In the Connected Age users have real power. They cannot be viewed as a gregarious heard of consumers waiting to be milked for what they have. Instead, value must be co-created and sharedRemember: customers are a company’s most valuable asset.

The practice of UX design inherently seeks to strengthen the value provided to users. With methods such as ethnography, mental models, personas and scenarios, UX strives to view the world from the outside in, rather than the inside out. In doing so, companies can better provide solutions that solve real-world problems and that fit into users’ lives.

But the contemporary practice of UX design doesn’t go far enough. The field implicitly examines and models user behavior as it currently exists. What’s needed is a better way to envision users as they may act.

Enter “The Ask,” a single question outlined by MIT Professor Michael Schrage in his book Who Do You Want Your Customers To Become?Successful innovations, Schrage contends, don’t merely ask users to do something different; they ask them to become someone different.

Here’s an example: George Eastman didn’t just invent inexpensive, automatic camera; he created photographers. His innovation allowed everyday people to do something only trained professionals could previously do with expensive equipment. The result: you, too, can be a photographer. That’s transformational.

kodak girl
With Eastman’s camera (circa 1888) anyone could be a photographer

Another example: Google’s innovation isn’t just a brilliant search algorithm; instead, Google let’s everyone become expert researchers and fact checkers. We’re now all reference librarians with the power of all known human knowledge at our finger tips. Powerful.

Now consider a would-be innovation that failed, such as the Segway. What does the Segway ask us to become? A mad helmeted scientist racing down the sidewalk? Or maybe an authority figure (e.g., policewoman) extending a few feet above other pedestrians? Or maybe just an odd ball on a weird scooter? During its commercial launch, the inventors of the Segway promised to revolutionize transportation and the way people get around cities. But instead it asked us to become somebody we didn’t want to become, and it failed.

nerd magnet<br /> small
The Segway asks us to become someone we don’t want to.

Role of UX

User experience design plays a role in all of the above examples. For instance, Kodak claimed in its early ads: “You push the button, we’ll do the rest.” Their strategy clearly relied on an exceptional user experience, and they delivered on that promise. This resulted in the mass adoption of Eastman’s camera.

Peter Merholz et al. discuss this at length in their book UX strategy Subject To Change. They write:

“[Eastman] recognized that his roll film could lead to a revolution if he focused on the experience he wanted to deliver, and experience captured in his advertising slogan, “You press the button, we do the rest.”

We find a similar pattern with Google: a drop-dead simple user experience with high tolerance for “user error” (e.g., spell correction) makes the service efficient, effective and enjoyable to use. Schrage also highlights the importance of user experience design in his book. He writes:

“Innovations failing to provide good user experiences find difficulty succeeding, no matter what their price…The better the customer experience, the better the odds for innovation success.”

Practically speaking, The Ask doesn’t supersede or replace current tools and methods, rather extends them. It offers a unique perspective on our practices and how they fit into the bigger picture of things. And it can help better shape existing techniques.

Take personas. Often the number and type of personas created for a solution line are determined by traditional (even outdated) segmentation techniques of existing markets. By using The Ask, we can now consider creating personas around the transformational outcomes we envision. Who will our customers become in the future? We can then align our personas to the answers of that question and describe them in terms that address their transformation.

Keep in mind that it is the innovation that transforms the customer. So the point here is to align tools of design and innovation to point towards the future. Right now, personas typically reflect an as-is view of customer behavior. But to be relevant in rallying teams around truly transformational innovations — such as in design sessions and in workshops — they should rather describe an answer
to The Ask.

.the ask

For more on The Ask, I recommend Michael Schrage’s book. It’s clear and compact, and it’s wholly relevant to core UX work. Written by a leading business thinker, this book highlights the increasing overlap between business and design. The Ask is a simple, reflective query can alter the way we see our users and our
offerings. It increases our ability to create more value through user experience design.

I encourage you to continually ask yourself and the clients you serve, who do we want our customers to become?

2012 was a relatively slow year for me in terms of quantity of new blog posts. But I was able to capture and share some of my best thoughts this year.

Here are quotes that summarize each of the top 5 posts by number of views in 2012, in reverse order of popularity:

#5 – Incremental Innovation Is Underrated

Some business stakeholders are swinging for the fences in their innovation efforts:they want the big wins. And rightfully so: reaching for the stars keeps the company pushing forward, beyond what it can currently deliver. This inspires and motivates employees and management alike. But sometimes this quest for the next biggest and best thing overshadows everything else.

Companies need incremental innovation, breakthroughs and disruptions alike. To do this, there must be a comprehensive innovation program in place to channel attention and effort in the right direction.

The point is that incremental ideas shouldn’t be neglected: they are profitable and can fund your big idea projects. And they also provide a stepping stone toward game changers via the adjacent possible.

#4 – Principles of Alignment Diagrams

Specific techniques for research and diagramming are important, of course, but it’s really the principles of alignment diagrams that are essential. Once you grasp these, you’ll find there range of potential ways to go about diagraming, including mental models, customer journey maps, service blueprints and more. You may even introduce variations on these standard forms or come up with your own.

#3 – Clarifying Innovation: Four Zones of Innovation

I’m proposing a 2-dimensional picture of innovation:

  • The y-axis indicates the degree of technological progress an innovation brings with it. Moving from low to high along this line indicates improving existing capabilities, services and products.
  • The x-axis shows the impact an innovation has on the market, also from low to high. This usually entails new business models or reaching underserved target groups.

This gives rise to four distinct zones of innovation:

  • Incremental innovations involve modest changes to existing products and services. These are enhancements that keep a business competitive, such as new product features and service improvements.
  • Breakthrough innovation refers to large technological advances that propel an existing product or service ahead of competitors. This is often the result of research and development labs (R&D), who are striving for the next patentable formula, device and technology.
  • Disruptive innovation is a term coined by Clayton Christensen. In his best-selling book The Innovator’s Dilemma he shows that disruptive innovations “result is worse product performance, at least in the near-term. [They] bring to a market a very different value proposition than had been available previously” (p. xviii).
  • Game-changing innovation transform markets and even society. These innovations have a radical impact on how humans act, think and feel in some way.

#2 – Cross Channel Design with Alignment Diagrams

I’m advocating the incorporation of channel-based distinctions and information, such as a Touchpoint Matrix, directly in alignment diagrams. By doing this, you get not only channel-specific information, but you can also see how this aligns with both customer goals and business goals. In this light, alignment diagrams are a suitable tool for cross channel mapping and design.

#1 – The Project Canvas

Defining a project in its earliest stages is like hitting a golf ball: if the face of your club is slightly tilted , you’ll end up slicing the ball as it travels down the green. Likewise, small miscalculations at the beginning of projects can have massive consequences later on.

Part of the problem is that the logic of a project definition is invisible. You can’t “see“ project goals or risks, for instance. Sure, you can write them down as text. But long documents – if they get read at all – tend to get lost in the shuffle as the project unfolds.

What’s more, a written description of project elements doesn’t expose relationships between them. The big picture can fade quickly as work and deadlines pile up.

Here is a tool to help you get a quick, but broad definition of a project in a single overview. It’s called the Project Canvas.  You can download it here: Download the Project Canvas v1.0 (PDF)

5 Levers of Behavior Change

17 November 2012

In my talk at UX Brighton 2012, I highlighted Everett Roger’s 5 perceived attributes of innovation. These, I explained, can be seen as heuristics in the innovation adoption process. See my presentation on SlideShare in case you missed it.

To quickly review, the principles Roger’s identified over 50 years that predict whether an innovation gets adopted or not are:

  • Relative advantage. Is the proposed innovation better than existing alternatives?
  • Compatibility. Is the innovation appropriate? Does it fit into the user’s daily life, beliefs and values?
  • Complexity. Is it easy to comprehend and use?
  • Trialability. Can it best tested without penalty?
  • Observability. Can it be observed and understood?

Any time an innovation is introduced to a group of users, it requires them to change their behavior. After all, innovations are by definition “new.” And with this newness comes change. The above factors describe how the adopting population is likely to perceive that change. If an innovation is too complex to use and hard to understand, for instance, it may not get adopted. Or, if an innovation is contrary to one’s beliefs (i.e., not compatible), it may also get rejected.

Of course, there many other factors that may influence the rate of adoption, such as price, communication channels and PR, but the above human factors play a key role. Building a better mousetrap does not guarantee user’s will accept the new idea. You also have to look at the human factors involved. In fact, many would-be breakthrough inventions fail because of not taking this human factors into consideration.

Keith Wood, CMO at Unilever, recently contributed an article to the Harvard Business Blog entitled “Change Consumer Behavior with These Five Levers.” I was struck by the similarity of these 5 levers to Roger’s perceived attributes. Wood focuses on invoking change for sustainability reasons, and he doesn’t talk about “innovation” explicitly. But the message is the same, I believe:  recognizing the drivers of behavior change and designing with them (instead of against them) can greatly increase the likelihood of adoption.

Unilever’s 5 levers of behavior change are:

  1. Make it understood. This lever is about raising general awareness and, more important, the understanding of the innovation. Woods points to the example of video demonstrations using ultra-violet light to show children that washing their hands with water alone doesn’t get rid of invisible germs. In Rogers’ terms, this corresponds roughly to “observability.”
  2. Make it easy. People like things to be simple. But this lever is also about convenience and about confidence. If a new product or service has a long learning curve, for instance, it will lower the likelihood of invoking a behavior change. Rogers calls this “complexity.”
  3. Make it desirable. Changing behavior has emotional aspects to it. This lever is about asking, Does this new behavior fit into my aspirational self-image? This overlaps with Rogers’ “compatibility” and “relative advantage” factors.
  4. Make it rewarding. Do people know when they’re doing the behavior correctly? Do they get some sort of reward? This is about confirming the correct behavior.
  5. Make it a habit. Often a one-time behavior change is not the goal of innovation. We generally want people to continue using the things we introduce to them. This resembles Rogers’ “compatibility” attribute. (Things that become a habit are things that fit into our lives well, generally).

The Unilever levers don’t exactly line up one-to-one with Rogers’, but many of the sentiments are the same. Here’s my somewhat artificial alignment of the two sets of principles:

Unilever’s 5 Levers Rogers’ Perceived Attributes
Make it understood Observability
Make it easy Complexity
Make it desirable Compatibility and/or Relative Advantage
Make it rewarding
Make it a habit Compatibility
Trialability

“Make it rewarding” doesn’t directly appear in Rogers’ list, and likewise “Trialability” doesn’t appear in Unilever’s list. I’m not sure if that matters in the long run if the labels doesn’t match. It’s the approach that I find interesting: identifying key, human-centered principles that drive behavior change or innovation adoption and consciously designing to support them. As Woods concludes, change agents “will have the most positive influence when they work with these ‘structural’ factors, rather than against them.”

A main point from my presentation at UX Brighton 2012 is that UX design as a disciple fundamentally strives to achieve a positive influence on behavior change. Thus, our inherent user-centered approach plays a key role in the innovation process. In commercial contexts, UX design is ultimately good for businesses and for growth.

See Unilever’s full white paper outlining the 5 levers of behavior change for more details on their approach.

.

UX Brighton 2012 was a fantastically brilliant event. I was truly honored to share the stage with a first-class line-up of speakers: Alex Wright, Mark Backler, Guy Smith-Ferrier, Ben Bashford, Sriram Subramanian, Mike Kuniavsky and Karl Fast. Wow.

The theme of the event was “Past & Future Interactions,” which took us from hundreds of years in the past via Alex’s history lesson to Guy’s controlling computers with his brainwaves. What a ride. One of the best single-day conferences I’ve ever attended.

My talk was entitled “Human Factors in Innovation: Designing for Adoption.” Here it is on SlideShare:

And here’s the summary from the conference program:

The ultimate goal of innovation is user adoption: we want people to actually use the things we create in a way that impacts their lives. But building the better mouse trap guarantees nothing. In fact, history shows it’s not the whiz-bang of technology but rather human factors that matter in the end. This is where UX designers come in. Through empathy and understanding of people’s needs and perceptions, we can increase the rate of adoption.

My intent was to give UX designers additional, high-level arguments to better evangelize UX or convince stakeholders for more time and money. I made 4 over-arching points in the course of the presentation that sum up the value of UX design in relation to innovation:

  1. The impetus for innovation has no start point: it’s an iteration between technology and needs.
  2. The end point of innovation always lies with users: the ultimate goal is adoption.
  3. UX reduces the risk of non-adoption and accelerates the rate of adoption.
  4. Good UX is good business: it is essential for innovation and for growth.

“Risk” and “growth” in business contexts aren’t things UX designers general talk about. These are terms business stakeholders understand and will grab their attention.

We need to live up these expectations, however, so my positioning of UX presents a real challenge for us. I hope you’re up for it!

In a previous post, I show that not all innovation is the same. By putting innovation on a two-dimensional matrix, different types emerge — from incremental to game changers. This isn’t new per se, but it does help locate initiatives relative to each other.

Some business stakeholders are swinging for the fences in their innovation efforts: they want the big wins. And rightfully so: reaching for the stars keeps the company pushing forward, beyond what it can currently deliver. This inspires and motivates employees and management alike. But sometimes this quest for the next biggest and best thing overshadows everything else.

In particular, incremental innovation is underrated, I believe. I’m not just talking about continuous improvements and optimization of existing products, rather clear steps forward that keep a business in the game.

And I’m not alone. Innovation expert James Gardner writes in his book Future Proof Banking. He describes how incremental innovations not only sustain a business but are prime source of positive returns. They’re downright profitable:

People are surprised when I tell them most returns from good innovation programmes come from incremental innovation.

Perhaps the most famous incremental innovator is Toyota. The volume written about this company and its rise from relative mediocrity to global dominance on the back of small, quite basic changes is monumental. Founded in 1937, the company started commercial passenger car production in 1947, and by the 1980s was consistently ranked higher than any other manufacturer in owner satisfaction surveys. Attention to detail, and making small changes to create lasting improvements, led the company to become the largest automotive manufacturer in the world by 2007. Clearly, incremental innovation can pay, even if the individual changes aren’t exciting and high profile.

Convincing people that small improvements are important is a big challenge for an innovation function. A common response to the idea that innovators should do incremental is that innovators who do so are reducing themselves to optimisers. (p. 11)

Breakthroughs, as Gardner points out, are risky with a lot that can go wrong. They also often suck up more money than they bring back in the short-term, but also in the long-term. So it’s no wonder some companies have done well focusing on incremental innovation.

Marriott hotels, for example, are known for continuous innovation. They identify the services people want and launch them in a planned way to continually “wow” customers and keep the competition guessing.

Even Apple, which frequently tops lists for the most-innovative companies, profits from incremental innovation. Sure, Apple has launched more game changers than any other company in recent times. But after the initial release Apple sees huge returns from incremental innovations. In his article “Incremental Change Wins Apple Big Gains” tech commentator Glenn Fleishmann describes Apple’s incremental approach:

Apple is consistently criticized by pundits, bloggers, other firms, and market analysts for either innovating too much with initial releases (the MacBook Air, the iPhone, and the iPad, notably) or too little in subsequent product revisions. There’s a reason for that. I want to defend Apple’s incremental improvements as the basis of its success in the market, something its competitors seem baffled by, because they apparently don’t understand the difference between revenue and profit, and between delighting customers with products that can be used for several years and those that are obsolete before they’re even sold.

The advantage of incrementalism seems clear if you can make products that are outstanding enough to cut through the clutter of the marketplace. Rather than focusing at any point in the last decade on a cheap item that could outsell PC and then handset competitors, Apple has largely focused on releasing hardware that costs more in order to buy more of the future for its purchasers. The iPad is unusual, in that it marks the first time that Apple can be both ridiculously ahead on price relative to features and have such an extreme lead over competitors that it can maintain its position, all while making only incremental improvements.

The key, I believe, is having an incremental innovation strategy. Sequences of smaller innovations — taken together or spread out over time — can give the illusion that a company is moving forward faster than competitors.

One such strategy is “The Long Wow,” a concept first developed and described by Adaptive Path’s Brandon Schauer. With this approach, companies strive to pace features that will give a “wow” experience over time. He writes:

Plan and stage the wow experiences. Developing all your ideas at once is a risky undertaking. Instead, organize a pipeline of wow moments that can be introduced through your platform of touchpoints over the long haul. As you learn more about your customers and how they perceive the wow moments you can better organize your pipeline of ideas for development. Outline where and when additional wow experiences will emerge in the future, unfolding in a coordinated network of experiences.

Finally, consider also Steven Johnson’s notion of the “adjacent possible,” one of the core concepts of his excellent book Where Good Ideas Come From. Johnson shows that innovative ideas aren’t conjured up out of thin air; rather, they most often come together by combining existing ideas in new ways. Rarely in the history of innovation has man leaped forward ahead of what’s currently possible. Johnson explains:

What the adjacent possible tells us is that at any moment the world is capable of extraordinary change, but only certain changes can happen.

The strange and beautiful truth about the adjacent possible is that its boundaries grow as you explore those boundaries. Each  new combination ushers new combinations into the adjacent possible. Think of it as a house that magically expands with each door you open. You begin in a room with four doors, each leading to a new room that you haven’t visited yet. Those four rooms are the adjacent possible. Three new doors appear, each leading to a brand-new room that you couldn’t have reached from your original starting point. Keep opening new doors and eventually you’ll have built a palace. (p. 31)

So not only is incremental innovation profitable, it’s also necessary to fuel and support breakthroughs from a creative standpoint. It’s the foundation that helps you build a palace of innovation.

In the end, none of this is an either-or question: companies need incremental innovation, breakthroughs and disruptions alike. To do this, there must be a comprehensive innovation program in place to channel attention and effort in the right direction.

We can use matrix for the “Four Zones of Innovation” to balance resources. I’m suggesting a ratio of 5:2:2:1, as shown in the chart below:

If you had $1 million, for instance, you’d dedicate $500k to incremental development, $200k to breakthrough ideas and disruptions each, and $100k to a game changer. You can argue with this distribution (please do!). But for immediate returns, focusing on incremental innovation makes sense.

The point is that incremental ideas shouldn’t be neglected: they are profitable and can fund your big idea projects. And they also provide a stepping stone toward game changers via the adjacent possible.

“Innovation” is a tricky word to define: it means different things to different people. A recent article in the Wall Street Journal entitled “You Call That Innovation?” provides a solid review of the use of the word “innovation” in business contexts.

The article points out that some people limit the scope of term. Scott Berkun, author of The Myths of Innovation (see my review), reserves “innovation” for civilization-changing developments, like electricity and the telephone. This avoids the dilution of the term, which has already become the buzzword du jour.

In a broader perspective, some consider any change to be an innovation. Etymologically, this is acceptable: the Latin root “innovare” simply means to renew or change.

To distinguish between these two extremes, some definitions view innovation on dichotomous scale. For instance, Michael Porter talks about “continuous” and “discontinuous” technological changes;  Tushman and Anderson distinguish between “incremental” and “breakthrough” innovation; Abernathy and Clark refer to “conservative” vs. “radical” innovations; and Clayton Christensen shows the difference between “sustaining” and “disruptive” innovations. While this helps differentiate types of innovation efforts, viewing innovation along one dimension doesn’t tell the whole story.

To clarify the situation, I’m proposing a 2-dimensional picture of innovation:

 

  • The y-axis indicates the degree of technological progress an innovation brings with it. Moving from low to high along this line indicates improving existing capabilities, services and products.
  • The x-axis shows the impact an innovation has on the market, also from low to high. This usually entails new business models or reaching underserved target groups.

This gives rise to four distinct zones of innovation:

  • Incremental innovations involve modest changes to existing products and services. These are enhancements that keep a business competitive, such as new product features and service improvements.
  • Breakthrough innovation refers to large technological advances that propel an existing product or service ahead of competitors. This is often the result of research and development labs (R&D), who are striving for the next patentable formula, device and technology.
  • Disruptive innovation is a term coined by Clayton Christensen. In his best-selling book The Innovator’s Dilemma he shows that disruptive innovations “result is worse product performance, at least in the near-term. [They] bring to a market a very different value proposition than had been available previously” (p. xviii).
  • Game-changing innovation transform markets and even society. These innovations have a radical impact on how humans act, think and feel in some way.

My proposed view of innovation isn’t original. It’s directly influenced by a model developed Wheelright and Clark (1992), which is mentioned as a way to prioritize and plan for innovation in the book The Innovator’s DNA. Still, I believe my approach improves their model and sheds new light on some important differences in our discussions and efforts around innovation.

Chief among these is the confusion between “breakthrough” and “disruptive” innovation. Scott Anthony et al. point to this common misconception the book The Innovator’s Guide to Growth (see my review). They write:

The word disruption itself is loaded with alternative meanings and connotations, many of which run counter to the precise pattern Christensen identified is his original stream of research. As the concept has seeped into the mainstream, this language “disconnect” has led to confusion, misunderstanding, and the occasional misallocation of resources… The error people make most frequently is assuming that a great leap forward in performance is synonymous with disruption.

Breakthrough innovations promise significant improvements in performance compared with existing products. Examples include the Airbus 380, Nokia’s flagship Lumia 900 phone and Microsoft Office 2007. To contrast, disruptive innovations address underserved market needs with products that are more convenient to access, easier to use, and cheaper to buy. Examples include budget airlines, plain vanilla $25 mobile phones, and “good enough” web-based word processing software.

The value of viewing different levels of innovation along two dimensions, as in the graph above, is that you can plot different trajectories of innovation that keep breakthroughs separate from disruptions, as needed.

What’s more, the above zones of innovation can better guide innovation efforts. I believe a good innovation program should balance attention to each zone. Each has a different purpose and requires a different strategy:

  • Incremental innovations help keep a company in the game and provide short-term revenue.
  • Breakthrough innovations can catapult a product or service well ahead of competitors.
  • Disruptions usually entail a change in a business model, making them harder to implement. One strategy is to create a separate brand or company that operates at a lower level than its parent — perhaps more like a startup. (See my review of Xiameter, a sub-brand of Dow Corning launched to address the low end of the market.)
  • Game changers transform markets. They introduce new product categories, for instance, which can ensure long-term success for a business.

Of course the lines between each zone are blurry. And you can argue about the labels themselves. But it’s the logic behind the above graph that’s key here. I’ve found it helpful in explaining innovation to clients and hope you find it helpful too. I hope you’ll adopt my labels.

Please let me know what you think.

In his book The Myths of Innovation (see my review), Scott Berkun highlights the importance of framing problems creatively. Finding the right problem is as important–if not more important–as coming up with a solution quickly. Berkun writes:

Discovering problems actually requires just as much creativity as discovering solutions. There are many ways to look at any problem, and realizing a problem is often the first step toward a creative solution. To paraphrase John Dewey, the inventor of the Dewey Decimal System, a properly defined problem is partially solved. (p. 128)

The start of innovation, then, shouldn’t begin with the search of the perfect solution, rather with the search for the right problem.

Read the rest of this entry »

I’ve been working with Alexanders Osterwalder’s approach to business model generation via the business model canvas (BMC) for a few years now. The canvas is straight forward to use, which is the beauty of it: you “get it” right away. But it does take some practice to identify and capture the various elements. It’s more of a craft than a science.

To sharpen my skills I decided to deconstruct the Xiameter business model and compare its parent, Dow Corning–just for fun. (You have the right to now say, “Get a life, Kalbach”). My starting point was an article outlining the structure of Xiameter: “Dow Corning’s Big Pricing Gamble” by Loren Gary. I combed the text for the 9 elements of the BMC, jotted them down on paper, and then entered them into the canvas.

The image below (Figure 1) shows my analysis using the iPad app for the BMC. The GREEN notes represent Dow Corning’s core business. The ORANGE notes show the Xiameter model. Interestingly, Xiameter seems to have had an effect back on the core business model, according to the article. These aspects are shown in BLUE notes.

Figure 1: Comparison of Dow Corning’s core business to Xiameter using the Business Model Canvas (Click to enlarge)

The new Xiameter channel is a textbook example of disruptive innovation. Clayton Christensen illustrates the basic dynamics of distruption in a now well-know diagram:

Figure 2: Clayton Christensens illustration of disruption

Dow Corning recognized that it was overshooting its market. Overshooting is one of the first signs of a market ready for disruption. Scott Anthony et al write about overshooting in The Innovator’s Guide to Growth:

At the heart of the disruptive innovation model is the concept of overshooting, that is, providing too much performance for a given group of customers. Remember, the model holds that companies innovate faster than people’s lives can change to take advantage of the advances those companies provide. As companies innovate, products or services that were previously not good enough become perfectly adequate; ultimately, they become too good for a given group of customers. (p. 65)

(See my full review of The Innovator’s Guide to Growth in a previous post).

As the Xiameter case study article shows, Dow Corning seems to have recognized overshooting:

In the early 1990s, however, Dow Corning noticed an emerging trend toward commoditization in some of its markets. This meant that as specific products matured, the priorities of clientele within them shifted from wanting help with innovation to wanting to keep costs low. …

This change in what some customers valued—and the consequent decline in profit margins within those market segments—led Dow Corning to conclude that the basis of competition had shifted in parts of the industry. Facing the possibility that such a shift might spread, the company realized it required a more needs-based approach to customer segmentation. Its existing business model, which emphasized selling technical assistance and product testing on top of its core products, ignored price-conscious customers. To meet their needs—and to keep them from migrating to other, less-expensive providers—Dow Corning would have to devise a radically lower cost structure that would allow it to profit solely from selling products.

Overshooting is a key sign of a market ready for disruption. But don’t confuse breakthrough innovation with disruption. A breakthrough is the next, biggest, better product or service in an existing market. It’s the fifth blade on a razor or the Airbus 380. Or, see Kohler’s numi toilets–another example of a breakthrough product design, with a heated seat, feet warming, music and a remote control. But by definition these aren’t disruptive.

Disruptive innovations are more convenient, cheaper and easier to use, generally targeting previously underserved market segments. Think: Flip video camera, eBay or Zopa (a peer-to-peer lending service), as well as Skype and Ryan Air as disruptions. Xiameter is also a disruptive innovation.

The amazing part of Xiameter, however, is that Dow Corning distrupted itself. The fear of self cannibalization is extremely difficult to overcome in most companies, particular those as large and traditional as Dow. And that fear is precisely what causes the innovator’s dilemma. Dow overcame this fear and didn’t let entrants take that piece of their pie, as the chart above (Figure 2) show what usually happens.

My big take-away from this exercise is in the power of visualizing and diagramming all of these elements. Go read the article article that I reversed engineered (Here’s the link again–opens in new window); then come back here and compare what you read to the diagram.

Which explains the big picture better? Don’t get me wrong: the author of the article writes well, and it’s a clear story he tells. But you don’t get nearly the same sense of interlocking dependencies and overall logic you get from the text as you do from the canvas.

More importantly, the BMC let’s you design your business. You can quickly “sketch” multiple directions or variations. If they don’t work out, crumple it up and go back to the drawing board. That’s the power of it: iterative prototyping. With the BMC, you can apply design thinking to the innovation of a business model. It’s a far better better way than trying to detail a model out in text-based report or description.

Visualizing abstract business concepts really helps solve problems. I’ve been beating that drum for the last year or so, ever since I gave a presentation on “Alignment Diagrams” at the Euro IA conference last year. (See also the article Paul Kahn and I co-authored on alignment diagrams: “Locating Value with Alignment Diagrams“). Alignment diagrams are a class of document that includes such things as customer journey maps, service blueprints and mental model diagrams.

In a previous post, I suggest that the BMC is a type of alignment diagram. The elements on the right side represent customer-facing aspects. Alexander Osterwalder calls this the “front stage.” The fields on the left represent business-related aspects, or the “back stage.” In the middle is the “value proposition.” It’s this type of alignment between the back stage and front stage that’s often missing in business logic. While no silver bullet, the BMC and alignment diagrams can help bring clarity.

.

NOTE: I’m giving two workshops this year on alignment diagrams:
1. Alignment Diagrams, Euro IA, 22 Sept 2011, Prague (1/2 day workshop)
2. Alignment Diagrams, part of UX Fest, 3 Nov, London (Full-day workshop)

.

***DISCLAIMER: I have no association with or interest in either Xiameter or Dow Corning, nor do I have first-hand knowledge of their business models and thier success. The above analysis is based solely on the text in the article cited. 

In my presentation at Euro IA 2010 in Paris, I proposed the term “alignment diagrams” to refer to the class of documents currently found in design practice that do a similar thing: they visually align multiple facets of customer behavior with business activity in a single graphical overview. Here’s my presentation:

Together with Paul Kahn, I published an article outlining alignment diagrams in more detail. See “Locating Value with Alignment Diagrams” [pdf] (Parsons Journal of Information Mapping 3/2, April 2011).

Examples of alignment diagrams include customer journey maps, mental model diagrams, and service blueprints. These are often employed by practioners in creative design disciplines to conceive of better products and services.

But ultimately an effective use of alignment diagrams can have a strategic impact on the business. “Use your design thinking skills and ability to map out complex, abstract concepts to inform the business,” I urged the audience in my presentation. Or, consider what Paul and I wrote:

The alignment technique supports the increasing importance of design disciplines in business success.Alignment diagrams, then, can potentially help information architects, user experience professionals, and service designers have a greater impact on the direction of final business solutions.

I’d now like to put another example into the alignment diagram bucket: the “business model canvas(BMC). Developed by Alexander Osterwalder, the BMC is a tool for helping business owners and stakeholders discover and prototype different ways to make profit. How to use it is outlined in the best-selling book Business Model Generation. There’s also a series of tools available online as well as an iPad app for the BMC.

Here’s the BMC (click to enlarge):

When presenting this, Alexander talks about the “front stage” and “back stage” sides of a business model. The front stage is all the customer-facing elements of a business. The back stage refers to the internal business processes. This division is reflected in the canvas:

  • Front stage elements include: customers, relationship, channels and revenue (the right half of the canvas)
  • Back stage includes: partners, key activities, key resources and cost (the left half of the canvas)

Right in the middle is “value” or the offering.

The business model canvas, then, is primarily set up to capture both customer aspects and business concerns in order to create value for both sides–in other words an alignment diagram. Compare to what Paul and I write:

It is the system of visual alignment that distinguishes this type of diagram. By aligning the user’s experiences with the business offers the diagram identifies and highlights the intersections where value can be located.

The BMC reflects such a system of visual alignment.

However, unlike other examples of alignment diagrams I mentioned above, the BMC is a tool and not a deliverable. It’s blank at first and used to brainstorm. Sure, you could use it to capture an existing business model. But it’s real value is letting business stakeholders explore alternatives on paper. Still, we can refer to a BMC as a type of alignment diagram.

Join My Workshop On Alignment Diagrams:

I’ll be giving a half-day workshop at the Euro IA 2011 conference in Prague this September on alignment diagrams. We’ll be focusing customer journey maps and mental models (but not business model canvases).

See my description of the workshop on this blog.

Registration is open online as well. 

Review of Free, by Chris Anderson (2009, Hyperion).

“Innovation,“ in the broadest sense of the term, comes in different forms. Sure, there is product or technology innovation. But there is also process innovation, design innovation, organizational innovation, and business model innovation. It turns out that the latter—business model innovation—actually proves to be the most disruptive (if we want to talk about disruptive innovation). As Mark Johnson and colleagues conclude in a recent Harvard Business Review article [1]:

Truly transformative businesses are never exclusively about the discovery and commercialization of a great technology. Their success comes from enveloping the new technology in an appropriate, powerful business model.

But not all business models are created equal: some prove to disrupt more than others. In his book The Silver Lining [2], Scott Anthony argues that companies should embrace low-cost products and services to connect with budget conscious customers and fend off attacks from competitors. He advises us to “learn to love the low end,“ referring to business models that target under-served customers with lower budgets. He writes:

There is a fortune at the bottom of the pyramid. Companies that follow the tenets of disruptive innovation can dramatically increase their chances of reaching that fortune. (p. 147)

Anthony then presents a framework for large corporations to innovate the low-end of the market, where disruptive innovation occurs most.

Chris Anderson, author of the best seller The Long Tail, explores the lowest of the low-end business models there is in his latest book, Free. After all, there’s nothing more disruptive than offering something for free. Anderson explains early in his book:

Today, we know that the most disruptive way to enter a market is to vaporize the economics of existing business models. Charge nothing for a product that the incumbents depend on for their profits. The world will beat a path to your door and you can then sell them something else. (p. 43)

“Vaporize”—that’s a good word to describe the effect free can have on markets. And throughout the book, Anderson show that free is not only disruptive, but also that there’s a fortune to be made.

The Free Lunch Revisited

The concept of free isn’t new, Anderson reminds us right from the outset. We get free samples of food a deli; or, credit cards offer us the first year of card use for free; or, we may get 33% more laundry detergent free in a promotional offer. We already know about free.

Or, consider the loss leader model, the classic example of which is the story of Gillette razor blades. The Gillette figured out that they can make more money selling blades to customers over their lifetimes than with a one-time sale of the razor itself. So the razor is practically given away, thereby creating a much more valuable market to sell blades to.

Anderson carefully details these and other kinds of free that have been around for over a hundred years. While some of this feels familiar and obvious, his examples are fascinating. And, as usually, Anderson does a great job at packaging and explaining his ideas for ready consumption by the reader. It’s eye-opening to learn about just how many different forms free can have.

Free At Last?

In the new economy wrought on by the online, digital world, we’re experiencing a new kind of free. It’s precisely this new type of free that is a central thesis of the book. Anderson writes:

It the atoms economy, which is to say most of the stuff around us, things tend to get more expensive over time. But in the bits economy, which is the online world, things get cheaper. The atoms economy is inflationary, while the bits economy is deflationary.

The twentieth century was primarily an atoms economy. The twentyfirst century will be equally a bits economy. Anything free in the atoms economy must be paid for by something else, which is why so much traditional free feels like bait and switch—it’s you paying, one way or another. But free in the bits economy can be really free, with money often taken out of the equation altogether. People are rightly suspicious of free in the atoms economy, and rightly trusting of free in the bits economy. Intuitively, they understand the difference between the two economies, and why free works so well online. (p. 12)

Online there’s no “paying later“ effect. There really is such a thing as a free lunch, or so it would seem.

Note that free isn’t just about advertising. On the contrary, Anderson explores a range of ways that products and services can be free without advertisements. Sure, advertising keeps a lot things free—from TV to web services. But there’s more to free in the new digital economy, as Anderson sees it.

A centerpiece of this new paradigm is the “freemium” business model. This model is becoming increasingly popular, particularly with web-based services, where the basic service is given away for free while charging for a premium service. Think Flickr, LinkedIn, and Skype.

The freemium model isn’t just about giving away free samples. It’s not like getting just enough chocolate or perfume or whatever the manufacturer is giving away for a single use. Instead, with digital products, you pretty much can get the whole thing.

More importantly, the ratios of usage are reversed compared to freebies in the physical world. Anderson calls this reversal the 5-percent rule: 5 percent of users support all the rest.

In the freemium model, that means for every user who pays for the premium version of the site, nineteen others get the basic free version. The reason this works is that the cost of serving the nineteen is close enough to zero to call it nothing. (p. 27)

And that’s the real crux of the matter: treating something that approaches zero cost as if it were free. Storage space on computers is so inexpensive, for instance, providers should just give it away, or so Anderson would claim. That’s why Google’s Gmail accounts, for one, offer nearly 8 gigabytes of space to save emails for free. (The cost per gigabyte is currently measured in cents—somewhere between $0.15 – $0.20 per gigabyte—and falling). Anticipate the cheap, the author advises us.

Anderson doesn’t consider any of this a passing trend. Instead, he views free as the way of the future, particularly for digital products:

In the digital realm you can try to keep free at bay with laws and locks, but eventually the force of economic gravity will win.

And this gravitational force can change entire industries. The newspaper and the music industries seem to be on the chopping block first. Others will follow.

Free Beer Tomorrow

In the end Anderson is a realist. He knows that somewhere, someone is paying for free services. In all of the models examined in his book, there is always someone funding it. There’s just a huge difference to previously models of free in how the costs are shared:

What’s changing, however, is that those costs are moving from the mostly “hidden“ (the small matter of the beer you must buy for that lunch) to the “distributed“ (somebody’s paying, but it’s probably not you; indeed, the costs may be so distributed that we individually don’t feel them at all.) (p. 217)

Consider Wikipedia. We all use it, and someone pays for it. Servers and electricity cost money, after all. Apart from a donation, your contribution to Wikipedia comes indirectly by supporting companies that support Wikipedia, like Sun or Google. So the costs get so distributed, they are essentially non-existent to a wide majority of the users of the service.

But Wait, There’s More

In Free, Anderson also debunks myths about Stewart Brand’s famous statement that “information wants to be free.” This is frequently misquoted and taken out of context. Brand never intended to imply that all content should simply be free. On the contrary, looking at what Brand originally said he implies the opposite:

On the one hand information wants to be expensive, because it’s so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other.

The first part—about information wanting to be expensive—is all but completely left out of most popular discussions of free content in the digital world. Yet it has important implications, particularly for companies trying to compete with free services.

And while free models can certainly be disruptive, Anderson also reminds us that introducing a free product doesn’t necessarily make that given market collapse. Premium brands have known this for a long time. Quality, satisfaction, brand loyalty, trust, credibility—these are also reasons that people are willing to pay more money for a product.

Kevin Kelly also explores similar factors in an insightful posting entitled “Better Than Free.“ [3] From his studies of the network economy, he identified eight types of qualities of products and services that trump free. He calls these “generatives,“ or attributes that must be grown and can’t be copied easily. Kelly’s generatives that are better than free are:

  • Immediacy: Receiving products and services the moment they become available is something worth paying for. The opening night of a movie costs of lot more than a rental DVD of that same movie a year later.
  • Personalization: Products that are custom made to your needs are generally worth more.
  • Interpretation: Understanding information often comes at a price. As the old joke goes, the software may be free but the manual costs $10,000.
  • Authenticity: Getting a certified original is worth paying for in many instances. People may be willing to pay for bug-free, reliable and warranted products, even though a comparable knock-off may be cheap or free.
  • Accessibility: People are willing to pay for storage, access, and organization of their things, even in a completely free economy.  
  • Embodiment: The form in which a product or service is presented can make a big difference in its value. You may pay a considerable price to see your favorite band live although you own all of their music.
  • Patronage: Some audiences may want to reward the work of artists, musicians, and authors, among others. Radiohead’s release of the album In Rainbows is one example. ArtistShare.com has based its entire business on this effect.
  • Findability: Just because something is free doesn’t necessarily help people find it—in fact it may hinder people discovering it. Being found can be extremely valuable, as the folks in the SEO business are well aware.

While free can indeed vaporize markets, all hope is not lost. If the products you sell can be copied and re-distributed easily, Kelley would advise to start looking at one or more the about attributes as part your business model.

 

May I Have Your Attention, Please?

The twentieth century, Anderson argues, not only started to embrace the concept of free, it also saw the arrival of abundance. Everything from electronics to cars to information is now so abundant, we take it for granted. What’s more, the “Age of Abundance,” as Anderson calls it, has driven extraordinary social and economic change.  Consider this example the author offers:

When I was a kid, hunger was one of the main problems of poverty in America. Today, it’s obesity. Something dramatic has changed in the world of agriculture in the past four decades—we got much better at growing food. A technology-driven revolution turned a scarce commodity into an abundant one. And in that story lie clues to what can happen when any major resource shifts from scarcity to abundance. (p. 45)

Citing Herbert Simon’s rule of economics, Anderson makes another key point in his book: “Every abundance creates a new scarcity.” This is the heart of “freeconomics,” as he affectionately calls it, and how we ultimately can find fortune with free. Namely, while treating the abundant things as if they are free, you must simultaneously find the resulting scarcity. That’s where the money is to be made.

In an information-rich world, the scarcity is attention. A person’s interest in a given matter is worth money. Attention, then, becomes the new currency. In this light, Anderson re-casts Stewart Brand’s quote (above) about information wanting to be free as such:

Abundant information wants to be free. Scarce information wants to be expensive. (p. 97)

Organizations looking to earn profits by providing information are advised to find the scarce information and capitalize on that.

Achtung, Baby!

The consequences of too much information are dire, results in a lack of focus and attention. Paul Hemp explores the relationship between attention and information overload in a recent Harvard Business Review article. [4] He writes:

So it’s a lot of stuff [i.e., information], but what precisely is the problem? Well, the chorus of whining (punctuated by my own discordant moans) apparently has some validity. Researchers say that the stress of not being able to process information as fast as it arrives, combined with the personal and social expectation that, say, you will answer every e-mail message, can deplete and demoralize you. Edward Hallowell, a psychiatrist and expert on attention-deficit disorders, argues that the modern workplace induces what he calls “attention deficit trait,” with characteristics similar to those of the genetically based disorder. Author Linda Stone, who coined the term “continuous partial attention” to describe the mental state of today’s knowledge workers, says she’s now noticing, get this, “e-mail apnea”: the unconscious suspension of regular and steady breathing when people tackle their e-mail.

There are even claims that the relentless cascade of information lowers people’s intelligence. A few years ago, a study commissioned by Hewlett-Packard reported that the IQ scores of knowledge workers distracted by e-mail and phone calls fell from their normal level by an average of 10 points, twice the decline recorded for those smoking marijuana, several commentators wryly noted.

This doesn’t mean you can turn off Outlook and smoke a joint at work. But it does underlie a scarcity in an information-rich environment: your attention.

Hemp goes on to present some interesting statistics from a survey on Intel employees to demonstrate just how distracted people can get from information overload. For instance, knowledge workers average nearly 20 hours a week managing email. They may also turn to email 50 to 100 times per day.  Sadly, though, employees consider only one in three emails to be necessary.

By Anderson’s logic in Free, companies looking to innovate the information industry would be better served solving those customer problems rather than offering more information.

Recommendation

Overall, Free is a detailed look at forward-looking business models, particularly in online, information-rich contexts. But Anderson doesn’t just touch on digital products. He looks everything from free silverware to free DVRs to free bikes. His sidebars on these and other topics are quite compelling. For instance: How can air travel be free? How can a university education be free? How can a car be free? Get Free to find out. It’s quite fascinating.

Free is well written and well researched. As expected, Anderson carefully dissects the free business model with surgical precision. Discussions include everything from the history of free (chapter 3) to the psychology of free (chapter 4) to explanations of “freeconomics” (chapters 11-16). This book should prove to be of interest to a broad audience—not just MBA-types in marketing positions or folks deciding on product price points. It’s recommended for anyone who designs, creates, and sells products, online and offline.

Quotes From The Book
“Therein lies the paradox of Free: People are making a lot of money charging nothing.“ (p. 3)

“Twentieth-first-century Free is different from twentieth-century Free. Somewhere in the transition from atoms to bits, a phenomenon that we thought we understood was transformed.“Free“ become Free…The older critics, who had grown up with twentieth-century Free, were rightly suspicious: Surely “free“ is nothing of the sort—we all pay sooner or later. Not only is it not new, but it’s the oldest marketing gimmick in the book. When you hear “free,“ reach for your wallet. The younger critics had a different response: “Duh!“ This is the Google Generation, and they’ve grown up online simply assuming that everything digital is free.” (p. 5)

“It’s as if our brains were wired to raise a flag every time we’re confronted with a price. This is the “is it worth it?” flag. If you charge a price, any price, we are forced to ask ourselves if we really want to open our wallets. But if the price is zero, that flag never goes up and the decision just got easier.” (p. 59)

“So from a consumer’s perspective, there is a huge difference between cheap and free. Give a product away and it can go viral. Charge a single cent for it and you’re in an entirely difference business, one of clawing and scratching for every customer. The truth is that zero is one market and any other price is another. In many cases, that’s the difference between a great market and none at all” (p. 63)

“This is one of the negative implications of Free. People often don’t care as much about things they don’t pay for, and as a result they don’t think as much about how they consume them. Free can encourage gluttony, hoarding, thoughtless consumption, waste, guilt, and greed. We take stuff because it’s there, not necessarily because we want it. Charging a price, even a very low price, can encourage much more responsible behavior.” (p. 67)

“…Free is almost always a choice. If you don’t offer it explicitly, others will typically find a way to introduce it themselves. When the marginal cost of reproduction is zero, the barriers to Free are mostly psychological—fear of breaking the law, a sense of fairness, an individual’s calculation on the value of his or her time, perhaps a habit of paying or ignorance that a free version can be obtained. Sooner or later, most producers in the digital realm will find themselves competing with Free.“ (p. 72)

“The problem is a classic one in Free. It’s easier for the newcomers than for incumbents. That’s not just because the incumbents have a revenue stream that they’re in danger of cannibalizing. It’s also that they have a lot more users, and the costs of serving millions of customers can be astronomical.“ (p. 144)

“The way to compete with free is to move past the abundance to find the adjacent scarcity. If software is free, sell support. If phone calls are free, sell distant labor and talent that can be reached by those free calls (the Indian outsourcing model in a nutshell). If your skills are being turned into a commodity that can be done by software (hello, travel agents, stockbrokers, and realtors), then move upstream to more complicated problems that still require the human touch. Not only can you compete with Free in that instance, but the people who need these custom solutions are often the ones most willing to pay highly for them.“ (p. 231)

“Ten principles of abundance thinking:

  1. If it’s digital, sooner or later it’s going to be free.
  2. Atoms would like to be free, too, but they’re not so pushy about it.
  3. You can’t stop free.
  4. You can make money from free.
  5. Redefine your market.
  6. Round down. If something is heading to zero, free is just a matter of when, not if.
  7. Sooner or later you will compete with free.
  8. Embrace waste.
  9. Free make other things more valuable.
  10. Manage for abundance, not scarcity. “ (pp. 241-243)

[1] Mark W. Johnson, Clayton M. Christensen, Henning Kagermann, “Reinventing Your Business Model.” Harvard Business Review (Dec  2008).

[2] Scott Anthony, The Silvering Lining. Harvard Business Press, 2009.

[3] Kevin Kelly, “Better Than Free.“ Blog post part of The Technium (Jan 2008). http://www.kk.org/thetechnium/archives/2008/01/better_than_fre.php

[4] Paul Hemp, “Death by Information Overload.” Harvard Business Review (Sept 2009).

Don Norman has a provocative article on his site about ethnography and design research. See “Technology First, Needs Last“. He gets right to the point, summarizing his basic premise in the first sentence:

I’ve come to a disconcerting conclusion: design research is great when it comes to improving existing product categories but essentially useless when it comes to new, innovative breakthroughs.

He goes on:

Myth: Use ethnographic observational studies to discover hidden, unmet needs. To achieve major conceptual breakthroughs, we should do ethnographic field study to understand the hidden unmet needs of our potential customers. Right or wrong? It all sounds logical: study people. Discover hidden, unmet needs. Fulfill those needs, and leap ahead of the competition, producing yet another wondrous advance.

[…]

But the real question is how much all this [design research] helps products? Very little. In fact, let me try to be even more provocative: although the deep and rich study of people’s lives is useful for incremental innovation, history shows that this is not how the brilliant, earth-shattering, revolutionary innovations come about.

He claims to have done some kind of investigation to arrive at this opinion:

I reached this conclusion through examination of a range of product innovations, most especially looking at those major conceptual breakthroughs that have had huge impact upon society as well as the more common, mundane small, continual improvements. Call one conceptual breakthrough, the other incremental. Although we would prefer to believe that conceptual breakthroughs occur because of a detailed consideration of human needs, especially fundamental but unspoken hidden needs so beloved by the design research community, the fact is that it simply doesn’t happen. New conceptual breakthroughs are invariably driven by the development of new technologies

Interestingly enough, I had just finished reading an article in the Harvard Business Review called “The Innovator’s DNA” (Dec 2009) by Jeff Dyer, Hal Gregersen, and Clayton Christensen. After extensive research of top executives, the authors identify five key qualities that separate innovative leaders from the non-so-innovative leaders: associating, questioning, experimenting, and networking, and observing. Regarding the latter—observing—Scott Cook, founder of Intuit, has this to say:

Often the surprises that lead to new business ideas come from watching other people work and live their lives.

A.G. Lafley, former CEO of Proctor and Gamble, is generally seen as a leading innovator amongst executives. He writes about how direct observation of customer behavior has lead to greater innovation at P&G in his book The Game Changer:

P&G spends more time living with people in their homes, shopping with them in stores, and being part of their lives. This total immersion leads to richer consumer insights, which helps identify innovation opportunities that are often missed by traditional research.

You’ve probably heard short sound bites like this before. For sure, such snippets alone don’t disprove Norman’s thesis. But if you look around a little more, you’ll find other contradictory evidence.

For instance, Indi Young, author of Mental Models, also has a recent posting that is somewhat related to this topic. See “Support Intentions, Not Existing Workflows”. Indi concludes:

When you spend time with people who might become someone you produce a service or a product for, concentrate on finding these underlying intentions. Deliberately jump past the details of how they execute something currently and spend time instead asking them what’s behind this step. What are they trying to accomplish besides the step itself? Frequently, people haven’t really thought past the steps, and your conversation turns into more of a psychotherapy session, helping the person work through the underlying issues and describe them for you. When this happens, you know you’re on the right track. With the results of several conversations like this, you can guide your organization into areas you hadn’t previously considered or been consciously aware of. This direction leads to services and products that support what a person really intends to do and makes their life smoother. And that is a very attractive proposition to most of us.

More formally, consider the results of the study “Ideation for product innovation: What are the best methods?” by Robert Cooper and Scott Edgett (2008, Stage-Gate). Ethnography emerged as the #1 method to foster innovation and creativity in organizations. The authors write:

Ethnography is ranked #1 of all methods among users, with a strong effectiveness score of 6.8 out of 10. (For comparison, the average effectiveness score for all 18 methods is 5.6, with a standard deviation of 0.73; so a score of 6.8 is, relatively speaking, “strong.”) The method provides perhaps the greatest insights and depth of knowledge into users’ unmet and unarticulated needs, applications, and problems of all the ideation approaches we studied, according to users.

Finally, the work of Sarah Miller Caldicott really flies in the face of what Norman is trying to say. She is the author of the book  Innovate Like Edison: The Five-Step System for Breakthrough Business Success, co-authored with Michael J. Gelb (Dutton Penguin, 2007), as well as the great-grandniece of Thomas Edison. She did a first-ever analysis of hundreds of thousands of documents in Edison’s collection in Menlo Park, NJ over the course of an intense three-year study.

Caldicott’s recent white paper for Strategyn is directly relevant to the debate of the effectiveness of needs versus technology: “Ideas first or needs-first: What would Edison say?”. In it she writes:

Edison learned a valuable lesson with this failure. He realized that his approach to innovation was somehow faulty. He began reshaping his efforts by redefining what success would need to look like for one of his inventions, and he decided that success was now going to be a function of utility; that is, a function of the ability to satisfy a customer need or a marketplace need. He said, “Anything that won’t sell, I don’t want to invent. Its sale is proof of utility, and utility is success.

[…]

He recognized that simply bringing hundreds of ideas to market would result in many failures. Being a man who was focused on efficiency and success, failure was an unattractive proposition. Edison realized that by understanding customer needs first, he could invent useful products more efficiently than he could otherwise.

It would also appear that Edison did a type of ethnographic observation in inventing the light bulb:

Edison’s trained teams visited people in their homes and watched how they used their current lighting products— kerosene, whale oil, and gas. The goal was to figure out what consumption chain jobs to consider and how to address them. This process enabled Edison to gain insight into all these critical jobs. From there, Edison worked with numerous employee teams to develop products that would address the consumption chain jobs. Products like the electric circuit, the on-off wall switch, the fuse box, electric meters, and dynamos that could power the entire lighting system were all invented. Edison received over 40 patents for these inventions. Yes, Edison invented the lightbulb, but within three years he also invented the entire system of electrical power distribution, along with the world’s first central power station. That’s fast, even by modern standards.

Here again, Edison’s needs-first approach enabled him to identify a large market and guided his research and development efforts. He was able to come up with a revolutionary lighting solution and address all the consumption chain jobs required to bring this solution to market. Because he kept his focus on exactly what customers needed, he could hone his product development timetable and production timetable very efficiently.

Caldicott concludes:

If your company wants to take a page out of Edison’s innovation playbook, it should start by discarding ideas-first thinking and adopt an effective needs-first approach to innovation. This crucial lesson enabled Edison to pioneer the creation of six industries and lead the United States to a century of prosperity—a feat that has not been duplicated since.

Compare this to Norman’s contention about how Edison worked:

Edison launched his first phonograph company within months of his invention: he never questioned the need.

Overall, it seems other examinations of innovation have proven the exact opposite of what Norman claims in his article. There is indeed a wealth of evidence that people’s needs can and should precede technology. And frankly, Norman’s “examination” seems more of the back-of-the-napkin type with several errors.

But does Norman have a point? Well, I guess it’s always good for us design researchers to step back and question our own practices. But I think there are two key arguments that speak against Norman’s main point:

  • First, there much more evidence from much more rigorous studies to suggest that ethnographic techniques and understanding people’s needs has preceded technical invention in the past.
  • Second, Norman seems to forget that there are different types of innovation, not just product innovation. There’s also process innovation, organizational innovation, business model innovation, and strategy innovation. The equation isn’t as simple as: research needs, then develop technologies (or vice-versa), as Norman suggests.

I’d actually argue that it’s better to understand customer needs before creating the strategy that allows technologists to start working on a given technology or not. That is: needs > strategy > technology. So needs do precede technology.

Everett Rogers, author of Diffusions of Innovations—the “bible” in innovation diffusion literature—also indicates that needs identification precedes the entire innovation process. In Chapter 4, “The Generation of Innovation,” he outlines six phases, the first of which is “recognizing a problem or need.” He writes:

The innovation-development process often begins with recognition of a problem or need, which stimulates research and development activities designed to create an innovation to solve the problem or need. (p. 137)

And later, in the discussion on “compatibility” as a factor of adoption rates, he writes:

One indication of the compatibility of an innovation is the degree to which it meets a felt need. Change agents seek to determine the needs of their clients and then to recommend innovations that fulfill these needs. Determining felt needs is not a simple matter, however. Change agents must have a high degree of empathy and rapport with their clients in order to assess their needs accurately. Informal probing in interpersonal contacts with individual clients, client advisory committees to change agencies, and surveys of clients are sometimes used to determine needs for innovations. (p. 146)

So innovations that are conceived around user needs from the very beginning (i.e., BEFORE technology) have a higher chance of adoption and therefore a higher chance of success. Norman alludes to Roger’s work saying:

The path of diffusion of innovation has been well studied, well documented. Most radical innovations fail. Those that succeed can take decades before they are successful.

But that’s the point: innovators generally want to increase their chances of succeeding from the beginning, even if only marginally. Needs identification up front helps with that, at least according to Rogers (among others).

Perhaps a quote from Scott Berkun, author of The Myths of Innovation, can shed some light onto this whole debate. He says:

Successful innovators spend as much time understanding the people they are designing for, their beliefs, feelings, values, and needs, as they do the technologies they’re using to build innovations, and the book offers the fundamentals on how to do this. So, the superiority of your mousetrap is sure nice in an ivory-tower setting, but if people—customers—can’t see why it’s superior, then the superiority is just your opinion. And sadly, I don’t know anyone who has made millions solely on the superiority of their own opinion.

Ultimately, I believe it’s not an either-or question, nor is it a first-last question. It’s a question of balance. This is what the HBR article “The Innovators DNA” suggests as well as detailed studies like those of Sarah Miller Caldicott. But since technology already gets so much attention, Norman’s basic claim “technology first, needs last” is in the end a more harmful perspective than helpful.

In April 2009 I posted about a European Commision looking at Design (with a capital D) as a driver of innovation. Charlotte Arwidi from this commission has now made public the results of a public survey on the report itself. See the full results of the survey here.

In a nutshell :

“91 percent of responding organisations consider that design is very important for the future competitiveness of the EU economy; 91 percent consider that initiatives in support of design should be taken at EU level.

96 percent think that initiatives in support of design should be an integral part of innovation policy in general, 74 percent think that design should be part of EU innovation policy.”

I’m not sure if the sampling of the survey is good, however. Seems there might have been a high degree of self-selection. So, yes–of course a very high percentage of people coming with a Design background will think that Design is an important part of EU innovation policy.

Still, there are some good take-aways from this latest survey. In particular, when asked about barriers to Design the questionnaire reveals:

“Respondents were asked about the most serious barriers to the better use of design in Europe. Multiple answers were possible. The most important barrier is considered the “lack of awareness and understanding of the potential of design among policy makers” (78 percent of organisations; 76 percent of private persons). The second most important barrier is considered the “lack of knowledge and tools to evaluate the rate of return on design investment” (64 percent of organisations; 62 percent of private persons). The third most important barrier is considered the “lack of awareness and understanding of the potential of design among potential design customers, i.e. private and public organisations”

The least frequently selected barriers are the “lack of designers/design companies with the right skills and/or capacity”, and the “lack of high quality design education in Europe”, indicating that there is not a lack of skilled designers in Europe. This conclusion is however partly contradicted by some respondents who suggest that Europe lacks designers with professional skills such as management, marketing and communication. This is described as a problem for designers in their communication with potential clients. Several respondents added that business managers, in particular in SMEs, do not understand design and that, due to this lack of understanding on both sides, designers and their potential customers “do not speak the same language”.”

Seems there are enough us out there with the appropriate skills, but Designers’ talents aren’t necessarily being used effectively. Hopefully, the commission can make a difference and bring awareness to the potential Design can offer innovation.

All of this, BTW, represents what I believe to be a paradigm shift in innovation. Organizations are shifting (or adding) focus from innovation through technology and operational efficiency to innovation via design and user experience. Let’s just hope Designers can capitalize on the opportunity and get their deserved place at the innovation table.

The Innovator’s Guide to Growth, by Scott Anthony, Mark Johnson, Joseph Sinfield, and Elizabeth Altman. Harvard Business Press, 2008. http://www.innovatorsguidetogrowth.com

“Innovation” is a term that’s hard to define precisely. It can mean different things to different people at different times. Newness, invention, change, and creativity are generally associated with innovation. Still, as a field of inquiry its boundaries are blurred.

For companies looking to innovate their businesses, this vagueness presents challenges. How do you start innovating? How do you know when you’re innovating? How do you manage it? Or even more elusive: how do you measure the outcome of innovation? How do you calculate ROI? All of this begs the larger question, Is there even a process for consistently innovating?

Some people believe there isn’t any single method for companies to innovate. Scott Berkun, for one, author of The Myths of Innovation, has this to say to the common question, How do you systematize innovation?:

It’s as absurd a question as asking how to control weather or herd cats, because those approximate the lack of control and number of variables inherent in innovation. [1]

Berkun cites an interview with Steve Jobs in Business Week as an example [2]:

Business Week: How do you systematize innovation?

Steve Jobs: You don’t. You hire good people who will challenge each other every day to make the best products possible. That’s why you don’t see any big posters on the walls around here, stating our mission statement. Our corporate culture is simple.

“You don’t” is not the answer managers want to hear. (BTW, if Apple is not trying to innovate, they are doing a good job it!) Notice Jobs focuses on corporate culture instead. Innovation seems to come from within at Apple—it’s about the company’s attitude, ethos, and vision.

A key problem in systematizing innovation is the fact most attempts at innovation don’t succeed. Embarking on an endeavour that has more than a 50% chance of failing can hardly be considered a “system.” What’s more, innovations often have a long gestation period from first conception to becoming a viable business venture—sometimes decades. Bill Buxton refers to this as the “long nose of innovation” [3]. He writes:

The bulk of innovation behind the latest “wow” moment (multi-touch on the iPhone, for example) is low-amplitude and takes place over a long period—but well before the ‘new’ idea has become generally known, much less reached the tipping point.

But it really doesn’t make much business sense for companies cross their fingers and hope that one-in-a-thousand ideas develops into a viable solution.

Or does it?

Consider what’s going on at Whirlpool. A recent Business Week article outlines their program for letting thousands of ideas bubble up. [4] Each idea is then systematically reviewed by trained innovation experts with a formalized process. The i-box, or so it’s called, is a detailed score card used to evaluate innovative ideas.

Another key element in Whirlpool’s innovation program is the i-board—a 15 member panel that regularly reviews innovative ideas and funds them, as needed. Such a program takes a lot of commitment and lot of money—an estimated several million dollars a year in North America alone. But it pays off in the end: Whirlpool hopes to have $4 billion dollars in sales from its new innovations.

Whirlpool’s approach represents what’s called “green housing.” Essentially, green housing is about letting new ideas live as long as possible before either killing or supporting the idea. The company ?What If!, a consultancy in business creativity, describes green housing as follows:

Green housing is the behaviour that protects young ideas when they are at their most vulnerable, and nurtures them into healthy growth. It is an interactive behaviour that enables people to get the most out of their initial thinking by supporting each other’s ideas.

The reason green housing is so important is that creativity is rarely a sudden flash of inspiration leading to the perfect invention…We believe that green housing behaviour is at the heart of creativity in business. [4]

This makes sense. History is riddled with examples of innovations not being recognized as such on first sight. It took six years for the Wright brothers to sell an airplane commercially. Western Union turned down Alexander Graham Bell’s idea of the telephone. Yahoo! turned down Google when approached by Brin and Page at the end of the 90s. Even with a detailed scorecard, like Whirlpool’s i-box, recognizing the potential of an innovation very early in its lifecycle is difficult, if not impossible.

Still, most managers can’t place bets on every idea—even every great idea—that comes through the door. Nor can most companies fund an endless garden of inventions indefinitely. Businesses need more structure around the innovation process.

Enter The Innovator’s Guide to Growth.

If the outcome of innovation can’t be predicted consistently, the forces that shape and act against innovation can be. Perhaps this is splitting semantic hairs, but it’s an important distinction to understand before reading book. The authors explain:

Some managers believe there is no way to guide the innovation journey, because innovation is just random and unpredictable. If innovation is indeed a black box, the best that companies can do is let a thousand flowers bloom, in the hope that one of them sprouts into a substantial growth business. This is a bit like releasing a thousand monkeys into a room full of word processors and hoping they’ll produce Shakespeare. If you are lucky enough to have it happen once, you surely wouldn’t expect it to be repeatable.

Research over the past two decades has shown that many successful strategies for new growth actually adhere to a specific pattern. (p. 121).

And that’s what the Innovator’s Guide to Growth is really about: the observable, repeatable patterns of the innovation process. It’s a complete how-to book for managers looking to create growth through innovation. It takes the hit-or-miss approach out of the equation and provides a rational framework for understanding and managing innovation. And it’s based on years of experience observing and consulting companies on innovation from top experts in the field.

What’s more, the authors of The Innovator’s Guide to Growth also agree that innovation should come within. Ultimately, this is the book is about how companies can transform their organizations internally.

Disruptive innovations—in the Christensenian sense of the word—is a key lever to growth according to the authors. To recall, disruptive innovations are products, services, or approaches that transform existing markets or create new ones by trading off performance in favour of simplicity, convenience, affordability, or accessibility. This contrasts sustaining innovations, or innovations that maintain established performance improvement trajectories by offering demanding customers better performance. Disruptive innovations, on the other hand, change the competitive playing field fundamentally. The authors emphasize:

Our belief is that if you want to influence or shape a market in which you compete, sustaining strategies are the key to achieving your goal. But if you want to redefine a market, create a new one, or defend against attack from below, disruptive strategies are essential to success. (p. 5)

A brief note on terminology: In The Innovator’s Dilemma, Clayton Christensen’s best-selling book from 1997, the author introduces what he called disruptive “technologies.” Here, he meant “technology” to mean “the processes by which an organization transforms labor, capital, materials, and information into to products and services of greater value” [6]. That is, he wasn’t only talking about hardware and capability—although those, too, could be disruptive. But “technology” is a loaded term that triggers specific associations, and many people misunderstood Christensen’s sense of the word: they assumed he was talking about hardware and capability. Later, in The Innovator’s Solution, the sequel to The Innovator’s Dilemma, Christensen changes the phrase to “disruptive innovations.”

Now, in The Innovator’s Guide to Growth we’re starting to see the phrase “disruptive strategies,” as evidenced in the quote in the preceding paragraph. This shift in focus—from “disruptive technology” to “disruptive innovation” to “disruptive strategy”—represents an important conclusion in The Innovator’s Guide to Growth: true disruption rarely comes from the features and functionality of a company’s offering. It’s not about technology, but instead business models: they are the key to disruption. As Mark Johnson and colleagues conclude in a recent Harvard Business Review article:

Truly transformative businesses are never exclusively about the discovery and commercialization of a great technology. Their success comes from enveloping the new technology in an appropriate, powerful business model. [7]

Keep in mind, too, that disruptive innovations aren’t the same as breakthrough innovations. Next generation mobile phones with faster transfer rates, 5-blade razors, the Airbus 380: these are all breakthroughs, but they are not disruptive. Ten-seat planes used as taxis, $25 mobile phones that only make calls, and online word processors with limited functionality that are free: these are disruptive. Simpler. Cheaper. More convenient.

In any example of a disruptive innovation you’ll see hard tradeoffs being made along one dimension in favour of another dimension. Mastering tradeoffs is therefore a key element in disruption. Sometimes, this means turning conventional wisdom on its head and, above all, breaking the rules. Disruptive offerings typical don’t compete along the traditional dimensions as the rest of the mainstream market.

The authors give several examples of these kinds of counterintuitive tradeoffs and rule-breaking that leads to disruption. They cite the following examples, among others:

  • “Everyone in the mop category know that a map was a onetime purchase, until Procter & Gamble introduce Swiffer, whose consumable cloths now produce close to $1 billion in annual revenue.
  • Everyone at Dow Corning knew that the company couldn’t afford to compete in the commodity end of its business, until its Xiameter distribution channel became a booming growth offering.
  • Everyone in the music industry knew that people who had access to pirated music wouldn’t pay anything for MP3 files, until Apple’s iTunes showed how a well-designed, reasonably priced model that was tightly integrated with Apple’s iPod music player could thrive.” (p. 7-8)

This suggests looking at all of the assumptions that currently drive a mainstream market and reversing though assumptions to arrive at disruptive innovations.

The consequence of not making hard tradeoffs is what the authors call overshooting. In the pursuit of increased profits, companies naturally tend to pack more and more performance in their offerings. The result is that the average person over-served and, in the worse case, can’t use the product or service at all. But here is the dilemma: these companies have to add features and functionality, or sustaining innovations, to even compete in the market in the first place.

Consider the popular netbook. For about $300 you can easily surf the web and do basic word processing. Most people can get most of things done they need with the  netbook. This is referred to as “good enough” design.

Sales of netbooks took off, and entrants into the laptop market disrupted that space. This disruption, however, was only temporary: market incumbents quickly—and seemingly easily—matched the “good enough” design and offered their own netbooks. Today, nearly all of the computer manufacturers offer netbooks. Still, the initial disruption put companies like ASUS onto the map of a crowded playing field.

The Flip digital video recorder is another example of “good enough” design. This device does essentially one thing: makes short videos. It’s small and convenient to use. A built-in USB connector allows you to upload videos to your computer within seconds after filming (and directly to YouTube, as well). And there’s only a few buttons, so the learning curve for nearly every function is about 2 minutes—without training and without the help of manual. The Flip is really defined by what it DOESN’T have: there are no menus, no settings, no video light, no optical viewfinder, no special effects, no headphone jack, no high definition, no lens cap, and no memory card.

Again, this approach works: the Flip Ultra has been the best-selling camcorder on Amazon since its release. And it gained about 13% of the video recorder market in its first year. As David Pogue, technology reviewer for the New York Times concludes about the Flip:

The lesson is one that the electronics industry seems to miss over and over again: that creeping feature-itis often impairs your product instead of improving it. In the Flip’s case, the size, shape, ruggedness, low price and one-button simplicity take it places where no real camcorder would go. [8]

But it’s not easy to disrupt, particularly for market incumbents. Disruptive innovation strategies require deep organizational transformation. This means making tough changes—in business models, strategies, and company culture. For most managers, it’s a real paradox: how do you maintain your current targets while starting low-end ventures that don’t have predictable returns? The Innovator’s Guide to Growth shows the way—or at least a way. The authors present a clear framework for guiding this transformation.

The authors outline three larger phases in building business innovation, reflected in the first three parts to the book:

  1. Indentify opportunities: Chapters 2-4 discuss customers and their activities. The authors show that segmentation is important, including identifying non-customers. Understanding jobs people are trying to get done is then the real first factor in identifying innovations.
  2. Formulate and shape ideas: In this section, the authors recommend to start by focusing on ideas that solve customers’ problems or unmet needs. But also look at competitors and how the ideas and company fit into the market.
  3. Build the business: The two chapters in this part focus on managing the innovation process internally, including how to form and manage innovation teams.

A fourth and final section of the book describes building the right capabilities for innovation, thus amplifying the internal transformation theme. The last two chapters discuss the institutionalization of innovation as well as implementing metrics to measure progress and success.

The Innovator’s Guide to Growth should appeal to a broad group of readers. But user experience designers, in particular, should find large parts of the books very familiar. There were many times in reading the book that I thought to myself “right on, brother” or “that’s obvious” but also “no duh.” It seems large part of innovation frameworks, such as the one outlined here, overlap with user-centered (UCD) design principles, particularly customer insight and indentifying opportunities. But shaping ideas and developing concepts are also something designers particularly good at.

UCD and innovation ultimately have the same goal: the creation of solutions that bring businesses value by solving customers’ problems. In other words, both ultimately want their innovations to be adopted.

UCD seems to focus on only part of the innovation equation, however. And really, this is a short-coming of the UCD movement in general: practitioners have, by and large, failed to tell business and system developers really what to do. This is where The Innovator’s Guide to Growth fits in: it’s not only about knowing your customers, their problems and creating solutions to address those problems, but also how to transform businesses to capitalize on innovations.

Beyond this book, there is a quickly growing body of literature around business innovation that has lots of commonalities with UCD methods. This presents a real chance for UCD and designers in general—to make a difference with our methods and perspectives and to gain status in the business world. Of course, there has been a dull rumble about “design thinking” in business literature, and there have been calls for business types to real on the left-brain thinking of creative types. But many business innovators and strategists really don’t know that the decades of UCD approaches even exist. And they are, in part, re-inventing their own methods.

We really need much more cross pollination between both sides, I believe. And it shouldn’t only be the turtle-necks reaching out to the suits: the business types should seek out designers to help them solve their business problems, particularly when talking about innovation.

A wealth of case stories make this book down-right interesting to read. Each chapter ends with tips and questions to help, making the material in the book more so practical. There are even checklists (such as the Disrupt-O-Meter on pages 155-157) and an accompanying website with downloadable spreadsheets and documents (www.innosight.com/resources). The FAQ at the end of the book is also quite practical.

The structure of the book promotes an enjoyable front-to-back reading, but the chapters can also be accessed individually and in any order. It’ll prove to be an invaluable reference source on any innovation manager’s desk. Anyone looking to implement a complete innovation program should own this book. But also, just about anyone in an organization looking to transform itself will get something from the Innovator’s Guide to Growth. It’s highly recommended.

[1] Scott Berkun, The Myths of Innovation. O’Reilly, 2007.

[2] “Voices of Innovation: Steve Jobs,” Business Week (Oct 2004): http://compuserve.businessweek.com/magazine/content/04_41/b3903408.htm

[3] Bill Buxton, The Long Nose of Innovation,” Business Week (Jan 2008). http://www.businessweek.com/innovate/content/jan2008/id2008012_297369.htm

[4] Jessie Scanion, “How Whirlpool Puts New Ideas Through the Wringer,” Business Week (Aug 2009). http://www.businessweek.com/innovate/content/aug2009/id2009083_452757.htm

[5] What If?!, Sticky Wisdom. Capstone, 2002.

[6] Clayton Christensen, The Innovator’s Dilemma. Collins Business Essentials, 1997.

[7] Mark W. Johnson, Clayton M. Christensen, Henning Kagermann, “Reinventing Your Business Model.” Harvard Business Review (Dec 2008).

[8] David Pogue, “Camcorder Brings Zen To The Shoot,” New York Times (Mar 2008). http://www.nytimes.com/2008/03/20/technology/personaltech/20pogue.html?_r=1&pagewanted=all

In preparation for my talk at the Euro IA conference this year, I’m re-reading Diffusion of Innovations by Evertt Rogers. I came across this statement and immediately thought of personas:

One of the most distinctive problems in the diffusion of innovations is that the participants are usually quite heterophilous. A change agent, for instance, is more technically competent than his or her clients. This difference frequently leads to ineffective communication as the two individuals do not speak the same language. (p. 19)

Personas are a way for designers to conceptually deal with a hetergenous target group. They build the necessary empathy for the user to allow us designers to “communicate” effectively with them through our designs. They also help focus our attention. But in light of the above quote, personas may also lead to solutions that are more readily adopted by the target population. Why? Because the use of personas in design results in more satisfaction for the users they represent. As Alan Cooper says in The Inmates Are Running The Asylum:

The broader a target you aim for, the more certainty you have of missing the bull’s-eye. If you want to achieve a product-satisfaction level of 50%, you cannot do it by making a large population 50% happy with your products. You can only accomplish it by singling out 50% of the people and striving to make them 100% happy. It goes further than that. You can create an even bigger success by targeting 10% of your market and working to make them 100% estatic. It might seem counterintuitive, but designing for a single user is the most effective way to satisfy a broad population.

So if a common goal of innovators is to have a target population actually adopt the innovation at hand, personas are a tool that help meet that goal. Now, that might sound obvious but it’s good to have an explicit reasoning that marries the concept of innovation adoption and personas. You can throw on to your pile of arguments for using personas.

And vice-versa: when developing an innovation or innovation programme be sure to use personas to focus your attention. This means that personas should represent dimensions such as adoption rate in the persona description (e.g., early adoptors or laggards?).  Focusing on both ends of the spectrum at the same time may be more harmful than helpful in many cases.

Jan over at The Hot Strudel pointed this out. Thanks, Jan.

As a term and concept in business, “design thinking” has been around for a while. See for instance Victor Lombardi’s collection of design thinking-related materials. In the Spring of 2008, the Harvard Business Review finally picked up on the topic. Tim Brown wrote an excellent article simply entitled “Design Thinking”. He writes:

“Historically, design has been treated as a downstream step in the development process—the point where designers, who have played no earlier role in the substantive work of innovation, come along and put a beautiful wrapper around the idea. To be sure, this approach has stimulated market growth in many areas by making new products and technologies aesthetically attractive and therefore more desirable to consumers or by enhancing brand perception through smart, evocative advertising and communication strategies. During the latter half of the twentieth century design became an increasingly valuable competitive asset in, for example, the consumer electronics, automotive, and consumer packaged goods industries. But in most others it remained a late-stage add-on.

Now, however, rather than asking designers to make an already developed idea more attractive to consumers, companies are asking them to create ideas that better meet consumers’ needs and desires. The former role is tactical, and results in limited value creation; the latter is strategic, and leads to dramatic new forms of value.

Moreover, as economies in the developed world shift from industrial manufacturing to knowledge work and service delivery, innovation’s terrain is expanding. Its objectives are no longer just physical products; they are new sorts of processes, services, IT-powered interactions, entertainments, and ways of communicating and collaborating—exactly the kinds of human-centered activities in which design thinking can make a decisive difference.”

Seems someone in the European Commission might have read Tim’s HBR article, or at least the literature around the connection between design and innovation. The EC is currently working on a document called “Design as a driver of user-centred innovation,” which provides an analysis of the rationale for making design an integral part of European innovation policy.

See: http://ec.europa.eu/enterprise/newsroom/cf/itemlongdetail.cfm?item_id=3054〈=en

“The results are compelling: companies that invest in design tend to be more innovative, more profitable and grow faster than those who do not. At a macro-economic level, there is a strong positive correlation between the use of design and national competitiveness.

Although often associated with aesthetics and the ‘looks’ of products only, the application of design is in reality much broader. User needs, aspirations and abilities are the starting point and focus of design activities. With a potential to integrate for example environmental, safety and accessibility considerations — in addition to economic — into products, services and systems, design is an area which deserves public attention.

Design as a driver and enabler of innovation complements more traditional innovation activities such as research. In the current economic climate, where resources for innovation are scarce, design and other non-technological innovation drivers, such as organisational development, employee-involvement and branding, become particularly relevant. They often are less capital intensive and have shorter pay-back periods than for example technological research, but still have the potential to drive competitiveness.

Potential barriers exist to better use of design for innovation in Europe. Design as a tool for innovation has developed rapidly in recent years, resulting notably in concepts such as strategic design, design management and design thinking. Innovation policy and support, as well as education systems, have not yet caught up with these developments. Companies that lack experience of design — particularly SMEs, low-tech companies and companies not located in big cities where design businesses tend to concentrate — often do not know where to turn for professional help in the area of design. Design businesses are generally very small, a factor affecting their marketing and influencing powers.”

It’s good to see design and design thinking being taken seriously by large, influential organizations like the EC.

Follow

Get every new post delivered to your Inbox.

Join 66 other followers