The Radical Re-Design of Business
November 2, 2012
This week I was invited to Shanghai to speak about the transformational design of businesses at Radical Design Week – Shanghai.
In the Heavy Metal Seminar (heavy industry rather than a debate about Metallica), my topic was car manufacturing and how with state of the art 3D fabrication tools, combined with networked participatory cultures and tools, insights into rapid innovation and build practices, a car company Local Motors can build cars five times faster at one hundred times less the capital cost and sell its first production vehicle The Rally Fighter at $79,000. This is radical transformational business design.
Designing high performance organisations
I made the point that companies can change the shape, capability and performance of the organisation by rethinking and redesigning all its core processes in the instance of Local Motors; its factories (the Local Motors factory was rated by Jalopnik in the top ten of most impressive car factories in the world), R&D, sales and marketing and final production – this is whole systems design, that represents an industrial ecology, not a series of boxes & silos. Moreover it is much less costly to set up, run and maintain—it also enables the company to invest its energies into high quality design and production.
It demonstrates that better much better does not necessarily have to cost the earth.
An open innovation platform
Local Motors runs competitions to innovate, in one year for its first vehicle competition; 44,000 designs were submitted to Local Motors, and 3600 innovators have shared their knowledge and insights, no one company can hire that many people. Through its open participatory platform now called ‘The Forge’, Local Motors has collaborated in automotive innovation with DARPA the US Military research agency co-designing and building a fully functional prototype of a Combat Support Vehicle in three and a half months. Normally such a process would take years. As the owner John ‘Jay’ Burton Rogers said to me, ‘you can’t be nimble if you tool big’.
Whilst even large car manufacturers have turned to Local Motors, such as BMW running an urban driving experience challenge. So Local Motors becomes more than just a car manufacturing company its an automotive innovation platform.
How do we learn to design for transformation?
At the end of my presentation I was asked the same question by a number of heavy industries. It went something like this – we have built our industrial organisations to work within an orthodox industrial model how can we learn to design for transformation—is it even possible? It is a vexing question. The further discussion that ensued indicated that these companies were thinking very carefully about their future, what a best possible future looked like and how to get there. For me it was interesting that this conversation was happening in China.
Navigating a complex world
As a consequence of this audience question, we explored other stories from No Straight Lines of organisations and businesses designing for transformation. The large scale systems change in the public healthcare system in Nova Scotia enabled by what is called participatory leadership, to a radical re-design of venture funding as a networked platform, to factories of the future, radical innovation and the business models that supported them. We explored other successful stories in manufacturing, finance, education, agriculture and healthcare.
We agreed that it required companies facing volatile and challenging times to be able to describe a new destination with new perspectives and a new language, and to get there they needed a set of navigational tools. These are some of the navigational tools discussed.
Whole systems: companies needed to learn how to deal with a more complex world by being able navigators, to do that they had to think in whole systems. I used the example of the World Food Programme using systems thinking to describe the interconnectedness of the environmental, economic, social and political dimensions in the Sudan producing a richer narrative and world context enabling them make more meaningful mission critical decisions.
Literacy and prototyping: companies needed to become adaptive and to do that they needed to be able to evolve their literacy of new tools, process and capabilities and to achieve that had to learn how to prototype internally and evolve a culture which supports such practice.
Openness is resilience: Companies of the future will be far more open, nature thrives because it is an open system that encourages diversity to flourish. From a business perspective openness is cultural, it is a process, accommodates legal frameworks impacting on patents and approaches to business and relates to technology. An example of the language of openness: open innovation, open legal frameworks, open data, open api’s, open business models, open organisation, open source, open eco-systems, mutuality as a business strategy. To get to a comprehensive understanding of these capabilities companies will need to evolve their ability to practice appreciative inquiry.
Participatory cultures and tools: the organisational performance of 21st Century companies will come from its ability to design for and effectively employ participatory cultures as Local Motors or the public healthcare system in Nova Scotia have done to great effect. I have chosen the word ‘performance’ because for example participatory cultures can; accelerate innovative practice, enable greater flexibility, deliver a more lightweight organisation, become purpose and values led, harness collective intelligence evolving into the learning organisation which learns everyday, and reduce the bottom line cost of running an organisation. Participatory cultures taps into the core DNA of what motivates human beings which can unleash their full creative potential—in so doing social capital, intellectual capital, and financial capital can be created all at the same time.
The crafted organisation: is built upon the concept of craftsmanship. Conventional organisations are designed to run at 100% efficiency, and that’s fine when the world is in synch but when its not it’s a recipe for disaster, think Detroit, Kodak, Nokia or the entire music industry. Therefore, organisations need a culture of craftsmanship, the process of the constant exploration of new techniques, process, language, ideas, models, patterns and systems. It is in fact a description of a creative process that ultimately delivers the ability to design for transformational change that no longer is identified as risky, but relevant and necessary – the larger question then becomes one about execution, rather than why not. This is how Local Motors for example was able to develop such a high performance company.
Be realistic imagine the impossible then create it
This is how companies can design for radical business transformation amidst volatile business conditions, where they become more resilient, more socially and environmentally sustainable and more economically vibrant and creative. Interestingly better much better does not necessarily have to cost the earth—its all about the quality of the design process and practice that enables the impossible to become reality.
I have written a 30 minute read on Designing for Transformation. Which expands on the themes above and also explains a process called Transformation LABs.