In December, six months after we began our discussions, and with the invaluable help of project manager Heather Fraser, we launched a prototype of the program with the P&G global hair-care business in London, England. The prototype, called Design-Works, was itself an exercise in design thinking. We got a raft of feedback from participants, which we then integrated into refined programs for the cosmetics, skin-care, colorants, fabric-care, and home-care units. One of the most important aspects of the experience, Kotchka argued, was that the participants were working with their close colleagues on problems the teams were facing day to day. “The course was really designed for business teams—a whole business team—to get experience using design thinking, working on real problems,” she said. “And that is what makes this course so incredibly successful.”
The program also had to be scalable and, as Kotchka said, “designed so we could learn it and run it ourselves.” The P&G design leadership, including Kotchka and her second-in-command for DesignWorks, Cindy Tripp, were intensively involved in transferring DesignWorks technology to P&G personnel. By the summer of 2007, P&G personnel were leading DesignWorks exercises independently. The program has since extended its tendrils through the organization. Now, not a day goes by without a DesignWorks session taking place somewhere in the P&G universe, led by one of their hundred and fifty or so trained facilitators, not necessarily designers but members of business units who have expressed an interest and volunteered their time. “These things are literally going on every day, and we don’t even know where or when,” Kotchka noted happily.
DesignWorks began by encouraging category teams to seek a deeper understanding of their consumers, to stare into mysteries and not continue to utilize the same old heuristic. The hair-care category team, for example, went to a styling salon to observe how women actually used styling products, a part of the hair-care category in which P&G is underdeveloped compared with its leadership position in shampoos and conditioners. The next day, the team members brought those customers back to talk about their experience at the salon. Drawing on what they learned from those discussions, the category team explored how to create an at-home user experience that rivaled the salon experience. They created prototypes of the experience, tested them at the salon, one on one with each member of the user group, and incorporated their learning into the next product iteration. Finally, they worked on converting the refined experience into a system of activities that P&G could execute with sustainable advantage over competitors.
The category leadership teams emerged from the process with a greater understanding and appreciation for design thinking. The course both models and teaches the organized pursuit of new knowledge, looking up the knowledge funnel and seeking productive new insights. “The business teams think they’re coming to do packaging,” Kotchka said with a laugh. She told the story of one finance manager who said that before the program he didn’t see the need to learn about package design. “And afterwards, he came to me and said, ‘Claudia! This is amazing! I can see how I can use this in my everyday work.’ And that is the goal. They all walk out with solutions they would have never thought of before; this is the whole idea behind design thinking. It’s going to take you to a place you’ve never been. And that’s what it does every time.” While DesignWorks alone does not establish a balance between reliability and validity at P&G, it gives senior managers a set of tools and a process for engaging in validity-oriented thinking in a creative, practical way.
Designing New Processes
In addition to equipping his managers with more skills and expertise in design thinking, Lafley worked to change organizational norms to support design thinking. He modeled that thinking in his own behavior, doing in-depth at-home visits with consumers wherever he traveled. He even chatted (through a translator) with rural Chinese women washing clothes in a river. After all, they use detergent too.
He changed key processes, including strategy review. The tradition at P&G was that each category president came to the annual review with a thick deck of slides that culminated in a single right answer for the coming year, including all the inductive and deductive proof needed to gain the approval of the CEO and senior management. Additional slides were prepared to address any objections top management could conceivably raise.
Lafley recognized that this process was a recipe for producing reliability, not validity. The category presidents wanted their strategies to be airtight, so risky creative leaps were out of the question. Lafley saw he had to stop the drive for reliability before it gathered momentum, so he devised a new process. Presidents would submit their slide decks two weeks before the strategy review. Lafley would read the materials and issue a short list of questions that he wanted to discuss at the meeting. He emphasized that he wanted a discussion, not a presentation. Presidents were allowed to bring only three more pieces of paper—charts, graphs, notes—to the review. Only by more or less forcing category managers to toss around ideas with senior management, he reasoned, could they become comfortable with the logical leaps of mind needed to generate new ideas.
At first the presidents and their teams bridled at Lafley’s new process. Actual dialogue at the senior levels of P&G was exceedingly rare before Lafley became CEO. Rather than engaging in dialogue, executives devoted their time and energy to bulletproofing arguments and then advocating and defending them. Dialogue was different, foreign—and unnerving. Only after two or three cycles did it dawn on the presidents how invigorating and mind opening it was to engage in dialogue about what could be rather than what was. It was also great for their businesses. Freed from the demand to come up with the single right answer and prove it, they started to work out bigger bets with the corporate team.
To elevate design thinking in the corporate hierarchy of values, Lafley made the solving of wicked problems a high-status, glamorous assignment. (For a short primer, see “Wicked Problems.”) For instance, the executives who turned around the baby-care business, which had been in secular decline for almost a decade, were at least as highly rewarded as those running bigger or more stable businesses. He also set up explicitly project-based work with managers, making clear that their work was time bound and that they would go on to another project or assignment when they had completed their current project.
In addition to building skills and changing organizational processes and norms, Lafley made dramatic interventions at each stage of P&G’s knowledge funnel, converting mysteries to heuristics and heuristics to algorithms during his time as CEO.
Converting Mysteries to Heuristics
At the mystery end of the funnel, Lafley was frustrated with P&G’s success rate for innovation projects. By the time he became CEO, a mere 15 percent of R&D projects were meeting their internal targets. Even though P&G was an acknowledged R&D powerhouse in the consumer packaged-goods sector, with a track record of game-changing innovations like disposable diapers, anti-dandruff shampoo, and fluoride toothpaste, it was not earning the returns on innovation spending needed to maintain a winning value equation.
Lafley recognized that despite P&G’s record of innovation and mammoth R&D budget, its R&D organization was not distinctly better than the competition at converting mysteries to heuristics. In fact, engaging with mysteries was not the R&D department’s strong suit. Its forte was honing and refining existing discoveries and making sure that the portfolio of existing P&G products kept improving and optimizing in ways that consumers would recognize and value. The original Pampers disposable diaper was a genuine breakthrough, a risky and imaginative solution to the mystery of diaper washing. But once that innovation took hold in the market, P&G’s R&D department turned its attention to the steady improvement of the disposable diaper. Software guru Bill Buxton calls this sort of activity N+1 innovation. 7 Lafley was confident that when it came to N+1 innovation, P&G was the best in its competitive space. But N+1 innovation was not going to yank P&G out of the doldrums.
P&G needed true discovery activity: the conversion of mystery to heurist
ic, which Lafley recognized is widely distributed in the world. Large corporations like P&G do not produce a share of discoveries proportionate to their investment in the pursuit. On the other hand, independent inventors, small invention-focused firms, and academic researchers produce a share of discoveries wildly disproportionate to the resources they apply to the task. They work independently of reliability-oriented organizations that insist they prove every initiative or undertaking with empirical data. Instead, they work in validity-based environments—sometimes no more than a basement workbench—that are conducive to producing desired breakthroughs, however inconsistently and infrequently they might emerge.
Wicked Problems
by Jennifer Riel
Lots of problems are hard: differential calculus, for instance. Or determining the optimal production schedule for a new manufacturing plant. Or assigning a realistic value to stock options. Hard problems are complex and take many steps from beginning to end, making it difficult to see your way clear to the solution from the outset. Hard problems face us at every turn, but fortunately business schools specialize in giving us the analytical tools that allow us to tackle and solve these problems.
So hard problems aren’t the problem. The real challenge that faces the CEO and the young manager alike is that not all problems are hard problems. In fact, many of them belong to an entirely different category: wicked problems.
Wicked problems aren’t merely harder or more complex than hard problems. They don’t just involve more factors or stakeholders. They don’t just take us longer to solve. Analytical thinking alone, no matter how skillfully applied, isn’t going to generate an answer to a wicked problem.
Wicked problems, first identified by mathematician and planner Horst Rittel in the 1960s, are messy, aggressive, and confounding. Rittel’s notion of wicked problems was detailed by C. West Churchman in a 1968 issue of Management Science. Churchman described wicked problems as “a class of social system problems which are ill-formulated, where the information is confusing, where there are many clients and decision makers with conflicting values, and where the ramifications in the whole system are thoroughly confusing.” 8 In other words, wicked problems are ill-defined and unique in their causes, character, and solution.
Here’s how to tell if you have a wicked problem:
• The causes of the problem are not just complex but deeply ambiguous; you can’t tell why things are happening the way they are and what causes them to do so.
• The problem doesn’t fit neatly into any category you’ve encountered before; it looks and feels entirely unique, so the problemsolving approaches you’ve used in the past don’t seem to apply.
• Each attempt at devising a solution changes the understanding of the problem; merely attempting to come to a solution changes the problem and how you think about it.
• There is no clear stopping rule; it is difficult to tell when the problem is “solved” and what that solution may look like when you reach it.
It’s almost as if attempting to solve a wicked problem is like that old cliché of trying to grasp a handful of sand: the harder you grip, the more sand slips through your fingers. The more you think about the problem, the more wicked it becomes.
With hard problems, your job is to look at the situation, identify a set of definite conditions, and calculate a solution. With wicked problems, the solution can no longer be the only or even the primary focus. Instead, dealing with wicked problems demands that attention be paid to understanding the nature of the problem itself. Problem understanding is central; the solution, secondary. It’s no wonder that so many designers have come to embrace the notion that their role is to work with wicked problems. “Designers thrive on problem setting, at least as much as problem solving,” explains Bill Buxton, principal researcher for Microsoft. 9
In a world rife with wicked problems—the end of oil, the battle for talent, confounding mysteries of all kinds—the companies that succeed will be those that make a valued place for design thinkers, for those people who thrive on setting and solving wicked problems, throughout their organization.
With so many talented inventors working at discovery, Lafley saw the futility of P&G’s insistence that all its product innovation be homegrown. With the help of colleagues in his R&D organization, Lafley championed a wholly new approach to R&D called Connect + Develop. Connect + Develop called for P&G to connect with innovators outside the P&G tent and develop their creations as only P&G could. He set a goal that P&G would source half its product innovation from outside the company. P&G’s contribution would consist of adding value to these inventions by exercising its state-of-the-art capabilities in qualifying inventions, honing and refining them for the market, and distributing the eventual product on a mass scale. When it came to branding, positioning, pricing, and distributing a great new product, P&G’s capabilities were unmatched. Not surprisingly for a big corporation, those activities were one or two stages removed from mysteries; commercialization and branding are mainly heuristics, and selling and distribution have largely been refined to algorithms.
In essence, the Connect + Develop initiative, through its networked approach, bulked up P&G’s supply of ideas in the mystery-to-heuristic transition where it was thin, enabling it to feed more opportunities into its well-developed heuristics and algorithms, which had idle capacity. By doubling the volume of discoveries entering the funnel, Lafley doubled the capacity of the overall funnel. Among the successful products to emerge from P&G’s knowledge funnel since Lafley launched Connect + Develop are the Crest SpinBrush, the Mr. Clean Magic Eraser, and the Tide to Go stain remover. By 2006, at least 35 percent of P&G’s new products had elements that originated outside the company, well on the way to Lafley’s goal of 50 percent in five years.
Driving Heuristics to Algorithms
Like most large corporations, P&G employs an army of highly paid and extremely talented managers who spend their days running the same heuristic processes over and over (though this may come as news to them). In fact, the vast majority of corporate employees earning six figures or more spend most of their time operating a personal heuristic—a high-level intellectual exercise requiring considerable personal judgment, which their organization depends on them to provide. They have no obvious incentive to drive their own heuristic down the knowledge funnel to an algorithm, because an algorithm can be run by a less experienced and dramatically cheaper human resource. Unless given an incentive to free up time to stare into the next mystery, managers valued for their skill at running a heuristic will jealously guard their domain.
Lafley realized that because heuristic skill is so highly rewarded, even some of P&G’s most essential and long-running activities—above all, brand building—still existed only as heuristics in the heads of scarce and costly senior executives. Despite its central importance to P&G, very little of the brand-building heuristic had actually been committed to paper. In part, that is because P&G itself isn’t a marketplace brand the way Tide, Pampers, and Crest are. Those individual brands are managed by the global category teams that have grown up around them. Those teams have become a magnet for marketers who want to hone their brandbuilding expertise to the highest possible pitch. Among the alumni of P&G’s brand-building academy are Steve Ballmer of Microsoft; Meg Whitman, formerly of eBay; Jeff Immelt of GE; James Hackett of Steelcase; and Scott Cook of Intuit. But because little had been done to shift brand building significantly toward an algorithm, a great deal of knowledge about building brands existed only in the oral history of the company and in the heads of its current brand-building experts. The only way to understand what brand building actually entailed at P&G was to hang around the experts, watching and trying to learn from what they did and said.
With Lafley’s support and encouragement, P&G made a conscious, top-down effort to drive the brand-building heuristic toward algorithm. Lafley engaged some of his best brand builders and thinkers to document a brand-building framework and drive it toward an algorithm (recog
nizing that, because of brand building’s complexity and inherent subjectivity, it is unlikely ever to be a true algorithm). Like all good design thinkers, the group put out a first prototype—Brand Building Framework 1.0—and then solicited user feedback, integrating the findings into the next iterations of the model, which became Brand Building Frameworks 2.0, 3.0, and so on. For the first time in P&G history, junior marketers had a detailed, regularly updated process document to use in learning and practicing brand building. The days are gone when all a fledging marketer could do was watch and listen to the masters, trying to infer what they were up to.
What is most remarkable about the work of writing down P&G’s embedded brand-building wisdom is that it had for so long been simultaneously the most important thing at P&G and the least documented. One might have imagined that it would be the most documented, but that ignores the powerful incentives that heuristics runners have to keep their heuristics to themselves. P&G is systematically stripping away those incentives in order to drive much of the brand-building discipline all the way to an algorithm.
The Brand Building Framework has two goals. The first is to give junior marketers the tools needed to do much of the work previously done by high-cost elites. But those elites have not been made redundant. By handing over the routine part of their jobs to junior staffers, senior brand builders are free to accomplish the framework’s second goal of focusing their considerable talents on the next mystery in order to create the next brand or brand extension that consumers want. Some of these managers may never be comfortable exploring mysteries, but others will be. They are P&G’s pioneers, pointing the way to the organization’s future as they drive the brand-building heuristic toward an algorithm.
The Design of Business: Why Design Thinking Is the Next Competitive Advantage Page 9
