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 user 2005-03-12 at 10:45:00 am Views: 109
  • #10818

    The Empathy Economy

    “Design thinking” can create rewarding experiences for consumers
    – the key to earnings growth and an edge that outsourcing can’t beat

    You can’t Six Sigma your way to high-impact
    innovation, but you can design your company to generate products and services
    that provide great consumer experiences, top-line revenue growth, and fat profit
    margins. That’s the sometimes-painful message CEOs in America are learning

    Quality-management programs can’t give you the kind of empathetic
    connection to consumers that increasingly is the key to opening up new business
    opportunities. All the B-school-educated managers you hire won’t automatically
    get you the outside-the-box thinking you need to build new brands — or create
    new experiences for old brands. The truth is we’re moving from a knowledge
    economy that was dominated by technology into an experience economy controlled
    by consumers and the corporations who empathize with them.

    “MASTERS OF HEURISTICS.”  Indian and Chinese engineers and
    manufacturers are doing more and more of the old cost- and quality-control
    Six-Sigma stuff (you haven’t seen anything yet in outsourcing), leaving U.S.
    corporations to build new business models around customer culture. America’s
    customer culture is a divide that foreigners have a hard time penetrating —
    which gives U.S. companies their best, and perhaps only, shot for growth. And
    design thinking is increasingly the discipline managers are embracing to
    penetrate this culture.

    Roger Martin, dean of the Rotman School of
    Management at the University of Toronto, is reshaping his entire MBA program
    around the principle that “businesspeople will have to become more ‘masters of
    heuristics’ than ‘managers of algorithms,’” that “design skills and business
    skills are converging,” as he said in the Winter, 2004, edition of the school’s
    alumni publication. It’s time to embrace a new value proposition based on
    creating — indeed, often co-creating — new products and services with
    customers that fill their needs, make them happy, and make companies and
    shareholders rich.

    Understanding, empathy, problem-solving — these are
    the heuristic managerial skills needed today, argues Martin, who advises Procter
    & Gamble (PG ) CEO A.G.
    Lafley. That should tell you a lot. Lafley is using design thinking to transform
    P&G into an innovation powerhouse. Managers who want to “get” the new
    innovation paradigm should check out Martin’s MBA and exec-ed programs.

    RIGHT-BRAIN GAINS.  Martin isn’t the only one
    who understands this major shift in the economy and why CEOs must respond. In
    his new book, A Whole New Mind: Moving from the Information Age to the
    Conceptual Age
    , Daniel Pink argues that left-brain linear, analytical, and
    computer-like thinking are being replaced by right-brain empathy, inventiveness,
    and understanding as skills most needed by business.

    Pink points to
    Asia, automation, and abundance as the reasons behind the shift. What does this
    mean for future jobs? Winners are designers, inventors, counselors,
    ethnographers, social psychologists, and other right-brain folks, while losers
    will be lawyers, engineers, accountants, and other left-brainers who will see
    their jobs migrate across the Pacific. There’s also, of course, C.K. Prahalad’s
    terrific book The Future of Competition: Co-Creating Unique Value with

    If you still harbor doubts about what’s happening, check
    out the job boards of two of my favorite design sites: idsa.org and core77.com.
    The Industrial Designers Society of America runs one of the best design contests
    in the world (which BusinessWeek supports and publishes the results of
    every June) and core77 is one of the coolest, most informative design sites

    RISING TO THE TOP.  In December of
    last year, ZIBA Design in Portland, Ore., a top design consultancy, ran an ad
    for a “visualization specialist.” ZIBA advertised itself as “an international
    design consultancy that helps companies create meaningful ideas, designs, and
    experiences that customers crave.” It says it’s a company driven by an obsession
    “for understanding people, brands and technology.” “ZIBA innovates with soul.”
    Is that heuristic enough for you?

    That same month, Palo Alto
    (Calif.)-based IDEO (see BW, 5/17/04, “The Power of Design”) ran an ad for a
    conceptual designer. It read: “You bring…a holistic approach to process:
    Formulating cultural and user insights, mapping opportunity spaces through
    strategic frameworks, and expressing compelling solutions.” Ask yourself this:
    Who in your company at this moment is mapping out opportunity spaces through
    strategic frameworks?

    Smart CEOs are turning to this kind of design
    thinking to guide them to the new land. ZIBA, IDEO, and other design firms are
    in great demand. Increasingly, design thinking is making its way up to “C” suite
    levels inside corporations, with chief creative officer, chief innovation
    officer, or even chief customer officer joining the organization table.
    Sometimes, design thinking goes all the way to the top.

    SHAPING CONSUMER EXPERIENCE.  Think about what GE Healthcare
    Technologies (GE ) CEO Joseph M. Hogan has to say about the future of his
    business. Hogan wrote in @issue: The Journal of Business & Design:
    “Today, when we think about designing, say, a new MRI system, we don’t just
    think about designing the product, we think about designing the whole radiology
    suite. Design in the next 10 years will move beyond the product. It will move
    beyond workflow. Hospitals in the future…will have different ways of
    interacting with the patient. We have to think about setting the course for how
    design can affect the whole health-care experience.”

    Patient experience.
    Consumer experience. Take Hogan’s template and apply it to the U.S. economy, and
    you can see where we’re going. Now, how many of you have looked up the word
    “heuristic” yet?