Design-Driven Innovation by Roberto Verganti
Here is an excerpt from Verganti’s website, Design-Driven Innovation about the book:
The Strategy of Design-Driven Innovation
Two major findings have characterized management literature in the past decades.
The first is that radical innovation, albeit risky, is one of the major sources of long-term competitive advantage. For many authors, however, the phrase radical innovation is an ellipsis for a longer construction that spells radical technological innovation. Indeed, investigators of innovation have focused mainly on the disruptive effect of novel technologies on industries.
The second finding is that people do not buy products but meanings. People use things for profound emotional, psychological, and sociocultural reasons as well as utilitarian ones. Analysts have shown that every product and service in consumer as well as industrial markets has a meaning. Firms should therefore look beyond features, functions, and performance and understand the real meanings users give to things. The common assumption, however, is that meanings are not a subject for innovation: they are a given. One must understand them but cannot innovate them. Meanings have indeed intensively populated the literature on marketing and branding. And user-centered perspectives have recently provided powerful methods for understanding how users (currently) give meaning to (existing) things. But in studies on radical innovation, an examination of meanings has been largely absent. They are not considered a subject of R&D.
Innovation has therefore focused on two strategies: quantum leaps in product performance enabled by breakthrough technologies, and improved product solutions enabled by better analysis of users’ needs. The former is the domain of radical innovation pushed by technology, and the latter of incremental innovation pulled by the market (see figure).
However, companies such as Nintendo, Apple, Artemide, Whole Foods Market, Alessi, and many others discussed in this book show that meanings do change—and that they can change radically. These firms therefore also purse a third strategy: design-driven innovation— that is, radical innovation of meaning. Think for example at the Nintendo Wii that transformed consoles from a passive immersion in a virtual world approachable only by niche experts into an active physical entertainment for everyone, in the real world, through socialization. Or at Whole Foods Market, that has radically changed the meaning of healthy nutrition from a severe, self-denying choice to a hedonic one, and shopping from a chore to a reinvigorating experience.
These firms have not provided people with an improved interpretation of what they already mean by, and expect from, a console or an organic food store. Rather, they have proposed a different and unsolicited meaning, that was what people were actually waiting for. The design-driven innovations introduced by these firms have not come from the market but have created huge markets. They have generated products, services, and systems with long lives, significant and sustainable profit margins, and brand value, and they have spurred company growth.