Kaleidoscope - Innovation-Driven Product Development

Thursday, May 22, 2008

6 Standards for Good Design Strategy & Research

One of the issues facing the design world is a lack of standardized vocabulary found in other professions. "Innovation" is perhaps the most obvious example, but "research" and "strategy" are two others. To some people "research" means going to the store and looking at products on the shelves, to others it means exhaustive qualitative and quantitative studies that take months. In my opinion, both could be valid in certain contexts, and the right way to judge their validity is through a set of universal, context-free criteria.

To that end, I came across Harold Kincaid's set of standards for good science that also apply very well to design research & strategy (as presented in Philosophy of Social Sciences, by Robert C Bishop, page 349):

Falsifiability
Hypotheses and theories must be capable of standing before the court of experience and being proven wrong. (See Karl Popper's work)

Predictive Success
Empirically adequate theories exhibit both a high quantity and high quality of predictions borne out of observation and testing.

Scope
Theories should predict and explain a wide variety of phenomena.

Coherence
Good theories exhibit logical consistency as well as cohering with the best information available from other sciences.

Fruitfulness
Theories should lead to new insights and developments, suggest new avenues for research and guide experimental investigation among other results.

Objectivity
Our best theories should reflect the way the world is, not the way we want it to be.

Labels: innovation, research, strategy

Friday, February 01, 2008

McKinsey Quarterly: Shedding the B2B Commodity Mindset

The latest issue of McKinsey Quarterly has an excellent article on elevating B2B products above the commodity level:

Is the soap you buy really different from the competition? Probably not, though consumer goods companies know how to differentiate their products by building strong brands. By contrast, companies that sell things such as bulk chemicals and steel to businesses, burdened by the notion that these goods are commodities, churn out more and more product more and more cheaply and then sell as much as possible at the market price. Yet in many B2B markets, nonprice factors might be responsible for as much as two-thirds of a customer's buying decision.

The conventional wisdom is that price is the only real differentiator in B2B products, that nonprice and touchy-feely things like branding don't really matter, but as the article points out, that simply isn't the case.

For one data point that supports the article, I think back to my days in printing, where I dealt with a lot of paper suppliers. Most kinds of paper are without a doubt commodities, especially common versions like 20# white. You can get just about any kind of paper from just about any supplier, which I did when I placed my paper orders every day. I rarely bought from the cheapest place in town. Instead, I bought from the supplier that was most reliable, with better inventory management systems that meant they were almost never out of what I needed. I paid a higher price, but it was worth it to me because it meant one less round of phone calls I had to make everyday, which was worth a lot to me.

Check out the full article here. Free registration is required, but it's more than worth signing up.

Labels: innovation, product development

Sunday, December 23, 2007

Adaptive Path on "sketchboards"

The excellent Adaptive Path blog has a post on a key piece of their process that they call "sketchboards." While they're an interactive firm, what they're describing is a crucial part of our process. The first step for us is always to get everybody in our "war room," armed with markers and whiteboards, and start ideating. For anybody that wants a peak under the hood, they've created a really cool, short video that visually documents the process.

The sketchboard technique unleashes your right brain to find and convey great solutions pictorially. You get:
Faster, but higher-quality design iterations that encourage heavy collaboration
Exploration of many ideas before investing time in polishing one design
Sketching and collage activities that provide design the same speed and focus that agility gives to coding

As a designer, the sketchboard allows you to create endless possible solutions in a vivid, pictorial form. You're set-up, again and again, for breakthrough moments. And with more shots on goal, you can't help but score regular and repeatedly.

Make sure you read the full post here

Labels: design management, innovation

Monday, December 03, 2007

Zara's supply chain innovation

The Spanish chain Zara is doing more than just selling clothes: it's changing the face of retail. From the shopper's perspective, it's similar to Forever 21 or H&M, but just a little more sophisticated, and a little more expensive.

Viewed from a business perspective, though, Zara is remarkable more than just their low prices. Zara's success is built on their incredibly innovative supply chain. Like other fast fashion retailers, their ability to get product on shelf in with breakneck speed is one of their most powerful competitive advantages. We took a few minutes to put together a short overview.

First, The Economist's excellent survey of supply chain management in their June 15, 2006 issue gets the ball rolling (emphasis mine):

Yet supply-chain management is not just about wringing costs out of a business. It can also be used to increase revenue and boost profits without necessarily lowering costs. Indeed, some companies have re-engineered their supply chains to gain a huge competitive advantage. What has put Wal-Mart ahead of Sears in retailing, Dell in front of Hewlett-Packard in the personal-computer business and Zara ahead of Marks & Spencer in fashion? The market leaders all have supply chains that are more responsive to customer demand, according to Yossi Sheffi, director of the Massachusetts Institute of Technology's Centre for Transportation and Logistics.

Second, Strategy+Business has a fantastic article on the dynamics of Zara's cost structure. This graphic tells the highlights of the story, but to get the full picture, check out the whole article. Click to view the image full size so you can resolve all the details- note their comparatively small reliance on markdowns.

Third, Harvard Business Review explains how Zara's dual-channel supply chain raises their cost of goods, but enables them to bring the right clothes to market faster than their competitors:

For example, Zara, a Spanish fashion-oriented retailer, utilizes dual sourcing. Picture the demand for a product over time as looking like waves on the ocean. Staple products have small waves, and fashion products have large, erratic waves. Zara sources the "waves" from local vendors with higher cost and fast response time, and the "ocean" from Eastern European vendors with lower cost but poor response time. That way, Zara gets the best of both worlds.

The economics are compelling. Think about this: One major retailer has structured a supply chain with a 48-hour response time on fashion products sourced in the Far East. If you buy a fashion garment from one of its stores in your local mall, the data is transmitted to a factory in the Far East. The factory keeps semi-finished "greige goods" products in stock, and that day it cuts and tailors a replacement for the one you bought. The garment is flown to the United States on an air freighter, cleared through dedicated customs, and driven through the night to the store in your local mall to replace the one you bought.

Does this sound expensive? It is. This expedited supply chain adds about three dollars to the cost of the garment. But the garment's margin is over twenty dollars, and the sale otherwise would have been lost, so it makes sense.

Finally, this Slideshare deck is a little on the dry side, but does a good job of summarizing a lot of what makes Zara so competitive.

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RSS readers click here to view the Slideshare

Like the Strategy+Business article says, the next generation of retail will look a lot more like Zara and a lot less like the supermarkets and big box stores we're used to seeing today. Right now it's playing out in fast fashion stores at the mall, but it's pretty likely that you'll see something very similar to Zara at the supermarket very soon.

Labels: innovation

Tuesday, June 19, 2007

Peter Drucker on Innovation Traps

I'm a big fan of Peter Drucker, whose ideas and insights are as timeless as they are valuable. Branding Strategy Insider posted some of his best work ever on the topic of innovation, focusing on some of the pitfalls that innovation projects face. Read the article here.

Change leaders will be tempted by three innovation traps. They're so attractive that leaders can expect to fall into one of them--or into all three--again and again.
1. When looking for ways to innovate, the first trap to avoid is an opportunity that is not in tune with the five strategic realities: the collapsing birthrate; shifts in how disposable income is spent; new definitions of performance; global competitiveness; and the growing incongruence between economic globalization and political splintering. (See "Strategy: The New Realities," below.) The misfit opportunity often looks very tempting--precisely because it looks truly innovative. But even if the innovation does not result in failure--as it usually does--it always requires extraordinarily wasteful amounts of effort, money, and time.

2. A second trap is confusing novelty with innovation. The test of an innovation is that it creates value. A novelty creates amusement only. Yet again and again, management decides to innovate for no other reason than that it is bored doing the same thing or making the same product day in and day out. The test of an innovation--as is also the test of quality--is not "Do we like it?" It is "Do customers want it and will they pay for it?"

3. The third trap is confusing motion with action. Typically, when a product, service, or process no longer produces results and should be abandoned or changed radically, management reorganizes. To be sure, reorganization is often needed. But it should come after the action--that is, after what must be abandoned has been faced up to. By itself reorganization is just motion and no substitute for action.

Labels: design management, innovation

Thursday, April 12, 2007

The First Prototype Wins

There is no more effective tool for business communication than a prototype. I'm not the first person to mention the power of prototypes (Seth Godin and IDEO are big proponents), and hopefully I won't be the last. Whether we're talking about a product, service, or idea, there's no substitute for a prototype when it comes to selling your concept.

What's A Prototype?
To be clear, when I say a prototype, I don't necessarily mean a functional "looks like" or "works like" prototype. It could be a lot of things: for a product, maybe it's an animation, a drawing, or a "Frankenstein" model cobbled together out of foamcore and duct tape. If it's a service, maybe you make a short video where you and some other people act out the idea. Production values aren't usually important, the key is that the essence of your idea is immediately clear in some kind of tangible form.

Why Are They So Powerful?
I'm a designer. Designers are great at connecting the dots: imagining things that don't yet exist, thinking in terms of abstract "black boxes" and visualizing things in their head. What designers tend to forget is that most people (marketers, executives, scientists, etc) aren't so good at connecting the dots. That doesn't mean they're dumb, or that they aren't creative, it just means they think differently than designers.

Prototypes are so powerful because they give ideas form. They connect the dots for the audience, which ensures that they don't misinterpret your idea. This seems obvious, but if it was that obvious, we'd all be using prototypes a lot more often.

First Mover Advantage
Notice that I didn't say "the BEST prototype wins," but "the FIRST prototype wins." Prototypes are also powerful because they make an idea seem a lot more real. This matters a lot, because once an idea seems real, it's a lot harder to derail it.

What this means is, don't spend too much time worrying about the details of your prototype. Don't noodle details unless they matter- unless they tell your story. Focus on the big idea, on communicating your vision, not on finessing the prototype. If you're telling the story, you'll be successful.

Start Speaking In Prototypes
From now on, promise yourself to start speaking in prototypes. Before you unveil your ideas, make them real. Make some kind of prototype, and I think you'll be happy with the results.

Labels: design management, innovation, product development