3a. Lecture 2 - Masters of Innovation (9/15)

What We Did: Today’s class focused on the wise insights from several experts that were referred to as “masters of innovation”, as well as the idea of growth mindset and creative potential. A growth mindset believes that it’s possible to learn and grow because your skills and capabilities are not set in stone. Creative potential is the limitless capacity to be creative. This involves self-efficacy and guided mastery.

We first talked about disruptive innovation, an idea coined by Clayton Christensen that explains how even top companies can be overthrown by new opponents. The belief is that disruptive firms will initially offer a product with lower performance compared to traditional market standards, but with new performance features that cause it to flourish in a different market. As the product improves, it eventually displaces the former technology. Disruptive innovations are so problematic to existing firms because at first, they aren’t seen as a threat due to the fact that they don’t supply the current market demand. They’re profitable as time goes on because they offer new technologies at lower costs, leaving behind the large companies who did not invest soon enough.

The camera and film company Kodak (represented in the graph as the blue arrow), illustrates this theory. When digital cameras started being produced, they had horrible quality and unfavorable zoom features (this is the yellow arrow, which shows how the first digital cameras were a downgrade from Kodak ones). However, when digital cameras started to improve (green arrow representing new performance trajectory), their success in the market grew at a much faster rate than Kodak’s, and eventually surpassed it.

The second innovation model we discussed was reverse innovation. This is when companies produce inexpensive goods to meet the needs of the poor, then marketing the same good to a large enough demographic of the rich. As Vijay Govindarajan explains in a TED talk, it is “a rich man wanting a poor man’s product.” Developing economies are the bulk of the consuming business (China, India, etc…) Creating a product for the worst case scenario can then cause it to be marketable anywhere. Glocalization is the opposite of reverse innovation – companies develop products at home in rich companies, and then distribute a stripped down version of it worldwide.

The third model we looked at was blue ocean strategy. Red oceans are industries with boundaries that are defined and accepted. Here, companies simply compete head-to-head by trying to outperform one another within the same business and market constraints. Blue oceans are untapped markets with little to no demand yet – basically all industries not in existence today. Demand is created rather than fought over. A company will alter its boundaries and strive to make the competition irrelevant using a completely new and unimaginable product. We can determine if a business is employing the blue ocean strategy by arranging it into a four actions framework grid, which highlights factors that are created, reduced, raised and eliminated.

The final innovation model we learned about was the company IDEO, which is one of the original design firms out there thanks to their signature design thinking process called the “deep dive”. The deep dive is the process of designing a better product with a group of diverse team members to get the job done. Ideas pour out for hours, and everyone builds on each other’s ideas. People are actually encouraged to be absurd. David Kelley, founder of IDEO, feels that is everyone suggested the same old “appropriate” ideas, nothing new would come of it and there wouldn’t be anything to narrow in on. He also believes that approaching challenges from a human perspective yields some of the richest opportunities for change. The three factors to balance in every innovation program are

1. Human factors (desirability)

2. Business factors (viability)

3. Technical factors (feasibility)

IDEO consults other firms on business management strategy, and enforces a process of inspiration, ideation, and implementation. Above is a video that shows just one (of many) examples of an IDEO design team improving an existing product under a very strict time constraint.

Key Takeaways and Future Applications: Today’s lecture gave me a plethora of new information that made my mind race. For example, it took me a very long time to wrap my head around the idea of blue ocean strategy. Until today, I had never even considered the fact that market space could just be created out of nowhere. It’s difficult for me to imagine this because “market space” is merely a social construct, and not an actual physical reality. Therefore, I needed an actual example of this idea to help me understand it. I had been to a Cirque du Soleil show a few years ago, so I knew firsthand that the shows were unlike anything else I had ever experienced. I didn’t know how innovative they really were until I thought about it. Cirque du Soleil disrupted the circus industry by being more artistic and appealing to an older and more mature audience. The shows incorporate music and theater with acrobatics and dancing. Additionally, every show has a different theme, encouraging people to come again. Traditional circuses, however, are all more or less the same. I also thought it was really interesting how the company invented their own made up language called “cirquish” which was what all the performers spoke. This allowed the company to be successful on a global scale because there were no language barriers to prevent success in different places.

I really enjoyed learning about disruptive innovation and asking myself: Why existing firms fail? Clayton Christensen’s answer is because they listened to their customers. This reminds me of the Steve Jobs biography that I read over the summer. At one point, people at Apple tossed around the idea of doing market research to make their personal computers meet the demands of consumers. Jobs wholeheartedly rejected this notion. He said that customers don’t know what they want; they need to be shown what they want. When companies only meet the demands of the consumers, they aren’t innovating. They see no financial logic in entering the next generation of technology, and this is when newer firms surpass them. I agree with

In my opinion, society needs to prioritize reverse innovation if we want to bridge the gaps in social class. Innovations for the poor will transform the rich and rebuild infrastructure of countries like the U.S. Some countries think, “a small sales revenue in India is okay,” but India is growing and on its way to becoming a major market, and companies ignoring countries like this will miss out on major success in the future. We must innovate to capture growth. Glocalization worked fine when rich companies made up most of the market and others offered little opportunity, but those days are now over. Reverse innovation is the practice of the future.

Ultimately I would have to say that the most valuable thing I learned today was design thinking. It’s a concept that I can use everyday, especially when I start my career. I hope to be a marketing executive in the future; so coming up with good ideas for products is crucial.

I decided to give the process a try using my most common daily annoyance: my UMD student ID card. This is the “inspiration” step of design thinking. I hate the inconvenience of having to swipe my card to get into any building. It’s such a pain getting my card out of my bag or pocket wherever I go, and it’s especially annoying doing this in the rain or freezing cold. I’ve also noticed that this is difficult to do when students have a lot in their hands. I can recall plenty of times (and I’m not the only one!) coming back from the diner while holding my drink and cell phone in one hand, my to-go box in the other, and trying to balance a banana on top of my box. Then, when I finally get back to my dorm, I have to put all my food down on the ground, get my ID card from inside my backpack, and let myself in. The worst part is, I have to make two trips because I can’t carry all my food inside and swipe myself in through the two barriers on the way to my room at the same time. So while I’m making my first trip inside, my remaining food is sitting outside unsupervised and getting cold.

Using all of these observations, I tried to think of a solution. This is the “ideation” step of design thinking. Through brainstorming I came up with many ideas, but a lot of them weren’t economically viable. For example, UMD will probably never be able to afford the technology for retina scanning recognition to get into a building. Therefore, I had to think realistically. My idea was an electronic ID card that would use near field communication to automatically unlock building doors when I came within a small range. Now, as long as I have the card on my person (in my pocket, in my bag, etc.), I don’t need to physically swipe it to go to my room.

Of course, I can’t really attempt the third step of design thinking (implementation) because I don’t have the means to create such a product. However, I would like to see this actually become a prototype someday because I find it to be a good solution to an existing problem. If this kind of solution can form from one person using design thinking, I can’t even imagine what would be generated with an entire design team. To achieve my goal of being more innovative, I plan on employing this process to as many daily situations as I can, as I’m a firm believer that practice makes perfect.