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Design of Business – Roger Martin’s New Book on creating “integrative” organization December 7, 2009

Posted by Sehoon Min in [Books] Ways of Thinking.
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Roger Martin’s previous book “Opposable Mind” was about how innovative leaders think.  Martin argues that it is their “integrative thinking” that helps them to overcome the dichotomy/duopoly trap and to generate something new and meaninful.  His new book “Design of Business” takes this innovation generating force into organizational level.  

In his mind, market disrupting businesses such as McDonald’s has been created through the process of going through mystery, heuristics, and algorithm, the process that he names as “knowledge funnel”.   Mysteri is about asking question, heuristics is about generating hypothetical explanation or running prototypical operation about the matter in question, and the algorithm is about getting rid of subjectivity and uncertainty out of  the prototypical operation to create a folumaic process of  scalable and sustainable output generation. 

Most of the companies are focusing their effort on the sophistication of their heuristics or algorithms, the tentency that Martin calls “exploitation”.  However, to grow sustainably, an organization has to find new opportunities by serving untapped needs in the market, which necessitates whole new circle within the knowledge funnel.  This work of going through the whole circle in knowledge funnel is called “exploration”.   It is only the organizations that are balanced between these two activities who can achieve sustained prosperity.  He calls this kind of organization as “design thinking organization”, noting that design thinking embodies the harmony of intuition, the key requirement for ‘validity’ that supports exploration, and declaritive reasoning, the key requirement for ‘reliability’ that supports exploitation. 

The major portion of this book is devoted to the ways that an organization can transform itself into design thinking organization walking through the example of P&G since A.G.Lafley as its CEO.   Above all the details, what was most impressive to me was his arguments that the core  competency of those design thinking organizations should be nothing but “the speed of movement through the knowledge funnel, which produces perpetual advantage in both cost and innovation.”   To enable this, the most fundamental device for the organization was to have a management capability of ensuring freeing-up of resources for exploration through extensive or intensive building of algorithms.   For instance, P&G’s ‘exploration’ project teams were only possibly created after developing manuals for brand management.  With these manuals, junior managers were able to do brand management themselves, while senior managers were freed up from those tasks to engage in new mysteri finding, i.e. new exploration of new brand creation.   This reminds me of Geoffrey Moore’s recent book “Dealing with Darwin” where Moore talks about managing resources so that a firm can constantly invest in trying and developing new “core” withough having its resources bound by encumbent stable (and sometimes stale) business that he calls “context”.

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