Every couple of years a crackpot comes along and prophesizes the end of the world. Fortunately for us, the outcome of the Mayan calendar looks a lot more favorable than reviews for Roland Emmerich's film, 2012. So far, no end of the world cult has gotten it right and as a populace, we remain unsurprised. At the same time, on a very different calendar, an entirely different set of crackpots make promises on a much shorter timeline. This group tends to achieve their predictions, at least in the short term, but their shortsightedness might be just as dangerous as the Mayan's prophecy from so long ago.
Unfortunately, the second group has far more sway on the global economy. Each quarter CEOs give "guidance" to stock market analysts, which is basically a prediction of the earnings that they expect to achieve in the next quarter. Using an enormous bag of accounting tricks and choosing when to buy or sell assets, they often get their earnings per share estimates correct. When they exceed those estimates, they are rewarded by seeing their share price jump or punished when they miss it. For investors, that "pop" is a nice thing to see in their personal account, but the suits that own their stock aren't necessarily their customers.
Peter Drucker observed in 1973 that the only valid purpose of a firm is to create a customer, and the recently eulogized Steve Jobs fully understood that insight. Because Apple made an effort to focus on user experience rather than shareholder wealth, the people who invested in Apple shared in the same customer driven joy when it made its way to their pockets in earnings. Jobs, however, retook control of the reins of Apple in 1997 and the full extent of his influence is still being felt today. Jobs was CEO for around 60 quarters, while a design engagement usually takes less than a year. Apple succeeded in part because he understood that business is an ongoing design engagement, not an exercise in hitting quarterly earnings.
Steven Jennings wrote a thoughtful review of Roger Martin's new book Fixing the Game in Forbes called The Dumbest Idea in the World: Maximizing Shareholder VALUE. Maximizing shareholder value isn't necessarily the dumbest idea in the world if we view companies as players in a short-term betting game. For product designers, employees and customers, however, product development and corporate survival is not a short-term game of beating expectations, but instead represents creating actual value in the real world.For designers, it might seem comforting that we're not in the soothsaying business, but unfortunately corporations often approach design with the same expectations. It's a tired cliche that a client will ask for the "next iPod," and the design office given that task has to explain how the iPod was made by the Apple culture from the top down. The same corporate culture that allocates $50K for an outside design shop to make a better widget has already created an environment where the short-term sacrifices required to introduce revolutionary products are trumped by short-term budgets and a need to maximize shareholder value on a quarterly basis. Otherwise they probably wouldn't need an outside consultant, or at least wouldn't be making such naive requests.
As a consequence, designers find themselves dealing with budgets they didn't create and a set of entrenched players whose primary interest is self-preservation. Lots of design books preach "disruptive" thinking, but as a designer working in a bureaucracy with pre-existing budgetary constraints, the design team lacks the freedom to practice the same disruptive thinking management seeks to attain.
Recent design books like Luke Wilson's Disrupt provide a strong template for crafting disruptive entrepreneurial ideas, but do little to explain how entrenched players can disrupt their own businesses. History suggests they rarely do (e.g. Xerox, Kodak, Polaroid, Blockbuster, Encylopedia Britannica, etc.). Indeed, as GM's electric car demonstrates, even when a company does come up with something truly disruptive to their own market stakeholders often hamstring that idea.
By no means do we begrudge the design firm tasked with inventing a paradigm-changing product. Our anecdotal experience with design consultants indicates that they're often frustrated by their assignments since the bureaucracy that requested change tends to be resistant to it. The founder of Luke Wilson's firm frog, Hartmut Esslinger, wrote a book called A Fine Line, and in it he expressed the formula Culture + Process = Profits. When we reviewed that book, we pitched it to management, not designers. When was the last time you read a design brief that asked for cultural change?
The trouble is that companies who have very little in common culturally with Apple request products as disruptive as the ones that come from Cupertino. Perhaps it's time for corporations to question the core values behind their culture. If they want Apples design success they need to forego Jack Welch's ability to always hit his earnings targets. We don't predict a celestial conjunction and global earthquakes, but we do anticipate that disruptive change will come, as it always has, from outside sources unsaddled with the bureaucratic baggage that builds up over time. That presents a death knell every bit as dire as the Mayan calendar for entrenched players, except that it's real. As designers, we can continue to build products that innovate on a scale of human behavior, but we're never given the mandate to change corporate structure. Corporate structure dictates corporate behavior.
As the Mayan calendar comes to a close, we won't see many people going on spending binges to sell their home or car before the end of the year. Such choices would seem absurdly shortsighted. And yet every day, companies make changes in their asset base or staff allocations that ensure they won't be prepared for the future.
While designers hold little sway over the systems that pay their salaries, CEOs are finally beginning to pay attention to design thinking. To succeed in the future, not only will we need to make innovative products, but we also need to educate our clients that design thinking needs to extend beyond the studio and into the market. As the absurd deadline of 21 December 2012 approaches, perhaps we can offer to business leaders the fundamental truth that only planning for their next product isn't any more sensible than planning for the end of the world.