutron and Stanford University

  1 Balancing long-term goals with short-term demands

  2 Predicting the returns on innovative concepts

  3 Innovating at the increasing speed of change

  4 Winning the war for world-class talent

  5 Combining profitability with social responsibility

  6 Protecting margins in a commoditizing industry

  7 Multiplying success by collaborating across silos

  8 Finding unclaimed yet profitable market space

  9 Addressing the challenge of eco-sustainability

  10 Aligning strategy with customer experience

  [*] A wicked problem is a puzzle so persistent, pervasive, or slippery that it can seem insoluble.

  In a 2008 survey sponsored by Neutron and Stanford University, 1,500 top executives were asked to identify the wickedest problems plaguing their companies today. While the list included the usual suspects of profits and growth, it also revealed concerns that hadn’t shown up on corporate radar screens until now: aligning strategy with cust
omer experience, addressing eco-sustainability, collaborating across silos, and embracing social responsibility. The number-one wicked problem cited by leaders was the conflict between long-term goals and short-term demands.

  Clearly, these were not the concerns of 20th-century managers. The last management obsession of the 20th century was Six Sigma, the total-quality movement inspired by Dr. W. Edwards Deming and his postwar work with the Japanese. Six Sigma has been so successful that quality has virtually become a commodity. Customers now expect every product and service to be reliable, affording no single company a competitive advantage. Unfortunately, the more progressive elements of Deming’s philosophy were all but ignored by a business mindset that preferred the measurable over the meaningful.

  A One-Track Mind

  When we look around and see today’s companies and brands beset by distrustful customers, disengaged employees, and suspicious communities, we can link these problems to a legacy management style that lacks any real humanity. The model for 20th-century management was not the warm humanism of the Renaissance, but the cold mechanics of the assembly line, the laser-like focus of Newtonian science applied to the manufacture of wealth. The assembly line was intentionally blind to morality, emotions, and human aspiration—all the better to make your competitors and customers lose so you can win.

  Yet business, at bottom, is not mechanical but human. Today we’re finding that innovation without emotion is uninteresting. Products without aesthetics are uncompelling. Brands without meaning are undesirable. And a business without ethics is unsustainable. The management model that got us here is underpowered to move us forward. To succeed, the new model must replace the win-lose nature of the assembly line with the win-win nature of the network.

  In 2006, when Ford Motor announced plans to close 14 factories and cut 34,000 jobs, Bill Ford made a revealing statement: “We can no longer play the game the old way. From now on, our vehicles will be designed to satisfy the customer, not just fill a factory.” Too little, too late. While Ford was figuring this out, Toyota had already been satisfying customers for years.

  We’ve spent the last century trying to fill factories and making minor tweaks to the same basic idea of efficiency. The high-water mark in the quest for continuous improvement is Six Sigma, yet THE WALL STREET JOURNAL cited a 2006 Qualpro study showing that, of 58 large companies that have announced Six Sigma programs, 91% have trailed the S&P 500. We’ve been getting better and better at a management model that’s getting wronger and wronger.

  Go Ask Alice

  In an era of Six Sigma sameness, it’s no longer enough to get better. We have to get different. Not just different, but REALLY different. In ZAG I proposed a 17-step process to create the radical differentiation necessary for companies, products, and brands stand out from a marketplace of increasing clutter. Thanks to unprecedented market clutter, differentiation is becoming the most powerful strategy in business and the primary beneficiary of innovation.

  So if innovation drives differentiation, what drives innovation? The answer, hidden in plain sight, is design. Design contains the skills to identify possible futures, invent exciting products, build bridges to customers, crack wicked problems, and more. The fact is, if you wanna innovate, you gotta design.

  Imagine a crazy world where what you learned in business school is either upside down or backwards—where customers control the company, jobs are avenues of self-expression, the barriers to competition are out of your control, strangers design your products, fewer features are better, advertising drives customers away, demographics are beside the point, whatever you sell you take back, best practices are obsolete at birth; where meaning talks, money walks, and stability is fantasy; where talent trumps obedience, imagination beats knowledge, and empathy trounces logic.

  If you’ve been paying close enough attention, you don’t have to imagine this Alice-in-Wonderland scenario. You see it forming all around you. The only question is whether you can change your business fast enough to take full advantage of it.

  The management innovation that is destined to kick Six Sigma off its throne is design thinking. It will take over your marketing department, move into your R&D labs, transform your processes, and ignite your culture. It will create a whip action that will bring finance into alignment with creativity, and reach deep into Wall Street to change the rules of investing.

  Design, Design, Where Art Thou?

  The discipline of design has been waiting patiently in the wings for nearly a century, relegated to supporting roles and stand-in parts. Until now, companies have used design as a beauty station for identities and communications, or as the last stop before a product launch. Never has it been used for its potential to create rule-bending innovation across the board. Meanwhile, the public is developing a healthy appetite for all things design.

  One survey by Kelton Research found that when 7 in 10 Americans recalled the last time they saw a product they just had to have, it was because of design. They found that with younger people (18–29), the influence of design was even more pronounced. More than one out of four young adults were disappointed in the level of design in America, saying, for example, that cars were better designed 25 years ago.

  In Great Britain, a recent survey commissioned by The Design Council found that 16% of British businesses say that design tops their list of key success factors. Among “rapidly growing” businesses, a whopping 47% rank it first.

  The mushrooming demand for design is being shaped by a profound shift in how the first world makes its living: creativity in its various forms has become the number-one engine of economic growth. The “creative class,” using the words of University of Toronto professor Richard Florida, now comprises 38 million members, or more than 30% of the American workforce. McKinsey authors Lowell Bryan and Claudia Joyce put the figure only slightly below at 25%. They cite creative professionals in financial services, health care, high tech, pharmaceuticals, and media and entertainment who act as agents of change, producers of intangible assets, and creators of new value for their companies.

  When you hear the phrase “innovative design”, what picture comes to mind? An iPhone? A Prius? A Nintendo Wii? Most people will visualize some kind of technology product. Yet products—technological or otherwise—are not the only possibilities for design. Design is rapidly moving from “posters and toasters” to include processes, systems, and organizations.

  Dr. Deming, the mid-century business guru who inspired Six Sigma, had some far-reaching ideas beyond quality control. You’d expect his thinking to be stuck in the rusty past, but it remains remarkably progressive by modern standards. His trademark 1982 “System of Profound Knowledge” was an attempt to get managers to think outside the system they’re working in. It featured a list of “deadly diseases,” including a lack of purpose, the mobility of executives, and an emphasis on short-term profits (sound familiar?). Among the diseases was an over-reliance on technology to solve problems.

  The sure cure for Deming’s diseases, as well as for the top ten wicked problems, is design. It’s the accelerator for the company car, the power train for sustainable profits: design drives innovation; innovation powers brand; brand builds loyalty; and loyalty sustains profits. If you want long-term profits, don’t start with technology—start with design.

  Brand and Deliver

  There are only two main components for business success: brands and their delivery. All other activities—finance, manufacturing, marketing, sales, communications, human relations, investor relations—are subcomponents.

  In THE BRAND GAP I defined a brand as a person’s gut feeling about a product, service, or company. I showed where brands derive their financial value, drawing a distinction between me-too brands and charismatic brands. Charismatic brands support higher profit margins because their customers believe there’s no substitute for them; they form unbreachable barriers to competition in an era of cutthroat pricing.

  A former editor of WINDOWS magazine, Mike Elgan, illust
rated the difference between ordinary brands and charismatic brands in two succinct sentences: “Microsoft CEO Steve Ballmer is famous for a crazy video in which he yells, I—LOVE—THIS—COMPANY. With Apple, it’s the customers who shout that.” This may explain why BusinessWeek’s top-100 survey placed Microsoft’s brand value at only 17% of its market cap, and Apple’s at an impressive 66%.

  The well-documented connection between customer loyalty and profit margins has encouraged many companies to launch so-called loyalty programs, using incentives or contracts to “lock in” customers. Trouble is, customers don’t like to be locked in. It makes them disloyal. Not only that, loyalty programs are expensive to manage and easy to copy. They’re nothing more than Band-aids on a much deeper problem—offerings so uncompelling that customers prefer to keep their options open.

  In the previous century, a little brand loyalty went a long way. Often, what passed for loyalty was merely ignorance. If customers didn’t know what their options were, they would simply stick with the devil they knew. Today’s Microsoft, with its low brand score, may be one of the last major companies to profit this way. In the new century, customer ignorance won’t be enough to keep competitors at bay.

  To build a brand that fosters voluntary loyalty, it’s better to do what Google does: Use design to create differentiated products and services that delight customers.

  If you can deliver customer delight, you can dispense with the high cost and relationship-straining effects of loyalty programs. Organic loyalty beats artificial loyalty every time.

  The central problem of brand-building is getting a complex organization to execute a bold idea. It’s as simple and as vexing as that. First, you have to identify and articulate the right idea. Next, you have to get hundreds or even thousands of people to act on it—in unison. Then you have to update, augment, or replace the idea as the market dictates.