Sunday, September 16, 2012

The Designer’s Innovation Dilemma: How Many Increments Need or Make a Breakthrough?

Finally, Apple has unveiled the much awaited iPhone 5 on September 12, 2012. The phone has a larger screen, better construction, sleeker form factor, lighter weight, faster processor, and more advanced operating system. Simultaneously several functionalities have been upgraded, including SIRI, the voice assistant. Accessories have also taken a leap in design with earpods becoming a new benchmark for earphones and a new sleeker connector pin emerging for charging the battery. Apple maintains that its device may appear numerically challenged in specifications but the device will easily outperform its counterparts in terms of its smooth user experience and near-perfect functionality. Yet, probably for the first time, analysts and critics have started voicing an opinion that the incremental innovations of iPhone are merely offering catch-up options against the strides taken by other smartphone makers.

IPhone 5 represents the sixth generation of the iconic phone that Steve Jobs launched in January 2007. From then onwards, he and the Apple team launched successive generations of iPhones, each with incremental capabilities and functionalities. iPhone 3G that was launched in July 2008, iPhone 3GS in June 2009, iPhone 4 in June 2010, iPhone 4S in October 2011 and iPhone 5S in September 2012 reflect the annual transformation that has been the norm of design innovation and operational excellence at Apple each year. The changes were not minor either; from video camera calling to voice assistance, and from iTunes integration to iCloud integration, successive generations of iPhones provided each year a major scale-up in performance and functionalities. While Apple may believe that it still has a clear winner in its hands (as indicated by the fast building up pre-order pitch) and hence needs only incremental innovations (as could well be proven by performance), iPhone 5 has laid the base for a debate on a classic innovation dilemma of the product designer.

Defining a lifecycle

Defining the lifecycle of a product is the cornerstone of viable product strategy, and hence the determinant of the business strategy of a firm. No firm, Apple included, would be in a position to formulate a priori a fixed time horizon for a product to be on the market. Given a choice each firm, Apple included, would be keen to continue the basic product configuration almost perpetually while adding to functionalities as long as the market response continues to be robust for successive generations of a product. This is one reason why iPhone could successfully retain the basic screen size (3.5 inches) with the same form and weight factors from the first generation iPhone to the fifth generation iPhone 4S. Many times, however, design teams fall into the trap of lifecycle management with incremental innovations and fail to see the major breakthrough innovation that could be coming their way, transforming the product-market space, and hence the firm’s business viability, radically.

The concept of product lifecycle is rooted in three basic concepts; the first is the product category, the second is the technology backbone and the third is the brand equity. The product category is defined by the most dominant product characteristic; for example, communication of a phone versus photography of a camera. The technology backbone is defined by the most dominant technology deployed; for example, liquid crystal display versus plasma in televisions. The brand equity is defined by a brand longevity that makes consumers see the brand as the product itself; for example, Corolla as a brand defining what a sedan is. Different products of different firms face diverse combinations of the three basic dimensions in the definition of product lifecycle. That said, to determine a product lifecycle effectively, at least during its evolution, one would need to appreciate the broader industrial design ecosystem in its totality.

Design ecosystem

The design ecosystem of a product is a combination of organic, proprietary, inorganic and licensable technological developments. The design ecosystem is rooted in the aggregate intellectual property of individual technologies of individual components as well as the integration of such technologies as a singular product. In iPhone the chipset, the operating system, the unique accessories, and the system design as well as the use and feel enablers are perhaps the organic, proprietary features. The camera, the glass, the voice recognition system as well as the assembly are perhaps the outsourced items. A different smartphone which is more open could have much higher level of outsourcing including the chipset and the operating system. At the same time, it may establish an additional differentiation by accessing external technological developments such as wireless charging as is proposed by Nokia in its upcoming Lumia 920.

The brands are increasingly getting both reflected in and reinforced by the flagship products. Just as Apple’s iPhone has become an iconic representation of a seamless consumer experience in smartphones, Galaxy for Samsung, One for HTC, Xperia for Sony, Razr for Motorola and Lumia for Nokia became flagship brands for the respective companies. Even internal technologies such as Bravia technology of Sony’s flat panel televisions got supplemented as a new benchmark in imaging and viewing system of its smartphone range. Theoretically, it is possible to run products through successive generations to sustain and extend the product lifecycles. Individual brands of cameras, for example, can continue to be market leaders based on continuous improvements in sensor, lens and aperture technologies. This seemingly endless possibility could lead to sub-optimization unless the design teams are able to grasp the inflection points in the development of design ecosystems.

The game changers

Game changers are certain technological innovations that could completely change how a device is configured. Science and technology by their very nature move towards game changing developments. It is often the business and corporate considerations that impede the inexorable move of technology, in the name of concepts such as market segmentation, customer skimming and value for money as well as return on investment. There was, for example, never a justification for huge desktops with oversized monitors and briefcase sized CPUs to coexist with laptops of fractional size and weight but imbued with higher specifications and superior performance. If science and technology were not titrated by business considerations, desktops would have been obsolete decades ago. But for the business need to keep the Mac line of computers going Apple would have displayed enough technological savvy to make iPods both media-friendly and business-friendly, with high powerchips, standard USBs and the like. Probably, Microsoft could be the new game changer with its Surface tablet that would meet both the needs.

The game changing mindset is just the reverse of the incremental mindset. A game changing Nokia could, for example, choose to make its 41 megapixel pure view imaging technology the standard in all its upcoming Lumia range of Windows 8 run smartphones. A game changing Toyota could decide to convert half of its products to hybrid drive. A game changing Microsoft could offer Windows 8 basic free and keep Windows 8 Professional on chargeable basis. A pump manufacturer may choose to make all its pumps, not merely its submergible pumps, waterproof. The game changing mindset is, however, not merely one of offering the highest end technology at the lowest end or mean affordable price point. It is more of visualizing the next big jump in consumer needs and the next big enhancement in consumer experience and deploying the right science and technology to fulfill them through breakthrough products.

The designer’s dilemma

Left to himself or herself, every bright designer, and left to themselves every bright design team would have the classic challenge of deciding between incremental innovation and breakthrough innovation. But for Steve Jobs making “touch and feel” the deciding game changer over mechanical querty key board, the iPhone would not have been a differentiated product. How long should Apple increment the iPhone in terms of technological improvements vis-à-vis making a breakthrough transformation could be the current challenge for Apple. Possibly, non-touch based gesture control of computers, tablets and iPhones, or even thought reading control mechanisms could be technically feasible and economically possible even now. Development of pumps which combine the features of both reciprocating and rotary mechanisms could be a near term reality. Cameras which send the images with oral or written messages of friends could drive a new generation of communicative cameras.

The designer’s dilemma, and at another level the corresponding corporate dilemma, is how often the consumer must be enabled to experience the ‘wow factor”. iPhone 5 could still be a runaway success with its global sales surpassing the previous records. Yet, the absence of wow factor in the recent smartphone launches, Apple and Samsung included, indicates that a period of five to ten years is probably the optimal period to try a breakthrough, transformative innovation to completely reengineer and redevelop a product. Put slightly differently, after every five to ten cycles of annual incremental innovations would come the need for one breakthrough transformative product. Certain industries which are stylistically oriented to update models each year at considerable costs (for example, the automobile industry) could explore an alternative of conserving investment and technological power by making stylistic changes only once in two years, and introducing breakthrough products every four or eight years.

Separate streams

Given the distinction in the design thought, experimentation, development, investment and commercialization approaches between incremental innovation and breakthrough innovation, firms would be well advised to establish distinct organizations for both the streams of innovation. Design institutes of fundamental or basic science and technology would go a long way in enabling larger firms play the rightful role of transformative agents in the industrial milieu. Clearly, the scientific and technological leadership required for breakthrough product transformation would be gutsy, visionary, consumer-centric and even iconoclastic. The right industrial leader, Apple and Samsung included, would never be averse to creating a new icon that challenges or obsoletes its own icon. As a thumb rule, targeting a breakthrough innovation from such groups for every five to ten annual incremental innovation cycles of the normal research groups (depending on the nature of industry) would be empirically and theoretically appropriate.

Posted by Dr CB Rao on September 16, 2012

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