Digital Business Delivery-1
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MN7030Session9DesignandInnovation.pptxMaster of Business Administration Digital Business Delivery Session 9 : Design and Innovation
Professor Nigel Caldwell
Recap last session: Process design and mapping
Services are not some residual of products
Service is about co production and
Businesses use servitisation
The Experience economy is arguably an extension of the service economy
Todays agenda
Design and Designers – or any function that has a powerful voice and the ability to sway
The Resource Based View in action
What is our organization about – key competencies, playing to strengths
Importance Performance matrix?
Operations Resources
Market Requirements
Operations strategy reconciles the
requirements of the market with the
capabilities of operations resources
Strategic Reconciliation
Operations Strategy
Forecast level of demand
Rapid technology change
The increasing strategic importance of product and service development
Shortened life-cycles
Fragmented markets
Means of building capabilities
Involves all parts of the business
Operations resources
Market requirements
Product and service development
Adapted: Slack and Lewis. (2002) Operations Strategy, p392.
‘design n. & v. n. 1 a a preliminary plan, sketch , or concept, for the making or production of a building, machine, garment, etc. b the art of producing these … 3 a plan, purpose or intention. 4 a an example or a completed version of a sketch, concept, or pattern. b an established version of a product (one of our most popular designs). v.tr. 1 produce a design for (a building, machine, picture, garment, etc.). 2 intend, plan, or purpose …’Concise Oxford Dictionary, 1997 edition)
‘Design is important because if it was not designed, it could not be made.’
(Edward, aged 10)
Design
Redesigning the emergency ambulance
Emergency response
Fast, light
“Scoop and go” – just take to hospital
Design – incremental
Measure: response time
NB Ambulance Trusts run ambulances
Emergency response
Treat – slow, big
Treat at scene – reduce hospital admissions
Design radical
Measure: response time
Hospital Trusts run Hospital Trusts
http://www.qualitywatch.org.uk/indicator/ambulance-response-times
https://www.metropolismag.com/design/ambulance-of-the-future/
Agenda
The role of innovation in creating competitive advantage
Product and service design realities
Enabling effective creativity
Combining product and process design
Barriers to innovation
Exploring “disruptive innovation”
New models of innovation
Why innovate?
‘Firms that get to market faster and more efficiently with products that are well matched to the needs and expectations of target customers create significant competitive leverage’
Wheelwright and Clark (1993) Revolutionizing Product Development.
Creating competitive advantage:
Scarcity
Imperfect mobility
Imperfect imitation
Imperfect substitution
Resource Based View
‘Innovation is a product of the interaction between necessity and chance, order and disorder, continuity and discontinuity.’ Nonaka (1990)
Creativity & Implementation
uncertainty regarding the final design
certainty regarding the final design
time
choice and evaluation "screens"
concept/s
large number of design options
final design
specification
one design
Traditional view of design - variation reduction
Men with a mission
The problem
The client
Richard Seymour & Dick Powell
products:
currently makes “low-end” bathroom suites
bought mainly building contractors and middle-income customers in 30-50 age range
committed to move up-market
typical price £372
company:
Ceramic bathroom manufacturer est. 1939
850 strong workforce
turnover (1997) £40.8m, net profit £1.8m (4.4%)
Main markets: UK, Benelux, Germany, Greece, Singapore, Hong Kong & Middle East
competences:
ceramics; some traditionally made by labour intensive pouring, moulding, drying, glazing and firing, others made by using state of the art pressure casting techniques
competition:
Armitage Shanks, Twyfords, Ideal Standard, Hermitage as well as imports from EU and Middle East. Shires’ markets are relatively volatile
distribution:
via bathroom suite merchants
concept generation
screening
evaluation and improvement
prototyping and final design
preliminary design
design brief
production
pre-design
04 Understanding Capability.mov
Understanding capabilities
The stage gate model
The stages
that appear in
Slack text book
What is the role of the designers?
concept generation
screening
evaluation and improvement
prototyping and final design
preliminary design
design brief
production
pre-design
Engaging designers
What are the objectives of customers, marketing, operations, and the designers?
Are there any conflicts amongst these groups?
12-month deadline (for Paris show)
must be “manufacturable”
target price (for complete suite) around £900-1000
£250,000 for development to include pre-production tooling and marketing costs
feel: “modern classic with a hint of revival”
“a stunning bathroom suite that was going to sell”
The design brief
flushing must be push - button
12-month deadline (for Paris show in March 1998)
investment commitment:
£250,000 for development to include pre-production tooling and marketing costs
target price (for complete suite) around £900-1000
must be “manufacturable”
“a stunning bathroom suite that was going to sell”
feel: “modern classic with a hint of revival”
Charles Kyriacou
customer
marketing
interpretation of
expectations
expectations
product / service
specification
product/service design
product / service
operations
The design loop
The market
The creative bit
Where do ideas come from?
concept generation
screening
evaluation and improvement
prototyping and final design
preliminary design
design brief
production
pre-design
Ideas from:
Internal
Analysis of customer needs
Suggestions from customer contact staff
Ideas from R&D
External
Competitor actions
Customer suggestions
Market surveys
Other
Other products / services
internal sources
marketing
department
analysis of
customer needs
suggestions from customer contact staff
ideas from research and development
market
surveys
suggestions from customers
actions of
competitors
concept generation
external sources
Concept generation
Enabling effective creativity
Define market boundaries
Understand market dynamics
Identify new market trends
Identify new technological trends
Integrated future searches
Learning from others
Involving stakeholders
Involving insiders
Using mistakes and ‘failures’
Communication and connection
‘Search’
‘Select’
‘Implement’
Define market boundaries
-what market are we in?
-are there new markets we can access?
Understand market dynamics
-where’s the market going?
-what factors influence change? (organics market in UK linked to social issues and inversely to economic climate!)
Identify new market trends
-what about markets that don’t exist?
-how can we pick up early signals of emerging markets? (crazy frog in UK)
Identify new technological trends
-how can we identify future technologies? – suppliers, conferences, forums, R&D,
Integrated future searches
-alternative futures / linked to scenario planning
-parallel futures
Learning from others
-benchmarking, reverse engineering (e.g. South west airlines benchmarking against F1 to improve turnaround times for planes)
Involving stakeholders
-using customers for ideas – e.g. Novopen for diabetes
-CIT, panels, surveys
Involving insiders
-the huge value of employees in product, service, and process improvement
-ask…when did you last speak to your internal customers? (Marketing don’t even know who they are!)
Using mistakes and ‘failures’
-viagra, pritt stick, and post-it notes were all a result of mistakes
-failure is an opportunity
Communication and connection
-the value of communication internally and externally. Example of professor at Warwick leaving a fund for donuts and coffee to encourage interaction
The initial concept
What was the concept that was created?
concept generation
screening
evaluation and improvement
prototyping and final design
preliminary design
design brief
production
pre-design
What will Shires make of it?
Ideas from:
Internal
Analysis of customer needs
Suggestions from customer contact staff
Ideas from R&D
External
Competitor actions
Customer suggestions
Market surveys
Other
Other products / services
The client response
What will Shires make of the concept?
Evaluation
concept generation
screening
evaluation and improvement
prototyping and final design
preliminary design
design brief
production
pre-design
What are the screening issues raised by marketing, operations and finance?
Why was time to market
so important?
delay in financial breakeven
delay in time to market
development costs
development costs of delayed project
time
cash
sales revenue
cash flow
delayed sales revenue
delayed cash flow
A challenge
Refining the concept
Benchmarking
Practicalities
What was involved at this stage?
concept generation
screening
evaluation and improvement
prototyping and final design
preliminary design
design brief
pre-design
production
concept generation
screening
evaluation and improvement
prototyping and final design
preliminary design
design brief
production
pre-design
Evaluation and refinement
What were the pressures on the design and the designers at this stage?
Presenting to the board
16 Presenting to the board.mov
Focusing management attention
KNOWLEDGE ACQUISITION
CONCEPT INVESTIGATION
BASIC DESIGN
INITIAL TESTS
PILOT PRODUCTION
MANUFACTURING RAMP-UP
LAUNCH
ABILITY TO INFLUENCE OUTCOME
MANAGEMENT ACTIVITY PROFILE
TIME
70% of a product’s costs determined in the design stage
Let’s summarise the story so far….
Loo design in the UK is “stuck in a time warp”
Existing products uniformly difficult to use and clean
Proposal - new loo that incorporated some of the best features and technology already established in Japan in a modern form
Key features:
self-cleaning coating
rimless
seat flush
no dirt-traps
urinal back - reduced “splash factor”
Aesthetics:
tall, sleek shape (Macintosh Loo)
Shire’s Response –
Liked the aesthetics, but design challenged operational capabilities
concept generation
screening
evaluation and improvement
prototyping and final design
preliminary design
design brief
production
pre-design
Making it
What did this stage involve?
Was this a successful design?
Product design
Process design
Traditional product and process design
Products and services should be developed in such a way that they can be created effectively
Processes should be developed in such a way that they can create all products and services which the operation is likely to introduce
Decisions taken during the development of the product or service will have an impact on the decisions taken during the development of the process which produces the product or service or vice versa
Product or service design
Process design
Combining product and process design
Product/service and process development
New Core Process
Next Generation Process
Redesigned Processes
Minor Modifications
Add-ons and Enhancements
Extension of Product/Service Range
Next Generation Product/Service
New Core Product/Service
Degree of Product/Service Change
Degree of Process Change
Research and Advanced Development
‘Pioneer’ Process
Developments to Process
Extension to Processes
Modifications to Process
Modification to Product/Service
Extension to Product/Service
Development of Product/Service
‘Pioneer’
Product/Service
Degree of Product/Service Change
Degree of Process Change
Research and Advanced Development
Volvo 1970s and 80s
Internet banking service
Call-centre banking service
Branch banking service
The ‘Mini’ 1960
Boundary for service operations
Boundary for manufacturing operations
Market testing
Into production
The launch
Some aesthetic features incorporated into design that was launched on schedule
No radical features incorporated (e.g., self-clean coating, integral flush seat)
However, customers like the “Icon Suite” and Shires couldn’t make enough of them
Suite now being developed for export markets
Results
Barriers to innovation at Shires
Shires may be stuck in a “technological paradigm”
Manufacturing seem willing to try new approaches, but these are extensions of existing competencies and do not involve radical process development
Although Shires invited Seymor-Powell to be a design contributor, there was an element of “NIH”
Shires had inadequate competence in new areas (plastics / coatings)
Barriers to innovation at Shires
Charles’ job security may be critically dependent on the success of the new suite - this may engender a high degree of conservatism
two agendas:
Consultants want technology stretch, maximum attention to perceived customer needs, exposure of design expertise, please the cameras
Shires want a competitive edge achieved by aesthetic enhancement of standard product
marketing (Charles Kyriacou) appear to understand their markets
the “compromise suite”, the “Icon” is selling very well
manufacturing have coped very-well with changes
BUT…
Is there really a problem?
Although it is Shires expressed intent to move “up-market” the assumptions underpinning their analysis of future market needs are the same as for their current markets - this assumption (that price is v.v. important) pervades the firm
Although the new suite is selling well, this is as a result of styling changes only. These are easy to copy, and so Shires gains no “leader advantage”
Manufacturing have “coped,” but the fact that they had to cope implies a functional mentality, and approach to innovation
Adopting the “radical loo” design, Shires would risk:
Focussing resources on proposals that (they think) customers will reject
That even if accepted by customers, will offer initially, lower profit
Offering a product that will (almost certainly) have initial “teething” problems that in turn result in lower price / performance than existing technology
Risk
the Icon loo:
has no seat flush
is not an urinal loo
is not a self-cleaning loo
more generally, several new technologies have been aired in the public domain that (we think) will be very attractive to certain customers
at the rate that Shires solve their problems, some other firm is going to implement these innovations before Shires
The near-term problem?
... the short term Shires have lost what was potentially a major competitive edge that was difficult to copy
… in the longer term they have an approach to managing innovation that in fact stifles innovation
Fundamentally ...
2006…. Icon gives you crisp fresh looks, solid craftsmanship and new ideas - like the innovative optional integral towel ring.
Ignoring these radical technologies is, from Shires’ perspective, a good idea, is good management
Shires are “playing the game the way its supposed to be played”
Their business decision-making is sound
Their resource allocation appears sound
They listen to their markets
They track the competition
The root cause of the failure?
What then can we learn from this case?
Resource dependence - customers and investors effectively control the patterns of resource allocation in “well-run” companies - “we listen”
Small markets don’t solve the growth needs of established, (especially large) companies (Shires have a history of selling high volumes at low margins)
The ultimate uses or applications for disruptive technologies are unknowable in advance - failure is an intrinsic step towards success
Technology supply may not equal market demand - the attributes that make disruptive technologies unattractive in established markets are often the ones that constitute their greatest value in emerging markets
Clayton M. Christensen, “The Innovator’s Dilemma”
Harvard Business School Press, 1997
Forecast level of demand
Rapid technology change
The increasing strategic importance of product and service development
Shortened life-cycles
Fragmented markets
Means of building capabilities
Involves all parts of the business
Operations resources
Market requirements
Product and service develop-ent
Adapted: Slack and Lewis. (2002) Operations Strategy, p392.
Key learning points from second case points
Innovation has vital role in creating competitive advantage
Product and service design is often typified by high levels of conflict, delays, and missed opportunities
When designing products or services, think about the process that will deliver them
Traditional firms often find it hard to innovate. Disruptive innovation requires a new mindset towards innovation
New(er) business models tend to co-create with customers and/or suppliers rather than go it alone and fail small and often to innovate e.g. Zara
