Thanks to Cato who once again this year kindly invited me to the Wellington simulcast of the AG Ideas Business Breakfast held in Melbourne yesterday. The theme for the AG Ideas 2012 Business Breakfast was how companies could use design and innovation to compete effectively in high-cost economies. Technical issues prevented those of us on this side of the Tasman getting the video feed, but there was plenty to listen to, as Dana Arnett, Dale Herigstad, Mauro Porcini and MC Göran Roos steered us through the morning. Today, I want to touch on a couple of points raised by Göran Roos in his opening statements and one or two takes on an interesting, point-packed address from Mauro Porcini, Chief Design Officer, 3M.
Porcini pitched a new social scenario; one where consumers are not just savvy, expert and demanding, but also difficult to categorise and understand because of four overlapping generations (boomers, X, Y and Z) and different geographies and cultures (which themselves were in different states of market maturity). The emergence of this social scenario, he said, has led to a sea-change in product development – where companies such as 3M have moved from developing products focused on functional tasks to releasing products that now essentially accompany experiences intended to fulfil emotional needs.
He talked about increased irrationality on the part of customers, or rather, needs that are much more difficult to rationalise, and that catering to these whimsical audiences requires organisations to function and innovate outside their comfort zones. At the same time as it jeopardises traditional corporate approaches to product development, this new market dynamic hands leadership opportunities to those prepared to mix innovation (meeting people’s needs) with customer engagement (through storytelling and prototyping)
Products now operate at three levels, according to Porcini. They must compete effectively in an age of mass customisation (meaning they must provide what he referred to as “intimate pleasure”); they must work as a signal to others that the brand user belongs to a community (because consumers want to be able to send signals about varying types and levels of status to those around them); and the products themselves must convey and carry meaning (so there must be a natural flow between the product and people).
Design, he asserted, can be a powerful contributor to all of these operations … as long as companies don’t simply see design as styling. His views echoed those of Roos earlier who, in his opening statements, said that design continues to be misunderstood, particularly in the business world. Design, says Roos, has been assigned the label of art. However, in today’s context, it is not about developing pretty things at all, but rather creating value. The objective of design is to generate and achieve behavioural change; change that is desirable for the user, beneficial to the supplier and positively impacts other stakeholders.
Apple is a living example, Roos said, of the triumph of design over innovation. Apple didn’t so much break new ground, as redesign emerging ground, and that when they do this well, everyone in the Apple ecosystem benefits. Clearly the Apple brand benefits. But so do those people who design apps that can be used on Apple devices and so do the telcos that carry the data generated by these apps. A point very well made that for me set up a key premise for the morning.
I’ve long held and expressed the view that most of the innovation hype is based on a myth – and the myth is that if you innovate, you will succeed. Not true, Roos seems to be saying. You don’t have to be the innovator – if you back your design approach enough to trump what the market has seen already. Not true either, according to Porcini, if you think that innovation revolves around products. Increasingly you must look to innovate experiences, and design products to deliver them.
Forget about satisfaction, Porcini asserted. Deliver customers magical, surprising experiences. Insist on it. So many companies, he says, set out to be exceptional and then let the magic and the pleasure be ground away during development. I smiled broadly, as did everyone around me, at his views on research. The secret, Porcini says, is to conduct research and to listen to it, but not to necessarily believe everything you’re told. Sometimes what you’re hearing is not market rejection, it’s market indecision. It’s literally a lack of imagination on the part of those being polled to see what it is you’re asking them to give an opinion on. Design led companies, he says, get that. They learn, they adjust but they don’t compromise.
Experiences are too important to be left to chance. Instead they must be carefully designed. Porcini talked us through how great experiences have a strong pragmatic flow that mirrors the sales funnel. People buy into an idea. They see and purchase. They receive/unpack and they discover. They use and interact. They keep and live with the product. And one day, they dismiss the product from their lives and they leave it behind (perhaps for an upgrade, perhaps for a competitor).
Simultaneously, he says, people’s experience with a product evolves through an emotional flow. They start out by having a visceral experience (the impulsive, purchase decision). Then they have an interactive relationship (where they immerse themselves in the product and enjoy it). At this stage, they accumulate loyalty. Finally, they have an expressive relationship, during which time they want to share their experience with others and recommend the product to all their friends. He didn’t explain why customers then move on from this expressive relationship to leaving the relationship (assuming that the pragmatic flow and the emotional flow mirror each other as a logic” magic combination), but as I said earlier I suspect it is because they upgrade and the process starts again, or they are tempted to make an impulsive decision elsewhere. In which case, I wonder whether we should see both processes as linear.
What the new social scenario does demand though, says Porcini, is that brands pack as much experience into each part of the relationship as they can. Nothing should be exempt – product, packaging, the purchase experience, web, interaction with people, facilities – all should work to delight and deliver magic.
Finally, let me share Porcini’s definition of a “design strategy” because I think it is quite different from how many companies would define it. Design strategy, he says, is business strategy that leverages design. What I got from this is that value is designed not generated, and it is quite literally born of how a company thinks.
That thought led me to review my own definition of brand strategy, which I have now amended to this. Brand strategy is how a business leverages its brand(s) to achieve its business goals. (Brands will only achieve those goals if they are prepared to intelligently design for value and competitiveness.)
So where does all this leave us? Perhaps my biggest take was that amongst the world’s big product brands at least, the war for market share is now firmly experience-driven. The experience race is on. Expect those experiences to not only come thick and fast, but also for them to become less spontaneous as companies look to design more and more of how they deliver as well as what they deliver. Expect too that the value of each experience will commoditise much more quickly as consumers come to expect surprises-by-design as a matter of course. Finally, understand that innovation in such an environment could perhaps be more accurately described as the opportunity to supercede rather than the continuing invention of the “new”. Companies like Apple have shown that out-delivering by out-designing can be highly effective if second-to-market is better-in-market.
Overall, lots to think about. Huge thanks once again to Cam and the Cato team for the invite and the hospitality.
The fall of the wall between customers and culture
Great brands unearth
Sense and Seratonin
Participation versus differentiation