If you’re a parent, here’s a cool new product: Cucuyo. It’s portable baby changing station and diaper bag. It was designed by a couple of friends of mine, husband and wife team Ana Reza and Page Hadden (she formerly of frog design and Pottery Barn, he of Timbuk2 and Lowe Pro, so they know their stuff). It folds up sort of like a burrito, and unrolls into a pad for doing diaper changes, and has a pouch for storing new and old diapers. As they say, there’s no need to have a dedicated diaper bag, as this fulfills the role. Plus it comes in a bunch of cool colors and patterns.

I believe we are about to see the birth of a new business organization - one that is optimized for complex systems of problems and solutions, rather than based on silos focused on specific functions, and which treats user experience as a core organizational axis rather than a meddlesome add-on. Call it Org Chart 2.0.

Today’s companies are largely structured with Org Chart 1.0: silos of knowledge and product offerings (segmented by customer type, price point, technology, etc.). We have had this structure for decades, even centuries, and there are good reasons for it: it helps drive efficiency of development and decision-making, focus on customer segments and competitors, it makes the chain of command and (in theory) accountability clear, and so on.

Unfortunately this type of organizational structure is quite poor at dealing with complex systems and systemic-level problems. And this is becoming increasingly untenable for several reasons:

1. User experience design challenges the ability of organizations to cross silos: user experiences run rough-shod over org charts. Why? Because many elements go into making a user experience that from the user’s point of view should all be seamless and to an extent indistinguishable. Users don’t really care if the e-commerce portion of your website is created by a different group than the informational areas of the site, and from a brand point of view you should be ensuring that both areas of your site speak with the same brand voice. Now multiply that across your products (hardware, software), collateral, packaging and out-of-box experience, call-center, point-of-sale displays and materials, sales staff, and so on. That’s how user experience gets created.
2. Companies now need to deliver whole “solutions” rather than old-fashioned products. User experience design is just one example of this. More and more companies must pull together complex networks of partners, acquisitions and vendors in order to create and sell these solutions. No-one today is as vertically integrated as Henry Ford’s River Rouge manufacturing plant, where iron ore came in at one end and finished cars went out the other. Being nimble, global and adaptive in hyper-competitive and dynamic markets has forced dis-aggregation of capabilities and resources.
3. Customers are more complex than they used to be (or more likely it’s simply that our old models of market segments and personas did not allow for human nature and its self-contradictions). This makes understanding them and addressing them with offerings more nuanced and multi-faceted. A one-size-fits-all shrink-wrapped product on the shelf at Best Buy or Walmart is not going to cut it any more.

The strain is showing on the traditional silo’d organizational structure. I believe we will soon see the emergence of new companies formed in this environment and they will look quite different than what we have seen for the last decades. For these companies, thinking systemically and about user experience will be as natural as breathing. They will treat complex systems as inherent to their structure and creators of value, rather than as headaches to be avoided and territories to be fought over by silo’d clans.

What could a Business Organization 2.0 look like?

Instead of business units these companies will have “experience units”, which manage the end to end experience. Instead of focusing on products and technologies, they will be focused on the “invisible” system that connects the various products and customer touchpoints together. They will welcome outside vendors and partners as enablers rather than disdaining them as “not invented here”, and see themselves as being modular entities that can fluidly adapt to chaning market dynamics and customer needs. Customer input will be voraciously sought after and taken in, and customer participation in shaping the company and its offerings will be routine rather than the exception.

I’m sure there are many time-honored and well-established reasons why these things don’t make sense, and why Org Chart 1.0 is better. But the fact is that the world is changing and we need to think about new business organizational structures to adapt.

So what do you think? Are there any companies you see emerging that have these traits?

Mark Ury just alerted me to a post he did on his blog, springboarding off my notion that “the system is the product”. He makes the point that time is an important factor in how systems come to be:

Time determines the success of systems more than any other factor. This can be maddening for strategists and designers slaving away at product, service, hardware, and software ecosystems.

He argues that systems are not so much designed as evolved. This may be a matter of semantics, but I’d argue that while systems do indeed change over time, and there are unexpected mutations caused by hapenstance and the “environment” (the surrounding customers, competitors, culture…), that does not mean design has no role. We have some control of our own destiny, even with complex systems (though perhaps not as much as we like or think). All is not left up to the divine, as it were, and fortune rewards the prepared mind.

Semantics aside, I definitely agree that time is a key factor in system success. I’ve used the phrase “high panic threshold” when it comes to thinking about complex systems problems - you must resist the temptation to prematurely state that you have defined the problem fully. Doing so means you will likely miss out on a key insight into your customers, your competitors or your business, thus losing potential competitive advantage. You must have a high threshold for ambiguity, patience to wait it out.

In the past I’ve written quite a bit about wicked problems. I’m still percolating on that idea, but moving in a somewhat different direction. Why? Because wicked problems are incomplete when applied to the business world because in their classic definition they lack the notion of competition. Wicked problems emerged out of public policy and planning. In that arena there is not competition in the same way there is in business. So you do not have the time pressures to the same degree, and the fear that someone else is going to crack the problem ahead of you and thus gain an advantage.

Competition: The Go-Fast Force 

Competition is fundamental to business. You might think of it as the “go-faster” force that propels the world of business and individual companies forward. This instills a sense of impatience in companies, particularly when dealing with complex, rather abstract systems. Mark hits it on the head:

Most companies don’t have the patience (or the time) for the system to reveal itself. Public companies are focused on three month cycles. Their CEO’s have three-year tenures. Their middle-management has 50% churn. At the other end, startups have no resources. Two-thirds have the wrong-market strategy. Ninety-percent of them fail in three years.

Systems are so rarely produced because they take time and time is one resource companies don’t have. Most die long before the system is revealed.

This is the market equivalent of natural selection.

In this context, time to market comes to the fore. First mover advantage is key. Decisions are made quickly, partial understanding is the rule.

Emergence: The Go-Slow Force

However, as Mark points out, systems take time to understand, to refine. As the wicked problems definition would have it, you have to start making solutions in order to even understand the problem, and the problem definition emerges slowly over time. In other words, wicked problems resist the classic waterfall process of research > synthesize > define > recommend > act . In fact they turn it on its head: It is only by starting to act that you can illuminate the less obvious aspects of the problem, but its those aspects that deliver the competitive advantage for the very reason that they are non-obvious. If you can crack the wicked problem you gain a competitive advantage just because it is so difficult to understand.

So we have a “go-slow” force that is in polar opposition to the go-fast force of competition. I call this force emergence. Instead of time-to-market, time-to-right is the priority in emergence. Having that high panic threshold really comes in handy here, because this can take several years.

Obviously having large monetary resources helps a lot here, as you can afford to make mistakes (up to a point - shareholders and investors often have low panic thresholds). Having said that, start-ups tend to be good sources of illumination of wicked problems as they are laser focused on differentiation from the big-boy incumbents. Rather than complacently thinking they’ve got the problem well bounded, they actively seek out new aspects of it. The resource-constrained nature of start-ups often makes them more efficient at the rapid, iterative prototyping that is at the heart of using solutions to understand the problem (note that “solution” does not have to mean full-blown product on the market).

The Never-Ending Tension

We’ve all experienced the clashing forces of competition and emergence, the tension between going fast and going slow. For many people it sets the daily context of their work life, myself included. All the tools, processes and frameworks that we bring to bear on design challenges (user research, competitive analysis, trend spotting, market analytics, etc.) are fundamentally about trying to resolve this tension, or at least to make it managable.

Listening to a radio program this morning about the possible Microsoft/Yahoo merger, Cnet’s Michael Kanellos argued that one of Yahoo’s problems has been its inability to kill off unsuccessful properties. Citing Google as a counter-example, he discussed how Google has been able to pull out of less-than-successful businesses, such as its own social networking tool and Google Video (I would throw Froogle onto the list as well). 

To be fair to Yahoo, they have recently stopped Yahoo photos in favor of Flickr, and just today announced they are selling their music service to Rhapsody. But it’s also fair to say that Yahoo has gone beyond being a “one stop shop” (1990’s portal thinking) to a company that neither employees nor customers really know what it is about. I would tend to agree with Kanellos that an unwillingness to draw boundaries around what’s in and what’s out has a good deal to do with that. (Full disclosure: both Yahoo and Microsoft are clients of frog design, where I work, though I have no inside knowledge of the merger at all.)

In the book Code Name Ginger which chronicled the development of the Segway Transporter, there was a great phrase — “drowning puppies” — that describes the mindset necessary when tackling innovative products and services.

The challenge is this: you’ll have lots of great ideas, but you will only be able to expend finite resources to bring a small number of them to market. If you try to spread resources across them all, they will all be starved and unhealthy. So you have to prioritize and not fund some of them. This is very difficult because, just like puppies, these ideas bounce around joyfully and are so shiny and perfect and full of future growth and promise. But the sad fact is you have to drown some of your puppies. It’s a harsh phrase, but accurate.

Yahoo has continued adding property on property, service on service, but has not done enough drowning of puppies to allow shifting away from less successful areas. Regardless of whether the merger happens or not, let’s hope they can regain some of their focus both for their employees and their customers.

I wrote in my end-of-year wrap-up about the Pentax K10D, a prosumer digital SLR, and Pentax has just announced its successor, the K20D. This has led to a storm of commentary in several Pentax discussion forums which are a microcosm of the extremism that the internet often generates. The level of emotion really gets out of hand quickly as people try to one-up each others’ arguments.

What are all the arguments about? In this case, in part whether Pentax dropped the ball by not improving the frames-per-second (fps) that the camera can shoot. Both the K10 and the K20 are 3fps, which is arguably slower than the competition. Some people, presumably who shoot fast moving sports, wildlife or kids, are vociferously complaining about “only” 3fps and are really dominating the conversation. However, a poll going on at The Online Photographer is (as of this writing) showing that 3fps is just fine for the vast majority of people.

This highlights two things:

1. Complainers tend to outweigh the silent majority of satisfied people and leads to a skewed perspective of the quality of a manufacturer’s products.
2. People’s perceptions of the importance of features can be very different at the point of purchase than in ongoing use.

In any case, the whole dialog reminds me of the famous Monty Python “Four Yorkshiremen” sketch where each man tries to one-up the others on how horrible their childhood was.