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These days, the buzz in business circles is all about “design.” Gurus such as Roger Martin at the University of Toronto's Rotman School of Management and American journalist and author Warren Berger have preached convincingly about how design holds nearly unlimited potential to solve problems. Entire university departments and art schools have converted to “design centres.” It seems that cutting-edge MBA programs talk more about design than they do about accounting or marketing.

Designing as a way of solving basic problems is the story of civilization. The wheel itself was designed to solve the back-breaking problem of hauling wood or rocks. Over the years, we've turned our design efforts to other issues: Can we design a better chair? A better cob of corn? A better health-care system? A better set of financial market regulations?

All of it leads to a grand question: Is it possible to redesign an entire economy?

Consider Alberta's energy-fuelled economy. It's a bit like a sports car that has only two speeds: 150 kilometres an hour, and 20 km/h in reverse. It's clear that such a car – and such a provincial economy – needs some redesign. The skeptics will quickly point out that redesign is exactly what the government tried in the 1970s with its efforts to diversify the economy. Schemes in Alberta ranging from government-sponsored phone manufacturing to magnesium companies didn't end well. The word “boondoggle” took on a rich new meaning.

So let's add a constraint to the design question: Is it possible to redesign Alberta's economy without government intervention? That's certainly a question that can't be accused of socialist agendas. Like all compelling design problems, the initial proposition seems a little bit impossible.

What's been tried in the past? Tax subsidies and government loan guarantees have been traditional tools of various provincial and federal governments, but can these ever really work? At the very best, they simply steal companies and industrial clusters from other regions. At their worst, they artificially prop up industries that aren't economically viable.

Lowering taxes may create some “winning conditions” for existing companies in the region, and it may even lure companies and jobs from other regions. Certainly profits would improve, and higher wages and investment may follow – all good things. But is there really any evidence that lowering taxes leads to diversity? Alberta's overall tax base is the lowest in the country, yet its economy is the least diversified.

Maybe Alberta's economy could be redesigned and diversified more organically – more spontaneously – without the same top-down government intervention and involvement. Perhaps the design problem could be solved if it were left up to the one group of people most desperate for diversification: Albertans.

Unleash their entrepreneurial spirit by making it ridiculously easy to set up a small business. Design a system whereby would-be entrepreneurs could be up and running in less than two hours. Work with governments at all levels to lighten up on cumbersome red tape and bureaucratic hoops through which small-business people are forced to jump.

Business groups such as the Canadian Federation of Independent Business have identified red tape, not taxes, as the most serious problem impeding commerce. Bureaucratic language, unacceptably long turnaround times for approvals, and getting different answers to the same questions about regulation compliance tend to crush small enterprise.

Albertans have demonstrated they're up for the entrepreneurial challenge. From the peak in 2008 to the recent trough in 2009, Alberta shed 31,000 employed positions. But over the past two years, self-employment increased by more than 15,000. Clearly, when faced with the loss of employment, thousands of Albertans have the skill, courage and confidence to act on their entrepreneurial impulse. The reason many don't succeed, though, could have a lot to do with bureaucratic hurdles we put in their way.

By nature, entrepreneurs bring diversity. They have unique business ideas, and they will find the niche markets that need tapping. Even the largest corporations in the world were at one point just an idea – a glimmer in the entrepreneur's eye. Some may falter, but others will certainly succeed.

Redesigning Alberta's economy could be as simple as allowing diverse thinkers to do their thing.

Todd Hirsch is a Calgary-based senior economist at ATB Financial. The opinions are his own.