Point: Innovate the experience, not just the product

Story: At the World Innovation Forum today, C. K Prahalad asked the audience about their experiences with “Build-a-Bear” — an e-commerce company that lets kids of all ages design their very own Teddy Bear. Audience members reported spending as much as $200 in choosing the look of the bear, the amount of stuffing in the bear, adding a custom sound to the bear, getting the bear’s birth certificate, buying clothing for the bear, and buying accessories and siblings for the bear. This culminates in making “The Bear Promise” to care for this personalized stuffed animal. Discussing the depth of the experience and the simplicity of the physical product revealed that the bear embodies both negligible product costs and priceless customer experiences.

One of the “trick questions” for job interviews is to ask the candidate, “How would you redesign a Teddy Bear?” This example shows that the design of the bear may not change much, but the design of the experience of buying the bear may be where the real opportunities are. In fact, Build-a-Bear is more about the customer redesigning the Teddy Bear than it is about the company redesigning the Teddy Bear. Therefore, C. K Prahalad recommended that companies think more about experience innovation to complement and enhance product innovation.

The Build-a-Bear phenomenon is not unique to toys. Other companies provide experience-intensive products. These include Medtronic’s pacemaker (the device is augmented with remote monitoring, health records coordination, and provider networking services), Bridgestone Tires (by-the-mile fleet usage pricing with value-added vehicle usage services), Nike’s iPod-connected shoes (shoe sensor feedback that drives work-out feedback and performance). The point is to think about the value chain of the experience, rather than the value of chain of the product.

Action:

• Seek to solidify customer relationships through well-designed experiences
• Innovate to improve the value of the experience, not just the performance/cost of the product
• Leverage customer innovation through co-creating experiences and products
• Create an ecosystem of collaborators to support the experience

Point: Breakthrough innovation requires nonlinear change

Story: In his presentation at the World Innovation Forum, strategist and Dartmouth professor Vijay Govindarajan used the analogy of Olympic high-jumping to illustrate the non-linear thinking that companies need to make to create breakthrough innovations. The traditional approach to high-jumping until 1920 was the “scissors” approach: jumping over the bar with a scissoring motion similar to what is used by hurdlers. The highest jump possible was about 5′ 3″.
The best approach to jumping higher, however, is to identify the limiting factor in the jump. For high-jumping, the limiting factor is the jumper’s configuration of body parts relative to their center of gravity and to the bar. In the 1920s, the innovation called the “western roll” changed the jumping style from a hurdling over the bar with a scissors kick to rolling over the bar sideways with the jumper’s back to the bar. In the 1960s, the innovation of the straddle changed the center of gravity even further with the jumpers keeping their belly to the bar. And in 1968 the Fosbury flop (invented by Dick Fosbury) changed the motion yet again: jumpers launch themselves straight up into the air using both feet, and then they twist over the bar so that the head clears first.
The challenge for organizations: you can’t win by incrementally improving the incumbent scissors kick if your competitors are inventing the western roll or the Fosbury flop. Breakthrough innovations require removing or changing the limiting factor. This often means breaking old assumptions. Prior to the Fosbury flop, all high jump techniques assumed that the jumper goes feet-first over the bar and lands on their feet. Fosbury jumped head first over the bar to flop on the mat and extended the possible jumping height to over 8 feet.
Action:

• Document the fundamental limits that seem to prevent further incremental innovation
• Consider ways to break those limits or bend those limits
• Examine the “how we’ve always done it” assumptions to find opportunities for radical change

See Vijay Govindarajan’s blog here.

Point: When forecasting, keep in mind that simple signs can have a deeper meaning if you take the time to look.

Story: At the Cultivating Intuition: Effective Forecasting in the Face of Rapid Change workshop preceding the World Innovation Forum, forecaster Paul Saffo described how to watch for signs of the future. In 1991, as he and his newlywed bride were driving to Mendocino County for their honeymoon, he saw a new road sign that was so intriguing that he turned around, drove back, and took a photograph of it while his exasperated bride waited. The sign simply said, “End Emergency Call Boxes.” But the sign told Saffo of both the near-term future and the long-term future. First, the literal interpretation of the sign told Saffo that he and his wife were on their own. If they had any problems, they couldn’t expect to quickly reach the authorities for help. Yet fear of being incommunicado was not why Saffo stopped at the sign.

Second, and more crucially, the sign indicated to Saffo that people’s expectations had changed. Why would the California Highway Department think that such as sign was needed? Prior to the 1990s, no one expected to be in constant communication. But now, the advent of the solar-powered call boxes meant that people expected more.

The sign was part of a series of long-term changes in communications. Only a couple of years later, the sign was gone because the call boxes extended all the way to the Canadian border. Low-cost communications enabled almost-universal coverage. About a decade later, the call boxes themselves were gone, because everyone had cell phones. Yet that sign triggered Saffo’s thinking about communications and how changing technology led to changing expectations and future changes in technology.

Action

• Look at signs and signals in the environment. (Paul recommends carrying a camera at all times to snap pictures of these signs)
• Examine the deeper meaning of those signs — what do the signs say about the changing expectations of consumers and citizens?
• Consider how your future products and services can meet those changing expectations