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Design Driven Innovation: Changing the Rules of Competition by Radically Innovating What Things Mean

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Does design drive innovation or does innovation drive design. The answer is "Yes." The success of each approach depends almost entirely on what Roberto Verganti characterizes as "radical research" and those who either conduct it or support those who do. In his introductory Letter to the Reader, Verganti explains that this is a book on management. More specifically, "it's about how to manage innovation that customers do not expect but eventually love. It shows how executives can realize an innovation strategy that leads to products and services that have a radical new meaning: those that convey a completely new reason for customers to buy them. Their meanings are so distinct from those that dominate the market that they might take people by surprise, but they are so inevitable that they convert people and make them passionate." Or what Ben McConnell and Jackie Huba describe as "customer evangelists."

Verganti calls this strategy "design-driven innovation" because design, in its etymological sense, means "making sense of things." Therefore, think of design-driven innovation as the R&D process for meanings. This book shows "how companies can manage this process to radically overturn dominant meanings in an industry before their competitors so and therefore rule the competitors." Throughout his lively narrative, Verganti responds to questions such as these:

1. How to innovate by making sense of things?

2. How to integrate design-driven innovation with an organization's strategy?

3. How to initiative and then sustain productive interplay between "technology-push" and design-driven innovation?

4. Why do some companies invest in design-driven innovation and others don't?

Note: Verganti's comments in response to this question will be of great value to readers now determining whether or not design-driven innovation is appropriate to their organization's needs, objectives, and resources.

5. What are "interpreters" and what is their role in the design-driven innovation process?

6. How to locate and then attract key interpreters?

7. How can an organization develop its own vision?

8. How to leverage the "seductive power" of the interpreters?

9. When establishing what Verganti calls the "Design-Driven Lab," where to begin?

10. What is the "key role" of an organization's senior managers and their influence on the organization's culture?

However those involved are identified (e.g. "interpreters") and their functions are defined, whatever a given organization's goals and resources may be, questions such as these suggest critically important issues that must be addressed by its business leaders. If I understand Verganti's core thesis, it is that the process by which to do that must itself be design-driven. That is to say, a competitive advantage can be achieved and then sustained only by innovative thinking about innovation. Only then can those who are involved "make sense" of what to do and how to do it for their customers.

Those who share my high regard for this book are urged to check out Mark Gottfredson and Herman Saenz's The Breakthrough Imperative: How the Best Managers Get Outstanding Results, Dean R. Spitzer's Transforming Performance Measurement: Rethinking the Way We Measure and Drive Organizational Success, and Enterprise Architecture as Strategy: Creating a Foundation for Business Execution co-authored by Jeanne W. Ross, Peter Weill, and David Robertson. HR Transformation: Building Human Resources From the Outside In co-authored by Dave Ulrich, Justin Allen, Wayne Brockbank, Jon Younger, and Mark Nyman.

One of the best books of the year is undoubtedly "Design-Driven Innovation: Changing the Rules of Competition by Radically Innovating What Things Mean," by Roberto Verganti. In it Verganti, a favorite of this blog, attacks one of the central mysteries of innovation-how can a company successfully create a product that is a radical break from the past, and which shows the way to a new future?

We've seen these products at work. The mobile phone is one. The personal computer is another. We know that you can't survey users to determine what these products will look like or what they should do. So how to create them (apart from cloning Steve Jobs, who seems to have a knack for the radical innovation)?

Most companies punt on this question and are satisfied to extend existing products into adjacent spaces, fix latent customer pain points, etc. These are fine tactics, but with the ease of imitating product features and the speed with which information and intelligence flows, extension is a less and less stable platform for growth (arguably, it is an unhealthy and unproductive basis for business - in Umair Haque's term, "thin value").

Besides, as Verganti points out, radical changes in meaning yield longer product life cycles and more profitability.

So what's the key to achieving this sort of innovation? Verganti writes that it is changing the meaning inherent in the product. The Wii changed the meaning of gaming from "passive immersion in a virtual world for young adults" to "active physical entertainment for everyone" (p.65). iPod/iTunes changed the meaning of a digital music player from a storage medium to a seamless platform for finding, buying, organizing, transporting and listening to music. The iPhone (not specifically discussed in the book) changed the meaning of a mobile phone from a voice device, with a few data applications attached, to a platform where data applications are the central focus of the product. The phone part is almost an afterthought! (I've noticed that iPhone customers are very tolerant of poor voice quality and dropped calls-deficiencies that would doom a plain mobile phone.)

In all the above cases, the changes of meaning opened up entire new markets, created hard-to-duplicate ecosystems and caused competitors to spend time and resources figuring out what the changes meant and how/whether to follow.

I highly recommend "Design-Driven Innovation."

Reading "Design-Driven" Innovation, one can only link this book to books that call on us to reflect on the larger context in which we live. Comparing this book to Zen and the Art of Motorcycle Maintenance or other books that investigate the larger context beyond the products and services is simply the only way to think about this book.

The author, Roberto Verganti, has a passion for innovation that is "design driven". His argument is that too often innovators and authors talk about, and write about, innovations that are technology driven or customer centered, which are important, but not truly insightful or disruptive. He seeks innovation based on the vision of the designer, which creates new context and new possibilities for innovation - instead of asking a customer what they want, Verganti's adherents will create a completely new proposal for the customers. His argument is that people buy products and services to satisfy utilitarian needs, but also to satisfy emotional and psychological needs as well, and if we can align our innovations to those deeper needs we can create more meaning, and create more value. Additionally, while product features and attributes can be easily copied, meaning cannot be copied as easily or as quickly, offering the firm that innovates with design and with meaning a significant advantage.

I've written on this subject before, and believe his premise wholeheartedly. As most consumers in the US, Western Europe and other developed countries have countless solutions to solve everyday problems, we move up a Maslow's hierarchy of solutions. At the most basic is the utilitarian solution, and then as that need is met we seek solutions that touch other emotional, cultural or psychological needs. How else can we explain the value of Philippe Starck's teakettle, when we can simply boil water in any pan in the kitchen? As simple needs are fulfilled, we seek solutions that address the deeper and more sophisticated needs that align to empathy and meaning.

This book will be read by many in the innovation space and then quickly shuttled off to the "interesting but impractical" shelf. Too many larger firms are very suspicious of trying to create meaning or offer their customers a new "proposal". Rather, they prefer to wait until someone has proven a market and then offer something very similar to what exists already. Verganti points out that executives who follow his methodology don't think "outside the box" they "immerse themselves outside the network". The necessary capabilities that Verganti suggests are important for Design Driven Innovation point out another difficulty for most firms. The three capabilities he says are necessary for design driven innovation are: building a network of relationships with key interpreters in a design discourse. By this he means that the organization and key executives are holding an ongoing dialogue with people who can suggest new proposals and interpret what new opportunities may exist. This would entail much more dialog, and much more qualitative discussion, than most firms are willing to create. Second, he suggests that another capability is to harness the unique proprietary assets that the firm has that can't be found elsewhere. In most firms, we've worked very assiduously to shave off any capability or feature that is unique and different, and we've all adopted the same methodologies, systems, processes and thinking models, so there is little differentiation between firms, and most larger firms would be hard pressed to identify their unique propositions and assets, much less organize them effectively. Third, the final capability is the ability to organize and make sense of what the external dialogue and discourse is telling you and combine that with unique capabilities and skills from inside the organization and create a unique, compelling vision. Most larger firms have little strategic vision and a difficult time communicating the vision and strategies that they do have.

This book hits the mark right on the head - true innovators will identify propositions and proposals so compelling that the customers could not have possibly asked for them. Much of that will be based on the company's dialog with the market, it's core knowledge and capabilities and its ability to empathize with the needs of its customers. This kind of innovation is "push" not "pull" and is based on compelling vision and design, creating meaning and empathy. Try saying that to your management team.

While Verganti sets up an innovation tableau that is completely correct and lays out the model for achieving that vision, I suspect that many firms are too operationally focused and too dependent on facts, numbers and "proof" to ever extend themselves to his vision of innovation. And that's too bad, because his vision is correct, and would ultimately be more valuable in the end, but most firms will stretch for his vision and settle for technology or customer driven innovation outcomes.

Roberto Verganti finally translates into business-speak what every designer knows in their gut: that an innovative design process requires intuition AND a rational, analytic view. Informed intuition beats user-centered research. Truly innovative design happens when enlightened manufacturers trust design 'interpreters' to create new positions within the culture - to make a new proposal for how we live. For designers, this distinguishes between design for incremental newness and design for radical cultural innovation. Verganti provides this fantastic bridge between theory and practice to illustrate how radical new ideas can transform the market by proposing new categories rather than catering to existing ones. The hard lesson for business is this: real innovation is propositional and risky, not researched and proven. Twenty years after Branzi's 'Learning from Milan' we get the business version....

This book is targeted toward professionals people who are involved in some way with the innovation efforts in their organizations. I also find it relevant, useful, and clear to the point. A must have book if you are an innovation manager confronting the problem of selecting an innovation portfolio.

Although occasionally repetitive, this book is an eye opener. There is a sub-text in the market that companies fail to read...what clients literally ask for is often a symptom but not what they really need. This book attempts to explain how companies can develop resources and talent networks to better interpret the full context of client demand. It shows that when companies focus exclusively on linear processes it's almost impossible to create a sustainable competitive advantage since these are easily observable and replicated by a competitor. True innovation anticipates market demand, and it comes from developing both internal and external teams that allow senior executives (who must be fully engaged) to see and act on emerging trends before others. The author's key point is that this creates a company culture that drives sustainable growth and success that is always one step ahead.

If you want to be a real game changer and were highly disappointed by the homonymous book; and yet, if you are not a designer, but are eager to find out how design allows a breakthrough technology to disrupt an industry, then this book is certainly for you!

Professor Verganti takes you on an intriguing and never-want-to-stop reading that will introduce you to a new type of innovation...neither technology push nor market pull: it is what the brilliant author refers to as Design Driven Innovation, and through which you can create new meanings.

The book is very well articulated in two sections: the former focuses on products - taken from the Italian furniture landscape, the entertainment world, the watch and automotive industry, that Prof. Verganti uses as examples to get the reader familiar to this new concept of innovation. The latter, instead, becomes more theoretical as the author explains the Design Driven Innovation framework that will allow you to:

-Create a new meaning in the industry thus defining new rules of the game
-Overturn the competition with a sustainable advantage
-Create products with clear personality that stand apart
-Translate the uniqueness of the offering in higher profit margin per unit and product longevity
-Set new socio cultural models

The takeaway message is that, unfortunately, not anybody is suitable for implementing this type of innovation: you need to be bold, have a forward looking attitude and, more important, love the risk. Good luck with that!

I think this is a very nice addition to the already growing innovation literature. Its importance also emanates from the current debate on old marketing vs. new marketing. This approach has a lot to say regarding new marketing because apparently design-driven innovation is about finding new meaning to an existing category or or reeinventing a new category.

So far it is ver good.
But repetititon, my god. The same stuff could have been explained in half the space. Moreover, examples are stale: Alessi, Wii, iPod etc. Hence, even though I very much like the book, it requires alot of reduction so that it becomes easily readable. As it stands, it is unnecessarily confusing and at times boring. And also needs a lot to say on methodology. But overall it is a welcome contribution to the innovation literature. It is indeed interesting and valuable.

It's easy to win the game if you're writing the rules. "Design-Driven Innovation: Changing the Rules of Competition by Radically Innovating What Things Mean" is a guide to dominating a market through pushing innovation to the point where you create your own unique market, apart from the separate. Using models such as Apple's iPod, which changed the way music was listened to or other radical changes that earned companies millions just by offering something new and unique. "Design-Driven Innovation" is a must for any business who values evolution in their company.

While we are seeing a rise in books which acknowledge the role that design plays in innovation, Verganti's book is a reminder that well-structured, entrenched design-driven innovation processes have been in place for many years. Verganti uses a number of examples from northern Italy to illustrate his well-considered and usefully described method for discovering 'meaning' in products and services.

The difference between this and any other book on design and innovation (that I've come across in the past 15 years) is that Verganti provides a practical, easy to understand method which can be applied and tested in other environments. So unlike many books which continue to mystify the 'design process', Verganti proposes that the structure that is built around identifying and developing the problem is central to achieving innovative outcomes.

Where the method seems to fall short is in the way in which it engages audiences. The creation of meaning is, for the most part, undertaken, reviewed and assessed by interpreters. These interpreters are those engaged in a design discourse. The method doesn't extend to engaging audiences through social networking,something which is on the rise in the design sector.

The strength of Verganti's method is that it calls for identifying interpreters and engaging in a discourse around design. If this method, (which seems to be the key to success in Italian innovation)encourages designers to become more active in their engagement with discourse, then it will have done what few design and innovation books could do.