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The Design Race is Against the Competition, Not for the Customer

Posted: Andy Marken 12.20.17
Innovation isn't just improving on the old model but preparing for the future
“The closer you are to death, the more alive you feel. It's a wonderful way to live. It's the only way to drive.” – James Hunt, “Rush,” Exclusive Media Group, 2013“The closer you are to death, the more alive you feel. It's a wonderful way to live. It's the only way to drive.” – James Hunt, “Rush,” Exclusive Media Group, 2013
Recently, we had dinner with a friend; and during the evening, we got around to talking about how his firm had produced such strong earnings for three consecutive years.


“Our management doesn’t take anything for granted,” he said.  “We stay close to, listen to our system customers and have been making a major investment in two-tier R&D (research & development).”

No big deal about staying close to customers because everyone has those words impressed on their cerebral cortex but I give; what’s two-tier R&D? 

He explained that they have R&D centers in six locations around the globe that enable them to stay close to customers so they can get direct input from them for product enhancements and next- generation systems. “These centers are also close to major educational institutions that have aggressive theoretical and application-focused research programs,” he added.

 “First, they’re good sources for the engineers and designers. We need leading-edge product/process technologies we can implement and they carry out some very esoteric research that might be breakthroughs in 5-10 years,” he added.  “They help us meet our two growth objectives – keep the customers we have and consider new markets.”

The R&D centers have two completely separate engineering teams—one that focuses on a steady stream of customer-driven product/system enhancements for today, and the second that handles Dooms Day projects.

It’s not as ominous as it sounds. 

While some people call the second group in-house incubators, this firm prefers Dooms Day.

You know, it’s like when you get up some morning and discover someone has introduced a new system/product that does what yours does for the customer only better, faster, cheaper … making you instantly obsolete!

Marketing folks like to call customer-driven improvements “innovations,” even though they are simply product upgrades/enhancements or brand extensions. 

These refreshes are important to keep products and product lines from becoming stale in the customers’ eyes--but innovations, really?

As an example, the iPhone 7 was an improvement over the iPhone 6.  It had a number of improvements/enhancements to meet the consumers’ demand for variety and something new/different. This year’s Fords featured a series of good improvements over last year’s models.

Given the right mix of small improvements and product extensions, a company produces steady incremental growth and protects its market share from competitive encroachment. It’s almost the natural order of things.

Adoption Rising— With each new product/service category that is introduced to the market, consumers quickly adopt and use the new items.  While consumers have become accustomed to constant change, it also means that they are constantly on the search for what’s new.

 

Technology is being so rapidly accepted and used so much that it is altering the world around us to the point where constant change is the norm. As sinister as it sounds, the company’s Dooms Day teams are groups of highly skilled engineers, designers and programmers who focus on products that could take the company in a totally new direction if their existing business was wiped out overnight

When people talk about innovation, they’re typically referring to bleeding-edge breakthroughs that are total game changers. Some people like to say that the best innovations come from startups because they aren’t encumbered by legacy processes, systems or mindsets, so they respond quickly to new opportunities and adapt to today’s rapidly changing digital business climate.

Adoption Rising— With each new product/service category that is introduced to the market, consumers quickly adopt and use the new items.  While consumers have become accustomed to constant change, it also means that they are constantly on the search for what’s new.

Of course, I wouldn’t repeat that to 3M, GE, IBM, Intel or any of the Fortune 500 firms that consistently introduce new products and technologies that emerge from their in-house incubators or skunkworks (a small team of people who work on unconventional, “what if” projects). You know, solving problems, addressing customer needs they often didn’t even know they had.

It’s similar to what Apple’s Steve Jobs said about product development back in 1989,“You can't just ask customers what they want and then try to give that to them. By the time you get it built, they'll want something new.”

Development teams like that are working around the globe like the team that developed the first iPhone or worked on Musk’s original Tesla. They focused on doing something different from what was currently available … something they hoped people would like.

Similarly, while they didn’t change their industry; introductions like Amazon’s Alexa-enabled Echo, JauntVR camera, OWC’s Envoy Pro mini USB SSD, DJI’s drone, Nvidia’s GeForce were products that caught the interest of early adopters and the market at large.

Each, in its own way, was a slap on the forehead product that engineers/designers looked at and said, “Yeah, that’s a great solution I coulda’ developed.” Each had a seismic shift in its respective market.

Of course, it doesn’t take long for folks to copy the idea. People know a good thing when they see it. Copy the idea, make some changes and shoot it out as a “revolutionary, innovative” product.

Emerging markets such as artificial intelligence, gene editing, drones, virtual reality, battery-powered products, autonomous transportation and other technology advances have produced a dizzying array of innovations and me-too products/solutions. It’s the stuff that keeps Tractica, Technalysis, IDC, Gartner and other research firms in business! These emerging markets also produced a mob of new VC-funded competitors that are hellbent on doing it better and cheaper and are tracked by CBInsights.

A lot of these newbies don’t have a burning vision of the future but they recognize the noise of today, promises of tomorrow. It’s much more than Toffler’s Future Shock vision of and more like future blindness. But it goes beyond new bells and whistles, package changes and product repositioning. It’s more about examining the organization’s core expertise/DNA that drives change and the growth of business. 

 

Challenges – The biggest obstacle for a company to overcome is the comfort of status quo.  Innovation disrupts the natural rhythm of the organization; taking the staff into new, uncharted territories.

Every company wants to come up with that next great innovation—the thing that will change the industry and maybe even the world forever. But only a few are able to see the project through multiple disappointments.

The majority are good at what they do but are followers; satisfied with short-term, incremental gains rather than leaps into the unknown. 

The rewards of real innovation are fantastic but the risks are more than most senior management or designers/developers want to stake their reputation, their futures on.

Anyone who has been in the industry for any period of time can tell you about fantastic technology with product ideas that died because the leap forward was just out of reach.

Breakthrough innovation is challenging.

To achieve it, management needs to leverage their R&D to drive both breakthrough innovation and incremental change. They must develop original products and services with new technology by:

  • Creating clear missions, roles and lines of authority that align the development teams with the organization’s innovation strategy
  • Supporting the tools and processes that provide strategic/operating metrics, program transparency and seamless project collaboration
  • Having in place an organization-wide talent management strategy that includes internal and external expertise
  • Developing a global perspective and understanding of the company’s innovation capabilities and goals
  • Fostering a corporate culture that supports the firm’s innovation strategy and encourages collaboration worldwide
  • Maintaining an environment where risk, creativity and openness are encouraged and nurtured
  • While breakthroughs are more exciting than incremental innovations, they both require the same degree of focus from management, engineering and marketing. 
  • There has to be a combination of aggressive new product development activity and “everyday” brand extensions/enhancements for a firm to defend/grow the core business while exploring new opportunities.

The same is true for marketing. With today’s constant barrage of product messages, consumer loyalty is more fragile than brands might expect. It takes hard work to stay in front of even your best customers.  The “next great thing” can easily replace your products/services in the customers’ minds. 

Challenges – The biggest obstacle for a company to overcome is the comfort of status quo.  Innovation disrupts the natural rhythm of the organization; taking the staff into new, uncharted territories.

According to Nielsen, marketing has to constantly carry out concept and product testing using the company’s existing customer data and predictive analytics to ensure their firm stays relevant to the customer. 

In addition, new messaging, approaches have to be carried out aggressively, enthusiastically to replace existing company/product images/perceptions with new ones. 

Or, to put it bluntly, you have to rewin the customer with every contact!

There are no silver bullets or cookie cutter solutions for anyone in the firm’s product ecosystem. 

Everyone has to innovate; and that includes you.

Team members have to embrace the discomfort and the uncertainty of innovation because as Niki Lauda said, “Happiness is your biggest enemy. It weakens you. Puts doubts in your mind. Suddenly you have something to lose.”