Designing Convergence/Divergence

Tim Leberecht DESIGNING CONVERGENCE/DIVERGENCE Tim Leberecht - Die Macht des Design, Berlin April 21, 2008

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CLIENTS DEVICES MEDIA SERVICES ENABLERS

“ Design, structurally seen, is absolutely void of usefulness.”

“ I do feel ashamed for this…”

“ I do feel ashamed for this…” ZEIT: Monsieur Starck, you have designed everything, from toothbrush to spaceship. What do humans really need? Philippe Starck: The ability to love. Love is the most wonderful invention of mankind. And then, one needs intelligence. Mankind, as opposed to animals, has managed to create a civilization based on intelligence. For this reason, no human can afford to not work on their intelligence. And humour, humour is important. ZEIT: Can you think of anything else? P.S.: A pillow maybe, and a good matress. ZEIT: So why, then, have you become an industrial designer in the first place? P.S.: That is an interesting question. And I haven’t found an answer to it for myself yet. Look, I have designed so many things without ever really being interested in them. Maybe all these years were necessary for me to ultimatively recognize that we, after all, don’t need anything. We always have too much. ZEIT: So all the things you have created — unnecessary? P.S.: Everything I have created is absolutely unnecessary.

“ The problems that exist in the world today cannot be solved by the level of thinking that created them.” ALBERT EINSTEIN

"As we look beyond housing solutions to urban poverty, good design is enjoying a second coming as the cure for what ails us." "'Design thinking describes a moment in the pursuit of social good that hardly ever arrives: when all the hearts are in the right place, all opinions have been brought into line and all that needs to happen is the change itself. If the model has intellectual benefits, it's doubtful they outweigh the deficiencies of ignoring the long process by which consensus is built -- a.k.a. politics.” ALIX RULE The revolution will not be designed

Power to the amateurs “ Open it up and it will design itself.” Norman Lewis

3. THE EXPERIENCE IS THE PRODUCT

Stop designing products! “ When you start with the idea of making a thing, you're artificially limiting what you can deliver. The reason that many of these exemplar's forward-thinking product design succeed is explicitly because they don't design products. Products are realized only as necessary artifacts to address customer needs. What Flickr, Kodak, Apple, and Target all realize is that the experience is the product we deliver, and the only thing that our customers care about.” PETER MERHOLZ – Adaptive Path

BUT WHAT EXACTLY IS A PRODUCT?

NEW MARKETING AND COMMERCIALIZATION

Not all design is innovation. But innovation always needs design. Design = Innovation?

WHERE DOES THE NEED FOR INNOVATION BEGIN?

FROM STANDARD BUSINESS CHALLENGES… Margin Erosion “ We operate in a mature industry with a mature product portfolio and our margins are beginning to disappear.” Internal Churn “ Our new ideas are stuck in the mud of internal planning and review cycles.” Competition “ New competitors are moving into our space and we need to do something to defend our market position.” Adjacent Markets “ We see opportunities in adjacent markets (new segments, geographies, etc.) but we don’t know where and how to start.” Mining IP “ We have so much IP but we cannot convert it into products that resonate with consumers.” Time to Market “ Our linear product development process doesn’t allow for nimbleness and trial and error.” Customer Insight “ Our product ideas are driven by science and engineering but fail to recognize latent or unarticulated customer needs.” Sustainability “ We got lucky once or twice. How do we repeat our market success year after year?”

… TO SPECIFIC INNOVATION CHALLENGES DRIVERS: Demand for Compelling Experiences Higher Ecosystem Dependence Industry Convergence (Mediatization) Demand for More Customization HIGH Creative Challenge Strategic Challenge LOW LOW HIGH

… TO SPECIFIC INNOVATION CHALLENGES DRIVERS: Demand for Compelling Experiences Higher Ecosystem Dependence Industry Convergence (Mediaization) Demand for More Customization DRIVERS: Increased Customer Touchpoints Need for Aligned Touchpoints Multiple Technology Platforms Global Delivery Challenges HIGH Creative Challenge Strategic Challenge LOW LOW HIGH

TYPES OF SOLUTIONS ANALYTIC HORSEPOWER EXPERIENCE REALIZATION EXECUTIONAL FOCUS RAW CREATIVITY HIGH Creative Challenge Strategic Challenge LOW LOW HIGH

TYPES OF SOLUTIONS ANALYTIC HORSEPOWER EXPERIENCE REALIZATION EXECUTIONAL FOCUS RAW CREATIVITY Oil & Gas Utilities Logistics Advertising Hospitality Telecom Digital Media & Entertainment FMCG Industrial Manufacturers Consumer Software Film Retailers Consumer Electronics HIGH Creative Challenge Strategic Challenge LOW LOW HIGH

INNOVATION CATEGORIES Short -Term Advantage Sustain product life with incremental enhancements and consumer benefits. Since product categories exist, sustaining products are easily accepted by the market. On the other hand profitability can diminish quickly due to ease of imitation . These products are low risk bets with a high probability of short term returns. Near-Term Advantage Create new products within an existing product category that leverage high value benefits for consumers. The greater benefits of the product and the fact that it is within a know category drives rapid short-term growth. These product are higher risks bets with higher yet diminishing returns. Long-Term Advantage Innovate new to the world products that lead the creation of new markets or industries. Market acceptance may be slower to gain as multiple industry standards compete for dominance. These products are a long term investment with high potential returns over the long term. Other benefits include market dominance & strong competitive position . years $ 0 1 2 3 years $ years $ 4 5 Industry Level Innovation Competitive Advantage : 5-7 years Category Level Innovations Competitive Advantage: 3-5 years Product Level Innovation Competitive Advantage: 1-3 years ^ Sustaining (Evolve) Breakout (Expand) Disruptive (Envision) Go/No-Go (Director Level) Go/No-Go (VP/SVP Level) Go/No-Go (CEO/Board Level) 6 7 0 1 2 3 4 5 6 7 ^ ^ 0 1 2 3 4 5 6 7

THREE TYPES OF INNOVATION Successful innovation is more about behavior than about individual ideas, and it is more social than personal . It’s not knowledge that produces growth, but instead, insight -- into opportunities for discontinuous innovation. Innovation as Process Innovation as Capability Innovation as Culture

INNOVATION AS PROCESS Innovation is a dynamic process which requires companies to go from a fragment of an idea to a holistic design concept. This process must navigate the complexities of the business system to see innovations make it to market successfully . Cycles of ideation, refinement, and validation are needed to build alignment and ensure market success. Innovation as Process PERFORMANCE

INNOVATION AS CAPABILITY Can something as effervescent as innovation be systemized? While innovation will always be a mixture of serendipity, genius, and sheer bloody-mindedness, we believe that non-linear innovation can be fostered, celebrated, and rewarded. We recognize the need for multiple inputs, and believe there are key components for building innovation as a capability. Each of these has an essential role to play. Innovation as Capability ENABLEMENT

INNOVATION AS CULTURE Whenever organizations try to create new product and service offerings at a profit, culture matters . Organization imperatives powerfully shape “innovative behavior” of the enterprise. Understands both anecdotally and empirically the cultural patterns that shape innovation processes . An innovative idea is just as much the product of culture as it is a process or capability. Innovation as Culture VALUES

“ We don’t have an innovation process. We hire good people.”

A KEY INGREDIENT: DESIGN Design means more than pure creative product design. It is a mentality and an approach to problem-solving . It is a powerful alternative to the dominant management approaches of the past few decades and is an important perspective for leadership to embrace. In this way, design represents not a technique, but a more fundamental disposition involving: Focus on the user Creativity Interdisciplinary collaboration Iteration Evaluation and measurement Learning This disposition is applied to both the traditionally strategic and the traditionally creative activities that occur in conceptualization and development of new innovations.

Change is hard. Change is slow. Especially significant, disruptive, discontinuous change. The dilemma with innovation

Design as a catalyst Provoke, translate, transform a person or thing that precipitates an event or change; a person whose talk, enthusiasm, or energy causes others to be more friendly, enthusiastic, or energetic. Something that causes an important event to happen;

CONVERGENCE Hardware/software Real/virtual Process Platforms & media Disciplines

CONVERGENCE Disciplines Software? Hardware? Phone? PC?

“ Because an iPod’s really just software… it’s in a beautiful box, but it’s software …. And so the big secret…is that Apple views itself as a software company”

In a convergent world, the system is the product

Accessories MINI Retail Web Lifestyle

WHAT IS SO INNOVATIVE ABOUT THIS PRODUCT? Hard-drive based portable music players already existed Competitive products had better features and were cheaper Online music stores already existed

WHY THE iPOD STINKS High price Limited features Easy to scratch Hard to carry Can’t replace battery Cumbersome menus

WHY THE iPOD SUCCEEDED A convergent system that has given Apple a 5+ year competitive edge

REAL AND VIRTUAL WORLDS CONVERGED

Cross-over thinking (and doing) Artists Architects Industrial Designer Software Developer Digital Media Designer Business Analyst Strategist Anthroplogist Ethnographer Writer Mechanical Engineer

OLD “LINEAR” PROCESS BUSINESS DESIGN EXPERIENCE DESIGN Two divergent tracks

Stage 1 Gate 1 Stage 2 Gate 2 Stage 4 Gate 4 Stage 3 Gate 3 Stage 5 Gate 5 Initial Screen Second Screen Decision on Business Case Post-development Review Precommercialization Business Analysis Post Implementation Review Ideation Development Preliminary Investigation Detailed Investigation (Build Business Case) Testing & Validation Full Production & Market Launch Stage-Gate Process OLD “LINEAR” PROCESS

Stage 1 Gate 1 Stage 2 Gate 2 Stage 4 Gate 4 Stage 3 Gate 3 Stage 5 Gate 5 Initial Screen Second Screen Decision on Business Case Post-development Review Precommercialization Business Analysis Post Implementation Review Ideation Development Preliminary Investigation Detailed Investigation (Build Business Case) Testing & Validation Full Production & Market Launch Overly strict gating : Compelling innovations left in the discard pile; moreover, extensive use of lock-step, gated decision-making processes can perpetuate a culture of rigidity and inflexibility Lack of emphasis on understanding users: The traditional Stage-Gate process brings user perspectives in after Gate 4 Time-to-market: For fast-moving industries in particular, Stage-Gate can be too drawn out Stage-Gate Process OLD “LINEAR” PROCESS

Stage 1 Gate 1 Stage 2 Gate 2 Stage 4 Gate 4 Stage 3 Gate 3 Stage 5 Gate 5 Initial Screen Second Screen Decision on Business Case Post-development Review Precommercialization Business Analysis Post Implementation Review Ideation Development Preliminary Investigation Detailed Investigation (Build Business Case) Testing & Validation Full Production & Market Launch Flexible gating: informal evaluation of outliers / non-standard ideas / intangibles Interdisciplinary perspectives: user and market viewpoints at early stages Parallelization and compression: iterative business cases and rapid prototyping 1 2 3 1 1 1 2 2 3 Stage-Gate Process WHAT’S MISSING

THE CHALLENGES OF DISCONTINUOUS INNOVATION KEY QUESTIONS How do you evaluate innovations when part of their benefit is tied up in intangibles (wow factor, new experiences, emotional impact, novelty effect, intuition)? How do you generate a business case for innovations that are so novel that behaviors around them don’t exist? How do you still bring such novel products to market quickly?

THE CHALLENGES OF DISCONTINUOUS INNOVATION MORE flexible gating : evaluation of intangibles should be made in a formal way MORE interdisciplinary perspectives : interweave user, market, and technology activities to allow analytical evaluation of new user behaviors MORE parallelization and compression : business cases and rapid prototyping should start earlier, iterate more frequently, and be used for continuous validation and buy-in

STRATEGIC + CREATIVE CONVERGED

STRATEGIC + CREATIVE CONVERGED discover design deliver

STRATEGIC + CREATIVE CONVERGED discover design deliver Critical points

STRATEGIC + CREATIVE CONVERGED insight design build ! convergence of design with development convergence of insight with design

STRATEGIC + CREATIVE CONVERGED insight build convergence of design with development convergence of insight with design design

Design Analyst Visual Designer Design Technologist Developer Architect Tech Solution Mgr Driving efficiency and quality by creating parallel and massively integrated work-streams STRATEGIC + CREATIVE CONVERGED CONCURRENT WORKFLOW Technology/design

Role matrix Many of the work-streams cross standard discipline boundaries CONCURRENT WORKFLOW

WHY THIS WORKS FOR DISCONTINUOUS INNOVATION Enables decision-making on the outliers: Decision-making becomes more fluid, based on conventional success metrics, novel experience metrics, and user validation -- all of these are needed to properly evaluate discontinuous innovations Allows for more accurate business case development : Results in a business case that explicitly measures the new user behaviors that emerge from a discontinuous innovation Faster time-to-market: Continuous validation and buy-in across stakeholders, partners, and customers who are “bought in” and aligned in different ways

Change the rules of competition Create growth Decide on level of convergence DIVERGENCE MATTERS Divergence

Marketing as a Growth Champion Power shift

Marketing as a Growth Champion “ In the old days, brands wanted everybody to pay attention to them. Now brands need to pay attention to everybody else.” [ someone somewhere on the web] Power shift

The atomization of the web The web is a never ending conversation. First came email, then web portals, then search (aggregation), and now the distributed Internet with its myriad atomized blogs, widgets, voice posts, Twitter grams, RSS feeds, and social networking hubs. The World Wide Web is being atomized into thousands of "branded and un-branded micro-networks.” The days of "destination thinking" - the concept of driving as many eyeballs as possible to a central site ("one audience, one time, one venue") - are numbered.

2,600 blogs > 1,000 inbound links 100,000,000 < 20 incoming links 400,000 blogs > 20 inbound links “ The blogosphere is wild, violent, and nasty, and it can kill you." The long tail of the blogosphere

Power shift Mash-up/hybrid/slash culture Web 2.0, collaborative, social web, amateur web, whatever you want to call it: no longer is content production and distribution the exclusive domain of professional networks and content providers. “ The ants have megaphones,” as Chris Anderson put it, and “the Long Tail” has become very fuzzy. This disrupts traditional marketing paradigms and challenges marketing professionals. The borders between professional and amateur, producer and consumer, are blurring.

Digital footprints Technorati estimates the total number of blogs to be 112.8 million (this does not include all the 72.82 million Chinese blogs as counted by The China Internet Network Information Center) About 8,000 new blogs are created every hour According to a study by Harris Interactive , over two-thirds of adults have watched a video on YouTube over the last year By 2006, 10 million people were listening to podcasts in 2006; by 2010, it's expected to be 50 million people Each day, over 100,000 new videos are posted on leading video sites -> close to 70 videos each minute About 28% of online consumers have tagged a photo, news story or blog post; about 7% of all Internet users tag content every day A new study from Nokia predicts that by 2012 a quarter of all entertainment will be created, edited, and shared within peer groups rather than being generated by traditional media

Only 48 seats Designing for divergence A daptive T ransparent O pen M inuscule

Only 48 seats Designing for divergence A daptive T ransparent O pen M inuscule Conversations instead of messages Feedback = creation Customizable Permanent beta

Only 48 seats Designing for divergence A daptive T ransparent O pen M inuscule Conversations instead of messages Feedback = creation Customizable Permanent beta The more you share, the more you will receive Everything is visible to everyone Authenticity

Only 48 seats A daptive T ransparent O pen M inuscule Conversations instead of messages Feedback = creation Customizable Permanent beta Easy to use Easy to co-create/hack Easy to share The more you share, the more you will receive Everything is visible to everyone Authenticity Designing for divergence

Only 48 seats Designing for divergence A daptive T ransparent O pen M inuscule Conversations instead of messages Feedback = creation Customizable Permanent beta Easy to use Easy to co-create/hack Easy to share Content Distribution Timing The more you share, the more you will receive Everything is visible to everyone Authenticity

“ Design is too important to be left to designers.” Raymond Loewy

sketching rendering model making manufacturing support In 1969 this was what we did for our customers

Building Alignment Go-To-Market Plan Roadmap Business Plan Customer Segmentation and Targeting Value Proposition Business Concept Value Chain Analysis Revenue and Cost Modelling Business and Market Modelling Alternative Generation Industry Dynamics Market Sizing Competitor Segmentation Competitive Differentiation Project Framing Strategic Imperatives Product Definition Roadmap Planning Trend Research Competitive Research Engineering Teardown Retail Audit Shadowing Ethnography Concept Testing This is what we do today Diaries Creative Facilitation Surveys Expert Analysis Mental Modelling Conceptual Foundation Design Libraries Contextual Validation Usability Testing Visual Studies Workflow Modelling Wireframe Renderings Site Map Information Architecture Task Models Object Models Usability Think Alouds Cognitive Walkthroughs Heuristic Evaluations Visual Simulations Systems Design Sketching Affinity Diagrams Card Sorts Contextual Inquiry Anthropometrics

LOGIC EMOTION An old mind set Logical Sequential Rational Analytical Objective Strategic Parts-oriented Random Parallel Intuitive Synthesizing Subjective Creative Holistic

Manager vs. Designer Strives to keep bad things from happening Strives to make good things happen.

Design leadership Warren Bennis’ principles of leadership The manager administers; the leader innovates. The manager maintains; the leader develops. The manager accepts reality; the leader investigates it. The manager focuses on systems and structures; the leader focuses on people. The manager relies on control; the leader inspires trust. The manager has a short-range view; the leader has a long-range perspective. The manager asks how and when; the leader asks what and why. The manager has his or her eye always on the bottom line; the leader has his or her eye on the horizon. The manager imitates; the leader originates. The manager accepts the status quo; the leader challenges it. The manager is the classic good soldier; the leader is his or her own person. The manager does the thing right; the leader does the right thing.

Design leadership Creating an argument for change through strategic conversations Design’s challenge: often left out Designer’s challenge: Establish, perpetuate, communicate relationships Design leader’s challenge: Generate excitement and provide inspiration -

A designer as CEO? Sure, why not. But it’s still a long way to go. Leadership is about empowering others. Designers are still too busy claiming more power for themselves.

Design will only grow up…. … if it transforms the management systems that constrain innovation.

Seagate Branded Solutions Taking a B2B component manufacturer into the consumer electronics space

Customer research Understanding User Segments

Synthesis & ideation Translating Insights Into Ideas

DEFINING THE DNA OF A LIFESTYLE BRAND Convergent thinking

Understanding the Future Landscape Brand positioning

Defining the DNA of a Lifestyle Brand Design language system

Product & Platform Planning Roadmapping

Convergence and Divergence and require the ability to understand and conceive complex systems. Design is good at this.

THE REALLY BIG INTEGRATION Software Hardware Virtual worlds Real world Online Store Marketing messages Media Usability Out-of-the-box Business requirements Design creative Technology Culture Concurrent workflow Consumer insights Market research Desktop Mobile WWW Living room CONVERGENCE Consumer conversations Blogs Social media Outliers Outliers Crowdsourcing Outsourcing New markets Disruptive technology Hyper-personalization Business requirements D I V E N C E

“ Never doubt that a small group of thoughtful, commited people can change the world. In fact, it is the only thing that ever has.” MARGARET MEAD

Designing Convergence/Divergence

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Designing Convergence/Divergence