• January 26, 2010
  • By Jessica Tsai, Assistant Editor, CRM magazine

Required Reading: Innovation by Design

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For the rest of the January 2010 issue of CRM magazine please click here.

Innovation is rarely about the latest gadget or the coolest gizmo. That’s Roberto Verganti’s contention in his new book, Design-Driven Innovation—the phrase he uses to characterize a change that really shakes up the market. By introducing a new perspective, companies can satisfy a need consumers may not even have been aware of. CRM Associate Editor Jessica Tsai spoke with Verganti about how leading the market requires you to find meaning outside the market.

CRM magazine: “Consumer-driven” and “design-driven” innovation—mutually exclusive?

Roberto Verganti: Every company needs both—[but] not at the same time. Different types of projects need different types of approaches. In the innovation portfolio of a company, there are probably several incremental [consumer-driven] projects that are very necessary because you want to improve the customer experience.

But when you want more-radical changes, you need a different approach. You really have to stand back from the users and look at the bigger picture, without [the influence of] society and culture and technology. The closer you get to users when you want to do radical innovation, the [more you] get trapped [by] how users behave now.

CRM: What’s the ideal longevity of a radically innovative idea?

Verganti: It really depends on the industry. In computers, longevity can mean a product can exist in the market for two to three years; for cars, it can stay in the market for 15 years; for furniture it can be 30 to 40 years. But in every industry, the life cycle of products has [shrunk]. This is a consequence of the era of the consumer, and also a consequence of strategies that have been pushed by companies where people are investing in very incremental improvement for the short term. [This] provides a slight advantage [over] competitors, but incremental improvement can easily be copied—and after a few months, you end up being a follower.

Really investing in more-radical changes—to open up new avenues—is what’s important. First, it would take more time for competitors to imitate you. [More important], if you’re the first one to open a new avenue for innovation and create a product with a strong identity, even when competitors try to imitate you you’ll have built a reputation for being the first.

CRM: Should you just keep launching new “innovative” products until one finally sticks?

Verganti: Typically, [innovation is] a kind of a relentless attempt to develop a very strong idea. In the past few years, we’ve been told that innovation comes from large numbers of creative ideas that have been [developed] through brainstorming: The larger the number of ideas, the better the ideas. That’s not true when you want to create radical change because radical change is just one vision, one idea that’s pursued. Of course you still need to experiment. Yes, you need to try, because first attempts are not easy. 

It’s not that you should go in every possible direction and then hope…

there’ll be one interesting one. It’s really trying to shoot at one target. Maybe the first time it’s wrong, but then you understand how to take better aim the next time. If you keep on shooting in every possible direction you just waste your resources. You could hit the target, but it won’t be very likely.

CRM: Does a focus on getting close to the consumer contrast with your ideas?

Verganti: There’s an entire area that’s still unexplored: Once you have a whole amount of data about users, you can look for averages and trends. That’s what CRM is already doing: You’re happy to find out the average shows nothing unusual. But if you filter out the average behavior, then you find something strange in the behavior of people: It’s usually exactly what you don’t want to know. But when you talk about innovation, you really want to look for the group you usually don’t consider. That little statistic is usually what’s more interesting. Those are usually filtered out [of CRM systems], and instead you should filter it in.

CRM: So, as in the Pareto Principle, people should focus more on the 20 percent instead of the 80 percent?

Verganti: Exactly. Eighty percent is what’s happening now, but the innovation may be within the 20. CRM doesn’t usually consider the 20 percent…. There’s huge room to improve by looking to innovate with the “long tail” of users you [typically] don’t consider. 

CRM: How much of innovation is coming up with a new product as opposed to rebranding something that exists?

Verganti: Innovation is a combination of things. Innovation is never something that’s completely new. That’s why I use the word “intepreters”—it’s a new interpretation, and interpretation can make a huge difference.

Quartz [clock] technology was around for [about] 10 years before Swatch. What was completely innovative was [Swatch’s] interpretation of the watch as a fashion accessory—a completely radical interpretation. Watches used to be jewels. When quartz technology was invented, watches became tools—you had watches with calculators. It was Swatch that said watches can be fashion accessories and you can have more than one. Quartz technology made watches very cheap so you could have several. By working with interpreters, [Swatch] studied the behavior of people…and found that people were more emotionally involved with fashion during the ’80s than before.

Visit www.sn.im/jan10-issue for an online exclusive: more of our discussion with Roberto Verganti.

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