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The failure to employ the methods of innovation and design thinking to the current financial mess is prolonging and deepening the crisis. It is now clear that Treasury Secretary Hank Paulson and leading members of the Bush Administration and Congress are trying to solve an entirely new financial problem by using models from the past that fit their comfort levels and current levels of understanding. After 30 years of a market paradigm (governments are bad, markets are good), the effort to find market solutions to the credit crunch has sent the U.S. lurching from one plan to another, each so complicated that it can’t be implemented quickly. And so the crisis deepens. Markets are great for many things, especially sorting things out efficiently, but not in a credit meltdown built on highly opaque, complex financial instruments. Sequoia Capital has a great slide show showing how we got into the mess and how to survive it.
It took new thinking from Britain over this weekend to clarify the crisis and show the way out of it. Britain looked to a very different paradigm, a government, not a market solution. Simply invest taxpayers money directly into banks to boost liquidity. Take non-voting equity stakes so the people get their money back, if not profit, from the resulting rebound in the banks and the economy. This was out-of-the-box thinking. Perhaps it is an overstatement, but Britain has been one of the key leaders in the world recently in applying design thinking to non-business, civic society problems such as transportation. Coming up with a new choice, not making a better choice among existing options, is at the heart of that process. Roger Martin, dean of the Rotman School of Management, recently talked about design and the generation of new models.
We live in a period of ambiguity, volatility and complexity—perfect for design thinking which thrives in this environment. We need to employ the tools and methods of design to get us into the future. More later.
Want to stop talking about innovation and learn how to make it work for you? Bruce Nussbaum takes you deep into the latest thinking about innovation and design with daily scoops, provocative perspectives and case studies. Nussbaum is at the center of a global conversation on the growing discipline of innovation and the deepening field of design thinking. Read him to discover what social networking works—and what doesn’t. Discover where service innovation is going and how experience design is shaping up. Learn which schools are graduating the most creative talent and which consulting firms are the hottest. And get his take on what the smartest companies are doing in the U.S., Asia and Europe, far ahead of the pack.