in an iPod world

Organization Design with Toys

Yesterday, my class discussed Sony case. The case covers how the traditional organization structure that Sony had with product silos led to its failure to respond to digital challenges. Instead of discussing the case, I ask the students to build 3D representations of Sony to explore the problems deeper. Then, we discussed how Frank Gehry uses his projects as a way of organiz-ing, drawing on "From Organization Design to Organization Design-ing". Based on the ideas from the discussion, they modified their models to develop concrete suggestions for Sony. Here's a brief summary of their works.

Group 1: From Walls to Spaghetti

This group was trying to depict the "walls" separating different product groups and redundant knowledge resources (represented in different colors of Play Doe). They discussed the possibility of "back-channel" rogue communication attempts among engineers which are often thwarted by the management (you can see a small black tube through a wall in the back). The senior management sits on the top of the wall, not really connected to the day-to-day reality of each product groups.

Their revised model resembles Spaghetti organization. But, in fact, it is more like a matrix structure with a couple of twists. Each chunk of Play Does in different colors represents a community of knowledge. Each circle represents a convergent projects. Different color lines represent design visions that pull certain members out of their own home base (communities of knowledge) to join these projects. They felt that the firm still needs some type of central unit that coordinates these de-centralized efforts, which is represented with the Play Doe can in the middle. They identified that a key challenge here is preventing the central coordination unit becomes the innovation Nazi, enforcing the central vision. Yet, at the same time, separate project teams need some type of resemblance in order to maintain the sense of identity as a firm. Also, they kept the bended construction paper after removing the wall -- noting that the scars from old structure will likely remain.

Group 2: From Vertically Integrated Silos to Core Integrative Platform

This group represented each product group within a small circle. The tall structure in the middle of each circle represents a vertically integrated product structure that is managed within the narrow band. What is not shown here (because I took the picture before they finalize it) is that the location of senior management. The group built a high tower in the middle of these circles to place all the senior management. Again, similar to Group 1, that was meant to represent the isolation of central management from the grounded realities of each product group.

Their revised model shows a series of convergent product built on a shared platform (represented by a large flat panel). The three circles in the middle represents three core integrative capabilities that they identified (they did not specify those capabilities). These elements represent the core of the organizational structure - that remains stable. The periphery structures with different products are dynamic teams are brought together for specific innovation opportunities. These ideas are crowdsourced within the firm. The strength of their models was that they tried to represent both product and organization structures simultaneously, trying to explore relationships between the two.

Group 3: From a Maze to Whirlwind of Innovation

This group represented the old structure with a maze. This was meant to represent a micro-level experience of an individual engineer who had a break-through idea. He or she might want to have a conversation with another engineer from different product group, but finding the right person feels like an impossible task. Each product group again has redundant resources. Senior management is gathered in an isolated location (HQ).

The modified vision again was represented from a ground-level view from an individual engineer's perspective. Here, each Play Doe can represents a community of expertise. The firm has established an integrative design process by which individual ideas can be swirled into a whirlwind of innovation that is propelled by a design vision. The product (represented as a lump of Play Doe of mixed colors) shows a complex mixture of different knowledge resources (both in and outside of the firm). Unlike the other two groups, they focused on a micro structure of the new organization design.

Can Design Save Management?

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 21^st 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, 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).

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.

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.

materials for Innovation by Design

I ran a 2-Day workshop, "Innovation by Design", at Case Western Reserve University. Many participants requested presentations materials that I used for the workshop. So, here they are. At the bottom, I also added Amazon link for some books that I thought would be useful for the participants.

what BusinssWeek review on Nook missed

Yesterday, Barnes and Noble introduced its own e-book reader, Nook. Hardy Green wrote a review of Nook for BusinessWeek. At the end of the review, Green says:

"Still missing here is the paradigm-changing gadget, the book equivalent of Apple's iPhone. In fact—although you can load a number of e-reader applications, including Kindle and Barnes & Noble apps, onto an iPhone or iPod, Apple is keeping mum on any plans to produce its own device. But with a touchscreen that utilizes the same technology as the iPhone and its Google Android platform, the nook may have Apple's technoids thinking twice about entering the e-reader fray.

There still is probably space for that paradigm-shifting thing that is so terrific—so mind-bendingly lovely to fiddle with and to use for a variety of functions—that it actually expands the number of book readers. But at the moment, and for several years' time, e-books have represented only around 1% of the shrinking book-reading public. Not only must that percentage rise, but also the overall number of book readers must increase—then we'll know that e-book nirvana has arrived."

building 3D model of Rome from Flickr tourists photos

Reflection on Reshaping Boundary: Art, Design, and Management Workshop

Last two days were quite exciting. I was facilitating Reshaping Boundary Workshop, together with Lucy Kimbell who was the primary designer of the workshop. The idea was originally conceived by Fred Collopy as an on-going design inquiry of new way of new way of engaging design and management. While we were somewhat nervous the day before the workshop, it turned out to be better than anyone of us expected. Detailed design and careful preparation of materials and space paid off. What bound participants together, however, I believe was a certain sense of shared purpose, destiny, and urgency.

The idea behind the workshop was the movement between stakeholder experience and the invisible structure that generates that experience. The participants were given a persona of a stakeholder and asked to start from the reflection of their current image to the imagination of the future. The first day ended with a 2D sketch of the future experience and structure.

Digitalization in a post-professional world

I gave a very brief talk at Case Western Reserve University as a provocation at Reshaping Boundary: Art, Design, and Management workshop. Many of the ideas that I have discussed through my blog earlier.
Digitalization in a post-professional society

View more presentations from Youngjin Yoo.

re-imgainging as an act of design

As I am re-reading Designing Design for my class, I came to the following passage from the first chapter, What is Design?, of the book.

Today's designers are beginning to realize that endless possibilities for design lie dormant not just in the new situations brought on by technology, but also in the common circumstances of our daily lives. Creation of novel things is not the only creativity. The sensibility that allows one to rediscover the unknown in the familiar is equally creative. We hold a great accumulation of culture in our own hands, yet we remain unaware of its value. The ability to make use of these cultural assets as a virgin resource is no less creative than the ability to produce something out of nothing. Beneath our feet lies a gigantic, untouched vein of ore. Just as simply donning sunglasses makes the world look fresher to us, there is an unlimited number of ways of looking at things, and most of them haven't been discovered yet. To awaken and activate those new ways of perceiving things is to enrich our cognitive faculty, and this relates to the enrichment of the relationship between objects and human beings. Design is not the act of amazing an audience with the novelty of forms or materials; it is the originality that repeatedly extracts astounding ideas from the crevices of the very commonness of everyday life. Designers who have inherited the legacy of modernism and shoulder the new century have gradually begun to explore their consciousness of that fact.

Well said.

Reflect and re-imagine

Next week, I will be in Cleveland to work with my colleagues at Case and Lucy Kimbell to facilitate a workshop in which we work with several institutions in the University Circle area, reflecting on their past and re-imagining their future. It is a particularly exciting opportunity as these organizations collectively represent an idea of organizing in the industrial age and they are looking for ways in which they can re-design and re-discover themselves in this new digital era. At the turn of the last century, Cleveland was a hotbed of innovation and many of these institutions were born out of that particular socio-economic context. As the world moved beyond the industrial economy, however, the City of Cleveland has been struggling, along with other cities in the Rust Belt, to find its new meaning and relevance in this increasingly digitalized and post-industrial economy. As they city struggles, these institutions struggle as well. These organizations were built based on a particular cultural production and consumption regime that is no longer relevant in today's economy. These institutions represent a collective expression of grand idealism and soaring optimism shared among the last century's economic, cultural and societal entrepreneurs, who built the "New World." Now, that new world has become an old world and those entrepreneurs were replaced with whom Max Weber called "Last Man" (Letzen Menschen) -- “Specialist without spirit, sensualists without heart; this nullity imagines that it has attained a level of humanity (Menschentums) never before achieved”. The challenge upon us, then, is not just finding a relevance for these old institutions in this new day and age, but to discover sources of new entrepreneurial spirits that will fill the void that was created by decades of dominance by the specialists without spirit and sensualists without heart.

P.S. In thinking of this issue over the summer, I found a book by Kang, Sang-jung, "Power of Agony", very powerful. The book was originally published in Japanese and I read it in Korean version. In this book, he is examining the changes in the current society through the lens of two authors who wrote at the turn of the last century, Natsume Soseki (a Japanese author) and Max Weber.

culture and visual thinking

When I teach system thinking, I start with an exercise in which students are given a blank sheet of paper and given a question, "what makes organizations fail?" In the US, when I do that, invariably students develop a bullet list. I use it as an opportunity to say that they should draw a picture showing the whole system and interrelationship among factors. This is a technique that I inherited from Fred Collopy and others and quite useful. That was until I used it here in Japan. Few weeks ago, in my first class here in Japan, I opened the session on system thinking with this usual exercise. There are 14 students in all. To my surprise, 4 students drew pictures. 3 of them were Japanese students. So, I was not sure what to do as my opening line is preempted. People who are in the teaching business know what I mean!

That whole experience however made me to think why that was the case. So, each time I met people here in Japan, I shared that experience. The responses are remarkably consistent. Most of them say that they are not surprised. They point out Japanese culture is so visual that it is too surprising to hear that students' first instinctive reaction to the exercise was to draw. They point out Manga culture as one important element of such visual culture. Then, I began realizing that I am surrounded by strong visual cues no matter where I go. Here are some of those visual cues.