It isn’t wrong. It just isn’t enough. Design Thinking, the widely celebrated innovation model built on observation and prototyping, seems overdue to be assessed with the same scrutiny and iterative spirit it asks us to aim at everything else. Time now to say, ok, we’ve prototyped this thing… what have we learned? What’s working and what’s not? What should the next model do that this one can’t? The increasingly evident answer is that Design Thinking is 100% effective at solving 50% of what it takes to create big innovation outcomes.What’s ahead is a model that solves the other half. by Mark Payne
The 2-Sided CoinSolving the two-problem gamestarts with a truism that is toooften overlooked. IDEA PRODUCT BUSINESSA great idea, a great product, anda great business are completelydifferent things. A GREAT IDEA Opens an attractive new strategic marketThink of the distinction space and life space.this way: A GREAT PRODUCT Fulfills a need in an effective, $ compelling way. AIN’T BAD A GREAT BUSINESS is feasible, makes money, grows over time and endures.Obvious as it sounds, these lines are blurred in innovation A great product experience—Design Thinking’s sweet spotpractice with surprising frequency, and big consequences —is highly valuable when it embodies a big strategic ideafor shareholders bankrolling a given initiative. and works within a profitable business system, but merely interesting when it doesn’t. Let’s start with some that nailed the two that too often get the mostEach has a pivotal role in transformational innovation, attention—the idea and the product—but missed wildly on the third.but none is sufficient on its own. Deconstructing some wellA great idea points the way to a two-problem solution bydefining a strategically attractive gap in a market, and a known hits and misses helpsmarket in the gap. illustrate the distinction, andA great business requires, among other things, intelligent set up a framework for theuse of assets, sustainable competitive advantage and a shift to a two-problem model.path to long term growth. RETHINKING DESIGN THINKING
GREAT IDEA GREAT PRODUCT BAD BUSINESS Now to what happens when you nail all three in equal measure… TIVO Satellite radio was a brilliant idea, and another great product. Doing to radio what cable had done to GREAT IDEA GREAT PRODUCT GREAT BUSINESS TV was genius. The product is tremendous—bringing BEATS hundreds of channels, superior sound quality and a vast mainstreaming sonic superiority It was a radical idea. Taking the music array of commercial free offerings to an increasingly beyond the core audiophiles business’s greatest point of risk and pain— car-bound consumer. The business, however, has courted by Bose, to the tune the A&R game of placing big bets on artists been nothing short of a disaster. The cost structure of a reported $50million in ahead of knowing whether they’ll be popular, attached to delivering ubiquitous satellite coverage revenue in 4Q 2010. Founded by and turning it on its head by making the and top on-air talent pushed sirius and XM toward Based on the big idea that music icons Dr. Dre and Jimmy public into the A&R department. in the Tivo was a brilliant idea served up in a great bankruptcy and a forced marriage. SIRIUS music fans deserve to hear iovine, it’s a business model process spawn a hit TV show with a 10-year product. TV fans shouted from the mountaintops what artists hear in the studio, with top shelf endorsement run, a string of hit records, and a vertically that it had changed their lives, freeing them from Beats by Dr. Dre is street- baked-in rather than bought, integrated business, monetizing the show, the tyranny of the time slot and unsatisfying attempts smart triple play of great idea/ made real through beautiful the albums of its pre-promoted stars, tours, to program the VCR. it opened a new market in DVR, great product/great business. products (designed by Robert and even the votes. it should be considered and quickly built legions of addicted consumers. Jumping into the gap created Brunner’s Ammunition) and among the most complete 360º innovations The problem was the business. They entered a market XM by the technology shift from new hi-def software. Did we of the past decade. & with a structural competitive disadvantage vs. the AMERICAN CD to lo-fi MP3, Beats built mention the headphone cords cable companies who enjoy near monopoly market a new market in the gap, don’t tangle? Total triple play. power, and control the flow of content into the home. TiVo enjoyed a brief run, but is currently valued at just The idea was brilliant—transforming water from a pure ancient IDOL 10% of its peak market cap, as cable companies have thing to a modern carrier of nutrients and flavor turned the source- predictably usurped TiVo’s turf. obsessed water world on its head, and gave consumers a new lifestyle tool. Brought to life with an iconic bottle that tells its own LEAPFROG story, delicious liquids in vivid colors that break through the clutter SPANX and for kids whose parents were at retail, and a premium price point, the business sold for over suddenly handing them electronic $4 billion, and is purpose-built to innovate on a dime to address games. no begging required. its emerging need states and tastes in the years ahead. VITAMIN products were well accepted. The problem was that it went to market via the toy business, which carries LeapFrog was another great idea into games) represented a big win for famously tight margins that eventually By any measure, spanx is a great idea and product. Turning electronic games parents who could get their kids to got the best of LeapFrog. its market (reinventing the girdle for the 21st century WATER into an educational tool (or education willingly do something educational, cap is now less than 10% of its peak. woman), great products (a fabulous range of seamless body shapers) and a great business (flirting with a billion dollar business in just ten years). With a naughtyWhat these examples highlight is that solving for a consumer need is critical but not sufficient edge as a competitive edge and legions ofto the creation of a commercially successful piece of transformational innovation. What also devout fans, it makes any innovator wonderbecomes clear is that treating the human product experience as the thing that matters above what other staid categories are similarlyall else is akin to building a one-legged stool, raising the odds of falling over. ripe for reinvention. RETHINKING DESIGN THINKING
MONEy A BeTTeR WAY Rather than start with a one-problem orientation—focused solely on finding a human problem to be solved with a new product experience—Money & Magic The first killer app to the is the identification of an array of insights defining pain points and opportunities in the consumer’s life, and a parallel array of pain points and FoRWARd works from beginning to end with the opportunities for the business that’s out assumption that there are two discrete sets to serve her. of problems to be interrogated, defined and solved concurrently—the needs of the The nature of those consumer insights consumer and those of the business out —identified through observation and to serve her. empathy—is quite familiar to the Design Thinking conversation. The commercial It says that success lies not in first analogs are not. Those commercial insights solving for consumers then hoping the may come from spotting a costly new commercial, financial and strategic value piece of infrastructure under utilized in will eventually get figured out, but in the current business, an underdeveloped consciously pursuing new intersections consumer segment that represents a long between consumer needs and business term business risk, a portfolio gap in a high- needs, and only advancing ideas where growth adjacency, an emerging technology that sightline to intersection is evident. with no defined value to consumers’ lives, or a situation where a higher margin Rather than assume a robust set of technology platform is stuck in a nicheWhat the business world That is a powerful and important Design Thinking’s core strengths, strategic and commercial choices will part of the business rather than its core. contribution that should be leveraged but builds in the missing link that precede the innovation process or be madeneeds is a model that obsesses and pushed further in the years to come. separates the merely clever from independent of it, Money & Magic makes The consumer insights are doorways toover winning the two-problem But it’s gapped in the other areas, the successful, lucrative and the questions of where to play, how to win relevance and value in the marketplace.game, serving the needs of for no other reason than it wasn’t strategically valuable. and how to build and leverage competitive The commercial insights are doorways to built to go there. advantage integral to the innovation strategic, financial and operational wins MAGICboth the consumer and the Money & Magic is about pairing up process, bringing as much interrogation for the company.company by nailing a great To unlock the full power of creativity human-centric creativity with its and lateral perspective to the needs of theidea that opens a new strategic in igniting successful innovation catalytic complimentary opposite business as to the things that touch the Where inventive thinking has alwaysmarket space, a great product outcomes, human-centered creativity capability—the commercial acumen consumer’s life. been described as a process of patternoffering, and a great business. has to become a supporting part of needed to dissect the strategic, recognition and connecting dots no one a bigger, more complete, and more operational and financial needs of has connected before, Money & Magic strategically astute whole. a business. presents that process with two sets of dots,Design Thinking was designed to There are two killer apps in and a challenge to find ideas that forgebring the power of empathetic creative Let’s call this bigger new thing Money Not to reign in creativity, but to connections between them—not unlikeproblem-solving to bear on a human & Magic…an approach that leverages propel it to ideas that are big, doable the Money & Magic approach. a cat’s cradle of connections betweenneed solved by a product experience. all that’s powerful and right about and lucrative two-problem solutions. opposing anchor points. RETHINKING DESIGN THINKING
Commercial The distinction between working this way vs. Does this impede creativity? the traditional orientation of Design Thinking Quite the opposite. Creativity is quite profound. loves an intriguing problem Design Thinking’s single-minded focus on to solve, a compelling array of consumer realities, followed quickly by a leap into product prototyping, leaves it either to chance,Creativity stimuli, an ability to bounce to someone else or to a subsequent phase of work around among different to worry about turning a consumer solution into a strategically, financially and operationally perspectives, and the adrenaline attractive outcome. rush of making new connections. Money & Magic not only says the needs of the business should be solved in parallel, but that Beyond this first killer app of using parallel sets of they can—with no compromise to the inventivenessAt Work consumer and commercial insights to catalyze idea of the idea or its impact on a consumer’s life. development, Money & Magic’s second killer app is marrying the ‘wow’ with the ‘how.’ All that’s set aside is that too common breed of ideas that might have been great for consumers, but never In a two-problem orientation, the ‘wow’ is that had a shot at reaching them, owing to big strategic, transformational idea capable of catalyzing both a economic or operational flaws. great offering for the end-user and a great business for company stakeholders. The ‘how’ is the operational, Money & Magic says that if an idea can’t actually technical and financial road map to making an idea reach consumers, improve their lives and create doable and profitable in a reasonable time horizon. commercial value, it’s not a great idea. RETHINKING DESIGN THINKING
The easiest way to bring to life the concept of the two-problem Money & Magic, Short & Sweet: solutions Money & Magic To sum it up, in the pursuit of high-impact business is structured to deliver is by growth, Money & Magic is both a philosophy deconstructing some widely and a structured methodology for developing and familiar innovation successes. accelerating transformational innovation. its core elements can be captured as follows:Mini Cooper Red Bull JetBlue 1. 2. 3.It did a spectacular job of filling a Yes, it nailed an emerging consumer The consumer-facing solution was agap in consumer choice, where opting for need for energy in a life moving faster more enjoyable experience at a greata small, relatively affordable and efficient by the minute. price, manifest initially in superiorcar meant foregoing a fun driving entertainment systems that eased the IT’S THE OUTCOME THE TWO-PROBLEM PARALLELexperience and personal statement. But the parallel breakthrough was the way it solved a pain point of the pain of the journey and made time in economy pass more quickly. THAT COUNTS. ORIENTATION INSIGHTSBut the underlying genius was the way beverage business. At the time of innovation success isn’t measured in Unlike human-centric models, Money The pain points and unfulfilled aspirationsit solved for one of the biggest pain Red Bull’s leap from a quiet business The business solution was equally meetings; it’s measured in market. The right & Magic works from day one to uncover of the consumer are identified throughpoints in the prevailing automobile in Asia to the world’s flagship energy transformational, and in fact the innovation process is one that serves this two separate sets of problems—those of observation and creative empathy. Thosebusiness paradigm. The conventional drink, even the world’s most beloved catalytic mechanism that made the end. having an idea without knowing how the consumer and those of the business— of the business are uncovered throughwisdom was that the only way to beverage brands had little pricing consumer solution economically it makes money is as valueless as knowing and to solve them concurrently rather intensive strategic, financial and operationalscale a car brand was to offer a wide power. Ignoring that it had much in viable. JetBlue broke the traditional where growth lies without having the idea than sequentially. exploration. This two-front quest deliversarray of models, each requiring its common with conventional carbonated hub-and-spoke route model that to unlock it. separate arrays of consumer and commercialown prohibitively slow and expensive drinks—it was a canned, sugary saddled conventional airlines with insights to catalyze invention.tooling process and production line. sparkling drink principally aimed costs and complexities. Doing that let at teens and young adults—Red Bull them invest in superior entertainmentThe Mini wasn’t just a unique car,but a unique business system that circumvented established beverage pricing windows by setting itself infrastructure and still hit competitive price points. JetBlue’s model stayed 4. 5.allowed a single model runningdown a single production line to be outside the carbonated soft drink frame of reference, allowing a price point 3x profitable even through the brutal downturn of 2009. ANSWERS AT THE WOWliberally personalized—a win-win higher than conventional soft drinks, THE CROSSROADS AND THE HOWfor the consumer and the bottom line. paving the way for energy drinks to The creative process is unleashed on spotting Bringing ideas to life with high order The net result is ideas become a multi-billion dollar category. patterns and new connections between the creative insight, design, sensory experience that are big, fast needs of the consumer and the needs of the and storytelling delivers the wow. Robust business, sparking ideas out of the tensions strategic, operational, financial, and technical and doable, makingThese analogs are deliberately simple to make the point. Any transformational between them. Of the many possibilities in dimensions deliver the how. transformationalinnovation challenge on the table before you has its two-problem moral equivalent view, the only ideas that advance are those innovation the morewaiting to be unlocked. with a sightline to solving for both need sets. impactful and reliable growth engine companiesFocusing on just half an answer will bring us just half an outcome. need it to be. RETHINKING DESIGN THINKING
The experience of recent years has shown thatDesign Thinking can be 100% effective atdelivering 50% of the answer.it isn’t wrong, it just isn’t enough.Money & Magic is purpose-built to winin a two-problem world.And it’s not untried.it has been road tested and delivered new levelsof commercial traction with leading companiesacross a host of sectors, from food & beverage toconsumer electronics, technology to personal care,financial services to hospitality, luxury goods to retail.it’s delivering the outcomes these companiessought from Design Thinking, but didn’t see.namely, transformational innovation becomingthe more powerful, impactful and reliable growthengine they need it to be in the years ahead.Fahrenheit 212 is an innovation consultancy that isengaged to deliver top line growth. To learn moreabout our transformational approach to innovation,visit www.fahrenheit-212.com.