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The Design of Business by Roger Martin April 25, 2011

Posted by Sabou in Design Thinking.

Roger Martin is the dean of the Rotman school of business. In his book, The Design of Business, he nicely unfolds the importance of reconciling analytical thinking and design thinking in order to gain competitive advantage. Starting from post world war II period, Roger Martins tells us the story of sustainable businesses and how some business owners have created breakthroughs in the market over time. The book contains several case studies such as McDonalds, Target, RIM, etc. and how the CEOs/managers could come up with promising methods for delivering innovative and efficient businesses.

In short, the main question that the book arises is: “how to design a successful business?”. Author offers the notion of “knowledge funnel”.

The knowledge funnel is the progress of mystery to heuristic to algorithm. Author argues that successful organizations are ones that are able to extract business algorithms from obscure issues. It seems simple but it is a challenging journey that starts with a question and might end to a strategy.

In summary, knowledge funnel process is:

1 – Exploration of mystery that involves pondering over a concept or an issue

2 – Heuristic which is understanding the mystery and narrowing it down to a manageable size

3 – Running, controlling, and studying the heuristic until finding the formula.

It is about looking at a problem form the client perspective, arising a question, trying innovative and original ideas until finding the right rules or set of processes.

He also compares two school of thoughts: “analytical thinking” and “design thinking”. As he describes in his book, the model for value creation requires a balance and reconciliation between these two approaches.

Analytical thinking is the old school that is based on rigorous and quantitative analysis. The goal of this strategy, as he explains, is mastery through diligent analytical process.

Design thinking or intuitive thinking, that opposes the old-fashioned one, involves creativity and original innovation. It is when the person knows without reasoning.

I want to take a break from the book and gently remind you of what Don Norman stated in his article – Design Thinking: A useful Myth.

“What is design thinking? It means stepping back from the immediate issue and taking a broader look. It requires systems thinking: realizing that any problem is part of larger whole, and that the solution is likely to require understanding the entire system”, he says. I believe that the core of Norman’s view is Rogers’ knowledge funnel and the balance between analytical and intuitive thinking.

Although he emphasizes the importance of the knowledge funnel for design thinking, not every mystery can become an algorithm. It is more true when it comes to methods that  requires high level of tacit knowledge which is hard to codify. Another challenge is balancing between analytical and intuitive thinking within organizations. Most often, companies choose – not intentionally necessarily – either exploration or exploitation and neglect the other one. Third challenge emerges when the competitors follow your algorithm. To stay competitive, you need to start over; in other words, the process of knowledge funnel is cycling and not linear.

The development of design thinking asks for continuous practicing and staying in balance. Companies need to know how to delve into the knowledge funnel, pay the price for understanding an unknown situation, devise question(s), explore valid solution(s), and be able to exploit those solutions efficiently.

Here is a short visual summary of the book. Enjoy it!



1. Jon Pittman - April 25, 2011

Saghar – Martin makes the case that thinking differently about designing a new business is necessary He uses the term design-thinking but the way you describe it sounds a lot like the experimental approach used in the scientific method. Do you see a difference?

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