To most companies, innovation is a crucial element of growth and sustainability. CEOs, stockholders, and Wall Street analysts all stress the importance of innovation to a firm’s financial well-being. Innovations allow companies to remain competitive, attract new customers, and increase profits.
Yet, innovation remains elusive for a lot of firms. New products tend toward incremental improvements rather than disruptive innovations. Disruptive innovations are new business models, technologies, or sales channels that create significant and widespread change in a product, service, or market. Clayton Christensen first coined the term, disruptive innovation, in his seminal work “The Innovator’s Dilemma,” originally published in 1997.
What is Disruptive Innovation?
Disruptive innovations shift the entire eco-system of a market. Not all disruptive innovations involve the introduction of a new technology, but many do. Consider the addition of a low-quality digital camera to the ordinary cell phone. The technology was not new at the time, nor was it superior in any way. Many other inexpensive digital cameras were able to create photographic images with higher pixel counts, resulting in better quality photos.
Yet, the poor-quality digital camera embedded in the cellphone introduced a new business model and created a paradigm shift in the communication markets. People took photos (albeit low-quality ones) to share everyday moments of their kids with far-away grandparents. Others took photos of their meal when dining out at a special or unique restaurant. Many other people took photos to capture the spontaneity of friends engaging in adventurous activities.
While these photographs were of low quality compared to those captured by a Nikon or Canon device, they communicated thoughts, feelings, and attitudes of individuals. As people shared their photos and videos, more avenues for graphical communication among friends and family members popped up – Facebook, Instagram, Pinterest, etc.
So, the lowly digital camera disrupted the traditional photography industry. The innovation did not use new technology but created a new medium for connecting and sharing. New business models are often the disruptive outgrowth when combining technology and customer needs in novel or unique ways, such as putting a camera into a cellphone.
You Have to Know Your Customer
The problem with disruptive innovations is that they are far easier to recognize in hindsight. Who knew that hailing a taxi driven by a stranger without a city permit via a smartphone app would catch on? Or who would have known that home grocery delivery would continually suffer from low volume? Grocery shopping is often a dreaded task taking significant time away from a family’s leisure activities on the weekend. But, hailing a taxi at most airports, hotels, and public spaces was as easy as stepping to the curb where a queue of city-approved drivers awaited.
Disruptive innovations require understanding a customer in depth and knowing what drives his or her decisions. Most of these purchase decisions are based on emotion and not a logical application of feature and attribute analysis. Thus, to create disruptive innovations, you have to know your customer.
Design thinking (DT) is a set of collaborative and creative problem-solving tools that support innovation through customer empathy. Let’s look at this definition in more depth.
DT: Collaborative Tools
Design thinking tools utilize collaboration a key enabler. We all know that the best things in life are shared and when we give, we receive. Collaboration from a design thinking perspective draws together diverse perspectives to address a given problem.
For instance, disruptive innovations include far more than the technology, such as IT, operations, and sales teams. Each individual serving on a cross-functional new product development (NPD) team represents a different viewpoint and interaction with customers. The sales representative is likely to have distinctive customer feedback from talking to lots of customers and can relay trouble spots with existing products. The operations and manufacturing representatives provide insight on the challenge of creating a product to serve customer needs quickly and efficiently and with a cost structure that drives profitability. Finally, the IT department can serve to link together various efforts so that all team members communicate seamlessly and are using the most current datasets and information.
DT: Creative Problem-Solving
Too often, innovations look like the same old thing with a fresh coat of paint. Disruptive innovations aren’t just pretty enhancements; they are fundamentally different. Our creativity is suppressed by years of conformance to demonstrating the “right” answer to get an “A” in school. Tom and David Kelley of IDEO call this “rediscovering creative confidence.”
Rapid prototyping is a key element of design thinking. The idea is to try simple solutions and see if there are any benefits. We can both identify advantages and disadvantages of a potential solution through rapid prototyping.
Rapid prototyping means testing an idea or hypothesis quickly and in front of customers or potential customers. For a new commercial or retail web page, test a paper prototype where you can easily move sections to new positions – and you don’t require any expensive computer specialists to do the coding! For a new retail kitchen product, test the form using 3D printing to find out if the shape and size is suitable for use and storage.
Design thinking encourages you to connect with customers quickly to discard bad ideas and to prompt discussions on what they really want. Rapid prototyping allows an NPD team to identify and validate features, form, and function inexpensively and to continue to make progress toward the overall goal.
DT: Customer Empathy
Perhaps the most important part of design thinking is the role of the customer. Products and services are only successful if customers realize a value greater than the price they pay and if the product or service meets their needs. Customer expectations and customer satisfaction are measure of new product success. We consider customer expectations to be quantitative factors describing the technical features and attributes of a product (“a size 10 pink dress with a lace collar”). Customer satisfaction can be measured after a purchase to determine if the product met the customer’s needs (“I got a lot of compliments on my new dress at the company picnic and I felt pretty wearing it”).
Customer feedback through measures of expectations and satisfaction surveys is a start to building in-demand innovations. Yet, even more important to meeting customer needs is customer empathy. Empathy is defined by Dictionary.com as “the psychological identification with or vicarious experiencing of the feelings, thoughts, or attitudes of another.” So, empathy is deeper than just measuring expectations and satisfaction, and is vastly different than sympathy. Empathy means you are walking in the customer’s shoes. And if s/he steps on a sharp pebble, you will also feel that pain.
Using customer empathy as a means to identify customer needs is the key to creating disruptive innovations. We have to not only observe, but live, the customer experience from the point of deciding to make a purchase, researching options, selecting a specific product, paying for it, receiving it, installing it, using it, and discarding or recycling it at the end of the product life. If any step along the customer’s journey results in a negative feeling or emotion, the NPD team has an opportunity to innovate.
For example, cars used to have cigarette lighters. (I remember my older, middle sister burning her finger on a cigarette lighter in my parents’ car. She didn’t believe that once it turned red that it was actually hot. But, that’s another story…) In recent years, we have used USB adapters to plug into the cigarette lighter to charge phones, GPS, and other electronic devices. Automobile manufacturers recognized this pain point (a literal one for my sister) and have now installed multiple USB ports instead. Some new models include cordless phone charging as an added convenience.
Thus, design thinking uses customer empathy to identify the areas for improvement in a customer’s use journey with a product or service. We use rapid prototyping to test various solutions and we aren’t afraid to test the bounds of creativity. It is only with creative and collaborative approaches to problem-solving that we can identify disruptive innovations.
Using Design Thinking to Identify Disruptive Innovations
Normally, we have only been able to identify disruptive innovations after-the-fact. Isolated corporate R&D teams often conflate sustaining innovations – added features and incremental performance improvements – with disruptive innovation. Disruptive innovations do not always involve new technologies or enhanced feature sets. Instead, disruptive innovations create novel business models to address deep customer needs throughout their journey and experience with the product or service.
Design thinking tools offer a way to identify these deep customer needs and to develop the most appropriate solutions to customer problems. Through empathetic, people-centered observations, NPD teams can creatively and collaboratively identify new business models that bring joy and delight to customers’ lives through product or service delivery.
Design thinking builds on collaborative brainstorming. We are starting a new Innovation Master Mind group in December (meeting online) where we will practice design thinking and other innovation best practices to help you take your NPD program to the next level. We also invite you to learn more about new product development and innovation in an upcoming New Product Development Professional (NPDP) certification workshop. Check out our full class schedule at Simple-PDH.com. For more information, feel free to contact me at firstname.lastname@example.org or 281-280-8717.
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Your Strategic Innovation Partner