Three Different Types of Innovation

Historically two sources of innovation distinguished companies’ strategies: technology push and market-pull innovation.

In the last decades the world experienced significant changes, seeing postmodern consumers buying meanings rather than products. From this scenario, a third approach was born: design driven innovation.

Technology Push: Blackberry 

Mike Lazaridis

BlackBerry is a great example of techno push innovation, which is mainly related to functionality and efficiency. BlackBerry’s Founder and Vice Chairman Mike Lazaridis donated  $45.8 million to University of Waterloo for Quantum mechanics research, a technology on which most cell phone devices are based on today. BlackBerry was a technology push innovation because new inventions were pushed onto the market, starting from R&D, but without proper consideration of whether or not they satisfy market needs.

Today, the companies that play a major role in this ground are those that have huge and long-term investments in R&D more oriented towards techno-scientific fields such as telecommunication and healthcare firms.

  

Market Pull: Newspapers and Magazines

If the technology push represents a proactive approach, the market pull is a reaction to the market and its specific needs. The newspapers and magazine industry is a perfect example because in this field the demand is the gravitational center. The focus is completely on the present trends, extensive analysis of time series, and historical case studies. Magazines and Newspapers consider the customer’s expressed needs as the critical key for sales and success.

Companies in the industry apply an approach that is very analytical and sees surveys, customer specifications, and focus groups as main tools to detect the trends of the market and satisfy them with the highest standards.

Design-Driven: Metamorfosi, the Human Light

Design-Driven Innovation compared to the others

“A lot of times, people don't know what they want until you show it to them.” Steve Jobs  ― BusinessWeek, May 25^th 1998

This sentence represents the essence of Design-Driven Innovation and its huge advantage on the other two types in the generation of new meanings, and Metamorfosi, the “human light” is a perfect example of it.

Metamorfosi

Metamorfosi, the “human light”, created a completely new meaning: a light that does not illuminate, but answer some human biological, psychological, and cultural needs.

They applied a process that started from the customers’ experience and through ethnography they proposed this new concept of light.

For those of you who do not know what Ethnography is, it is the “description and study of human culture” (Light Minds, 2005), and is a fundamental tool in this type of innovation because it helps understand the aspirations, values, desires and behaviors of existing or potential customers in their normal environment.

Ethnography

In this way the company was able to predict data and show people something they desired even before their awareness. Predicting the future is the most powerful source of competitive advantage. This is the very tremendous advantage of the Design-Driven approach and the secret of Metamorfosi’s success.

-Michele Bellini-

Note: This post was specifically developed for a college class and its purposes are only academic. 

The Innovation Deployment Process

Only two months ago we started our journey in the world of innovation, talking about abstract concept about innovation. Then we analyzed the role of design in business with the innovation process and today, we are here for the last step. We went through the bottle neck and now we are in the real world. We are where “design needs business”, and precisely we will talk about the innovation-deployment process. The word process in this case does not emphasize the sequentiality of different steps, but it deals with the connection of different aspects that together contribute to the deployment of an innovation. 

Some of the main concepts

The innovation deployment process finds its declination in the life-cycle concept. This biology concept is applied to the innovation deployment to give the idea of a dynamic process. “Everything that grows, dies”. The most spoken words in innovation classes during this last part of the course. This is the reason why design needs business: the application of rational business steps are vital for reaching a sustainable level of innovation over time avoiding the “death” of the innovation itself.

The product/service life-cycle is a sociological theory that describes the diffusion of innovations among society through the concept of adoption. According to this theory the adoption of innovations could be observed from 3 different levels: micro, meso, and macro.

The micro level is about individuals, describing the stages of the adoption process from first exposure to an innovation to the decision to continue using it. 

The meso level deals with groups of individuals that are differentiated according to the speed with which they adopt an innovation. Precisely there are five adopter categories (innovators, early adopters, early majority, late majority, and laggards), whose distribution over time follows the normal distribution. 

Adoption Curve

As we can see from the picture, a big gap, called “The Chasm”, exists between the early adopters and the early majority. This is a critical point that could be seen as an ulterior filter: if the innovation overcomes The Chasm, it will become a mainstream. 

This moment is critical in the innovation life and to better understand it an analogy with Gladwell’s Tipping point is interesting. In this book, he explains how the World could be seen through social epidemics, where human behaviors are like viruses that when hit the Tipping Point start to expand exponentially among the society. Similarly, if an innovation hits the Tipping Point, it will be able to become a mainstream and start a “positive epidemics”, overcoming The Chasm.

The macro level puts the two previous levels together and relating the adoption to the diffusion of innovations. The latter is mathematically represented by the S-curve, which relates the increasing level of adopters to the saturation of the market share.

The S-Curve and the Adoption Curve

The S curve describes the diffusion of an innovation, but it also clearly shows that “everything that grows dies”, because after the saturation of the market-share is reached, the decline will eventually starts. Then, how is it possible that successful companies like P&G have been on the crest of the wave for so many years?

The answer lies in their ability to continuously innovate, creating and taking S-curve after S-curve. To this regard, the Tipping Point comes as an extremely useful tool. As a matter of fact, the creation of another S-curve has to occur in a very precise moment: when the previous innovation hits the Tipping Point. Even though it could seem illogical, that is the moment where something that used to be unique becomes a main stream and therefore a company has to start innovating again.

S-Curves

Talking about companies, it is interesting to notice that the life-cycle concept fits also with businesses. Precisely, Frank Demmler identifies four stages: Embryonic, Growth, Maturity, and Decline. For us the most important is the Embryonic stage, because it occurs right after the bottle neck has been overcome and it is critical for the entire life of the business, considering that this evolutionary stage sets the business’ basis.

This stage consists of 5 phases (Idea, Feasibility, Verification, Demonstration, and Commercialization), and despite the common belief that sees this stage as a quick one, research showed that it may last up to 14 years. These phases are sequential and they have increasing levels of investments needed, and the goal is to constantly reduce uncertainty to maximize the probability of success, while the venture moves foreword. Even though there is sequentiality, commercialization is the most risky and critical phase requiring the highest investments (Demmler Frank).

Cash needed-risk-phase relationship

At this point, careful readers should have in their minds questions like the followings: “So, we talked about innovations, ventures, life-cycles, and phases; but, what about money? How is it possible to finance a venture and its necessities?”

Well, to answer these questions it is important to identify the connection between the phases and the funding sources. In particular, this relation is driven by the risk and uncertainty perceived of a successful commercialization. Moreover, the most utilized forms of funding could be divided into 2 categories: debt and equity. The former, often in its institutional form (venture loan), is usually concentrated in the last phase while the latter is used in different phases according to its form: Angel Investors, who are private wealthy investors, are focused on the intermediary phases while Venture capitalists, who are investment managers and therefore not owner of the money invested, are usually much more focused on the commercialization phase. 

Types of funding

Enlarging our perspective it is possible to identify many other funding ways. For example, a model that is obtaining increasing recognition and popularity is corporate venturing. According to Kelley Starr, “Corporate venturing is the strategic allocation of a company’s resources to purposefully start new businesses”. More precisely, corporate venturing is internal when new businesses are started within the parent company, while it is external when the parent company directly or indirectly invests in independent start-ups (Starr Kelley, 2007). The advantages of having a parent company supporting innovations are extremely high, especially considering that in this way not only uncertainty and risks are mitigated, but also the funding itself becomes a much less important problem to overcome. On the other hand, the parent company benefits from the innovative waves that output from corporate venturing. If I were an employee in such companies, I would definitely find a trustful environment, where people would feel free to make proposals and work on their ideas. As a matter of fact, we should not forget that We, the People, are the main source for innovations and therefore it is extremely important for a company to give the right amount of freedom for employees to think outside of the box.

Corporate Venturing

An ultimate concept that is involved in the life cycle of both innovations and ventures is the intellectual property (IP). 

In our case, without going into much technical details, it is important to be aware that there are different types of IP and that each one is used according to the subject and to the stage of the innovation. So for example, Trade Secret focuses on the protection of intangible sources of competitive advantage such as ideas, information, and know-how, and it is likely to be used in the early stages of the venture life-cycle. Instead, other types of IP such as Patents, exclude others from the actual manufacturing of tangible compositions, and therefore it is likely to think that they would be utilized when there is the concrete chance to go into the market.

In general I believe it is worthwhile to share a brief reflection about the role of IP in the “West”. Our society puts a lot of emphasis on protecting ideas, justifying this choice in the fact that otherwise the entrepreneurial spirits would be limited by the risk to see innovations stolen or dispossessed. So, considering that innovation is commonly recognized as the engine of economic growth, it becomes extremely important to set the most suitable conditions to let the entrepreneurial spirit bring innovations to life, and IP has a critical role in this process. However, it is important to balance IP with the fact that the best innovations have origin not from a single person, but from a group of people. Therefore to reach a sustainable level of innovation for the future generations it is necessary to have IP laws that do not limit the power of sharing ideas.

       - Michele Bellini -

Communication and Innovation

Welcome back wonderful Folks!

Today I would like to share with you some insights I have recently developed about the connection between Innovation and Communication. 

I just followed my inspiration and let the virtual pen flow on the paper. 

I hope you will appreciate it.

Good Reading!

When speaking about creativity, new ideas, and innovations, we oftentimes forget to take into account communication. According to Oxford Dictionary, to communicate means to “share or exchange information, news, or ideas”. During this process of sharing, mistakes are likely to happen either in the form of misunderstandings or misconceptions. Thus, it is critical for human beings to actually express themselves, minimizing the likelihood of mistakes when communicating ideas to the external world. As a matter of fact, there is no more ineffective idea than the one that stays in your mind and even worse, than the one that is misunderstood by the people who should support it. The issue gets really critical when ideas are new and therefore, something people have never thought about before. Hence, the question is: how  can communicating new ideas be effective? In other terms, how is it possible to guide people out of their categories? The answer I would like to give today lies in the past.

Two thousands years ago, in Palestine, one of the greatest innovators in human  history was teaching revolutionary values and principles. What would have been “western society” had Jesus been a bad communicator? Fortunately, not only was Jesus an innovator, but also a master in communication. During his preaching, his main audience was composed of no more than simple shepherds and fisherman, who did not have any kind of knowledge of the world outside of their “area of specialization”. These reasons forced the Messiah to use a very effective communication tool, which became also one of the most characterizing method of his preaching: the parable.

The word parable comes from a greek terms meaning “comparison, illustration, analogy” and the third meaning is the one I would like to focus on today. Jesus used this type of analogy adapting his revolutionary message of love and salvation to the specific context he was living in. One of the most famous examples is Matthew 4:19 in the New Testament. Jesus has just started preaching in Galilee when he encounters the fishermen Simon Peter and Andrew. To call the couple to join him he says: “Follow me, and I will make you fishers of men.” Another clear example is the famous Parable of the Lost Sheep, where Jesus talks about a shepherd who left his flock of 99 sheep in order to find the one sheep who is lost. The Gospel is full of analogies like these, perfectly related to the cultural and historical framework of 30 A.D. Palestine.

The greatness of Jesus as an innovator as well as a communicator was his ability to literally take his people’s hands and guide them out of their categories by using categories themselves as the starting point. As a matter of fact, an effective innovator uses analogies and metaphors linked to the specific audience’s experiences. In this way people are able to easily understand new radical ideas because they are allowed to create a strong mind connection between what they already know and what they do not. However, this is not enough. This approach needs to be matched with another very critical issue when conveying new ideas: the need of simplicity. 

Analogies, metaphors as well as the concepts themselves must be almost instantaneous in order to be properly and completely understood. The only way to achieve this result is by breaking the concept down into different parts. To explain this last sentence I would use an analogy. Guiding people out of their categories has to be a process very similar to the climbing of a ladder: it is a matter of “step by step”. 

Once again the biblical example is a lucid way to understand the “step by step” through which an effective innovator lead people out of their categories. In fact, Jesus’ Parables do not force the audience immediately in the beginning. Instead, they start as ordinary stories, telling usual facts, in order to make people listening comfortable. Only after that, when the audience is in this  kind of “comfort-zone”, the degree of newness becomes to be prevalent, until it reaches the climax in the end, when the new radical message is conveyed. In this regard, the Parable of the Prodigal son is probably the best in showing how a radical new concept needs to be broken down and administered to the audience gradually. 

In conclusion, we could think about everything said above on a larger scale and apply it to society in general. Nothing would change, because society is a group of people sharing the same values and norms, but still it remains a group of people. In other words, a larger audience than the one attending a business presentation. The necessary condition to be an agent of change in every context is always the one that harmoniously matches innovation and communication skills and attitudes. Only in this way the communication process minimizes the likelihood of misunderstanding and reaches its maximum degree of effectiveness, generating the impact hoped. 

As always I would like to leave you with an inspiring quote:

“Electric communication will never be a substitute for the face of someone who with their soul encourages another person to be brave and true.” - Charles Dickens - 





I really want to point out that every reference on the figure of Jesus is something that in this context has nothing to do with religion; it is just about an insight about Jesus, the historical man, as an innovator and master communicator.

- Michele Bellini -

The Design-Driven process: why is it better than the others?

Welcome back Ladies and Gentleman! Today I would like to share an interesting conversation I had with a group of students willing to take Innovation class next semester: Juliet, John and Matt. We were discussing around one of my favorite topic: why Design-Driven approach is better than techno-push and demand-pull?

Here below I will report our discussion in retrospect.



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As you already know, there are three main processes used to develop an innovation: technology-push, demand-pull and design-driven. 

The first is completely technology driven and does not take into account customers; the second could be defined as a “costumers’ categories driven process”, because the customers tell you what they want: there is no newness of meanings. 

The design-driven approach instead, is more likely to generate new meanings because, starting from customers’ experience, it uses ethnography to propose them what they want, before they actually know it. In other words, it leads them outside of their categories. And for those of you who might not know what ethnography is, it is the “description and study of human culture” (Light Minds, 2005). 

And then they asked, “Why is ethnography effective in generating new meanings?”

Well, I answered, ethnography is fundamental because it helps you understand the aspirations, values, desires and behaviors of existing or potential customers in their normal environment (Light Minds, 2005).

Moreover, ethnography allows you to “highlights the differences between what people do and what they say they do, and as a result find needs that have not been directly expressed” (Light Minds, 2005). 

Only in this way you are able to fully comprehend the “job” people want a product or a service to do. Focusing on aspirations, values and desires allows you to predict data and show people something they desired even before their awareness. And predicting the future is the most powerful source of competitive advantage. This is the very tremendous advantage of the Design-Driven approach. 

“But Michele, how is the application of the Design-Driven approach possible in the real world?” John asked.

Well, I assure you it has nothing to do with witchcraft, magic or crystal balls. It is simply  a matter of applying a “very very rigorous process”, as head of Samsung Product Innovation Team Yoon C. Lee suggests. And this process is an on-going flow where five stages come one after the other.

The starting point is the current situation with the identification of the goal, which is  the problem you want to solve. After this step, you start to do research to understand customers’ categories. Usually product processes use two types of research: primary, which is based on ethnography and consists mainly of observation and deep interviews; and secondary, which is data driven and is aimed to support the actual existence and relevance of the problem.

After gathering enough information you start analyzing. Some frameworks are very effective in this step. 

“This is very confusing. I wonder how frameworks work” Juliet curiously pondered.

Well, as you can see they allow you to transform the “messy” data into meaningful information. You just organize your research and the frameworks help you to identify opportunity areas and ultimately lead you to the Point of View (POV), which will enable you to comprehend the customers’ necessities even if they do not know it yet.

At this point, the ideation starts. This is the phase where the flow of hypotheses and possibilities streams abundantly. This is when you start exploring what is outside of the box.

“And how do you choose the best idea?” John asked.

Here is one of the main reasons why the design driven approach is better than the others. You do not choose what you think is the best idea, you choose the most suitable. You need to make sure that your invention is not already on the market. You also need to start thinking about the feasibility of your “big idea” and here the analytic business approach could be determinant to make the right decision. 

Once the idea is chosen, concept testing starts. It is when you ask yourself: “could this really work?” Ethnography comes again as an extremely useful tool because it suggests you to observe people’s reaction to the idea and use feedback to learn. Yes, learning is once again a key word in the Design-Driven approach: learning from the recipient is always the best approach. 

Finally, once you have received enough feedback from your recipients, and consistently acted upon it, the final judge - the market – will emit the most important verdict. Not only the idea got real; now it is also in the real world. The market will tell if the invention can get into an innovation.

“So, Michele, you have thoroughly explained the process but give us a reason to choose the design approach considering its limited application to products”, Matt argued.

Well, you are mistaken, I said; the design thinking approach can be applied not only to products but also to processes and even business models. If product innovation focuses on the “What”, the other two focuses on the broader aspect of the “how”. But still, it is a “how” that differs in terms of scale. Service “how” involves a particular process of a business and the people affected by it (stakeholders), while business model “how” involves the business as a whole, being it the way an organization creates, deliver and capture value.

“Have you ever heard of Alexander Osterwalder’s Canvas model?” I rhetorically asked them.

His case is the application of the Design thinking approach to business models. To explain this linkage he uses a very effective analogy. Basically he applied the idea of car design process to business models. He emphasizes the consideration of many alternatives, the simulation and the testing, just as a car needs various sketches, prototypes and car tests.

This is another reason why the Design approach is better. Its action is almost a philosophy: it is so wide that it can be applied to extremely wide concepts.

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To conclude, let me share with you this video, which gives a very effective overall about the role of design in innovation.

Thank you for your attention!

-Michele Bellini-

Innovation in the Real World

Hello everyone! I hope you are fine!

Today I would like to share with you two videos that deal with Innovation within two World's leading companies: P&G and Samsung

• Innovation at P&G 

In this first video, A.G. Lafley, former CEO of P&G, talks about what innovation is at P&G, the process of innovation and the role of the CEO.

• Innovation at Samsung

In this second video we will listen to Yoon C. Lee, head of the Product Innovation Team in Samsung. Lee focuses his speech mainly on the process of product innovation.

Today innovation plays a predominant and vital role in many World top companies.

I hope you have enjoyed these videos and through them enriched your knowledge about innovation.

Michele Bellini

Give Peace a Chance

October 15, 2012

Give Peace a Chance

By John Perkins

The Lennon Ono Peace Award ceremonies were inspirational, thought provoking, and deeply emotional. Now, in a hotel room looking out over the Reykjavik harbor at the distant glacier and hearing John Lennon's words "I hope some day you will join us and the world will live as one," I am filled with renewed hope.

As I sat on that stage, I was deeply impressed by the variety of recipients. They ranged in age from early 20s (Pussy Riot) to late 60s (me) and in style from an on-the-ground activist killed for defending her beliefs (Rachel Corrie) to a super-star musician (Lady Gaga) and a controversial writer (Christopher Hitchens). Three were incarcerated in a Russian prison (Pussy Riot) and two were represented by their families because they had passed on (Rachel and Christopher). The one thing they all had in common was that they had been singled out by Yoko Ono. Her commitment to a peace initiative that she and her late husband had started before his death in 1980 set the tone for the day's events. Every speaker called on the people of the world to recognize that if we are to continue living on a planet our children will recognize we must devote ourselves to peace.

Later that evening, I experienced one of those profound moments: a knowing that we are all connected and here on this planet at this time in history for a shared reason. It was during the lighting of the Imagine Peace Tower on a small island off the coast of Iceland and the accompanying music by a local choir, along with the voice of John Lennon singing "Imagine" and "Give Peace a Chance." There were perhaps a thousand people from all over the world; we shared a bond that stretched from Pole to Pole.

It seems ironic that politicians can convince their followers that the road to security and peace passes through violence. We must, we are told, employ armies to obtain and insure peace. By now we should recognize the lie in that assertion. We know that violence does not beget peace. In the past, it may have stopped brutal dictators, such as Hitler, but today's wars serve to increase the riches of a few, the very wealthy who own the businesses that supply armies and rebuild wrecked economies – and cause misery for the rest of us. Wars can subjugate, intimidate and enslave and, by doing so, appear to force others to follow the rules of the perpetrator of violence; but armies inevitably create resentment, hostility and ultimately more violence.

As I stood there on that tiny island, staring up into the blue light that reached from the Imagine Peace Tower high into the atmosphere, I thought about the responsibility we in the United States share in the peace process. We have a military presence in more than 100 countries. When I visit one of these, people ask how my fellow citizens would feel if Russia or China built bases in California or Florida. Not far from the Peace Tower is a military base the U.S. closed in 2006. Icelanders hold this up as an important moment in their history; it is a point of pride and one of the factors that inspired them to stand up to multinational bankers and refuse to be burdened by debts foisted on them by economic hit men. The largest US military base in Latin America was located in Ecuador. When the lease came up for renewal in 1999, Ecuadorian President Rafael Correa said he would renew it if the U.S. would grant Ecuador a lease to build its own base in Florida. Washington declined and so did Correa.

Why are Latin American leaders more inclined these days to deal with China than the U.S.? When I ask them this question, the most common answer is "Because China doesn't have a military history on this continent. The U.S. does." The moment of truth has arrived. The current economic crisis has sent a message that we must tighten our belts. Let us slash the military budget. Allow the world to know that John Lennon has been heard. We will imagine peace. We will give it a chance. If we truly want to live in a world that is just, sustainable, and peaceful, we must set the example now. We are the strongest nation on earth. Let us show our strength by laying down our weapons.