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Everything listed under: Design Thinking

  • Inspiring Quote - Edison


    Because he successfully practiced a systematic innovation approach, the legendary inventor Thomas Edison was well aware that innovation is largely a numbers game. 

    In Thinkergy's X-IDEA innovation method, we also track the innovation outputs at each stage of the process, thus making sure that you first produce a lot of raw ideas (during Ideation) before you design the most intriguing ones into great ideas (in the Development-stage). 

    When can we guide you and your team through an innovation project with the help of X-IDEA?

  • How Innovation Affects Financial Performance

    Does innovation really deliver tangible financial results a company? Do investments in innovation yield a positive return? Does innovation pay? And if yes, how much positive impact does it have on financial performance?

    Tracking the innovation premium

    In 2006, BusinessWeek magazine and Boston Consulting Group (BCG) jointly devised a ranking of the world’s 25 most innovative companies. The list was led by Apple, Google, and 3M, and also included Toyota, Microsoft, General Electric, Procter & Gamble, Nokia, Starbucks, IBM, Virgin and Samsung, among others. Then, they compared the profit margins and stock prices of these Top 25 innovators with the median for all companies in the Standard & Poor’s Global 1200 index over a 10-year time period.

    The Top 25 innovators delivered median profit margin growth of 3.4% a year from 1995-2005, compared with 0.4% for the S&P’s Global 1200. This striking difference, which BW attributed “in large parts to innovation”, also showed when comparing the median annual stock returns of both groups: The Top 25 innovators yielded 14.3% over the 10 years, a full three percentage points better than the S&P 1200 median. No wonder that BusinessWeek titled the article “Creativity Pays. Here’s How Much”.

    In a follow-up study in 2009, BCG found a similar result: Innovative companies achieved significantly higher total shareholder return premiums  — 4.3% higher over three years and 2.6% higher over 10 years — than their less innovative industry peers. Interestingly, the figures for Asia-Pacific were much higher, at 17.7% over three years and 5.5% over 10 years, suggesting that it pays even more to lead innovation in traditionally less innovative environments.

    One of the most dramatic examples of superior stock performance by an innovator is Apple. When Steve Jobs returned to Apple on July 9 1997, the firm was on the verge of bankruptcy and its stock closed at $0.49 (in today’s prices after various share splits in between). Ten years later, the share price had soared to $18.62, a multiple of 38 times. Twenty years later, the price had skyrocketed to $145.06, a multiple of nearly 300. Had you purchased two Apple shares for one dollar on the day of Steve Jobs’ return, they were now worth nearly $300.

    So, 20 years of fanatical focus on innovation at Apple led to tremendous value, not only for consumers who benefited from groundbreaking innovations such as the iPod, the iPhone and the iPad, but also for Apple shareholders who reaped massive wealth gains. 

    Investing in design pays too, as several studies have confirmed:

    • A 2007 study by the British Design Council found that design-focused firms didn’t need to compete on price as much as their peers. Every £100 they invested in design increased turnover by £225, and their shares outperformed key stock market indices by 200%.
    • In a 2014 Harvard Business Review article, Jeneanne Rae introduced the Design Value Index, a new tool to track the financial performance of design-centric companies against those that are not. When comparing the stock performance of 15 design-focused companies it showed that over 10 years, shares of design-centric firms (such as Target, Walt Disney or Nike) beat the S&P index by 228%.

    To summarize, all the aforementioned study findings suggest that investing in innovation and design pays huge dividends for companies and their shareholders alike.

    Why do innovative firms perform better financially?

    BCG found that innovative companies tend to grow faster, have richer product mixes than their peers, expand into adjacent or new categories (especially if these promise higher margins), and produce more patents than less innovative companies.

    Innovative companies also enjoy higher profit margins because customers are willing to pay higher prices for more innovative products perceived to offer more value than ‘plain vanilla’ products.

    Innovative companies can charge even higher prices for their more innovative value offering (products, services, solutions and experiences) if they also invest in standout design, which further magnifies the perceived value in the eyes of their customers.

    Ergo, they enjoy considerably higher operating profit margins — and the best innovators even amplify those further through operational innovations (such as optimized processes and innovative structures) that allow them to produce superior value at a lower cost base than their peers.

    Moreover, innovative products sell faster and more frequently than normal ones, thus boosting revenues further, especially if the top innovators also multiply revenues through the leverage innovation types.

    Mapping out the financial dynamics and implications of innovation investments

    We can sum-up the financial performance implication of investing in innovations as follows:

    1. Innovative value offerings sell at higher prices and in higher volumes, both of which increase revenues. The higher the value differential, the higher the revenue growth driven by both price and volumes.
    2. Firms that magnify the perception of value of their products (and other value offerings) through design can achieve higher prices, which again boosts revenues and increases (operating) profit margins.
    3. Likewise, companies who make operational innovations typically can produce their value offerings at lower costs, which also increases profit margins (albeit to a much lower degree).
    4. Companies that market a value proposition through innovative channels, networks, platforms, partnerships and business models can multiply their revenues even further.
    5. Strong revenue and profit margin growth increase the demand for a company’s stock and its share price, and may trigger a positively reinforcing loop. If the innovative company shares part of its superior profits with its investors in the form of dividends, the share price and demand for the stock rise even further. A rising share price increases market capitalization, and over time the company shifts from being a potential acquisition target to being a dominant player with amble opportunities for strategic acquisitions.

    Conclusion: Embrace innovation and invest in innovative firms, as innovative firms deliver a noticeably better financial performance compared to the market average. It’s seems to be a safe bet to increase your wealth in the long run. As Warren Buffet put it: “Value is what you get.”

    Contact us to let us know how we can help you improve your financial performance with our innovation solutions.

    © Dr. Detlef Reis 2017. 

  • Why using one creative process stage leads to dull ideas

    When you “brainstorm” for ideas with a team, do you typically deliver conventional ideas that —if you’re honest— you could have got without dedicating extra time? Well, the reason you ended up with these ordinary low-hanging fruits doesn’t mean that you and your teammates are not creative. Rather, it means that you used an ineffective process — if you used a process at all.

    Most innovation process methods don’t allow you to move beyond the “obvious” ideas — the ones everyone else in your industry also thinks of first — because they use only one creative process stage. Today, let me explain how you can move from ordinary ideas to extraordinary ideas by adding a second creative stage to your innovation process.

    The unspoken problem of most innovation processes:

    Most innovation process methods have only one creative process stage. For example, the classic Creative Problem-solving (CPS) model labels this creative stage “idea finding”; the models of Bragg & Bragg, Clegg & Birch or VanGundy call it “idea generation”; and the popular design thinking method names it “ideation”. In all these process methods, this sole creative process stage is directly followed by a stage used to critically evaluate the ideas and select the best ones for further implementation.

    “That’s precisely how we always do it, too”, you may be saying. “So what’s wrong with that?” Well, you’re likely to end up with a low number of ideas that are all safe, sane and set.

    What causes the problem?

    When generating ideas, innovation project team members are supposed to follow four ground rules of ideation suggested by Alex Osborn, the famous advertiser and inventor of Brainstorming and other creativity techniques:

    • #1. No killing of any idea. Defer judgment.
    • #2. Go for idea quantity as it breeds quality.
    • #3. Shoot for wild, crazy, funny off the wall ideas.
    • #4. Combine and improve on ideas.

    Unfortunately, it’s difficult to comply to these four ground rules if your innovation method has only one creative process stage. Why?

    Why using one creative stage isn’t enough

    If idea generation is going to be followed directly by evaluation, how likely are you adhere to all ground rules of ideation? Quantity over quality, no idea too wild or crazy?

    Most probably not. It’s highly likely that your inner voice of judgment dismisses any wild idea the very moment you think it — and you won’t write it down. As such, you end up with fewer ideas overall — and most of them are ordinary or even boring.

    There is another problem related to using only one creative process stage: Suppose that against all odds, you had really mastered all your courage to adhere to the ground rules of ideation. If there were only one creative stage, would you be likely to select any wild idea for further in-depth evaluation?

    No way! You would kill all wild ideas right at the beginning of the critical evaluation phase, as you regarded them as useless to resolve your innovation challenge.

    Interestingly, a wild idea is often the seedling of a truly outstanding idea. That’s why we need to have two creative stages to make an innovation process really work and move beyond the same set of conventional ideas.

    The solution: Move from one to two creative stages

    Thinkergy’s X-IDEA innovation method is designed to move beyond conventional ideas by introducing a second, distinctively different creative stage, Development. In X-IDEA, the creative process flows as follows.

    • First we investigate the innovation project case in the Xploration stage to gain novel insights into what our real challenge is.
    • Then, the first creative process stage, Ideation, emphasizes idea quantity. Here we make an effort to produce hundreds of raw ideas (including many wild and uncommon ones) in a playful, fast and furious atmosphere.
    • In the second creative process stage, Development, we take our time to transform idea quantity into quality. Here it’s our job to design and develop a smaller portfolio of two to three dozens of novel, original and meaningful idea concepts.
    • Next, we evaluate the pros and cons of our idea concepts in a critical and realistic stage,Evaluation. Now we’re finally allowed to judge our ideas, but not before.
    • Finally, we take Action on those ideas that we selected for real-life activation

    How exactly to does the second creative stage work?

    In the Development-stage, we discover, design and develop to turn idea quantity into idea quality:

    • First, we discover intriguing ideas within the large portfolio of raw ideas generated during Ideation.
    • Then, we use these intriguing ideas to design realistic idea concepts through refinement, combination and transmutation.
    • Finally, we develop these designed concepts further by looking for ways to add even more value to them.

    Just like during Ideation, we also must follow four ground rules in the Development-stage. While ground rules #1 and #4 stay the same as before, two rules are changed compared to Ideation to reflect the altered objective of the Development stage:

    • Rule #2: Go for quality, and take your time.
    • Rule #3. The more meaningful, the better. Shoot for valuable, useful, realistic, meaningful idea concepts.

    Lesson: A creative process can unfold its magic only once it consists of two creative stages. Continue using a conventional, ordinary innovation process method with one creative process stage if you only want conventional ideas. Or switch to an unconventional innovation process method with two creative process stages (like X-IDEA) if you want to get unconventional, extraordinary ideas.

    Contact us if you want to learn more about how the two creative stages of X-IDEA may help your innovation teams to make the leap from ordinary to extraordinary ideas.

    © Dr. Detlef Reis 2016. This article is published in parallel in the Bangkok Post under the same title on 26 May 2016.

  • Mastering the Art of Ideation

    “How can I get better ideas for a problem that I face?” is a question I am often asked these days. First of all, remember that generating ideas with the help of creativity tools is just one part of the creative process. In order to do proper thinking, you first need to understand and define your challenge. Then generate ideas. Next, develop these into meaningful solutions or value propositions, which you then evaluate in order to find those vital few solutions that really deserve being brought to life. At Thinkergy, our proprietary systematic innovation method X-IDEA captures all these essential steps in the five stages Xploration, Ideation, Development, Evaluation and Action.

    Back to our initial question: Idea generation is an art. And effective ideation depends on the situation you are in. How important is the problem or challenge that you face? Do you have to solve a problem alone, or can you tackle it in a team? And how much time do you have at hand?

    Let’s capture these different contexts in a four-field matrix. On the vertical axis, we distinguish two basic scenarios related to the number of people involved – you’re alone, or you work in a team on the case. On the horizontal axis, we cover the other two aspects. First, decide if whether or not a resolution of your challenge is very important for you or your organization. In the former case, commit sufficient time for the ideation. If the importance is low to medium, than you can cut down your time investment. In result, we end up with four quadrants that suggest you different ideation approaches based on the respective situation.

    Scenario 1: The Notebook.
    Here you work alone and you need some ideas for a challenge that is not highly important – for example, “How to provide meaningful rewards for highly active participants in a training session?” Start to ideate by listing down at least 25 ideas to your challenge in your idea notebook (buy one if you don’t have one yet – and make sure that it is unlined, blank paper). In addition, use some simple creativity tools (such as Free Association, Word Association Chains or Concept Mapping) to generate some associations that may trigger further ideas. Go on until you reach a number of 50 ideas.

    Scenario 2: The Eureka Seeker.
    You have already worked for some time on an important individual challenge that you face – say, you are a scientist or a Ph.D. student and need a great idea to solve a tough conceptual problem. As you continue to explore your challenge, collect ideas that come along in your idea notebook. You also may apply some creativity tools such as Metaphors here. In addition, take some time out to engage in imagination exercises (like envisioning yourself in a perfect world where your challenge is resolved), and take notes of any new ideas and insights that may occur to you in result. For example, Albert Einstein used this technique extensively to collect “jigsaw puzzle pieces” that became part of his theory of relativity, thereby imagining himself surfing on a ray of light through time and space.

    Finally, if by now you still feel that none of the ideas that you have noted down is the right solution, then you might activate the process of incubation (which was subject of the last article in this column two weeks ago). Let go of your challenge, work on something else, take amble time for relaxing activities and incubate on the solution – and with luck, you will experience your personal Eureka-Moment and get the breakthrough solution to your challenge. Sure, all of this takes time — but aren’t you happy to invest time in an important personal endeavor?

    Scenario 3: The Brainstorming Session.
    In the third scenario, you work in a team on a challenge of medium importance, like saving costs in face of a temporary economic downturn. Send out an invitation for a 2-3 hours brainstorming meeting to your team member, wherein you brief them about the challenge and ask each member to bring in at least 10 ideas. At the beginning of the session, remind everybody of the four ground rules of ideation, then Brainstorm and do Pool Brainwriting to add to your initial ideas. Thereby, ideally integrate some other creativity tools (like Metaphors or Random Word) to broaden the scope of your ideas. After you have created a sufficient ground stock of ideas – say at least 300 raw ideas – start to turn them into meaningful idea concepts by combining and improving on your most promising raw ideas.

    Scenario 4: The Idea Circuit.
    In the last scenario, you look for meaningful ideas for a really important challenge that your company faces – like a new product development, customer experience design or strategy innovation project — that is of critical importance for the medium- to long-term success of your firm. Here, your best bet to get some really good ideas is to send your team into a full-fledged idea circuit over the course of one day. Thereby, you expose the ideators to 8-10 creativity tools to great a large pool of raw ideas (here were talking about four digit numbers) that you later develop further into meaningful value propositions. If you have no in-house ideation expert, it really pays to hire an experienced ideation and innovation company such as Thinkergy to facilitate the session and to take care for the process and the selection of effective creativity tools that light up the imaginations of the ideators and stimulate out-of-the-box ideas. It’s like when you have to undergo an important surgical operation — you just want to make sure that the doctor selects the right tools and knows how to handle them to get the job right.

    © Dr. Detlef Reis