Click here to download a PDF of this article from the Rotman Management Spring 2014 issue. 

Leadership Forum: The View from the C-Suite

Integrating Design Thinking with Systems Thinking: MEC’s David Labistour

Interview by Mark Leung

You’ve been a strong proponent of design throughout your career. How has it influenced the way you lead at MEC?

Design has always been my paradigm: everything I do is about placing the user first and focusing on a desired outcome or ‘future state’ for that user.  For me, things like hierarchical systems and processes are a ‘means to this end’ as opposed to an end in themselves. The other thing is, I don’t believe there’s a single ‘right’ approach to any problem. You have to be flexible in your approach to strategy.

Over the past five years, Mountain Equipment Co-op has evolved considerably, and we have re-visited the very purpose of the organization.  All of this was driven by what’s happening in the Canadian landscape: demographics, urbanization, how people are approaching leisure, and how technology is changing communication, particularly for young people. When you step back and look at this whole system of change, you realize that your business has to change in order to meet desired future states, and you have to look beyond your balance sheet and cash flow statement to understand where you have to go.

We’ve been very much driven by this and have used some trial and error and prototyping to really understand whether we’re on the right track.  There are no guarantees in business. If it was easy, it would be a very equal playing field, and organizations and brands would be around for hundreds of years. Organizations emerge and  grow, but they also fail and die. The average lifespan of an enterprise is decreasing because the future state is changing so quickly. And as much as data is vital to making decisions, the future state cannot be predicted by what came before.

How would you define design thinking?

To me, design thinking is about defining a future state for our customer and the desired outcome of that future state–what our customers will need, and what the effect will be on them, and then applying the appropriate solutions to meeting the challenge. I confess that I have a bit of difficulty separating design from systems thinking, which is also about defining what is changing in a market or businesses and getting to that future state. To me, systems thinking and design thinking are sort of ‘joined at the hip’, and starting to morph into one. Both are very future-focused and customer-focused and attempt to understand the complexity of what we do, as opposed to taking a very linear approach to strategy and solutions.

Talk a bit about complicated problems vs. complex problems.

Here’s an example: the wiring on a 747 is incredibly complicated, but every 747 has exactly the same wiring chart and diagram, so if a fuse blows, you can pull it out and put in a new one and you’ve solved the problem. You cannot fix a complex systems by replacing one part. When you’re dealing with people’s wants and needs, changing demographics, changing desires, unpredictable flows of commodity and material and a changing climate, you are dealing with a very complex model and you can’t just take one piece out and replace it and solve the problem. You have to deal with many different components and issues at the same time to try to understand what the solutions might be. In these cases, I think you have to apply both a systems approach and a design approach.

Why do you think design thinking has gained such prominence in recent years?

I think it’s because life has become so complex and is moving so quickly that the tools for solving complicated problems no longer work in a complex system. You really have to understand what is happening outside of your business, what the drivers and trends are and understand the desires of the people that comprise your market.

How will education change, as a result of all this?

We have to get to a point where we can teach people to adapt to change as it happens, rather than having them apply traditional models to new problems. There is some very robust intellectual thinking in schools these days, but little of it connects to the reality and difficulty of making something happen on the ground. I believe that we have to get to a place where there’s a very strong balance between left and right brain thinking and between design thinking and practical application. Most education institutions have been around for so long that change is going to take some time. I think in many ways, business schools should be in the best position to change.

You recently oversaw the redesign of an iconic brand. Can you talk a little bit about why that was necessary?

Let me go back five or six years. We were still doing quite well at the time, but knowing that we were cresting the ‘Sigmoid curve’, we decided to do a deep dive into the emerging trends and drivers. We looked way beyond just our business—at future demographics in Canada, how approaches to recreation were changing, park usage etc. We even looked at fertility rates and cultural change over the next ten years.

The signs did not look promising for us: we realized that we were very much playing in a traditional space that had been created by people who were  aging and very Caucasian, in a world that was becoming younger and more culturally-diverse. It had also been a very masculine world. We needed to change our approach.

Looking at the world beyond the one in which you play is critical for every organization. I’ll give you an example. We compete for the consumer’s discretionary time and money in the braoder sport, leisure and well-being market, and our market share within that segment is pretty small. We compete against the Sony PlayStation®, Netflix and Apple for the discretionary time and money of our consumer. Ten years ago, a young woman’s first discretionary expenditure was on footwear and clothing. Today it’s a phone and data plan. If we don’t look at these wider competitors, we will be lost, because we’re not just about ‘outdoor retail’, we’re in a much larger leisure arena.

Having studied all this, we went back and revised the purpose of the organization, from ‘helping people realize the benefits of self-propelled wilderness recreation’ to ‘inspiring and enabling everyone to lead active lives in the outdoors’. In moving towards that purpose, or future state, we expanded our product assortments and our activities. We also had to become far more urban. We didn’t ditch any of the back country stuff—we are still fiercely determined to provide the best service and assortment in this category—but we had to embrace busy urban lifestyles as much as we did the back country.

The last piece of it was refreshing our visual brand to realize this expanded ‘larger tent’, a more inclusive approach to outdoor recreation and the visual needs of the changing communication and transaction platforms (web, mobile and social media). We gave the design firm a solid idea in terms of painting the preferred future state, what we wanted to hold sacred and what needed to evolve. The one thing we knew for sure was that we wanted to change the brand to reflect how our Members refer to us—which is as MEC. We wanted to tap into that familiarity—to move away from the bigger Mountain Equipment Co-op nomenclature to just being a simplified MEC. As already mentioned, so much branding today is done in a social media or electronic space, that unless there is real clarity, you’re not maximizing your visibility. We wanted to simplify the visual brand. But we never expected to lose the mountain in the process! That was a real surprise for all of us.

You talk about imagining the future and being open to surprise, which are not traditional ways of thinking in business. How do you instill this in your organization?

You have to set a very clear direction for people and empower them to find solutions on their own. For example, as much as I hated doing it, I have stepped away from the design of our  products, because if I tell our team what I’d like to see, I can’t hold them accountable for surprising me, and the accountability moves away from them to me. By setting very clear direction and outcomes and then expecting people to deliver on them and hold them accountable, you allow people to surprise you.

Obviously, some parts of the organization need a more hands-on approach. If our store is supposed to open at ten o’clock, we need to have staff on the floor at 9:59 to serve customers—there’s no leeway around that one. But when it comes to design and strategy, encouraging people to come up with solutions that might be quite different from what you are thinking, and not constraining those too much, is very valuable.

The other thing is to allow people to make mistakes—honest  mistakes that are made in trying to achieve the outcome, as opposed to just being sloppy—they will be more creative going forward.  If a strategy is well thought out and executed but is not successful, that is a lesson learned. A product that is beautifully executed but has not resonated with the consumer is a ‘good mistake’; whereas something that is too expensive due to indulgent design or falls apart due to sloppy design is not acceptable.

For readers who are interested in design thinking, what’s the best way to get started?

Define the key target stakeholder needs and then take conscious steps to understand the system and constraints within which your organization operates to deliver these needs. Then, have a place to go to—a clear desired outcome.  You really need this end point or  future state to work towards.  Once you define and understand this future state, find the most appropriate ways to get there.

Our approach isn’t perfect, by any means, and I understand with all humility that things could come crashing down tomorrow. We could have misread signals, or we might be doing something wrong. Ultimately, the organizations that thrive and survive are those that are very nimble and adaptable, but there’s a lot of luck in all of this as well—the luck of timing, and the kismet that happens to organizations that remain curious and free of arrogance. I never assume we have all the answers.

David Labistour is CEO of MEC, formerly Mountain Equipment Co-op, Canada's leading retailer of outdoor gear, apparel and services. A retail co-op, MEC has nearly four million members across Canada. Born and raised in South Africa, David previously worked with Adidas and the South African affiliate of Marks & Spencer. David was named Design Thinker of the Year by the Association of Registered Graphic Designers at its annual conference held in November, 2013.