I wrote a short provocation for Convergence: Managing + Designing, which will take place in June 17-18, 2010. Here it is.
Youngjin Yoo
Temple University
Design, or design thinking, is becoming increasingly popular among management practitioners and scholars. Leading popular magazines like BusinessWeek and Fast Company regularly feature design as an important topic. Many leading business schools around the world incorporate some elements of design as a part of their curriculum. At the same time, leading design schools around world are challenging business schools by providing plausible alternatives to students and recruiters alike. A recent ranking by BusinesWeek shows a mixture of business schools and design schools. Design consulting firms like IDEO and Design Continuum are frequently called into do strategic and management consulting projects that used to be the exclusive tasks asked to management consulting firms. And, a quick scan of the shelves at the business section at local bookstores show titles like, Managing as Designing, Change by Design, Design-driven Innovation and Design of Business. Indeed, the first decade of the 21st century seems to be the decade of design. It is as if management found a panacea. And, that is design.
But, can design save management? In my presentation, I will explore this question from a historical perspective. It is undeniable that design and design thinking is having a positive impact on management practice and education. However, it is not clear if the current wave of design thinking will address the fundamental crisis that contemporary management is facing in this post-industrial economy.
The post World-War II economy saw the emergence two powerful economic forces. First, large multi-national firms have emerged as powerful economic actors that transcend the national boundaries. They control the direct access to the market and consumers, defined mostly based on physical products, acting either as final assemblers of parts or marketing and distribution channels. These firms grew in size and scope by exploiting the rapid developments in production, transportation and communication technologies (Chandler et al. 1999; Chandler Jr 1984). Their size and complexity are unparalleled. In order to manage the growing complexity, the paradigm of scientific management was developed (Teece 1993). A new class of economic actors, ADDIN EN.CITE
<EndNote><Cite><Author>Chandler</Author><Year>1999</Year><RecNum>3293</RecNum><record><rec-number>3293</rec-number><foreign-keys><key
app="EN"
db-id="f00rva998fzwt2e0927xz5x4sr2dv9e2vra5">3293</key></foreign-keys><ref-type
name="Book">6</ref-type><contributors><authors><author>Chandler,
A. D.</author><author>Hagstrom,
P</author><author>Sölvell,
Ö</author></authors></contributors><titles><title>The
Dynamic Firm: The Role of
Technology, Strategy, Organization, and Regions</title></titles><dates><year>1999</year></dates><pub-location>New
York, NY</pub-location><publisher>Oxford University
Press</publisher><urls></urls></record></Cite><Cite><Author>Chandler
Jr</Author><Year>1984</Year><RecNum>5730</RecNum><record><rec-number>5730</rec-number><foreign-keys><key
app=’EN’
db-id=’f00rva998fzwt2e0927xz5x4sr2dv9e2vra5′>5730</key></foreign-keys><ref-type
name=’Journal
Article’>17</ref-type><contributors><authors><author>Chandler
Jr, A</author></authors></contributors><titles><title>The
emergence of managerial capitalism</title><secondary-title>The
Business History
Review</secondary-title></titles><periodical><full-title>The
Business History
Review</full-title></periodical><dates><year>1984</year><pub-dates><date>Jan
1</date></pub-dates></dates><accession-num>16876322869684809580related:bC9dQjy-NOoJ</accession-num><label>p04874</label><urls><related-urls><url>http://www.ncbi.nlm.nih.gov/entrez/query.fcgi?db=pubmed&cmd=Retrieve&dopt=AbstractPlus&list_uids=16876322869684809580related:bC9dQjy-NOoJ</url></related-urls><pdf-urls><url>file://localhost/Users/yyoo/Documents/electronic%20papers/Papers/1984/Chandler%20Jr/The%20Business%20History%20Review%201984%20Chandler%20Jr.pdf</url></pdf-urls></urls><custom3>papers://59AEBB57-DC67-4B83-BEED-A15C62ED7905/Paper/p4874</custom3></record></Cite></EndNote> ADDIN EN.CITE
<EndNote><Cite><Author>Teece</Author><Year>1993</Year><RecNum>5729</RecNum><record><rec-number>5729</rec-number><foreign-keys><key
app="EN" db-id="f00rva998fzwt2e0927xz5x4sr2dv9e2vra5">5729</key></foreign-keys><ref-type
name="Journal Article">17</ref-type><contributors><authors><author>Teece,
D</author></authors></contributors><titles><title>The
dynamics of industrial capitalism: perspectives on Alfred Chandler's
scale and scope</title><secondary-title>Journal of Economic
Literature</secondary-title></titles><periodical><full-title>Journal
of Economic
Literature</full-title></periodical><dates><year>1993</year><pub-dates><date>Jan
1</date></pub-dates></dates><accession-num>13513641950020124853related:tUDEVMEZirsJ</accession-num><label>p04872</label><urls><related-urls><url>http://www.ncbi.nlm.nih.gov/entrez/query.fcgi?db=pubmed&cmd=Retrieve&dopt=AbstractPlus&list_uids=13513641950020124853related:tUDEVMEZirsJ</url></related-urls><pdf-urls><url>file://localhost/Users/yyoo/Documents/electronic%20papers/Papers/1993/Teece/Journal%20of%20Economic%20Literature%201993%20Teece.pdf</url></pdf-urls></urls><custom3>papers://59AEBB57-DC67-4B83-BEED-A15C62ED7905/Paper/p4872</custom3></record></Cite></EndNote>professional managers, who are equipped with the tools of scientific management has emerged during this era. Contrary to the original form of capitalism that emerged as a consequence of industrial revolution and brought the separation of production and consumption, this managerial capitalism, brought the separation of management and production (Zuboff and Maxmin 2002). ADDIN EN.CITE
<EndNote><Cite><Author>Zuboff</Author><Year>2002</Year><RecNum>4781</RecNum><record><rec-number>4781</rec-number><foreign-keys><key
app="EN" db-id="f00rva998fzwt2e0927xz5x4sr2dv9e2vra5">4781</key></foreign-keys><ref-type
name="Book">6</ref-type><contributors><authors><author>Zuboff,
Shoshana</author><author>Maxmin, James</author></authors></contributors><titles><title>The
Support Economy</title></titles><dates><year>2002</year></dates><pub-location>New
York</pub-location><publisher>Viking</publisher><urls></urls></record></Cite></EndNote>
Second, financial firms, often represented as “Wall Street”, emerged as important economic and social actors. Initially, they act as aggregators of financial resources to help firms on the “main street” finance their capital investments. Over time, these financial firms developed increasingly elaborate and often exotic financial engineering tools to help firms gain access to financial resources. As a result, firms’ performance was solely measured by the financial metrics, and financial firms started to buy and sell firms, as if they were products, using these financial metrics. After leading the barrage of corporate M&A that we witnessed in the last decade of the past century, many of which were funded by the historically low interest rate, these financial firms invented new financial products that are solely designed to finance other financial activities. Thus, we have witnessed the emergence of financial capitalism that brought the separation of finance and production.
The evolution of capitalism thus can be seen as continuing pursuit of higher return on capital through a series of separations: production, management and finance. Each of these separations brought a new form of “leverage” that amplifies the potential return on investment. Yet, at the same time, they brought greater degree of complexity, unforeseen systemic risks, and alienation of labor and consumers alike.
Design thinking, as it is currently popularized with the emphasis on human-centered product and service design, deals only with the problems from the separation of production and consumption, leaving other and possibly far more serious challenges that today’s management is facing. Many of these challenges arose as a result of separations of management and finance from production. For example, design thinking has little to say about the recent financial crisis that raised many fundamental questions about the continuing viability of the current form of capitalism and the role of management schools. The demise of the Big Three is the result of institutionalized “scientific” management and toxic financial products as much as the lack of human-centered design in their products.
My concern is that the current obsession with the design thinking can have unintended harmful consequences on the future of management in the long run. As it is currently being applied, design is seen as a quick fix of profitability problems, new product developments, and consumer satisfactions, rather than dealing with more systemic and serious issues. Indeed, it might lead us to the emergence of new form of capitalism, design capitalism, where creativity is separated from production and consumption. Just as management was for the sake of management during the managerial capitalism, and finance was for the sake of finance during the financial capitalism, we may see the creativity for the sake of creativity in this new form of design capitalism. If that happens, instead of finding its panacea, management might have discovered the most powerful painkiller it has ever found. And, alas, that is design.
ADDIN EN.REFLIST Chandler, A.D., Hagstrom, P., and Sölvell, Ö. The Dynamic Firm: The Role of Technology, Strategy, Organization, and Regions Oxford University Press, New York, NY, 1999.
Chandler Jr, A. “The emergence of managerial capitalism,” The Business History Review), Jan 1 1984.
Teece, D. “The dynamics of industrial capitalism: perspectives on Alfred Chandler’s scale and scope,” Journal of Economic Literature), Jan 1 1993.
Zuboff, S., and Maxmin, J. The Support Economy Viking, New York, 2002.
Can design save management?
Although design and design thinking are having a positive impact on management practice and education, Youngjin Yoo, an associate professor at Temple University , doesnt think that the current wave of design thinking will address the fundamental…
blogs like these make me drunk with beauty. thanks hattingh
It’s not about design trying to be the saviour of management. This is the ‘one or the other’ thinking patterns that got us to this place of economic instability. The question should be about ‘and’ thinking i.e. how can management AND design work together to support each other in generating new perspectives, insights and solutions.
Design, management or science can’t answer all questions. Design can’t necessarily make a comment on the performance of financial institutions that have been run on the basis of greed-fuelled egos placed in positions of power by former school friends and those at the club.
What it does say though is how could design and business collaborate to change the system. Like all change though you need to be allowed in to challenge and influence and if it is not in the interests of shareholders then that’s unlikely to happen.
Design thinking is a bit like change management, it is an approach, a set of methods and perspectives. It is also trendy, on the back of innovation thinking, and they are both linked.
How long will it last though, as a management fad – if it is that!
What it needs to do is find out how it can produce results in real time for clients which translate into business gains or savings – that’s the hard part, because in my experience designers are not that interested in money, business models, operations or marketing.
Dear Youngjin, that’s great work – more should be explored on what the panacea actually works in service of a different way of making decisions and operating in organisations. I don’t really see a big difference between a group of managers and designers doing consultancy or generating strategies… just because in my view the ‘design for’ work as much as the ‘manage for’. Then my question is — if we collectively design (the ‘creators’, producers, consumers), how much do we really need to manage?