The Design of Things. to Come

Innovation—The New Mandate

Not only are firms returning to innovation as a central source for growth and sustained viability in the competitive marketplace, they also recognize that the greatest growth potential comes from a skill they already possess—growth from within, which is organic growth. An alternative for growing revenues is acquisition. intelligent acqui­sition is without doubt a valid and important growth strategy. But there are two pitfalls of acquisitions. One pitfall is that it directs the firm’s energy and focus outside of the existing firm boundaries, away from existing knowledge, skills, customer insights and loyalties, and brand identity. with attention directed outside the firm, growth opportunities that are in-hand may be unseen or ignored due to man­agement time constraints and corporate budget allocations.

A second pitfall, similar but not identical to the first, is that the company underestimates its own potential for innovation, and it may be tempted to delegate innovation to outside firms. Although outside viewpoints add valuable fresh insights, it is those inside the firm who best know their own customers, who best know their own brand iden­tity, who best understand their own core competencies. New prod­ucts are not only expressions of a brand or corporate identity, they can also alter identity, for better or for worse. Volkswagen's redesigned Beetle not only expressed the company's history, it modernized its whole brand image, reinvigorating Volkswagen's connection with con­temporary culture.

Organic growth—stemming from innovation, knowledge, exper­tise, and skills already owned by the firm—utilizes rather than ignores the company's latent potential (not growth through acquisitions, nor that ephemeral growth seen only on the balance sheet). organic growth is growth through innovation and new customers and markets.

But many innovative ideas never see the light of day because commodity-oriented companies are not structured to identify and foster an atmosphere that supports innovation. The intense time-to - market pressures challenge a firm's ability to thoroughly research the product opportunity, and a quality product that is precisely manufac­tured may fail because it never was a valid concept from the cus­tomers' viewpoint. To avoid product failure, many companies follow a rigorous process for intermediary steps of product design. A popu­lar and prototypical one is the stageGate process of Robert G. Cooper.[3] This process creates the structure for timely process to mar­ket, with a checklist along the way to make sure the process meets the target schedule and budget. This type of process keeps companies precise. if the right decisions and valid insights are not made in the earlier stages, however, the later stages will not correct a poorly con­ceived product opportunity. The process will get you to production, but you might be producing a product that misses the mark in the marketplace. Unfortunately, mistaking precision and quality manu­facture for true product value, which is based on an accurate assess­ment of one's customers, is sadly common and costly. Unless the product is designed to meet the customer's experiential expectations, the well-made product will fail in the marketplace. We do not argue against a precision-oriented product development process or a well - manufactured product. on the contrary, we believe both are critical for product success. But the best and the average companies today follow those processes. To stand out and deliver value takes more; it takes a process of innovation.

Companies need to develop a culture and mind-set for innovation and organic growth. New companies, such as BodyMedia, are creat­ed with this attitude. People are there because they believe in what they are trying to do. They thrive on the challenge. They work in an integrated fashion without turf ownership and friction. Larger com­panies need to find ways to change the course. They must take their best creative and energetic people and provide an environment that gives them the freedom to innovate. Their success provides the veloc­ity to pull the others along.

Although company culture and mind-set are an important foun­dation for successful innovation, the challenge is to develop a method to identify and develop a truly innovative product. Although some inventions and innovations have been serendipitous, innovation is generally the result of disciplined activity. Several aspects of innova­tion and organic growth must come together in a unified strategy in the development and marketing of new products and services. These include an approach to researching the needs, wants, and desires of the target market; an understanding of who the customer is and how the product impacts the end user and indirect users; and an under­standing of societal trends. This also includes a rich and unified base of people within a company from the management to the product development team, a corporate culture that encourages and supports innovation, and a complete approach to managing and protecting intellectual property. Finally, a comprehensive process must unify each of these themes in an effective and efficient approach to inno­vation. These components together represent the product develop­ment process of today’s most innovative companies.