Design-driven innovation

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Reinventing innovation Companies are constantly trying to find added value to improve their competitive advantage and, although Switzerland is known for its business-driven, innovative approach, even here it is not an easy task. But, say the experts, innovation by design is the way forward for companies that want to please their customers – and deliver results


By Matthias Mueller*

Customer orientation is a principle that enterprises love to declare as one of their most important business drivers – and most outstanding achievements. When you start talking about customer needs and customer-centricity in management circles, you will probably hear that it was a concept of the late 1950s that has been understood and implemented for years. But if this is case, why is it so rare to encounter in real life? It happens every day: you buy a multipack of, say, washing powder and when you come to open it, you can‘t. The packaging is made to survive a trip to the moon. Or you wait at a bus stop and watch the bus stop a few meters away from you: the driver has learnt to drive a bus but not to serve customers. Cars deliver a bonanza of solutions driven by technology: for example, you want to expand the loading space of your car. In many cars, the back seats fold down quite easily. However, in some cars you have to fix them with a strap around the front seats: isn’t this technique something they used for post coaches centuries ago? Similar “design crimes” can now be seen in an

exhibition at the Gewerbemuseum Winterthur: Böse Dinge is on until 31 July 2011. Jay R. Galbraith, professor emeritus at the International Institute for Management Development in Lausanne, distinguishes between product-centric and customer-centric companies and concludes that customer-centricity will provide the competitive advantage in the future: “The power in the buyer-seller interaction has been moving systematically to the buyer.” But on the actual status quo, Galbraith is pessimistic: “In fact, product-centricity continues running the show with merely a cosmetic gloss of customer focus sprinkled around the edges.”

teraction. Nespresso's innovative idea was not the technique of brewing coffee with capsules, but making this technique useful in a relevant and compelling experience. The iPad is another example of a customer-centric, innovative product. It silently starts to become part of your life – after a few weeks, you find it everywhere: on the breakfast table, in the holiday suitcase and even in the bathroom. It provides value and you need it. What do these products have in common? Ease of use, an anticipation of customer needs and an elegant, simple product design with a minimum of decoration: they are design-driven.

Compelling experiences

The customer owns you

Of course, some companies and services understand that customers should be served according to their needs. In his book Designing the Customer-Centric Organization, Galbraith describes IBM as a shining example and, in the consumer market, Nespresso is a good illustration of a thoroughly designed experience from the first to the last step of the customer in-

Enterprises should be aware of the value of design. We now live in an era of what the Brazilian designer Charles Bezerra describes as the “transference of guilt”. Customers hate to be frustrated – and when it happens, they blame the companies. And they make sure everybody hears their frustration on platforms such as youtube, Twitter and blogs. As Galbraith says: “ToSWISS BUSINESS · May/June 2011


INNOVATION day, nobody owns the customer. The customer owns you.” And then there are the numbers. The Design Council UK publishes the Value of Design Factfinder, based on two large studies in 2005 and 2007. Its findings make interesting reading: "On average, design-alert businesses increase their market share by 6.3% through design. Designalert businesses develop 25 new products a year through design. More than two thirds (71%) launch at least one." The British designer Rodney Fitch puts it succinctly: "Only one company can be the cheapest; the others have to use design." Design-driven innovation is the differentiator and the creator of added value. Price is the lowest differentiator and from a design perspective the easiest value to strive for. To climb up this value ladder means to invest in design and innovation, and to become more distinctive from step to step. The most relevant value will be “meaning”. It’s a value for which price isn’t constitutional any more. At this point, people don’t buy products, services or brands – they buy experience and identity. It’s the value that transcends competition. The process of design-driven innovation comprises four clear steps. It always starts with the observation of the customer and the key question of every innovation: what are the obvious and hidden needs of the customer? Observation doesn’t necessarily mean asking customers what they want; market research won’t satisfy. One of the more famous quotes of Henry Ford says: "If I’d asked people what they wanted,



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they would have asked for a better horse." The customer has needs, but he hasn’t the solutions.

The story of the customer Customer insight is provided by talking to customers at the touch points, by observing customers when they use a specific product and service, and by arranging group interviews. The contact with the customer is easy and informal. This sort of research won’t produce statistical tables and analytical studies. The best way of digesting and understanding what you’ve learnt is to tell a story, the story of the customer. Because its driver is empathy, it will offer powerful insight. Of course, during that first step, usual methods such as market analysis or benchmarking can and should be introduced. But beware: they mainly inform about the past. Nothing provides more customer insight than meeting the customer in person. For many companies, the second step would be finding and implementing the solution. This sort of process produces results that present new problems. In the design innovation process, step two is about inspiration. The designer broadens the thinking and the vision, and tries to learn from other industries, from nature or from art. Einstein gave a good reason for doing this: "We cannot solve our problems with the same thinking we used when we created them." Inspiration is not a fuzzy thing: it requires training like any other discipline. What would have been the output of Henry Ford without inspiration?

Building the future with prototypes The third step is about developing the future by creating it. Rapid prototyping prevents innovation from the time-wasting circles of justification and argument. Innovators and designers start by creating simple and inexpensive prototypes, which can be done with flipcharts, Lego bricks or even by role play. In this manner, ideas can be tested, refined or rejected. The main idea of prototyping is to establish the future as quickly as possible and to get immediate feedback. These prototype-feedback-loops – best executed with multidisciplinary teams – make the solution stable and predictable. Step four is implementation. If the three preceding steps followed the rules of interdisciplinary team work and customer orientation, implementation shouldn’t evoke the sort of complexity that makes many projects fail in the final phase. Design helps to focus on what has to be implemented and to discover any non-useful system activity within the company: if the solution is relevant to customers, it can be implemented.

The new business case Innovation by design is a highly disciplined approach to innovation that effectively harnesses the available imagination and focuses it on the delivery of business results. This is achieved by ensuring that throughout the idea, consideration in the development process is given to a potential customer's interests and needs – and

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Co-star integrates the following categories and with this effort of integration it becomes what we call the new business case: 1. Who are the target customers; what are their needs and interests? 2. What is the unique technical and mar- ket opportunity? 3. What is the suggested solution that meets customer needs and takes ad- vantage of opportunities? 4. What talent needs to be on the team to ensure the best solution? 5. What competitive alternatives exist and what is the advantage the pro posed solution has over these alterna- tives? 6. What results can be expected from the solution, e.g. returns to the com pany and benefits to the customer? The power of this template comes from its


THINKING OUTSIDE THE BOX IDEAS PRODUCT VALUE INSPIRATION TECHNOLOGY S TIONS REVOLUTIONARY LEADING FOCU SCIENCE DESIGN ECONOMY ENTREPRENEURSHIP POLICY CONS that ideas will find a place in the market. An obsessive customer and market orientation is fundamental to all successful innovation and is effectively reinforced by the practice of consistently presenting ideas in the context of a value proposition. The refrain for effective innovation is not: what's your idea? Rather: what's your value proposition? Quite a few useful templates are available to create a good value proposition; for example, Barnes et al Value Proposition Builder, or SRI‘s NABC method (Need, Approach, Benefit, Competition). EDG‘s Co-star framework has become the standard method for many; indeed, the author of this article uses it in his innovation-bydesign practice. It even contains a bit of Swiss DNA: Herman Gyr, the co-founder of EDG in Palo Alto, California, grew up in Switzerland before leaving for the US.


a priori establishment of a customer-centric business case. The basic rule is this: no customer, no value, no innovation – and therefore no wasted investment of money or effort in an idea that will predictably fail in the market. It's as simple as that. In the end, this business case-driven, innovation-by-design discipline produces more value for customers, for companies and for society. It helps to cut down costs and waste, and it creates a common and vibrant language that enables useful, innovative thinking throughout an enterprise. By applying this disciplined process, innovation will cease to be a risky game and will instead become a critical driver for a company's future success.

* Matthias Mueller, innovation trainer, founder of Mensch Design Innovation GmbH. SWISS BUSINESS · May/June 2011


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