Design Thinking vs Traditional Problem Solving in M&A

It is a sunny August day, and you could either go for lunch with your friends in an open air restaurant, or you could try to convince them to meet you in the metaverse. Which one sounds more fun?

Mark Zuckerberg’s metaverse bet hasn’t paid off. In 2021 and 2022, Reality Labs, Meta’s metaverse division, recorded a cumulative loss of nearly $24 billion, including $13.7 billion just last year.

The company formerly known as Facebook paid $2 billion to acquire Oculus in 2014, in the belief that its use case was beyond gamers and that we would all want to hang out in VR headsets.

While this bet didn’t work out, Meta’s acquisition of Instagram for $1 billion in 2012 seems genius. What was the difference?

One originated via the Design Thinking approach, while the other came through traditional problem solving.

Traditional problem solving

Traditional problem solving begins with the company’s need, and is often the kind of analysis MBA grads do in M&A departments. It can be summed up as: Facebook is on track to reach market penetration in its key markets, and needs another fast growth outlet.

Unless it finds one, it will go from a fast growth company with exponential returns to a steady…