Innovation at Risk
Business management trends follow an interesting pattern—they track economic cycles. When times are good, the focus is on growth, creativity, and innovation. As the economy slows, attention turns to cost-cutting, productivity, and process control. Psychologically, this makes sense. Humans are programmed to hoard resources in uncertain environments—it's how our ancestors survived the ice age.
This cyclical pattern suggests managers believe profitable growth is impossible in a sluggish economy, so they focus on bottom line management until times improve. But profitable growth is exactly what successful innovation delivers. So why dump innovation when the economy decelerates? Wouldn't we all prefer profitable growth to just growing our profitability?
Design Thinking Is Not Enough
The economic wheel is turning. Companies such as General Electric (GE) are already shifting away from innovation toward portfolio restructuring aimed at incremental growth. Others, such as Motorola (MOT) and Whirlpool (WHR), are refocusing their innovation efforts through the lens of design. There's a belief in some quarters that design can keep innovation relevant—that applying design thinking to our biggest business problems will deliver sustainable growth. "If we can just get business people to think more like designers," the argument goes, "we'll get them out of their linear, analytical boxes and inspire them to generate novel, customer-centered solutions that will drive new growth."
The problem with this thinking is twofold: First, it paints businesspeople who aren't designers as uncreative and inattentive to customer needs. Worse, it runs the risk of overpromising what design thinking can deliver, which is a surefire way to undermine the role of design, and innovation, in creating new business value.
We've Been Down This Road Before
Consider the fate of strategic planning. In the 1960s and 1970s, strategic planning ruled the roost in the business community. Companies flocked to build strategic planning capabilities, and business schools scrambled to teach the new discipline. Strategic planning was hailed by consultants, academics, and newly minted MBAs as the foolproof path to sustainable growth, bridging the divide between performance management and business planning. Strategic planning groups sprang up in every business unit, and corporate bureaucracies were created to coordinate all the new planners.
Unfortunately, this zeal for strategic planning was based more on theory than on proven business results. Once it was revealed that most companies did just as well with or without strategic planning, CEOs fought back. Jack Welch led the charge at GE, and other leaders followed. As BusinessWeek reported in 1984 "scores of planners have been purged." Strategic planning as a practice became widely viewed with suspicion, a sentiment that lingers in many corporations.
Does this mean that strategic planning provides no benefit? Of course not. It was overzealous belief in the power of a single solution that left many companies ill-positioned for the economic challenges of the 1970s. Overpromising the impact of any particular discipline almost inevitably leads to its subsequent marginalization. This is the risk inherent in the current trend equating design with innovation.
Design Drives New Growth
The contrasting approaches to design as an agent of change and growth at Dell (DELL) and Hewlett-Packard (HPQ) help illustrate this problem. At HP, the approach is strategic. As CEO Mark Hurd works toward a leaner organization, HP's design leaders have focused on simplification, reducing SKUs and crafting reusable design elements for application across a wide variety of products. By using design thinking to craft products that are more attractive, easier for consumers to use, and less expensive to produce, designers at HP are connecting with both a larger corporate strategy and real people's needs to drive growth and profitability. Design is being used as a lever within a larger strategic framework, yielding focused innovations in products, processes, and metrics that are clearly benefiting the company's top and bottom lines.
At Dell, design appears to be operating mostly in response to marketplace trends, unconnected to a larger strategy. Flashy new colors and finishes introduced last year are grabbing attention but are also likely to increase costs and add production complexity. As the company moves beyond the direct-to-consumer model into multibrand retail venues, its products must now compete side-by-side with the likes of HP, Lenovo, and Toshiba. Is more style at a higher price what people want from Dell—the onetime champion of ever-improving value? Only time will tell. It's too early to determine the impact of these changes on the company's overall performance. For now, design for its own sake seems to constitute the whole of Dell's innovation strategy.
Build a Bigger Toolkit
Giving design a seat at the leadership table can and should deliver real business benefits. Applying the tools and techniques of design practice to large, complex business challenges can yield interesting insights and novel solutions. But promising more than design thinking can deliver risks a real backlash that could not only discredit design, but also accelerate the rejection of innovative growth as a goal.
Leading development of the Harley-Davidson (HOG) Museum, I faced a range of business challenges: selecting the right location, synthesizing the needs of the company and Milwaukee city planners, shaping a building that was both iconic and timeless, telling stories that would engage visitors from casual tourists to the devoted Harley faithful, and designing a sustainable business model. Design thinking was often helpful, and sometimes essential, in solving these complex problems—but only when connected with empathy and business strategy. And other techniques were equally valuable in identifying hidden opportunities for community-building, co-created experiences, and new business platforms. There is no single, turnkey innovation solution.
Design thinking is a useful innovation tool, not the absolute source of sustainable growth. Meeting complex growth challenges requires a broad range of capabilities from across the social sciences, business strategy, and design. Just as there is no one, best approach to innovation, there is also no evidence that profitable growth is impossible in a slow economy. As the economic cycle turns again, managers face a critical choice: Will they join the packs that give up on growth while waiting for better times? Or will they find new ways to grow during the coming storm?
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.