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• Before Hiring a Design Partner, Consider This -

  

  Design is a service, not a magic spell. There are designers who do it well, and those who do it poorly; some produce profitable outcomes, and some waste money. More and more companies view design as an important strategic element of their business and are seeking partners to help them understand how it can help. If you're setting out to do so, you'll need to confront uncertainty about how to get the most value from the investment and carefully consider what you're setting out to achieve. An effective client-partner relationship arrives at solutions that aren't just creative, but useful. The following considerations will help the design you buy yield results that are actionable and effective.

  Understand your need. Designers are problem solvers, and this worldview has enabled them to move from the world of making objects into the world of defining strategy and influencing consumer behavior. A designer can provide you with beautiful forms, but can also help you frame the problem, understand your consumer, and identify ways forward. The most successful relationships start with intention and truthfulness, with the client assessing exactly what they need from design and then seeking out a partner who fits where they are in the process. Clients who don't do this waste tremendous capital engaging design firms that specialize in tactical solutions to solve strategic problems, and vice-versa — Arnell famously failed to capture Tropicana's brand heritage when it took the orange-impaled-by-straw off the carton, and parent company Pepsi was forced to revert to the old packaging.

  Engage constantly. Even the most effective design team will eventually get on a plane and go home. You, on the other hand, are in for the long haul. It's your job to pour what you know into the project and travel with the team: think of it as an equal partnership. The outcomes will only work in the long term if both sides combine their expertise into a rich body of shared experience and understanding. Ziba's service innovation and retail design work with Umpqua Bank, for example, continues to be relevant and productive years after it was completed, with the bank adding dozens of branches and tens of billions in holdings. This reflects the Umpqua team's investment during the design process, as well as CEO Ray Davis's continued efforts to champion its results.

  Address your biases. Design can be messy, and it doesn't pull punches. The design team you partner with will believe you hired them as outside experts, and use this position to push you and challenge assumptions. They may debate or call into question foundational aspects of your business, or propose and discard radical hypotheses in a single conversation. You and your team must prepare to recognize your biases and be willing to break them. Other writers on HBR have delved into the topic of understanding bias extensively in the past, and it's a critical driver of successful design outcomes. Only this degree of self-awareness, combined with meaningful openness can deliver solutions that are both effective and able to function in your organization.

  Understand your capacity to act. A good design partner will push you beyond your comfort zone, in a way that produces amazing, energizing new ideas. Once you've reached consensus on which idea to activate, it is critical to push the pause button and honestly assess whether your organization is able to execute the chosen solution. Hopefully, you've already done some of this work up front. You should understand the solution's cultural impact, its technological and operational feasibility, and its viability in your business. Vijay Govindarajan and Chris Trimble have written at length on the challenges of execution in their book, The Other Side of Innovation. If your organization cannot execute the solution because it's unable to make necessary changes, then it's the solution that needs to be adjusted, at least in the short term. This may frustrate your design partner, but don't let it be an excuse to back down or walk away. Respect their engagement and effort, and ask them to help you mold the solution into something you can activate.

  Successful design outcomes require intentional beginnings, consistent work throughout, and rigorous maintenance following delivery. Don't expect that simply hiring a design partner will magically unlock new revenue streams and markets. Understand your competencies, set clear goals, and hire a partner whose skills align with your desired success. Design done right will still feel like work, but with intention applied — especially at the beginning of the process — the results should be worth it.

  
  
• Strategic Humor: Cartoons from the June 2013 Issue -

  Enjoy these cartoons from the June issue of HBR, and test your management wit in the HBR Cartoon Caption Contest at the bottom of this post. If we choose your caption as the winner, you will be featured in next month's magazine and win a free Harvard Business Review Press book.

  
  

  
  

  "It's not a requirement, but if you have a PhD in the arts or humanities, it's definitely a plus."
  
  
  Kaamran Hafeez

  
  

  
  

  
  

  "Most people prefer to keep their pencils and coffee in separate cups."
  
  
  Michael Shaw

  
  

  
  

  
  

  "Interns."
  
  
  Kaamran Hafeez

  
  

  
  

  
  

  "Oh, so you're homing from work today."
  
  
  Kaamran Hafeez

  
  

  
  And congratulations to our May caption contest winner, Terence McIver of Cleveland, Ohio. Here's his winning caption:

  
  

  
  

  "I knew this Pamplona satellite office was a bad idea!"
  
  
  Cartoonist: Bob Eckstein

  
  

  
  NEW CAPTION CONTEST
  Enter your own caption for this cartoon in the comments field below — you could be featured in next month's magazine and win a free book. Please submit entries by May 27, 2013 to be considered.

  
  

  Cartoonist: Susan Camilleri Konar
  
  
• What Is Organizational Culture? And Why Should We Care? -

  If you want to provoke a vigorous debate, start a conversation on organizational culture. While there is universal agreement that (1) it exists, and (2) that it plays a crucial role in shaping behavior in organizations, there is little consensus on what organizational culture actually is, never mind how it influences behavior and whether it is something leaders can change.

  This is a problem, because without a reasonable definition (or definitions) of culture, we cannot hope to understand its connections to other key elements of the organization, such as structure and incentive systems. Nor can we develop good approaches to analyzing, preserving and transforming cultures. If we can define what organizational culture is, it gives us a handle on how to diagnose problems and even to design and develop better cultures.

  Beginning May 1, 2013, I facilitated a discussion around this question on LinkedIn. The more than 300 responses included rich and varied perspectives and opinions on organizational culture, its meaning and importance. I include several distinctive views below, illustrated by direct quotes from the LinkedIn discussion thread — and then I offer my own synthesis of these views. (There often were multiple postings with similar themes, so these are simply early selections; unfortunately it was not possible to acknowledge everyone who made helpful contributions.)

  "Culture is how organizations 'do things'." — Robbie Katanga

  Culture is consistent, observable patterns of behavior in organizations. Aristotle said, "We are what we repeatedly do." This view elevates repeated behavior or habits as the core of culture and deemphasizes what people feel, think or believe. It also focuses our attention on the forces that shape behavior in organizations, and so highlights an important question: are all those forces (including structure, processes, and incentives) "culture" or is culture simply the behavioral outputs?

  "In large part, culture is a product of compensation." — Alec Haverstick

  Culture is powerfully shaped by incentives. The best predictor of what people will do is what they are incentivized to do. By incentives, we mean here the full set of incentives — monetary rewards, non-monetary rewards such as status, recognition and advancement, and sanctions — to which members of the organization are subject. But where do incentives come from? As with the previous definition, there are potential chicken-and-egg issues. Are patterns of behavior the product of incentives, or have incentives been shaped in fundamental ways by beliefs and values that underpin the culture?

  "Organizational culture defines a jointly shared description of an organization from within." — Bruce Perron

  Culture is a process of "sense-making" in organizations. Sense-making has been defined as "a collaborative process of creating shared awareness and understanding out of different individuals' perspectives and varied interests." Note that this moves the definition of culture beyond patterns of behavior into the realm of jointly-held beliefs and interpretations about "what is." It says that a crucial purpose of culture is to help orient its members to "reality" in ways that provide a basis for alignment of purpose and shared action.

  "Organizational culture is the sum of values and rituals which serve as 'glue' to integrate the members of the organization." — Richard Perrin

  Culture is a carrier of meaning. Cultures provide not only a shared view of "what is" but also of "why is." In this view, culture is about "the story" in which people in the organization are embedded, and the values and rituals that reinforce that narrative. It also focuses attention on the importance of symbols and the need to understand them — including the idiosyncratic languages used in organizations — in order to understand culture.

  "Organizational culture is civilization in the workplace." — Alan Adler

  Culture is a social control system. Here the focus is the role of culture in promoting and reinforcing "right" thinking and behaving, and sanctioning "wrong" thinking and behaving. Key in this definition of culture is the idea of behavioral "norms" that must be upheld, and associated social sanctions that are imposed on those who don't "stay within the lines." This view also focuses attention on how the evolution of the organization shaped the culture. That is, how have the existing norms promoted the survival of the organization in the past? Note: implicit in this evolutionary view is the idea that established cultures can become impediments to survival when there are substantial environmental changes.

  "Culture is the organization's immune system." — Michael Watkins

  Culture is a form of protection that has evolved from situational pressures. It prevents "wrong thinking" and "wrong people" from entering the organization in the first place. It says that organizational culture functions much like the human immune system in preventing viruses and bacteria from taking hold and damaging the body. The problem, of course, is that organizational immune systems also can attack agents of needed change, and this has important implications for on-boarding and integrating people into organizations.

  In the discussion, there were also some important observations pushing against the view of culture as something that it is unitary and static, and toward a view that cultures are multiple, overlapping, and dynamic.

  "Organizational culture [is shaped by] the main culture of the society we live in, albeit with greater emphasis on particular parts of it." — Elizabeth Skringar

  Organizational culture is shaped by and overlaps with other cultures — especially the broader culture of the societies in which it operates. This observation highlights the challenges that global organizations face in establishing and maintaining a unified culture when operating in the context of multiple national, regional and local cultures. How should leaders strike the right balance between promoting "one culture" in the organization, while still allowing for influences of local cultures?

  "It over simplifies the situation in large organizations to assume there is only one culture... and it's risky for new leaders to ignore the sub-cultures." — Rolf Winkler

  The cultures of organizations are never monolithic. There are many factors that drive internal variations in the culture of business functions (e.g. finance vs. marketing) and units (e.g. a fast-moving consumer products division vs. a pharmaceuticals division of a diversified firm). A company's history of acquisition also figures importantly in defining its culture and sub-cultures. Depending on how acquisition and integration are managed, the legacy cultures of acquired units can persist for surprisingly long periods of time.

  "An organization [is] a living culture... that can adapt to the reality as fast as possible." — Abdi Osman Jama

  Finally, cultures are dynamic. They shift, incrementally and constantly, in response to external and internal changes. So, trying to assess organizational culture is complicated by the reality that you are trying to hit a moving target. But it also opens the possibility that culture change can be managed as a continuous process rather than through big shifts (often in response to crises). Likewise, it highlights the idea that a stable "destination" may never — indeed should never — be reached. The culture of the organization should always be learning and developing.

  These perspectives provide the kind of holistic, nuanced view of organizational culture that is needed by leaders in order to truly understand their organizations — and to have any hope of changing them for the better.

  
  
• Don't Let Predictability Become the Enemy of Innovation -

  

  Unhappily shocked by Sputnik's unexpected 1957 success, President Eisenhower quickly pushed the Pentagon to establish the Defense Advanced Research Projects Agency (DARPA). Its ostensible mission: "to prevent technological surprise to the U.S. military, and to create surprises of its own."

  Anticipating and enabling "technological surprise" has become even more challenging, DARPA director Arati Prabhakar recently told an MIT audience, because more people in more places have more access to more technology that ever before. Surprises can come from anywhere. In an era of greater global trade, knowledge transfer and transparency, Prabhakar unsurprisingly reports DARPA's core value proposition demands disproportionately greater imagination and ingenuity. Predictability breeds complacency. Predictability is DARPA's cultural, technical and organizational enemy.

  The more Prabhakar talked, the clearer it became that DARPA's intimate historical relationship with surprise offered a powerful conceptual model for serious innovators worldwide. What role should surprise play in defining one's innovation brand in the minds of customers and competitors? To surprise or not to surprise? That is the innovation question. (This question from a marketing perspective was recently explored on this site.)

  For Apple, the iPhone and iPad were unquestionably strategic surprises explicitly intended to disrupt established industries and disorient entrenched competitors. Steve Jobs, who had always sought to surround his company in auras of mystery and secrecy, was a master of injecting the unexpected into the zeitgeist. Indeed, Apple assiduously cultivated "expect the [delightfully] unexpected" as part of its innovation brand.

  While seen neither as flashy nor as glamorous as Apple's offering, Amazon's Kindle and Fire platforms similarly signaled strategic surprise. Jeff Bezos transformed perceptions surrounding Amazon as a global retailer by making clear they wanted to be a global innovation ecosystem as well. Amazon had made itself accessibly and invitingly unpredictable.

  After initially dismissing tablets as inferior to laptops, Microsoft surprised a number of its partners and developers by introducing Surface. A defensive surprise, to be sure, but one acknowledging Microsoft's competitive environment had completely changed.

  But the greatest determinant of effective innovative surprise is not technical capability — it's expectations.

  Surprise is about expectations. Successful surprises subvert, destroy and/or exceed expectations. The great innovation tension in business is appropriately managing expectations. With apologies to Clay Christensen, this other "innovator's dilemma" asks, "Is it better to be 'predictably surprising' or 'surprisingly predictable'?" That is, do customers and clients prefer the comforts of predictable improvements and enhancements that fall squarely within educated expectations? Or would they rather the thrill and novelty of innovations that challenge and intrigue them in unexpected ways?

  If you're an Apple or a Samsung or an Amazon, is your brand better off building expectations around "no surprises" innovations that happily soak your customers in the warm bath of familiarity? Or do you gain greater brand equity by creatively disrupting the very expectations they're predisposed to bring to your products and services?

  The simple thought-experiment and test I advise innovators to explore is substituting the phrase "pleasant surprise" for "innovation" whenever they discuss new offerings and upgrades. There's a world of UX difference between a significant innovation and a significant pleasant surprise. In fact, as many innovators discover to their sorrow, many of their most innovative features and functions are frequently regarded as unpleasant surprises.

  How intimately do your designers and marketers link and measure the value of an innovation to the pleasure of its surprise? The great paradox, of course, is that the more people expect surprises, the less surprising those surprises are.

  And surprise, like any other differentiator, can quickly hit diminishing returns. But, as DARPA's successful history as a surprise-based innovator suggests, understanding the differences and distinctions between "proactive" surprise and "reactive" surprise can pay huge dividends. What's surprising is how few innovators appreciate that.
  

  
  

strategy+business: STRATEGY & LEADERSHIP

• Can Best Buy Thwart the Grim Reaper? - As Best Buy takes a pounding in the financial markets, its leaders need to look beyond conventional solutions and reach for true strategic innovation. But is the once-dominant big box retailer up to the challenge of seeking solutions from outside its comfort zone and, indeed, from outside its own industry? Doing so may be its last hope for survival.
  
  
  
• The Right Ideas in All the Wrong Places - Capable strategists must embrace and enhance strategic intuition to generate groundbreaking ideas for where their companies most need to innovate . That requires knowing where big, practical ideas come from.
  
  
  
• Think Functionally, Act Strategically - The specialist leaders of HR, IT, finance, and other functions have had their time, attention, and (in some cases) money freed up by more efficient practices. They now have the ability--and the mandate--to play a more influential role, especially when building capabilities. Instead of balancing services among all business units equally, or striving to be best in class in everything, they can become increasingly "fit for purpose," thinking and acting in line with the enterprise strategy.
  
  
  
• Well-Tailored IT - If you are a senior IT leader, you need to make the same kinds of disciplined choices for your department that the CEO and top leadership team are making about the strategic direction of the enterprise. Here's how to develop a sophisticated, more strategically oriented information technology approach--based on six ways to create value for the enterprise, and five archetypes that resolve the tension among those six value drivers.
  
  
  
• Designing the Right Supply Chain - When a company's supply chain practices are directly aligned with its enterprise strategy, the result is superior performance and a strong market position. And yet, a true strategic fit between enterprise and supply chain strategy is all too rare in the business world. This article describes how to marry your strategic goals with your operational capabilities.
  
  
  

The Economist: Business