Managing Innovation for Long-Term Value

Design Management Journal, Winter 2004 by Walton, Thomas

Innovation is the cornerstone of corporate success and longevity. While tradition and doing routine things well are important, it is also clear that organizations need to keep reinventing themselves. For example, Kodak is in the midst of a major transformation while it repositions itself as a leader in digital imaging. Apple is constantly trying to balance its reputation as user-friendly but cutting-edge. Telephone companies juggle the demand for wireless versus landline service and ponder how to blend communications and entertainment media. Research hospitals are using their skills and resources to become incubators for new drugs. Delivery firms are now logistics experts, and all manner of service firms-from auditors to designers-are also acting as strategy consultants.

It is in this context that the Design Management Review delves into the topic of innovation. Perhaps appropriately at this point, after 15 years as the Design Management Journal, our publication is taking on a new name. In this first issue under the new banner, contributors explore how design innovation can be managed to build long-term value. Innovation, as it is addressed here, is not simply about a creative process but about a culture that nurtures and integrates the frontiers of creative thinking as a critical dimension of business strategy.

Managing design and the quest for innovation

Writing the keynote essay, Bettina von Stamm, author of two books on innovation, asserts that designers have the right skills to move the innovation effort forward. They have a mindset that makes them comfortable dealing with unfamiliar concepts, fuzzy problems, and high levels of ambiguity. They are not afraid of experimentation and are willing to challenge the status quo. At the same time, their vision is holistic with a unique focus on quality. With these insights, they will generally opt for significant change over simply surviving. More pragmatically, they have a special understanding of consumer needs, and their talents arc essential to such business endeavors as product development, facilities design, communications, and branding. At the same time, von Stamm notes that innovation depends on teamwork and that design's impact depends on its integration across an organization's culture. Extrapolating from case studies, she recommends that executives motivate designers with vision and a clear decision-making process, that major design issues be handled in-house, that broad challenges not be over-fragmented into isolated design tasks, and that designers propose solutions that build on realistic assessments of corporate capabilities and strengths. She offers suggestions for facilitating the partnership between innovation and design and cites research that shows that such a relationship makes a positive contribution to the bottom line, expanding market share, differentiating a company from competitors, improving efficiency and the ability to customize products, and providing the basis for discerning and responding to unmet consumer needs.

Alison Rieple, professor of strategic management at the University of Westminster's Harrow Business School in London, reaffirms von Stamm's assessment of the designer's role in innovation. Like von Stamm, her thesis is that designers think differently. They look to the future, imagining what may be. They stress possibilities and opportunities. This contrasts with much corporate thinking, which instead emphasizes problems and solutions, desires predictability, and is resistant to change. Rieple measures these variations with Kirlon's Adaption-Innovation inventory (KAI), an instrument that scores creativity, problem solving, and decision-making styles. People in the 32-to-60 range are classified as highly adaptive, they prefer to do things better. Those rated between 120 and 160 are highly innovative, they prefer to do things differently. In an international study, general managers scored 96, and design managers, 11 .The 15-point variation is noteworthy, indicating the two groups will produce very different solutions to the same problem. In addition, those who are adaptive are more likely to be methodical, reliable, and masters of detail. Individuals who are innovative, however, tend to approach tasks from unexpected angles and to manipulate a problem by querying basic assumptions. Rieple concludes that successful organizations need both talents-the goal is to devise ways to blend the two types. One technique is to nurture "coping behaviors" that keep each stylistic profile open to the ideas of the other. Another strategy is to create teams that include "bridging" personalities who speak the language of both groups and act as translators and integrators. From an innovation perspective, the message is to go beyond merely tolerating diversity and instead to welcome and actively manage it.

The hands-on approach to diversity and the search for innovative business opportunities is the theme of a contribution from Bob Sutton, professor of management science at the Stanford Engineering School, in PaIo Alto, California. In an excerpt from his book, Weird Ideas that Work, Sutton distinguishes between routine and innovative work, between the tasks of "exploiting old ideas" and "exploring new possibilities." Many companies excel in the routine, and that is as it should be. These responsibilities are the source of profits and command most of an organization's resources. On the other hand, innovation is also necessary, a pathway to future profits. Fewer corporations, however, successfully master this arena, because it requires attitudesenhancing variance, seeing old things in new ways, and breaking from the past-that are at odds with the managing the routine. Moreover, the investment in innovation, even if modest, occurs in a context in which the risks are high, failure is the norm, and profits are elusive. Button's talent is to clarify the nature of innovation and articulate strategies that stimulate the spirit in this challenging but valuable corporate activity.