Latest / Mechanical Engineering Made Simple / (#63) Structuring Innovation with Strategic Design Tools

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(#63) Structuring Innovation with Strategic Design Tools · Mechanical Engineering Made Simple

• 0:00
  Welcome back design junkies to Mechanical Engineering Made
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  Simple. If you enjoy the podcast, show
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  your support with a like a follow or comment.
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  Let's keep designing, learning and levelling up together.
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  Today we are diving deep into the whole new product
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  development ecosystem, but we're not really looking at the CAD
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  drawings today. No, not at.
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  All we're looking at the organizational architecture, the
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  the strategies and the tools that actually turn that raw
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  creativity into something that succeeds in the market, right.
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  Our mission is to give you a shortcut to understanding the
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  system you need for real breakthrough design.
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  Because, you know, having the best engineers.
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  That's just not enough if the company's built for tiny
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  improvements instead of real innovation.
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  Exactly. And we've pulled apart the
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  source material to find the levers that really matter.
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  We basically boiled it down to four critical areas.
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  OK, first strategic alignment and trust.
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  Then how to manage the transition of those super high
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  risk projects. Third, developping.
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  You know a deep customer insight that goes way beyond the
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  obvious. And finally the big one,
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  Userdriven design all. Right.
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  So let's unack that first one, the whole organizational
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  challenge of trust and strategic alignment.
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  I mean, how do you create an environment where engineers and
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  product teams actually believe that their time spent on risky
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  ideas is a good investment? Yeah.
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  And not something that's just going to get cut the second
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  their quarterly numbers look a little shaky.
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  Exactly. So what's the fundamental tool
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  for building that trust? It it has to start with visible,
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  sustained commitment from the very top.
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  The most essential first step is forming an innovation steering
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  committee. OK, a steering committee.
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  And it has to be a subset of the senior management team, and they
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  have to stay actively, you know, consistently involved.
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  The sources say the bare minimum is one meeting a month.
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  One a month, that regular cadence that sends a signal
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  then. It sends a huge signal, says
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  innovation is a real strategic priority, not just a buzzword,
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  and that's how you build trust down the trenches that.
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  Visibility is so key because if management only only pops up
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  when something's on fire, everyone just learns to avoid
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  risk. They do.
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  And that committee, their first job is to connect the high level
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  strategy to what's actually happening on the ground.
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  They need 2 main tools to do this right.
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  The first is running what are called portfolio rollout
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  scenarios. Now, I know that sounds a little
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  dry, maybe a bit like corporate planning, but the sources really
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  hammer home that this is often a huge aha moment for management.
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  Why is that? Because it just completely
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  eliminates otimistic guesswork. These scenarios, they paint a
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  realistic picture of the number, the size, the magnitude of
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  products the organization absolutely must launch to hit
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  its financial goals. So it's the hard numbers.
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  It's the hard numbers, and when management sees that, it often
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  reveals a a really uncomfortable truth.
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  Which is. That their current way of doing
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  things, they're incremental NPD process.
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  It just can't support the financial targets they've set.
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  It's impossible. It forces them to confront that
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  they need a drastic change. So it's basically math proving
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  that if you keep doing what you're doing, you're going to
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  fail. That's a powerful motivator.
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  It is a very powerful motivator and once that's clear, you need
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  the second tool, product development go no go criteria.
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  And these have to be set up before any ideas are even on the
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  table, right? Absolutely.
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  Before the goal is to make sure decisions are based on objective
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  criteria. You know, market appeal.
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  Is it feasible? Does it meet a customer need
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  instead of who has the loudest voice in the room?
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  Right, taking the politics and personal preference out of it.
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  Exactly. It brings rigor and consistency
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  to the whole thing. So once we have that strategic
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  commitment, you inevitably hit the next big wall the the
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  radical innovation, no man's land.
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  Yes, incremental projects, they're fine.
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  They fit into a standard stage gate process.
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  But for the really uncertain stuff, breakthrough innovation,
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  those processes just fall apart. Why do the rules breakdown
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  there? Because they're a completely
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  different beast. They get hit with four types of
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  uncertainty all at the same time.
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  Four types. Yeah.
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  A standard gate system is designed to reduce a known risk.
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  Radical projects. They face technical uncertainty,
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  of course, but also the huge market uncertainty.
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  Sales forecasts are basically useless because the market might
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  not even exist yet. OK.
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  So technical and market, what are the other two?
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  You also have resource uncertainty and this is the
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  critical one, organization uncertainty.
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  That one sounds like the real killer, the organizational
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  uncertainty. It seems like that's what really
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  stops everything. It is because all that
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  uncertainty just wreaks havoc with the business units that are
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  supposed to, you know, eventually receive this project.
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  They have short term profit pressures, right?
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  They're worried about this quarter.
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  Precisely, it creates this structural gap.
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  The core business is measured on sales volume, on efficiency.
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  They have 0 incentive or patience for some radical new
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  thing that might start small and take years to pay off.
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  So the things you actually need to do, build a supply chain,
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  educate a new market, it all just falls into a void because
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  nobody officially owns that messy middle phase.
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  Nobody owns it is the perfect way to put it.
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  So this sounds like a problem you can only really solve
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  structurally. How do you bridge that gap
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  without just killing the project?
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  The transition management has to isolate the project so it has
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  time to mature. Companies like DuPont for
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  instance, when they were pioneering their bio based
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  materials, they often form a whole new dedicated business
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  unit for it. So you build a protective bubble
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  around it. You do, or you see joint
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  ventures like Corning Glass Works did for things like
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  fiberglass and silicones. Housing the project outside the
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  main business gives it the flexibility it needs and Shields
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  it from the tyranny of the quarterly numbers.
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  You have to be so clear about that transition phase.
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  It's not R&D anymore, but it's not a profitable business yet
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  either. OK, let's shift from that
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  internal structure to getting external insight.
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  We all talk about the voice of the customer, but you know,
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  traditional market research often just confirms what you
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  already think, right? It's.
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  Good for evaluating existing ideas, not finding new ones.
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  To find those breakthroughs, you need to uncover the latent
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  needs, the stuff customers can't even tell you they want.
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  Yeah, We have to understand their fundamental problems, not
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  just listen to them complain about features.
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  And this takes us into what's called contextual inquiry, or,
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  you know, ethnography. Ethnography, unlike normal
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  research, which starts with a hypothesis, it wants to prove
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  ethnography is inductive. It's all about observation and
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  context. The real learning happens when
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  your team is physically in the environment where the behavior
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  is happening. And the sources give some
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  amazing examples of why that's so critical.
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  I can't stop thinking about that German farmer case study.
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  That was a classic. He told the researchers his
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  tractor was perfect. Don't change a thing.
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  And he meant it. He thought it was perfect.
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  But then the design team goes into his shed and what do they
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  find? He had made over 20 of his own
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  modifications to the tractor. Over 20 rigging up levers,
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  adding supports. Each one of those modifications
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  was a latent unmet need that he just solved himself because he
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  couldn't even articulate it to the company.
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  So observation revealed a huge design failure that was hiding
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  behind a satisfied customer. It's incredible, isn't it?
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  It's like that C Max Cement company case.
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  They started calling themselves the Domino's Pizza of the cement
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  industry. Their focus wasn't even on the
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  cement itself. No, they were mapping the
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  customers pain. They figured out the enormous
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  hidden cost and and just the frustration that came from a
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  supplier not showing up on time. Exactly.
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  A delivery that's early or late, it can throw off an entire
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  construction schedule. You're talking massive
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  quantifiable waste in labor, in materials.
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  Hold on. So they stopped competing on the
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  price per bag of cement and instead started selling
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  certainty reliability. That's it.
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  They moved the goal posts by solving that underlying pain
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  point with the superior guaranteed delivery service.
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  They could actually charge a premium.
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  They redefined value by eliminating the customers pain.
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  And Speaking of eliminating things, how do we get customers
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  to get past the limits of what they think is possible?
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  That's where a customer idealized design or CID comes
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  in, right? Yes, CID, it's a powerful tool.
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  You ask users to pretend the current system was just
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  destroyed overnight, and now they get to design the perfect
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  replacement from a clean slate. It's powerful because it forces
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  that breakthrough thinking. Users aren't limited anymore by
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  what they think is technically possible today.
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  The best example is that IKEA shopping experience study.
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  Right. People were frustrated.
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  They felt lost in the stores. So in this idealized design
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  session, they came up with an Octagon shaped building.
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  It had this open, airy center, a huge ceiling and an Oasis in a
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  restaurant at the very top. And IKEA actually built it for
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  their Chicago store, and it immediately started doing double
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  the expected business, a massive commercial success that came
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  directly from that wish mode design.
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  And this all leads us to what is really the highest level of
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  organizational maturity in new product development toolkits for
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  user innovation. OK, see the core problem is
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  always this. The user has the need
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  information, but the manufacturer has the solution
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  information, the language of production.
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  It's the ultimate translation problem.
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  The customer is talking about taste or feel and the factory is
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  talking about chemical specs and process parameters.
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  And that translation step is where so much time and money
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  gets burned. Just look at Nestle's gum
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  division. When an executive chef designed
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  a custom food product with normal ingredients, Nestle would
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  spend up to 26 weeks just translating that recipe into
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  something the factory could actually make. 26 weeks, half a
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  year of just trial and error trying to bridge that language
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  gap. So how did the toolkit solve it?
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  Nestle created a toolkit made of precomponent ingredients.
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  These aren't just raw flour and sugar, they're complex
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  ingredients that have already been processed on factory
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  identical equipment. I see.
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  So when the chef designs the recipe using these
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  precomponents, the design is already from the very beginning
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  in the factory's language. Wow, so it needs almost no
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  translation. Almost none.
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  Why cut the development cycle from 26 weeks down to just three
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  weeks? That's a revolutionary leap in
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  efficiency. That's just an exponential
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  change. It takes the bottleneck that
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  translation and basically pushes it into the user's design phase.
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  We see this with physical products too, right?
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  Like GE Plastics with their web-based design tools.
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  It's exactly the same principle. Those web tools for designing
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  plastic products, they did two things.
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  They cut customer support calls in half because the customer was
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  doing the design work themselves, and the second
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  thing, they generated new sales leads.
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  GE could see who was using the tool and what they were trying
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  to design. The manufacturer goes from
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  trying to guess every customer's need to just empowering the
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  customer to design their own perfect solution.
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  This has been a really insightful deep dive into what
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  organizational innovation actually requires.
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  We've covered getting that strategic commitment with
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  steering committees, mastering the high stakes transition
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  management for big projects. We talked about deep needs,
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  discovery with ethnography and idealized design.
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  And finally reaching that pinnacle with user toolkits that
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  outsource the design itself. And if you connect all those
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  dots, the one thing that really stands out is that every single
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  tool we've talked about, it's designed to manage uncertainty.
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  Whether it's the financial risk in a portfolio, the structural
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  risk of a project handoffs, or just the ambiguity of what a
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  customer truly wants, they all force these critical, objective
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  conversations to happen early. Which leads us to our final
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  thought for you to explore. If you accept the premise that
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  solving customer pain creates quantifiable value, are you
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  spending more of your resources fixing the problems your
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  customers complain about? Or are you spending time finding
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  and eliminating the underlying pain points that cost them the
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  most? Think about that value
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  derivation process. Small operational failures that
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  cause a little bit of customer pain, a late delivery, a missed
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  feature. They have these huge compounding
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  costs. When you factor in customer
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  defection rates, you know customer loyalty is a function
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  of total actions, customers multiplied by lifetime value
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  multiplied by the defection rate.
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  So are you just chasing the squeaky wheel, or are you
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  solving the core economic problem that's hidden just
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  beneath the surface of the complaint?