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Design-Driven Innovation

Assistant Professor of

Operations and Technology Management

Chair, Steering Committee,

Management of Technology Program

Sung Joo Bae

School of Business Yonsei University

My past 12 years…

12 years later

HKU

Paper Airplane Competition

Similarity

Mapping

Analogies

• Most powerful form of reasoning in high complex and ambiguous decision setting

Target

Problem

Source

Problem

Candidate

solution Transfer

NPD

Process

Paper

Airplane

Findings Transfer

Paper Airplane Competition • Objective: Make a paper airplane that can

stay in the air as long as possible.

• Come up with the PA concept – 5~7 minutes

• Use all you know about the aerodynamics,

• Be CREATIVE!

• Use whatever is available around you to communicate – e.g. drawing

• Presentation of the concept to the class – 2 minutes

• Flying contest

• Evaluation: Creative design + Performance

Discussion

• How was the process in general?

• Was there any novel idea generated?

• Was it easy to reach the conclusion?

• How much did the previous experience of making PA affect the process?

• What could have been different if you had more than one piece of paper?

• What are the challenges in creative process?

• Was it fun?

• Was it frustrating?

Technical Problem-solving

(Adapted from Thomke, 2003)

Factors that affect technical problem-solving

(Adapted from Thomke, 2003)

Factor Definition

Fidelity of experiments

The degree to which a model and its testing conditions represent a final product under actual use conditions

Cost of experiments The total cost of designing, building, running, and analyzing an experiment (e.g. cost for prototypes, labs)

Iteration time The time from conceiving an experiment and to when the results are available

Capacity The number of same fidelity experiments that can be carried out per unit time

Sequence The extent to which experiments are run in parallel or series

Signal-to-noise ratio The extent to which the variable of interest is obscured by experimental noise

Type of experiment The degree of variable manipulation (incremental vs. radical)

Fuzzy Front End of Innovation

Concept Development

System-level

Design

Detail

Design

Testing &

Refinement

Production

Ramp-up

How do we develop new ideas for products?

IDEO

• World’s largest and most successful design firm

• Worked with many Korean firms as well (Samsung, LG, etc.)

• Well known for their system of innovation

How would you characterize the following elements at IDEO?

Process Management Organization Culture

VIDEO: Deep Dive

Process at IDEO

• Prototyping

– 3R: Rough, Rapid, & Right

• Intense brainstorming

– Stay focused on the topic

– Encourage wild ideas

– Defer judgment to avoid interrupting the flow of ideas

– Build on ideas of others

– Only one conversation at a time (esp. for introverts)

– Be visual

Process at IDEO

• Structure/Methodology – Phase 0: Understand & Observe

Understand client’s business and find the needs

– Phase 1: Visualize & Realize

Build models with overall product concept

– Phase 2: Evaluate & Refining

Enhance the prototype

Focus shifting from human factors to engineering issues

Shift from functional model to real model

– Phase 3: Detailed Engineering

Fully functional model

– Phase 4: Manufacturing Liaison

Organization at IDEO

• Small units (team-oriented)

• Flat hierarchy

• Peer pressure

• Low turnover

• Diversity in teams

Management at IDEO

• Low key

– Create the stage upon which designers can play the leading role

• Lead by example

• Connecting role with customers

• Knowledge management (Tech Box)

Culture at IDEO

• Failure & trust

• Child-like playfulness

• Attracts creative people

• Sharing & respect

– Comfortable with confusion, incomplete information, and paradox/ambiguity

• Simple rules

– Fail often to succeed sooner

– Stay focused

– Enlightened trail and error

Individual Creativity - 3 component Model

Creativity

(Source: Adapted from Amabile 1996)


Intrinsic

Motivation

Creative

Thinking Expertise

Creativity



Intrinsic

Motivation

Creative

Thinking Expertise

Creativity


• Independent thinking • Self-discipline • Risk-taking • Tolerance for ambiguity • Perseverance in the face of frustration • Less concern for social approval • Break out of a pre-conceived perception

-functional fixedness, given process or algorithms

• Suspension of judgment considering different approaches • Search for validation

• Deep interests and involvement in work • Curiosity • Enjoyment • Personal sense of challenge *** Extrinsic motivation’s synergy with intrinsic motivation (reward and recognition for creative ideas, clearly defined project goal, frequent constructive feedback)

• A set of cognitive pathways for solving a given problem • Factual knowledge • Technical proficiency • Special talents in the target work domain (computer simulation, gene splicing, etc.) • Familiarity with the past work and current developments

Environmental stimulants for creativity

• Organizational Encouragement

Fair, constructive judgment of ideas

Reward and recognition of creative work

Active flow of ideas

Shared vision for what the organization tries to achieve

(Source: Amabile, 1996)

• Supervisory Encouragement:

A good work model

Appropriate goal setting

Values individual contributions

Shows confidence



• Work Group Support:

Diverse set of skills

Good communication

Open to new ideas

Trust and help each other

Feel committed to their work



• Freedom:

Decision of what to do and how to do

A sense of control over one’s work



• Sufficient Resources:

Access to appropriate resources (funds, material, facilities, and information)

• Challenging Work:

Appropriate level of challenging tasks



Internal political problems

Harsh criticism of new ideas (Why?)

Destructive internal competition

Avoidance of risks

Overemphasis on the status quo

Extreme time pressure

Unrealistic expectations for productivity

Distractions from creative work


Environmental obstacles for creativity

http://www.styleture.com/files/2010/01/basic1.jpg

http://www.styleture.com/files/2010/01/basic4.jpg

http://archinspire.com/wp-content/uploads/2009/08/minimalist-ring-tissue-place-design.jpg

Creative Design? Choices from 2010

What aspect of product is valued in your selection?

• Which product (svc/biz model etc. ) did you choose?

• Could you describe why you chose that specific product?

• Aesthetic appeal: color, shape

• Ease of use

• Functionality

• Uniqueness

• Environmentally friendly

• Longevity

• And more….

Design

Function

Form

User Use Environment

Recent Changes in Korea

• Development Focus

Engineering oriented Design Oriented Integrated Thinking

• Product Focus

Function Aesthetics (Form) Concepts (e.g. eco-)

• Product Strategy

Single product Product groups Platform (ecosystem)

FIRMS

FINANACE AND

VENTURE CAPITAL

ASSOCIATION

UNIVERSITIES

RESEARCH

LABS

DESIGN SERVICES

- mechanical, engineering analysis

- SW programming

- product and mkting strategy

- rapid prototyping

SUPPLIERS

FIRMS IN OTHER

INDUSTRIES

Boston System

Freshman Zack Anderson can check

the weather at the monitor by the sink

in his fully automated dorm room.

Credits - Photo / Donna Coveney

Multifunction In-Dorm

Automation System"

(MIDAS)

Freshman R.J. Ryan hits the

'emergency' button in his

automatic dorm room on

East Campus. The button

activates 'party mode.‘

(relax mode, sleep mode

also possible)

VIDEO: MIDAS at work

Scientific results

into technology

Technological

need for scientific

understanding

and its response

Recognized need

for device,

technique, etc.

& User innovation

Adoption of

technology for

use

Problem-solving process from

Attributes of Five Development Projects

Stanley Tools Jobmaster Screwdriver

Rollerblade In-line Skate

HP Deskjet Printer

Volkswagen New Beetle Automobile

Boeing 777 Airplane

Annual production volume (units/year)

100,000 100,000 4 million 100,000 50

Sales lifetime (years) 40 3 2 6 30

Price (US$/unit) 3 200 300 17,000 130M

Part numbers (parts) 3 35 200 10,000 130,000

Development time (years)

1 2 1.5 3.5 4.5

Internal development team (peak size)

3 5 100 800 6,800

External development team (peak size)

3 10 75 800 10,000

Development cost (US$)

150,000 750,000 50M 400M 3B

Production investment

150,000 1M 25M 500M 3B

(Source: Ulrich & Eppinger)

New Product Development Process

Product Design Activities: • Consider product platform and architecture

• Assess new technologies

• Investigate feasibility of product concepts

•Develop industrial design concepts

•Build and test experimental prototypes

• Generate alternative product architectures

•Define major subsystems and interfaces

• Refine industrial design

• Define part geometry

• Choose materials

• Assign tolerances

• Complete industrial control documentation

• Reliability testing

•Life testing

•Performance testing

• Obtain regulatory approvals

• Implement design changes

• Evaluate early production output

Planning Concept

Development

System-level

Design

Detail

Design

Testing &

Refinement

Production

Ramp-up

Marketing Activities: • Articulate market opportunity

• Define market segments

• Collect customer needs

• Identify lead users

• Identify competitive products

• Develop plan for product options and extended product family

• Set target sales price points

• Develop marketing plan

• Develop promotion and launch materials

• Facilitate field testing

• Place early production with key customers

Different kinds of platform technology

Details are open to the public,

and not a proprietary

platform

E.g.) Internet platform

(TCP/IT, HTML)

Details are closed but the

government has the control

E.g.) Cryptography

Details are open to the public,

but the owner has the control

over the change of the

contents

E.g.) Nintendo, Palm OS

Technology often is the

industry leader (not always).

Details are hidden and the

owner has the full control.

E.g.) IBM 360, Landmark

graphics

Open Closed

Public

Private

Access

Control

Source: MIT’s Tech Strategy Course by Rebecca Henderson

Different kinds of platforms

Open Closed

Public

Private

Access

Control


Linux

Symbian

CDMA

Windows

IBM 360

Apple

What do producers prefer?

Open Closed

Public

Private

Access

Control


What do consumers prefer?

Open Closed

Public

Private

Access

Control


Can you satisfy both a producer and its consumers?

Open Closed

Public

Private

Access

Control


Opportunities?

Private/Open System - Is this easy?

OS

HW

Apps

Chipset

Provider

OS

SDK + API

HW

Application

Chipset

Feature Phone Smart Phone

Closed

Open

It is certainly working!

Alessi & Lombardy Design Discourse

• Free-floating community of architects, suppliers, photographers, critics, curators, publishers, and craftsmen

• Initially utilitarian (Form followed function) Importance of form increased

• Combination of “local” and “global”

• Change of product meaning Change in design (iMac: office product home appliance) Other examples?

• Absorb Interpret Address

• Links of the components of the design system (schools, studios, mfr., etc.) made Lombardy special

FIRMS

DESIGNERS

UNIVERSITIES

RESEARCH

LABS

DESIGN SERVICES

SUPPLIERS

FIRMS IN OTHER

INDUSTRIES

PUBLISHING

SHOWROOMS

EVENTS+ART

EXHIBITIONS

USERS

Lombardy System

Local

Discourse

Global

Discourse

談論

FIRMS

DESIGNERS

UNIVERSITIES

RESEARCH LABS

DESIGN SERVICES

SUPPLIERS

FIRMS IN OTHER INDUSTRIES

PUBLISHING

SHOWROOMS

EVENTS+ART

EXHIBITIONS

USERS

Actors in Lombardy System actor characteristics

Mfrs. • Italy is the largest world exporter(16%) • Lombardy accounts for 23% of Italian furniture manufacturer (High-end)

Design Firms • +700 design firms (60% of Italian total) • Mainly small studios with less than 4 employees

Users Italians spend 10% of their non-food budget on furniture Local users are immersed in the design discourse

OEM in other industry

Most advanced industrial setting

Suppliers Geographically concentrated and highly specialized

Universities & Research Labs

Milan is the center for architecture and design education – Politecnico di Milano and other universities in the region

Fairs, exhibitions and Publishers

• The most important international furniture fair: the Salone del Mobile • Triennale di Milano since 1920 / Experimentation at the show rooms • 454 design related publishers, 16 design magazines

Bang & Olufsen’s Design Oriented Product Development Process

Bang & Olufsen

Product Characteristics Details

Design philosophy

• Home electronics + luxury category product characteristics

• External design first internal delivery

• Importance of substance

Mode/Speed of innovation

• 1 year ~ 3-5 years

• Iterate until you get what you like

• R&D partnership

Product strategy

• Special products

• Fanatical acclaim

• Fabulous profit margin

Customers • Loyal, repetitive

• Small number of exclusive customers

• Distribution channel specifically designed

Manufacturing process • Small autonomous production groups

Bang & Olufsen

75% from Designers

IDEAS

25% fill holes

in catalog

2 or 3 ideas,

model

iterations

Concept

With

Substance

Thesis

Antithesis

Thesis

Antithesis

Synthesis

More models,

increasingly

detailed &

complete

Designer-driven

No market research

Design Oriented Product Development

Design concept: “thin” and “glossy” in an organic design that made the TV seem to be of one piece – front, back and stand

VIP Center: Developed the product concept - Emotion and lifestyle - Room decoration - Picture & Sound etc. (functional)

Engineering Challenges 1. Slimmer, Glossy throughout 2. Speaker holes 3. High glossy finish Solution: • Reducing the size of printed circuit board • Integrated frame (speaker holes into the frame) • New injection molding technique

Design Oriented Product Development

Design

Function

Form


Friction

Bang & Olufsen

75% from Designers

IDEAS

25% fill holes

in catalog

2 or 3 ideas,

model

iterations

Concept

With

Substance

Thesis

Antithesis

Thesis

Antithesis

Synthesis

More models,

increasingly

detailed &

complete

Designer-driven

No market research

Thesis

Anti-thesis Synthesis

Bang & Olufsen

75% from Designers

IDEAS

25% fill holes

in catalog

2 or 3 ideas,

model

iterations

Concept

With

Substance

Thesis

Antithesis

Thesis

Antithesis

Synthesis

More models,

increasingly

detailed &

complete

Designer-driven

No market research

Thesis

Anti-thesis Synthesis

David Lewis

Design

Engineering

Christopher Sorensen

Form

Function

Product

Torben Ballegard Soresen

Design-oriented product development at B&O

• Pros – Much more design focused product

development approach

– Priorities given to the aesthetic appeal

• Cons – Difficult to cope with the digital change (e.g.

iPod and related services)

– Designers having too much inputs in the product (sometimes dominating the discourse)

– Engineering & System understanding can be hampered over time.

• Christopher Sorensen’s IdeaLab efforts failed

Design

Function

Form


Friction

Product Innovation as a Problem-Solving Process

Scientific Research

Technology Development

New Product Development

User Feedback / User

Innovation

Market Firm R&D Org.

Government

Universities

# of users

perceiving

need

Time

Time

Traditional, Manufacturer-Centered Innovation Paradigm Manufacturers identify user needs, develop products at private expense,

And profit by protecting and selling what they have developed.

User-Centered (Democratized) Innovation Paradigm Lead Users innovate to solve their own needs at private expense

- and then freely reveal their innovations

Users innovate here

First manufacturer product appears here

Source: Eric von Hippel’s class – “How to create breakthrough products and services”

What is meant by “Innovation is becoming democratized?”

• Increasing numbers of users are able to develop innovations for themselves at a steadily more professional level.

Why?

– Improvements in design tools via computing (like simulation)

– Improvements in communication (like the Internet)

– All being provided at lower costs


Essential Definitions

The “functional” source of innovation depends upon the

functional relationship between innovator and innovation:

– An INNOVATION is anything new that is actually used

(“enters the marketplace”) – whether major or minor.

– An innovation is a USER innovation when the developer

expects to benefit by USING it;

– An innovation is a MANUFACTURER innovation when the

developer expects to benefit by SELLING it.


First device used in field developed and built by:

Innovations Affecting

% User User Mfg.

Gas Chromatography 83% 10 2

Nuclear Magnetic Resonance Spectrometry

80% 12 3

Ultraviolet Spectrophotometry

100% 6 0

Transmission Electron Microscopy

72% 44 17

Total 77% 72 22

67 Source: Eric von Hippel’s class – “How to create breakthrough products and services”

Consider Center-Pivot Irrigation – A major agriculture innovation


The original user innovation by a farmer


The product-engineered commercial version


The World Wide Web – A Lead User Innovation

“Berners-Lee did not set out to invent a contemporary

cultural phenomenon; rather, he says, “it was something I

needed in my work.” He wanted to simply to solve a problem

that was hindering his efforts as a consulting software

engineer at CERN.

Berners-Lee’s innovation was to apply hypertext to the

growing reality of networked computers. He expanded the

idea he had developed at CERN and made it available on the

Internet in the summer of 1991.

Technology Review, July 1996, p.34


Examples of Important Consumer Product Innovations

Category Example

Health Products Gatorade

Personal Care Protein-base Shampoo Feminine Hygiene

Sports Equipment Mountain Bike Mountain Climbing-Piton

Apparel Sports Bra

Food Chocolate Milk

Graham Cracker Crust

Office White-out Liquid

Computer Application Software

Electronic Mail

Desk Top Publishing


User and manufacturer innovations differ

Users tend to develop Novel Functional Capability innovations:

The first sports-nutrition bar

The first scientific instrument of a new type

Manufacturers tend to develop Dimension of Merit Improvements:

A better-tasting sports-nutrition bar

Improvements to an existing type of scientific instrument

Example – Study of Scientific Instrument Innovations New functional capability 82% user-developed DOM improvements 87% mfr-developed Total innovation sample size: n = 64 Source Riggs & von Hippel (1994)


Sticky information affects who develops what

Information is often very “sticky.”

Some reasons:

• Information needed by developers may be tacit

– Can you tell your child how to ride a bike?

• A lot of information is often needed by developers

– “You didn’t tell me you were going to use the product that way!”


To develop a product or service, information about needs and about solutions must be brought together at a single site.

• Need information is usually found at user sites.

• Solution information is usually found at manufacturer sites.

Solution Information

Need Information

Software Supplier Software User


Because of information is sticky,

each user responds to local needs

using local solution information


Time

Only lead user prototypes available

Commercial versions of product available

# of users

perceiving

need

Breakthrough solutions are often found in

“advanced analog” applications and markets

Trend: Improved AUTO Braking

Sedan Braking

Race Car Braking

Aircraft Braking


Lead User Method • Phase 1: Laying the Foundation

– Identify markets and the type of level of the innovation desired by the key stakeholders

• Phase 2: Determining the trends – Find the broad trend from the people who have a broad view of emerging technologies

and leading-edge applications in the area

• Phase 3: Identifying Lead Users – A networking process to identify the lead users

• Phase 4: Developing the breakthroughs – Lead user workshop to develop product/service concepts and ideas


Harnessing the Capability of Users

Toolkits – the basic idea

The standard, “find a need and fill it” product development model

Solution

Information

(“What is

possible?”)

Need Information

(“What do I want”)

Customers Supplier

The toolkits development model

Solution

Information

(“What is

possible?”)

Need Information

(“What do I want”)

Supplier Customers

Toolkits make sense because collecting accurate Information about customers needs is costly


To develop a product or service, information about needs and about solutions must be brought together at a single site.

– Need information is usually found at user sites.

– Solution information is usually found at manufacturer sites.

Solution Information

Need Informatio

n

Software Supplier Software User

The “sticky information” story


• Have solution information • Acquire need info from user

• Design product

Solution Info

Source

Need Info Source

•Have need information • Acquire solution information

•Design product

User-Based Design Manufacturer design task User design tasks

Manufacturer-Based Design Manufacturer design tasks User design task


Why sticky information means manufacturers should transfer toolkits to users

Economics of sticky information tends to shift the locus of problem-solving to users. For custom design projects, manufacturer information is standard from project to project but user need differs

Example:

Each ASIC design tends to require the same information from the ASIC manufacturer, but unique information from the ASIC user.

ASIC

user

ASIC

user

ASIC

Manufacturer


How do you design a toolkit? There are two major tasks

A. Separate out development tasks that are custom “need-information –intensive” and assign those to users.

Impact on Product architecture can be major – Custom cake vs custom pizza; – “Full-custom” IC vs custom ASIC

B. Develop the tools users need to carry out the need-intensive tasks assigned to them.


Toolkits for users contain:

Tools to carry out trial-and-error design:

1. That are “user-friendly”

2. That offer the right “solution space”

3. That offer libraries of pre-designed modules

4. That can translate from user-language to producer language without error


Toolkits should help users to do the trial-and-error work of problem-solving in design

Source: HBR, 2002

You might have to change the basic design of your product to enable toolkits your customers can easily use

“Full-custom” IC Design vs “Gate Array IC Designs”


Toolkits should help users to do the trial-and-error work of problem-solving in design

Source: HBR, 2002

Gate Array

Field Programmable Chips

Flavor Design Toolkit for Users


Nestle Food Services Toolkit: Pre-components for Mexican Sauces

Reduced the time to develop and begin production of a customer-

approved new sauce from 26 weeks to 3 weeks

Exercise: Planning a toolkit for your company

1. Identify a type of product your firm manufactures

where user demand for customization is strong.

2. Think of design tools within your firm that could be

used as the basis for a “toolkit for user innovation” for

that product type.

3. How would you adapt the basic product type to

separate out “need-intensive tasks” for user

customization?

4. Describe what a “user-friendly” toolkit for user

innovation might look like for this product type.

How to start developing a toolkit

• It’s OK to start with something rough as long as it offers sufficient value to entice user experimentation.

• You don’t need much insight to design and update toolkits – lead users will bump up against the edges of the solution space your toolkit offers and ask for more – or design toolkit improvements for themselves.

• Work with lead customers that really need your toolkit and so will be willing to work with you as you refine it.

There are many “product configurator”

toolkits for users – why?

Source: Franke and Piller (2004)

Toolkits provide value for customers beyond an easy access to customized solutions

Benefits of users to interact with toolkit are plentiful

• Increase in product satisfaction due to better fit

• Feeling of uniqueness of resulting customized product (in consumer goods case)

• Increase in process satisfaction due to higher perceived span of control, flow experience, pride of authorship, etc. (think on open source developers)


Getting more exactly what you want can be worth a lot to users

Bestselling watch designs (professional

company designers)

Mean willing-

ness to pay for

customized watch

Self-designed watch (toolkit)

(user designer)

“ideal” watch (perfect toolkit)

21.5 €

48.5 €

92.0 €

+ 126%

+ 90%

n = 165

Sou

rce:

Fra

nk

e an

d P

ille

r (2

00

4)

Helping customers to “design their own” can actually ease manufacturers’ problems in high-variety consumer industries

Consider Adidas AG

• Adidas has up to 45K models / variations (SKUs) on the market

at any one time across all countries served

• Average designer time for a shoe model - 2 hours*

• Average time from start of design until market introduction: 8-10 months

• Average shelf life for a shoe model - 90 days.

(Data Source: Piller 2004)

• How can Adidas possibly manage this “mass production” supply chain?

• Not easy - LOTS of mismatch between supply and demand, product development is “hit or miss”

* time of original creative work of industrial designer to draw sketch, mean of all models (including incremental modifications)


Adidas shoe fabrication is done by hand in Asia. Can be adapted to mass-customization - as mi Adidas shows

Started in 2001 as pilot, business unit since March 2004

Worldwide availability

30-50 percent price premium

Started with offline toolkit (store based), online re-order possible in some markets

Own store in New York City from May 2005


Three design steps to “build your own”


Toolkits can be offline, too ! This is how the store-based toolkit looks alike:


The miAdidas website for repeat customers


Benefits for the company

Value competition instead of price (new differentiation possibilities )

Reduced planning risk, increased flexibility

Reduction of inventory, fashion risk

New dimensions of shopping experience

Real customer relationship management

Lead user information (life panel without panel effects)

Higher market research efficiency


https://www.selve.net/servlets/selve.web.MyServlet?go=selve.web.DefaultPageGenerator&PageFile=MyShoes/collection/Collection.html&Navigation.Active=myshoes&JServSessionIdroot=b5e1gztg01

Major findings about Mi Adidas to date:

• Customers like the idea, are very willing to give feedback to refine their custom shoe designs

• Mass Customization provides plenty of customer information to the company: interacting with a few individual customers can facilitate better development for all (“mass”) customers

Retailers do not cooperate in recruiting customers (Channel conflict )

Important change process started … but still much work to be done


http://www.adidas.com/de/

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