3: Placing Design-Driven Innovation in the Strategy of a Firm
It is very often assumed that radical innovations are based on technology, which introduces new products that make existing ones obsolete - but this is not so. An innovation can occur by a change in meaning without a change in technology. Technology changes the utilitarian aspects of a product - the benefit that is delivered and the effort that is required - but this is only part of the reason a customer selects a product or brand. Again, there are psychological factors that can be more influential than utilitarian concerns, such that a radical innovation can be completely meaning-based, adding nothing to the functionality of a product but changing its perception by the market.
Radical Innovation of Meaning
Verganti mentions the emotional attachment that children form to things: the security blanket is an object of physical comfort that also becomes a source of psychological comfort. Adults also have emotional attachment to things. They have possessions that no longer serve a needed purpose, that are worn out and broken, and yet they cling to them out of a sense of affection and the prospect of throwing them away causes an irrational sense of distress. There is essentially no difference between an adult who keeps a cracked teapot on the mentle and a child who won't be parted from his teddy bear.
He mentions the work of an Italian psychoanalyst who categorized the attachments that people feel to things: they may feel that the object is protective (paternal) or nurturing (maternal) toward them. They may feel that they protect or nurture the object (parental), they may feel a kinship (filial) or sexual attachment (erotic), or they may feel the object represents birth/growth or protection against failure/death. Wherever a person speaks of an emotional attachment to a thing, we can find these codes, and often they are communicated or suggested through the design of the object itself.
There's some mention of the design firm Alessi, which makes very whimsical products (a toothpick holder shaped like a bunny, a time shaped like a duck, a corkscrew with the head of a doll). Their designers create practical objects that have a visual similarity of toys to give personality and create attachment to simple tools. In an industry where competitors struggle to maintain stable sales, Allesi's revenues doubled within three years after changing to this design approach. (EN: it's also worth noting that their products carry very steep prices - the "magic bunny toothpick holder" retails for $35 and the "duck timer" sells for $65 - basic versions of the same items can be found in a dollar store.)
These are radical innovations in the meaning of the products. The duck timer does its job no better than any ordinary kitchen timer - its functional benefits are exactly the same - but they clearly carry a different meaning to their buyers/owners than similar items that lack the whimsical qualities. It is only by giving the toy-like quality that enables the customer to form an emotional connection to the object.
In other instances, a radical innovation can entirely negate the value of the physical artifact. Again, the Metamorfosi lamp is an object that causes itself to be ignored: the customer's delight with the quality of the lighting causes them to ignore the lighting fixture. Another example would be music, as it was once fashionable to display a large and sophisticated-looking hi-fi stereo system in one's home. Nowadays, people consume music from MP3 players and cell phones, wirelessly connected to speakers in their homes, such that the appearance of the "player" has become entirely unimportant.
Meanings and the Innovation Strategy
The author considers that innovation can be done in two dimensions - functional and meaningful. Traditionally, companies seek to innovate functionally (better, faster, cheaper) and neglect the meaningful. And while the author is a proponent of meaningful innovation, he concedes that the most significant and market-shaking innovation takes place in both dimensions. A product that is functionally superior and more meaningful can create a radical shift in the marketplace.
Another common quality of innovation is that it is incremental. Consider the way that fashions change: seldom do hemlines change drastically from one season to the next, but they instead become slightly shorter or longer with each year - over the course of several years, the change is dramatic, but from one season to the next it is hardly noticeable. He also mentions the automotive industry: consider that the "fins" of cars did not appear all at once. They began small and subdued, grew more dramatic over time, then slowly shrank until they had disappeared again. While some customers would embrace a radical change, most will reject it but are amenable to slight modifications to last year's model. (EN: I also expect that this provides better revenue across several versions and more gradual cost changes as the production line does not need a radical overhaul all at once.)
The physical style of an item is used as an example because it is easiest to observe - but changes in the functional qualities of things also tends to be incremental. The microwave oven of the present day has far more features and functions than the microwave ovens of the 1960s, but they were added gradually over time rather than all at once.
Traditionally, products were designed by engineers and it was rare for a manufacturing company to enlist the help of a design firm in developing its products - which is a sign that companies have shifted to, or at least place greater emphasis on, the design of the product than before. In the older approach, the product was crafted by engineers and designers might be called upon to make cosmetic improvements - but in the modern age designers craft the product and engineers are left to figure out how to make it work.
The traditional approach gave us "a world of boring objects, lacking any emotion." Cars and coffee makers and other devices all looked alike, and there was little difference between the products of different companies. Where a company breaks from the herd, its products are suddenly dramatically different to those of its competitors - and the market either responds very positively or very negatively to the difference. That is, the product takes the market by storm, or is ridiculed and rejected.
Forget User-Centered Innovation
Very often, radical innovation is the result of an independent thinker who ignores the market and follows his vision. Those who do market research are too timid to make substantial changes: they consult with the customer, who is very familiar with the product he has today and may suggest minor improvements, but seldom does a customer have a bold vision about a superior product he has never seen or handled. That is, customers are conservative and when companies allow market research to dictate their innovation, they end up being conservative as well.
The CEOs of companies that innovate are often seen as very arrogant men who disregard what the customer wants and shows them something they ought to want, but had never imagined. As stated by Apple's Steve Jobs "A lot of times, people don't know what they want until you show it to them." Verganti draws a parallel to the art world: Picasso never thought about a target market when he painted, nor did he attempt to do what other artists were already doing - he took off in a completely different direction.
There is significant risk in being a bold thinker: a radical product is more likely to be ridiculed by critics and rejected by customers because they do not recognize its value. It is too different and too weird, and they see it as something unusual and possibly dangerous. Companies with established and profitable markets would not dare to undertake such a risk, which is why radical innovation remains the demesne of small firms who believe they have nothing to lose by doing something radically different than the rest of the industry.
Relaying on the market and making small changes seems less risky, and it generally is so long as none of the competitors breaks from the herd. But when one firm takes the risk and creates something sensational, the slow-moving traditional firms find themselves left behind.
He gives the example of the Aeron chair, whose inventor regarded it as a "seating machine." Whereas other office furniture manufacturers were focused on the stylishness of their chairs, Miller focused on its comfort and created a rather ugly chair that was extremely comfortable. Fortunately, many customers were office workers who spent many hours sitting, and were very interested in the prospect of a chair that was comfortable rather than visually impressive - so the Aeron chair took the market by storm, and because it was able to patent its designs, competitors were unable to effectively imitate it. More than a decade after the product launch "it remains one of the most coveted office chairs" and competitors' products are viewed with some suspicion - as cheap knock-offs of the Aeron chair that cannot be as good as the original.
A breakthrough product is "a proposal to people," and often it proposes something they would never have imagined. This is the reason that user-centered design practices do not lead to radical innovation. It begins with people who are happy with the way things are, and listens to their suggestions for minor improvements. And the presumption that this will yield a successful product is based on the belief that what a customer claims to want when he is being interviewed is something he is actually willing to pay for in the marketplace.
It seems to be well known, or at least palatable to accept, that customers are incapable of furnishing a company with technological breakthroughs. To make a better engine requires knowledge of physics can engineering, which is something the average customer doesn't have. The driver of a car does not know how to make a faster or more fuel-efficient engine. But for some reason, companies cling to the belief that customers have the ability to tell them how to make a better designed product, and do not consider that customers are no more qualified to be designers than they are to be physicists.
The radical innovator does not care what customers say they want, nor what their competitors are doing. They recognize the need to think about radically new products, not superficial modifications to improve current products. They might seem like "crazy old-style managers" who innovate from an ivory tower, removed from the real world - but they know exactly what they are doing.
This is not to say that they do not care about people's needs - they are merely indifferent to the way that people believe that their needs are served. Because if people already knew a better way to achieve their goals, they would already be doing it.
Three Innovation Strategies
Ultimately, there are two basic approaches to innovation (push and pull) and three sources (customers, producers, and technology):
- Customer Pull. This approach to innovation considers the things that people know that they want. Market research and user-centered design begins by investigating the customer and asking him what he would find desirable, then seeks a way to provide that to him. The innovation begins in the mind of the customer, and the producer is simply a follower.
- Producer Push. This approach to innovation considers the goals that people want to accomplish, but do not know how to accomplish them. Radical innovation occurs when a producer solves the problem and shows the customer a solution he had not imagined, and must convince him is worthwhile.
- Technology Push. This approach considers what solutions are provided by technology, and then seeks to identify human needs to which they might be of service. Technology push generally results in technical improvements to products (faster, more durable, cheaper) rather than changes to the way people solve their problems.
Companies that have established innovation programs can likely determine what kind of innovation strategy they are using according to the things that they do. Where funds are invested in market research, they are doing customer-pull innovation; where they are invested in engineering research, they are doing technology-push, and where they are invested in design think-tanks, they are doing producer-push.
While the author is definitely a fan of producer-push innovation, he acknowledges that the other forms of innovation have their place: a firm that has a stable customer base needs to keep abreast of market trends and technological evolutions in order to keep pace with its competitors and remain profitable by making minor adjustments to its existing product lines. But to keep pace is never to pull ahead - and to be constantly at risk of being left behind if one of their competitors is the first to make that leap forward.