Verganti’s book is unusually deep. There are an unusually large number of concepts in this book that are worth considering and acting upon, and I’ll discuss several of them over the next few days. Here is John Caddell’s description of the book:

Verganti, a favorite of this blog, attacks one of the central mysteries of innovation–how can a company successfully create a product that is a radical break from the past, and which shows the way to a new future?

We’ve seen these products at work. The mobile phone is one. The personal computer is another. We know that you can’t survey users to determine what these products will look like or what they should do. So how to create them?

Verganti’s primary point is that to do this, you have to create new meanings with your innovations. When he talks about ‘design’, that is what he means – the creation of new meanings, not simply making things that look elegant and beautiful. In fact, he contends that the latter is now a baseline skill that all firms must have to stay in the game, rather than a source of competitive advantage:

Look at a product that is sitting near you at this moment. Do you find it cool, sleek, and stylish? If so, you are acknowleding the ability of its manufacturer to interpret the trendiest standards of beauty in the market. Do you have the clear feeling that a designer has devised its shape, or that a manufacturer asked a design firm to create the product’s user interface or style? That is a clear sign that deisngers have completed their exercise – that the product is stylish, in line with the dominant language of the market – but that they have also been very conservative. This is simultaneously both the success and the failure of design as styling.
If all companies invest in incremental design and if all do it the same way using the same languages, design loses its power to differentiate one firm from another. Like total quality management, this type of approach to design is mandatory – nothing more.
The difference between [firms pursuing radical innovation of meaning] and their competitors is not in whether they pursue incremental innovaiton but in whether they invest in radical innovation: these firms periodically search for dramatically new meanings, but their competitors do not. The radical innovators know that meanings in the market alternate between periods of incremental change and periods of rapid and disruptive transition. They aim to ensure that they will lead these transitions and let their competitors suffer the consequences.

Yesterday Graham Horton said that disruptive innovation is a fashion that is misunderstood and misused by most who talk about it. In general, I think that he is right, but I also think that Verganti is talking about disruptive innovation in a useful way.

Anders Sundelin recently wrote an interesting post about disruptive innovation too. It included this talk by Scott Anthony:

There is one point in that with which I strongly agree, but also one big hole in the argument. I fully agree that:

Disruptive innovation will result in major changes but they don’t often rely on technical innovation, in fact many times the technology is quite trivial, it’s the business model, the way a company organizes and acts that drives disruption.

I think that is unquestionably true. This is one of the things that Anthony talks about a lot, and he is absolutely correct. It’s a point that needs to be more broadly understood. However, I am less convinced by his presription for developing disruptive innovations. I think that starting with focus groups to identify unmet needs is probably not the best way to approach this.

This diagram is from Design Driven Innovation, and I would argue that Anthony is talking about the top left quadrant here – innovations that are technologically radical, but which maintain the same meaning. If you start your innovation process with focus groups, it’s impossible to radically innovate the meaning of your innovation.

Interestingly, both Anthony and Verganti discuss Nintendo’s Wii gamestation as a radical innovation. This reminds me a bit of the competing explanations of Honda’s success in America. The Boston Consulting Group studied the Honda case and concluded that it was an excellent example of well-executed strategy formulation and execution. Richard Pascale then revisited the case a few years later. Based on extensive interviews with the Honda executives involved, he concluded that the strategy was emergent, fairly random, and fortunate to have succeeded. To me, Anthony’s discussion of the Wii is like BCG’s explanation of Honda, while Verganti’s is more like Pascale’s.

I find Verganti’s explanation of the Wii more compelling. Rather than it being a triumph of analysis, he describes it as:

The Wii offered a radical change in meaning compared with its competitors. It was a physical experience to be played no with thumbs but with the entire body, using natural movements common to sports and vigorous games…. The Wii transformed what a console meant: from an immersion in a virtual world approachable only by niche experts into an active workout, in the real world, for everyone.

The Wii was technologically inferior to the current Playstation and XBox consoles in terms of what were considered to be the key metrics – processor speed, and display resolution. However, by combining existing technologies (MEMS accelerometers and gaming consoles, both already in wide use in different industries) in a novel way, Nintendo created a radical innovation in meaning.

Design Driven Innovation is a terrific book. I recommend it to anyone interested in managing innovation. There are aspects of it that will challenge your core beliefs, I think (there are parts that challenge mine, at least) – but that’s one of the things that I value in a book. And like I said, if you follow Verganti’s advice, you’ll end up doing things differently – and that’s what makes things interesting, right?