Integrating innovation into business models requires radical ways of thinking & acting.

Doblin, a chicago-based consulting firm, has rethought the process. Designers are at its center. July/August 2007

The Innovation Imperative & the Indispensable Role of Designers

by Larry Keeley

Two summers ago I was biking in the Alps and got a call from a client CEO who expected me to drop everything and meet him in New York City the very next day. I said it was impossible, that it would take me two days to get there. He said he would wait, though in a tone of voice that clearly suggested he shouldnt have to. Thinking it unwise to appear in biking duds, I bought some business-meeting clothes and flew to New York, got to his conference room, and he promptly walked in to tell me a tale.

Three days earlier this CEO, head of a $70 billion financial services firm with offices in 40 countries, had met with stock analysts. He was reporting on his achievementswhich were numerous and impressive. Over the prior year or so he had cut $100 million of annual costs out of the firm; consolidated a bunch of bad data centers into two great ones; dumped several businesses that were not core to operations; improved customer response time; and a dozen other advances. He sort of expected the analysts would at least give him a standing ovation, or perhaps carry him out of the room on their shoulders.

They didnt.

Instead, in that special seen-this-all-before fashion unique to finance wizards on Wall Street, they looked at him passively while he ran down the whole list. Afterwards, the key analyst that tracks

his company said, OK, fine. Now we know you will survive. But now youre boring. Sowheres

your iPod?

DOWNSIDE OF THE INNOVATION IMPERATIVE These days every enterpriselarge and smallseems eager to innovate. After decades of seeking operational efficiencies (read that as lower costs) through business process reengineering, suddenly the urgent agenda is to achieve organic growthpreferably with some hot, new, iPod-like, culturally cool growth platform.

This is, of course, largely a disaster for the innovation and design fields.

Now, I know that seems counterintuitive. But, hey, any of us who has seen such management crazes before can attest that too much attention, too fast, tends to attract the charlatans, crowd out the category and cause big, costly mistakes to be made by firms large and small. This is an archetypal pattern with any management trend; lets call it the frantic fad flameout.

In practical terms, this means designers must be prepared to support those CEOs (or CMOs, CTOs, CIOs or heads of divisions) that suddenly are in a panic about innovating, but without making the usual classic mistakes that overheat a category too quickly and end up discouraging firms from trying the technique again for a decade or so. To help insulate your firm and your practice from the fad flameout, this article focuses on two broad but essential topics:

First, I make a case that effective innovation demands a broader view of possibilities drawn from 10 distinct types of innovation. New products are no longer enoughindeed, the evidence suggests they are the single weakest form of innovation. Solving this elegantly demands nothing

less than a profound change in the goals you should help your clients seek.

Second, I will suggest that great design and innovation advances are vastly easier to achieve if you use several innovation process advances, most of which clients neither know about nor use.

So this shift demands that you actively teach your clients to behave in unfamiliar ways.

In the spirit of STEP inside design, I will make this point by deconstructing elements of the built world and showing how you can analyze successful innovations more readily or synthesize your own more effectively, once you master the methods.

PART 1: CHANGING THE GOALS YOU PURSUE For some bizarre reason, when you ask any group of volunteers to innovate, they immediately think they should be a) brainstorming, and b) dreaming up new product ideas. Both of these universal impulses turn out to be not just flawed, but dangerous, sending teams in the wrong direction from the get-go.

FIGURE 1: 10 TYPES OF INNOVATION

A PAINSTAKING RESEARCH EFFORT ENABLED DOBLIN TO IDENTIFY THE 10 KEY TYPES OF INNOVATION THAT HELP PRODUCTS AND SERVICE MARKETING EFFORTS BECOME BREAKTHROUGH SUCCESSES. Several years ago, Doblin planners took nearly 3000 things generally agreed to be highly innovative and put them in computers. We kept boiling them down, much as Campbells does with its condensed soups, until we discovered what elements were common among these

innovative items. This led to a framework, a fresh way of thinking, that we call 10 Types of Innovation. You can see them in a compact, visual catalog with pure examples in figure 1.

As you glance through the types and the examples shown in figure 1, it is important to bear some useful principles in mind. Especially these:

USE SEVERAL TYPES OF INNOVATION & INTEGRATE THEM WELL. While its conceivable that you can build a great innovation by emphasizing just one of these 10 types of innovation, this is very rare. Great innovations, the ones that rewrite all the rules in the industry and are thus called disruptive innovations, typically use five or more types at once.

FIGURES 25

NOTE THAT IN EACH OF THE EXAMPLES ABOVE, MULTIPLE TYPES OF INNOVATION HAVE BEEN EMPLOYED. DOBLINS RESEARCH SHOWS THAT DISRUPTIVE INNOVATIONS TYPICALLY USE AT LEAST FIVE OF THE 10 TYPES OF INNOVATION THE CONSULTING FIRM HAS DEFINED.

THE TYPES ON THE WINGS ARE MORE VALUABLE THAN THE ONES IN THE CENTER. Instinctively, teams tend to brainstorm direct improvements in what they sell, plus, if anything else, a process advance or two. Even within that starting place, teams further assume that what will matter most is some form of protectable technologya proprietary, preferably patented capability. In fact, innovations in brands, channels, customer experience, effective partnering and how you get paid are vastly more likely to change markets and get a high return on investment. Advances in areas like business models and channels are harder to imagine, often because they are thought of as givens. Most teams either lack the authority to do anything to change them or assume that any such suggestion would be rejected within their firm.

DESIGNERS HELP BY MAKING VIVID FUTURE SPECULATIONS VERY TANGIBLE. Peter Laundy, our top graphic design-trained innovation expert at Doblin, has specifically invented a capability that makes such integrated, rich ideas easy to experienceeven for people with zero imagination. He calls this work Business Concept Illustration, and works with multifunctional teams to take a disruptive innovation and make it come to life. This capability borrows some of the surface techniques of rapid prototyping, of course, but its special genius comes in the way it builds tangible representations of two distinctly different future states: a) how a new concept will be experienced by its intended customer, and b) what the firm will need to do that is not already routine and familiar. So we think it is graphic designmore than any other specialtythat ultimately de-risks disruptive innovation, by revealing what new things to do and what special challenges must be overcome to do them.

A SHORT COMPENDIUM OF INTEGRATED INNOVATION EXAMPLES The 10 Types of Innovation are useful for both analysis and synthesis. For analysis, of course, you deconstruct the known world in order to understand it better. For synthesis, you invent a new worldideally one that is courageous and path-breaking and built without compromise. In figures 25, the 10 Types of Innovation are used to evaluate many cases that designers will understand

to varying degrees, all to help see how multiple types of innovation have been used (knowingly or unknowingly) to make breakthroughs.

FIGURE 6: INNOVATION DISCIPLINE MODEL

INNOVATION REQUIRES CERTAIN DISCIPLINES THAT WILL BE FAMILIAR TO MOST DESIGNERS (THEYRE SHOWN IN RED). BUT IT ALSO REQUIRES OTHER DISCIPLINES THAT DESIGNERS MUST BECOME SKILLED IN. THESE DISCIPLINES (SHOWN IN BLUE) HAVE HERETOFORE BEEN THOUGHT OF AS STRICTLY IN THE PROVINCE OF THE CLIENT, SPECIFICALLY TOP MANAGEMENT.

PART 2: CHANGING THE PROCESSES YOU USE Whereas I challenged you in Part 1 to have different goals, this second section urges you to work in fresh, new ways. To an extent, this challenge is easier for designers: Of all the groups that help businesses innovate, you may be relieved to know that designers seem the least out of step. Other players inside firms tend to be plagued by a wide array of innovation myths that need to be challenged if they are to have any hope of making innovation a robust, reliable competence. For more on this, see the sidebar on challenging innovation myths on the next page.

The Innovation Discipline Model in figure 6 shows an overview of advanced innovation processes that we at Doblin have found to increase innovation success rates (the percentage of initiatives a firm pursues that successfully meet their performance targets) by three to 10 times the global norms. The steps this model lays out challenge the traditional ones depicted in routine stage gate models of innovation. Instead, the emphasis here is on knowing what is already going on,

actively shaping both a strategy and competence for innovation, then challenging talented teams to deliver on the expectations. This approach specifically rejects the notion that innovation comes from creative brainstorming and huge idea-generation sessions, and is purposely built to produce a smaller number of bolder, more valuable innovation initiatives.

One subtlety of this process is signaled by the colors used. Most designers will be familiar with and typically skilled atthe items in the red circles. Thanks to the growing professionalism of design schools, along with todays increasingly specialized and advanced design firms, the items in red are now done with better methods, greater skill and more sophistication than ever.

Its the stuff in blue that is a problem.

First, most firms simply do not know that they should do those things. Second, they dont know how to do them. And third, they need to be done with the active participation of senior executives, not just a handful of brilliant engineers, designers and marketers. In the vast majority of firms, these specific tasks and skills are simply an error of omissionthe equivalent of trying to do medicine with no diagnostics or imaging systems.

Innovation is far too important to let clients do it in the dark, with methods that emphasize creativity instead of discipline. The firms that serve clients well will work to advance the frontiers of this new, emerging form of management science. At Doblin, we have spent the past seven years obsessively developing special tools that systematically de-risk each of the recurring steps that are central to effective innovation. If there is anything we know now for certain, it is the following:

Innovation is a discipline. The highly specialized teams that attack it with careful step-by-step
protocols get results that are roughly an order of magnitude better than those that emphasize creativity and hope lightning will strike.

It is very early in the development of this discipline. No one firm, no magic formula and no single
body of research is enough to deliver the robust, reliable breakthroughs clients want and need.

Most of the processes still need to be invented. Innovation today is roughly where medicine was
when leeches were the really advanced topic.

There is important, exciting and valuable work to be done. So come join in the effort to help pioneer this new field.

Oops! Getting past innovation myths One key to making innovation effective is teaching people to stop believing what they are customarily taught about innovation: what it is, where it comes from and how to shepherd it along. Among the most common myths about innovation are canards like these:

Innovation is fundamentally about finding new products. This is nonsense. Our research proves
there are 10 distinct types of innovation and, among these, new products are demonstrably the least valuable to pursue.

Innovation demands great creativity. A common mistake. Creativity is a plus in innovation, just as
it is in floral arrangement or cooking, but it is a very small percentage of the real need, which is exceptional discipline. Anyone can be an effective member of an innovation team if they follow the right disciplines. And it is fair, reasonable and responsible to expect everyone to innovate, regardless of experience or level in the enterprise.

New technologies will deliver innovation success. Technologies now arrive as waves that wash
over entire industries. The advances are obvious to all players and are emulated or licensed swiftly. Except in rare instances, new technologies are often necessary but not sufficient for innovation success. This can be a serious blow to engineering-led enterprises placing costly bets on the future.

You must generate hundreds of ideas because of high failure rates. Actually, you should generate
only a few innovation ideas, not hundreds. The newest methods now author only a handful of very strong ideas, any of which can then get to market faster and more reliably than hundreds or thousands of random, brainstormed ideas.

Labs and R&D centers are essential for innovation success. They are needed for only one form of
innovation: primary discovery. This is an especially rare form of innovation that can be great when it occurs, but is seldom ideal or even necessary at the vast majority of firms.

Patents are important to prevent competitive emulation. Until recently, patents were used as
barbed wire, explicitly to keep others out. While strong patents can be great, these days they are most valuable only if you get others, including competitors, to use them. Now the smart money tries to make them as pervasive as possible, in a race to get them to become the dominant standard in an interconnected economy.

Segmentation methods yield market understanding. Today the most valuable innovations
routinely disrupt market structures and create entirely new patterns. Relying too heavily on known segment models builds slightly better old ideas: They give you easier-to-program VCRs, not TiVolike digital video recorders. Great innovations reframe industries and carve out new, uncontested market spaces.

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