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1: Introduction

The author opens with the story of the Metamorfosi lamp, which be believed to be a radical innovation in lighting. (EN: take this with a grain of salt, as the Metamorfosi lamp was briefly faddish but ultimately a commercial failure and the only company that still makes them, Artemide, lists them among their "novelty" products.)

In its most basic sense, a lamp is a device that casts light. For some customers, this is all they consider because they have very specific needs - but in the residential market, the fact that a lamp casts light is taken for granted: most lamps take bulbs of specific wattages.

So the residential customer seeks a lamp that delivers a certain stylistic impression: aside of casting light, it is a piece of sculpture that matches the theme of the room. And this is what the lighting industry focused on for quite some time.

The designer of the Metamorfosi lamp considered that lamps were used to create an atmosphere - they were a source of light that illuminated the environment, and the object that created the light was of little importance. If people could have light without a visible source, it would be just as acceptable - it was only important for a lamp to be stylish because it happened to be visible.

They were inspired not by the demands of the customer, but by the psychology about the way that color influenced attitudes and behaviors, that suggested that light and darkness, even the color and direction of the light, had significant effects on human emotions, and sought to provide a product that could be used to create atmosphere in living spaces - much in the way that movie-makers use lighting in a dramatic scene.

This is significant because in the present day research is often focused on the user, and innovation is said to come from delivering benefits that the customer already desires - and more importantly, benefits that the customer is aware of and finds desirable. The Metamorfosi lamp would never have been discovered by doing market research because customers' current behavior cannot detect a desire for something that doesn't already exist.

The Strategy of Design-Driven Innovation

There is the general sense that radical innovation is one of the major sources of long-term competitive advantage. It is the only way by which a firm will be substantially differentiated from others in its industry, and it is more sustainable than the advantages gained by price, convenience, etc. which are easily matched or exceeded by others.

A second major principle is that customers do not buy products, but solutions. The customer does not want to buy a widget, but a way to accomplish a goal, and is always open to considering a different (and better) way to go about accomplishing that goal.

And third, that people are more motivated by "meanings" than by functional benefits to choose a specific solution. There are profound emotional, psychological, and social influences on their decision making process that may lead customers to choose and prefer a product that is functionally inferior.

All of this stands in contrast to the traditional mindset of business, which assumes that the various brands in an industry are essentially interchangeable, that the way to compete is to build a better (or cheaper) mousetrap, and that customers are drawn to features and functions of a given product. Hence R&D is geared toward efficiency and effectiveness, rather than the psychological factors that are often more motivational to the customer.

Customer-centered design is briefly mentioned as a practice that seeks to better understand the users' needs, but this too tends to be highly functional - the manner in which the product achieves its functional benefit. It also assumes that the customer knows their needs well enough to describe the solution they desire.

The opening example of the Metamorfosi lamp shows that customers may be delighted with a product that does something they never considered, addressed a need that people are not aware that they have. It was not a better lamp, nor a lamp that looked better in a room, but a lamp that made the room look better - or more aptly, it made the people in the room feel better.

An Unexplored Conundrum

The concept of innovation poses quite a problem for management. Getting people to follow known processes is as old as management itself, and fine-tuning processes for greater efficiency has had a few centuries to settle in. But there is no theory or practice in fostering and managing radical innovation in organizations. Innovation, discovery, and creative thinking are shrouded in mystery: everyone wants their people to do it, but no-one seems to know how to train and support innovation in their organizations.

Even the approaches to teaching design and innovation seem to lack discipline: they focus on how to communicate and develop creative ideas, but cannot teach a person to be creative. They best that can be offered is to expose people to case studies, tell them inspiring stories, and hope that they figure out how to be creative on their own.

The author looks to the success of Italian design in fashion, furniture, architecture, and other areas - though he stops short of declaring it to be some mysterious part of Italian culture - the "Italian" firms that have delivered many creative designs often hire our outsource to foreign designers, and hire about half of their staff from abroad. But this does seem to suggest that the Italian approach to organizational management is conducive to design thinking, particularly given the number of firms that are concentrated in northern Italy that are "industry leaders" in innovation and design.

The author talks a bit about his ten-year research project investigating these firms, but discloses nothing about the results of his study (EN: this is establishing credibility for findings to be presented in the present book.)

Dismissing Assumptions

Innovation requires questioning, and often dismissing, existing assumptions - because these assumptions are the very things that tether many firms to the past. And many of these assumptions are reinforced by marketing.

Consider the digital delivery of music and video content (the iPod and Apple TV). There once was the assumption that customers wanted physical media (discs) and would reject any technology that would make their existing media libraries obsolete. This assumption prevented many firms from recognizing that they tangible artifact had nothing to do with the experience of listening to music - and that the customer would not miss it at all.

The most innovative companies begin by dismissing common assumptions about what customers demand: it is not the product that they care about, but the benefit they get from using it. If they can achieve the same benefit using a different product, they will adopt it. So the innovator must not seek to improve the existing methods, but to discover new methods of achieving benefits - or in some cases, discovering new benefits that will be attractive.

There's an oblique mention of marketing campaigns that seek to stir up or rekindle customers' enthusiasm for existing products without changing or improving the product itself. In many instances it may require a marketing push to get customers to recognize the value of an innovative product (they are complacent with the success of traditional ways and simply haven't considered there might be a better one), but it can't be just marketing hype - there must be some value behind it.

Innovations are generally rejected as being "crazy or outlandish," first by the industry press, then by the media, then by consumers. It is extremely rare for the value of an innovation to be recognized immediately - though once a firm has delivered a string of innovative products to the market, it is assumed that any new offering, however weird, also has merit and should not be so quickly disregarded.

(EN: This is the "halo effect" enjoyed by companies such as Sony and Apple. Customers are already "Sold" on the firm's reputation and are enthusiastic about new products. The very same product from an unknown firm would be regarded with some doubt if it came from a different brand.)

Listen, Interpret, and Address

The innovative firm does not follow the path of other firms: it is not making improvements on a traditional product, and it is not borrowing ideas that its competitors have already delivered to the market. It is branching out in a new direction, and its products represent unsolicited proposals to the customer: you have never used this product before, but imagine how your life might change for the better if you did.

Again, there is disparagement of market research. When companies conduct consumer research, they look at the way people currently behave. Moreover, all the companies engaged in research are looking at the same market, observing the same behavior, noticing the same opportunities, coming up to the same solutions to the same problems. That is, they are running the same equations on the same inputs and, of course, their results are similar. To break away from the pack, a company must think differently - to change from observing what is to conceiving what might be. It is imaginative, and no two peoples' imaginations are exactly the same.

The process of design-driven innovation consists of three actions:

  1. Listen - In particular, listen to the things that are unusual, listen to fields outside the industry where competitors are not searching.
  2. Interpret - Consider the deeper meaning behind what you hear, the ideas behind the words are more important than the superficial message
  3. Address - Many creative ideas never leave the drawing board: they are too unusual, too novel, too different from what others are doing.

The Innovation Process

Managers are accustomed to processes, and are very attracted to any activity that involves a step-by-step sequence of actions that lead reliably to a result. In many instances, they attempt to take the same approach with innovation. However, a linear process is the approach to doing something that is known, whereas innovation involves discovering something that is unknown. For that reason, such processes seldom work.

If every an "innovation procedure" were invented, it would not for long be a way to gain competitive advantage. The same process can easily be replicated in other firms - and just as with market research, the same process performed on the same information yields the same results. It would not be long before customers were able to catch up or pull ahead by using the very same methodology.

Another common practice is that processes are the hallmark of top-down management style, in which those at the top of the organization make the meaningful decisions and put in place procedures to make sure that their ideas are followed by others. Being creative requires those with the most immediate knowledge, who are often far closer to the ground, to have the latitude to think unconventionally.

This does not mean that there are not practices and a general framework that can be applied - merely that there is not a rigorous and well-defined process.

(EN: The remainder of the first chapter merely describes the structure of the rest of the book - its parts and chapters.)