114 Harvard Business Review October 2011
Roberto Verganti is a professor of the management of innovation at Politecnico di Milano and the author of Design-Driven Innovation (Harvard Business Press, 2009).
How companies can systematically create innovations that customers don’t even know they want by Roberto Verganti
ACCESS TO TECHNOLOGICAL opportunities is becoming increasingly easy. Thanks to the collaboration the internet has made possible and the open innovation it has spurred, we live in a world where ideas and solutions are abundant. The main challenge facing innovation managers today is how to take advantage of this wealth of opportunities. Being first to launch a new technology is less important than being first to envision its greatest untapped market potential. Well-known examples of companies that did the latter include Nintendo, Apple, and Swatch. All three have used technology to radically change the meaning of offerings in a category—why customers buy or how they use a product. Nintendo’s clever application of MEMS (micro-electro-mechanical systems) accelerometers transformed the experience of playing with game consoles from passive immersion in a virtual world into active physical entertainment. Apple’s creation of the iPod and the iTunes Store made it easier for people to discover and buy new music and organize it into personal playlists, and provided a solution to the piracy that was threatening to destroy the music industry. And Swatch used inexpensive quartz technology to change watches from timekeeping tools into affordable fashion accessories. These companies weren’t necessarily the first to introduce a new technology in the product category (the iPod October 2011 Harvard Business Review 115
PHOTOGRAPHY: ELIE HONEIN
DESIGNING BREAKTHROUGH PRODUCTS
was released in 2001, four years after the first MP3 player), but they unveiled its most meaningful and profitable form. I call the strategies that led to these products technology epiphanies. An epiphany—“a perception of the essential nature or meaning of something”— is commonly thought of as a sudden revelation that comes to a lone creative genius in an intuitive fashion. But I propose that technology epiphanies do not have to be the result of rare eureka moments; they can be systematically produced by either the suppliers of new technologies or the companies that incorporate them in their offerings. I will demonstrate how by focusing on one best-practice company, Philips Electronics, which developed Ambient Experience for Healthcare, a breakthrough application for reducing the anxiety that patients often experience when they undergo medical scans with computed tomography (CT), magnetic resonance imaging (MRI), and other machines. Instead of assessing technologies in light of customers’ existing
needs, as conventional innovation processes do, Philips focused on developing a brand-new vision of the user experience. To do this, it assembled experts from a range of far-flung fields to interpret how the technologies might be employed, synthesized their interpretations into ideas for products, and created prototypes that could be tested with customers or users. Hospitals and patients hadn’t asked for AEH, but once they experienced it, they loved it.
Philips’s Search for Epiphanies
When exposed to new or emerging technologies, most companies focus on a narrow innovation strategy: technology substitution. The question they ask is, “Can we substitute this for an old technology to better address customers’ existing needs?” But companies that pursue technology epiphanies ask, “Will this new technology enable us to create products and services that people find more meaningful than current offerings? Will it transcend existing needs and give customers a completely new reason to buy a product?” Philips started to produce technology epiphanies in the early 1990s and has invested systematically in this strategy since 2001, when its...
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