Sunday, February 20, 2011

The Business of Design

I'm reading "The Design of Business" by Roger Martin.

The basic idea is that most businesses spend all of their energy and resources on refining whatever successes they have already had, exploiting the same product, tweaking what is essentially the same service.

I recently heard Robert Reich and Michael Porter talking about the dominant force in business over the last few decades which they say has been shareholder value. Martin points out that market analysts, however ludicrous, prefer that a stock's value come in according to projections rather than exceed them. This is because exceeded expectations signals that the company is behaving in ways that are not measurable, not predictable. The behavior of companies that produces industry leadership, long-term profits, long-term stability, and customer loyalty is precisely the type of behavior that is frowned upon through institutional incentives, shoddy market analysis, and poor business education.

Interestingly, the type of design thinking that affords business strength is practically laughed out of the room in favor of less profitable "reliability".

Back to Michael Porter, he was stating that the leading business thinkers today are seeing the need for a paradigm shift away from shareholder value and toward shared value as the key to goal development and the prime measure of success. Supposedly, this takes into account all of what were previously deemed externalities and incorporates them into the business model. This shift is due to the potential profits to be found in being responsible (both having and eating cake). Reich disagrees, saying that he has seen corporate institutions repeatedly go billions of dollars out of their way to find loopholes and continue to exploit externality-driven business plans in spite of the numbers on the table.

Whether or not Porter is right, these are exciting times for the redefinition of business and value. These things take time.


Caitlin made banana bread this morning and I said the bananas weren't ripe enough to do so. The bread was still good with plentiful banana flavor. Oh, how wrong was I.

No comments:

Post a Comment