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Capitalism Needs Design Thinking

An interview with Tim Brown, CEO and President of IDEO, and Roger L. Martin, Academic Director of the Martin Prosperity Institute at the Rotman School of Management at the University of Toronto. Moderated by IDEO editorial director, Shoshana Berger.


Tim Brown and Roger Martin have been in conversation about how design thinking can impact the world of business for over 12 years. As Roger embarks on a new mission with the launch of the Martin Prosperity Institute, the two will act as more formal advisors to each other. We took the occasion to sit down with Tim and Roger to ask them what’s top of mind as they map the future of their organizations.

Shoshana Berger: Tell me the story of how you originally met.

Roger Martin: I went back to my Outlook and it was on October 22, 2002 when I flew out with A.G. Lafley and Claudia Kotchka for a visit very early in IDEO’s work with Proctor & Gamble.

Tim Brown: When A.G. became CEO, he decided he wanted to do something about design. Claudia reached out to us and said that she wanted to bring A.G. out to meet with you guys to see whether it made sense for us to do something deeper. He brought you out with him and we sat in that meeting room at 100 Forest in Palo Alto and we went from there. But I didn’t realize it was in October 2002, which makes it 12 years ago, which is quite a lot.

RM: I do remember Tim introducing me to David Kelley because I told Tim a little bit about what I was up to at the Rotman School, bringing design and integrative thinking there, and it was so funny because David listened to me talking about that and then tried to prepare me for the fact that it probably wasn’t going to work, and he said: “Listen, I’ve tried to do all this stuff at Stanford, but I’ve got to try and talk my chair into doing something other than what he’s comfortable with, and then he’s got to go and talk to the dean and try to get the dean to do something that he’s really not comfortable with, and Roger it’s just like pushing a rock up hill.” I remember Tim turns to David and says, “But David, he is the dean!” Then David says “Okay, that may work.”

It’s interesting, too, because he was quite chagrined at the time about how much progress could ever be made at Stanford, and in the 10 or 12 subsequent years, he’s gone from the fringes to the epicenter there.

TB: Exactly. It’s one of those places that I think where we can argue that design has had an impact.

SB: Now Roger, you’re starting something new. Can you tell us about that?

RM: It’s called the Martin Prosperity Institute, and I’m studying the future of democratic capitalism. I love democratic capitalism but I’m very worried that we’ve now gone 24 years without the median household income in America rising, so it’s the same in 2013 as it was in 1989. That’s unprecedented in American history. The longest that’s ever happened before is when it took just under 20 years to recoup the loss in the Great Depression of the median income. Why I focus on the median is you need that voter to vote for you because the 51st percentile voter will determine who will be in power. I worry that while we have had this unprecedentedly long period of stagnation of the 51st percentile voter and their family, we’ve had it coinciding with the top 1 percent of the economy doing spectacularly. In the Great Depression, when median incomes were falling, actually the top 1 percent absolutely took it in the teeth; in fact income inequality shrank during that period.

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I’m worried that democratic capitalism depends on the vast majority of the citizenry believing in the system and that the belief in that system is going to fade away and we may try something else or do radical things that over history haven’t worked out so well. That’s what I’m studying and asking from the following perspective: what is the infrastructure that lies under democratic capitalism? I would argue there is physical infrastructure—we need road, subways, the internet, etc. There’s transactional infrastructure – voting systems, capital markets, laws and regulations that allow us to transact in a democratic capitalist system. And finally there is knowledge infrastructure, the accumulated knowledge that we use. All those things, to my way of thinking, just lie underneath the machine of democratic capitalism. I’m asking the question, is the current stagnation and rising inequality a function of the infrastructure not being invested in properly? Have we got the wrong infrastructure? Is it no longer fit for purpose? I want to study that and come up with ways to make this democratic capitalist system work better. So it’s a tiny little project.

SB: Tiny.

RM: I always do tiny little things. Tim, this is a massive challenge obviously. Are there ways in which designing thinking can help?

TB: Absolutely. In many cases, when we look at, if you like, underlying pieces of infrastructure, whether it be the education system or the health system or the way we design and build our cities, or maybe even our financial system, they rarely get looked at from the perspective of what happens if you radically redesign this system, or what happens if we radically evolve this system over time in order to meet some purpose that we’re clear about and in order to meet the needs of the participants in this system in a better way than we’ve being doing it.

They are design problems and whether it’s about using the techniques and methodologies of design to bring hypotheses and proposals out into the world much more rapidly and try them out and evolve them in real life, rather than spending months, years, or even decades writing hypothetical reports in policy think tanks where it doesn’t actually have much of an impact in the end, or whether it’s the skills of storytelling that come along with design that helps describe new possibilities in a way that can create some action.

Of course, at IDEO we’ve long had a deep interest in many of those same infrastructural systems. I was thinking pretty big when I was thinking what’s the future of healthcare or how do we fix education. But then to wrap it up into an even bigger context and say well no, it’s actually about how society works, how democratic capitalism works, that’s incredibly exciting. I’m pretty jazzed about participating in that journey. Setting new challenges is one of the best ways of pushing or discovering new ways of designing better.

Setting new challenges is one of the best ways of pushing or discovering new ways of designing better.

– Tim Brown

RM: IDEO is the place that figures out how to do that in a way that stuff actually happens. That’s the key here, which is why we have to make stuff happen out of the Institute. Tim is absolutely right, we can’t just write policy papers. Instead, what I want to do is do experiments, actually try stuff out, and help people who say sorry Roger, that’s just the way it is around here, that’s the only way we can or have ever done it. I actually think it’s sort of the hidden secret of IDEO, sophisticated intervention design.

SB:  Is that idea of rapid prototyping and disrupting the natural path of government taking hold at all or is that part of your project?

RM: I don’t see it taking hold much. I think the way that government generally works is to think, think, think, think, and then finally create legislation that brings about some change and then they say okay, we’re finished with that. Then people go and figure out how to game that legislation and the government doesn’t do anything about it. Whereas if they had a design view of it, they’d say you never stop kind of prototyping and when you pass a bill, that’s just the best idea we’ve got now, we have to go see how that works in practice, and then fix it. That’s just not the mentality.

What we’re working on now is the upside-down thesis—which postulates that government investment in a piece of infrastructure gets perverted and ends up not benefiting the folks it was designed for. The Patent Trademark Office was built for all of Americans to benefit from an innovation culture and to really reward people for being innovative. Now it has become a vehicle that benefits patent trolls. If government had a design mentality, they would have created the Patent and Trademark Office and said, it’s not going to work the way we had hoped and we’ll tweak it again and we’ll tweak it again, and they wouldn’t feel we failed. What IDEO would say is, you can’t ever figure out whether something is awesome until users use it. I think that’s the mentality governments are going to have to use to a greater extent.

TB: If I can just say, I think everybody is captured with the notion that we’ve got gridlock in Washington—we have to stop those Republicans or we have to stop those Democrats because if they get that thing done, then it’s done and you don’t have another shot at it. If instead the mentality was all bills are prototypes, if you had that, I think the motivation behind gridlock would go away. Washington works on completely anti-design principles.

SB: One could argue that the founding fathers thought of amendments as iterations, but it was a much slower-moving culture than today. Tim, are there modern enlightened leaders who you’ve seen adopt rapid prototyping and design thinking?

TB: There are plenty of business leaders who have done that, and have taken it beyond just the latest innovative product or service. One we were talking about earlier, AG Lafley, committed to that in his first tenure at P&G, and used it not just to reform innovation at P&G but also to some degree reform a culture and extend and expand how business leaders at P&G were expected to think about their businesses and growth in their businesses and serving their consumers. He’s one of the few CEOs that I ever met that whenever you said let’s meet, it would be let’s meet at this supermarket or let’s go check out the store. He was obsessive about understanding the world from the consumer’s perspective. He’s somebody who was hugely transformative for us and for me personally.

Somebody else, I think the way we work closely with today is an entrepreneur, a very successful business entrepreneur in Peru, Carlos Rodriguez Pastor. His stated purpose is to double the size of the middle class in Peru. He runs a holding company called Intercorp which has many different companies, several banks and various other financial services and organization, a big supermarket chain, a cinema chain, Home Depot-like retail, schools and universities, pharmacies, all the businesses that serve the emerging middle class in Peru. One of the first engagements that we carried out with him was to design a new school system for Peru that’s capable of delivering high quality education at private schools but $100 a month, so middle class prices and it’s scalable. A couple of years into it, we’ve now got 23 schools built, doubled the math and English achievement compared to what the national average is. Carlos thinks really big.

SB: Tim, what impact has Roger had on your thinking over the years?

TB: When we first met, Roger was writing his book The Opposable Mind, and in the concept of integrative thinking there was a huge overlap with design thinking. I referred to it quite heavily in my book when I was talking about design thinking. I was very influenced by that. It’s what got me to realize in fact that some of the most natural design thinkers in business are actually CEOs who are able to hold these tensions in their mind and yet make choices and come up with solutions that make productive and creative use of these tensions—which is so much about what design is.

Some of the most natural design thinkers in business are actually CEOs who are able to hold these tensions in their mind and yet make choices and come up with solutions.

– Tim Brown

It caused me to realize that there is an audience at the CEO level for design thinking, because that’s often what they’re doing, the best of them are doing that, and that was a big insight to me and gave me confidence that design thinking as a concept was one that could break out of the conventional focus of R&D and new product development, to actually begin to impact sort of leadership as a whole and the way we tackle systems and process problems in our organizations and in our institutions, which of course goes all the way back to what we’re now talking about with the institute and democratic capitalism.

RM: I was doing all this work on integrative thinking and realizing that all these people who were making these awesome great decisions were not actually using most of the approaches that they supposedly should, that they were taught at business school – analyzing things to determine answers. They were making some kind of a creative leap, and I was trying to figure out how do we characterize what they’re doing and the process by which they’re doing that. Tim and I met to talk about this in the summer of 2003 and out of that meeting, we firmed up in one another’s minds the notion of design thinking. In fact, I think out of that meeting, both of us started talking about design thinking, because I think what, he can correct me, but came to the conclusion of is that these companies are asking them to abstract out of what they do to design a product, a way of thinking that they can then apply to these other things that aren’t products or logos or any of the traditional design fields, and you I think became convinced there was this abstraction of the design principles that’s design thinking, and I came to the conclusion that it was taking that same thing that these business decision makers had to do if they wanted to get beyond the kind of choices that were available to you if you just tried to analyze your way to an answer. I think of August 19, 2003 as in some sense the birthplace formally of design thinking, or at least Tim’s and my sort of characterization of it.

SB: Tim, where has design thinking failed and where has it succeeded?

TB: It’s succeeded beyond my wildest dreams in terms of a concept that people have received with a high degree of enthusiasm. There’s hardly a business school anywhere today that hasn’t followed in the footsteps of Rotman and attempted to build some kind of design thinking program. The idea that there is an optimistic, creative, thoughtful alternative to business as usual in almost every sector, every corner of society, that’s been remarkable. I didn’t anticipate that.

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What worries me a little bit is that we have a lot of people out in the world who think of themselves in the good sense as design thinkers without any of the actual skills that it takes to do design thinking effectively. You have to find ways of delivering this stuff at scale because design schools have certainly never done that—they failed miserably to get to any kind of scale. That would be one of the things I would say that has been a lesson, that we were slow to catch on to—the fact that we needed to worry about the skills which people needed to use in order to be effective at design thinking. We’re doing some experiments with teaching these skills that we’re just beginning to put out there and are excited about.

RM: My friend Dan Pink argued in an HBR piece in 2004 that MFA is the new MBA and I wrote to Dan to say that if that’s the case we have a problem because America pumps out 1,500 MFAs a year and 150,000 MBAs. We’re going to have to figure out how to scale out to those MFAs pretty seriously because that volume means a mere 30 MFAs per state per year. That’s a rounding error. This is one of the reasons why I was so keen on transforming business education because there’s this huge infrastructure, 27 percent of all graduate students in America are in an MBA program. It’s just huge. It’s massive. If they’re all being taught how to analyze the things to death and to make tradeoffs instead of create the future, there’s a lot of them heading out into business and shaping it.

Sumantra Ghoshal wrote this great article in 2006 that said there’s a self-fulfilling prophecy created by MBA programs. They teach you that everything is a tradeoff—it’s guns or butter. His argument was if you have enough people going out into world saying everything is a tradeoff, they will make it so.

SB: Which is a fundamentally pessimistic point of view. So, how do we seed organizations that have a fundamentally optimistic point of view?

RM: The only way that you can get organizations to change is to give them different tools and this is why IDEO and the d.school are so important. Rapid prototyping—that’s a tool—you don’t have to have a perfect prototype, it could be really low-res and then people can say oh, okay, I now have a tool for approaching this.

For me, the answer is getting a bunch of the designerly tools into more peoples’ hands so that they can have confidence. People want to succeed. I wrote an article about this, after survival and procreation, the third greatest human need is success. They will go to all sorts of lengths to succeed, including setting the bar so low that they will always succeed. If you don’t have a tool that you have confidence in, one that would enable you to do the thing we want you to do, you’ll do something else so you can succeed even if succeeding is a low bar. If we give you economic tools and we say it’s all a tradeoff, you calculate the NPV of guns and the NPV of butter and decide how much butter to have and how many guns to have, and you’ve succeeded, you’ve done as good a job as you can.

The only way that you can get organizations to change is to give them different tools and this is why IDEO and the d.school are so important … the answer is getting a bunch of the designerly tools into more peoples’ hands so that they can have confidence.
– Roger Martin

TB: I couldn’t agree more with what Roger just said. If we want to scale the effects we have, we need to put the tools in the hands of people who can then go and use them, even when we’re not around. Yes, we can continue to do great work with organizations and I hope we can raise the bar for them, but you have to put the tools in peoples’ hands and then teach them how to use the tools—whether it’s a clear articulation of the methods and skills of understanding users or approaches to prototyping across a broad swath of media from business models, to physical prototyping, to digital prototyping, to experience prototyping, whatever it might be…. Even digital applications that help people organize around design the way that our openIDEO platform does. It helps bring 60,000 people together to collaborate on design challenges. That’s a tool and it has a clear methodology and asks people to contribute to the process in ways that suit them. It gives us access to creative talent that otherwise we might not have access to. There’s tremendous opportunity in exploring what might be useful tools to get into the hands of people in business and in other sectors of society.

SB: As organizations learn how to use these tools and become more creatively confident, do you think there has to be a new kind of social contract between employers and employees?

TB: I think it’s simple enough to answer that question when you look at the organizations that actually are creative and do generate lots of good outcomes through taking the design-based approach. Whether that be Apple or Nike or the Container Store—you look at their cultures and they’re different, they’re not the same as cultures of organizations that don’t take that approach. They value different skills, they often put different people in decision making positions, people you wouldn’t normally expect to be there, people who have intuition, not just lots of analytical evidence. They often have a different sense of purpose that’s not driven purely by shareholder return or Wall Street quarterly reporting. I think there’s a big field experiment going out in the world already and there are organizations, as I say, that are focusing on a more design thinking approach and a more optimistic approach, and I think we can see that helps.

RM: My favorite management thinker of all time is Peter Drucker and he said it in 1959, he said there’s this new kind of worker that’s emerging called the knowledge worker, and what’s different about knowledge workers is that physical workers who are hired for their strong arms, legs, and back can disassociate themselves from their work, so they can go home after work and say I am different than my work. He said when the most powerful muscle you use on the job is the one between your ears, and it’s impossible to disassociate you from your work—you are your work—therefore, you have to treat these people entirely differently because their whole being is captured in their work. He said you have to treat them more like volunteers; they’re volunteering their brain and their soul for your organization. Wow: he said this in 1959. Everybody said is this guy on drugs, what’s he talking about, and now it is so profoundly true and that’s what I would say that all the organizations that you mentioned, Tim, I think have a real sense of kind of treating their workers like volunteers, they’re donating their efforts, a chunk of their life, to the work so you better darn well make it a super fulfilling environment, don’t have massive numbers of rules, you do this and this and this. It’s like no, here’s what we’re trying to accomplish, let’s try and accomplish it together and we’ll all feel proud and fulfilled.

The world has taken a long time to figure it out, which gives me a certain amount of confidence which is that some things do have sort of a long tail, but he was right and the firms in some sense that implicitly or explicitly listened to him, I think are winning the battle.

TB: The infrastructure we’ve built is the lagging system and still drives so much behavior. The education system, Wall Street, and the financial system is driving the behavior of business leaders; trade systems drive how countries behave with each other. There are so many things that have an enormous influence on what happens every day in business that is outdated.

RM: It’s such a good point, Tim. Even as late as 1960, only 16 percent of the U.S. economy was powered by jobs that required any kind of meaningful independent judgment in their decision-making. That’s now up to 33 percent. Part of the tricky thing is knowledge workers are doing well economically—they will be at the top of that income spectrum—then the problem for America is that median worker is working in a job that requires very little independent judgment and decision making, and they’re not asked to use everything that they can be, should be, could be. They’re actually in a job where they’re just told: you move people from there to there all day long, you stand at the door of the emergency room, put people on stretchers, and move them over there. In my view and the view of Richard Florida is that the most important thing we can do to make the economy better and more prosperous and peoples’ lives better is to infuse most of those jobs with independent judgment and decision making.

Even as late as 1960, only 16 percent of the U.S. economy was powered by jobs that required any kind of meaningful independent judgement in their decision-making.
– Roger Martin

SB: It’s the only thing that will differentiate them from robots, who are taking over their jobs anyway, right?

RM: Or Indian or Chinese workers who are willing to work for a quarter of what they’re working for. That median worker is under enormous pressure, so they have more miserable jobs that are worse paying with much less job security than the knowledge workers. I think the transformation that is there for the taking is for companies to start seeing those jobs as jobs where the person can express independent judgment and decision making, but there’s where it goes back to Tim’s point, they need tools to do that. If they haven’t been taught tools, if the tools aren’t made available to them to think their way through issues or problems, what happens is IDEO goes into the hospital and interviews the orderlies and comes up with a better way to get people from the door of the emergency room into the operating rooms. The knowledge of how to do that is actually mainly in the heads of those orderlies, they’ve just never been asked and it takes IDEO to show up and engage their brains and use the tools that IDEO knows and they don’t know to redesign the system. We are not using a huge chunk of the brains of the people in the middle of the income distribution and job distribution and that’s what’s holding America back in some sense. Tim, do you agree?

TB: I completely agree and in fact, I think some of the places where I feel proudest of our impact has been in the healthcare environment, where we teach them how to do what we do and they go and do creative work, because we’ve given them the tools. You think about the retail environment, where classically retail workers are poorly paid and have little job security, but if those same retail workers are able to use the tools of design thinking to really understand the needs of the customer, constantly think around how the store environment might be better able to serve those needs and, therefore, make business far more successful because of it. By the way, that’s places what like the Container Store and Whole Foods do, and that’s why they pay their workers more than most retail businesses do and they get far more commitment from them. I think there’s the beginning of evidence to show that it pays off. I think there’s tremendous opportunity to bring down the barrier to entry as it were, of who gets to play in the knowledge-working environment. Instead of it being 33 percent of workers, let’s make it 50 or 60 or 70 percent. That alone would make an enormous difference.

RM: The thing I’m most proud of at the Rotman School is this program for teaching design thinking to K-12 students. I’ve been pitching this to make them the first jurisdiction where you cannot graduate from high school in Ontario without having learned a systematic approach to innovation, that you can come out and you know how to get deep user understanding, you know how to do rapid prototyping, you know how to convert that into a strategy. It doesn’t matter if you’re doing that in a government agency, it’s not just for business, it’s just a skill for life.

Tim, if Ontario was able to do that, I think we would be the jurisdiction that would be the fastest to get the 33 percent to 66 percent and to have the majority of the workers using their brains to redesign things to be better. It’s not what I’m doing at the MBA level, it’s the universality, if we could have everybody coming out, every kid coming out, they’re 18, they’re heading into the economy and they feel confident in innovating, they feel more confident in innovating than not because they’ve seen if you don’t innovate, bad things will happen. That’s a piece of educational infrastructure that I think we could change and have a huge impact. The thing that holds people back is they think, and this is where the Creative Confidence book is a great example, they think well, not everybody is creative, there are people in those classes who were born creative and this’ll be really good for them, but all those people who were born uncreative, it will be a waste of their time and a waste of our educational resources. We have to get people over that hump.

TB: It would be like arguing that everybody isn’t born a mathematician, therefore, we shouldn’t teach people math, it’s ludicrous. I wasn’t born a mathematician at all, but I’m still taught it and it’s still somewhat useful to me. I’m not even sure I was born a designer to be frank with you. I think I had certain traits that made me impressive in design, but when I compare myself to some of my peers that I have traveled my career journey with, who I do think of as being absolutely innate designers with this ability to like doing things completely intuitively without even knowing how they’re doing them, I don’t put myself in that category of designer. I had to learn how to be a designer, and I have to work at it. There are many, many people at IDEO who I don’t think would see themselves as kind of raw intuitive creative people, but they have a passion about creativity and they were willing to do the hard work to learn how to do it and have made very successful careers out of it. I think it’s completely specious, the argument that people aren’t creative.

RM: I have this confidence that if a person just leaves open a tiny possibility that they are not using their brain to the extent they could, magical things can happen.

I had to learn how to be a designer, and I have to work at it.
– Tim Brown

One of the great organizational learning theorists of the 20th century was a guy named Chris Argyris who taught at Harvard Business School, he was one of the founders of the Yale School of Management and then he came to HBS, and he worked on organizational defensive routines and how people organizationally behave in ways that get them the opposite of what they want, but they’re so proficient at it that they keep on doing it even though it doesn’t produce the results that they want. He was working with the senior partners of one of the world’s most famous strategy consulting firms. They hired him because they were having all sorts of interpersonal challenges between partners and their spouses. He almost had tears in his eyes when he told the story, which is he was teaching couples about how to talk through the work-life balance challenges of a partner together, and there was this one spouse who just left in the middle of it. He went out to talk to her and said here’s what I’m trying to accomplish, I hope you’re not taking offense, and I’d like to try to get you to the point where you and your husband can have a better relationship. She turned to him and said, “Chris, I know exactly what you’re trying to do, but it’s taken me 20 years to get used to the relationship this way and I’m done. That’s the way it’s going to be and I’m not going to do the work to make it something better.”

SB: He was 20 years too late.

RM: Yes. I kind of think of that as a metaphor for lots of people out there, who in their heart-of-hearts know they’re not using their brain, they could imagine things being better for their customers or their users or the like, but they just are dialed into something they know how to do well, so she knew how to have a crummy relationship with her husband but it was stably crummy, and she wasn’t about to experiment with a different way of having a relationship that could be better, she just wasn’t prepared to make the investment. In some sense, for both Tim and I, a big challenge is figuring out how to enable and empower those people to decide not to throw a proverbial wrench in the works.

TB: Right. The big challenge is to figure out how to empower people who are used to thinking in this way to raise their sights and design a better future.