ARRIVE

A Design Innovation Framework to Deliver Breakthrough Services, Products and Experiences

Frank Devitt, Martin Ryan, Trevor Vaugh

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000296259
• Edition: 1
• Topic: Commerce
• Subtopic: R&D

This book is an excellent best-practice guide for senior managers and directors with innovation responsibilities. It describes how organisations of all sizes and sectors can apply design thinking principles, coupled with commercial awareness, to their innovation agenda. It explains how to keep the customer experience at the centre of innovation efforts and when to apply the range of available practices. It provides a clear, extensive rationale for all advice and techniques offered.

Design thinking has become the number one innovation methodology for many businesses, but there has been a lack of clarity about how best to adopt it. It often requires significant mindset and behavioural changes and managers must have a coherent and integrated understanding in order to guide its adoption effectively. Many design thinking implementations are inadequate or sub-optimal through focusing too much on details of individual methods or being too abstract, with ill-defined objectives. This book uniquely provides integrated clarity and rationale across all levels of design thinking practice and introduces the ARRIVE framework for design thinking in business innovation, which the authors have developed over ten years of practice and research.

ARRIVE = Audit – Research – Reframe – Ideate – Validate – Execute.

The book contains a chapter for each of A-R-R-I-V-E, each of which has explanatory background and step-by-step methods instruction in a clear and standard format.

Using the ARRIVE framework, the book provides high-level understanding, rationale and step-by-step guidance for CEOs, senior innovation leaders, innovation project managers and design practitioners in diverse public and private sectors. It applies equally well to innovation of products, services or systems.

Design Innovation – design thinking applied to business innovation – combines deep human understanding, purposeful creativity and sound business rationale in order to create breakthrough innovations that succeed in the marketplace.

ACHIEVING POTENTIAL FOR GROWTH: WHY YOU NEED TO INNOVATE

Hypercompetition is a great word that describes the business conditions for a growing number of industries as the 21st century develops. It refers to increasingly intense and rapidly shifting competition, with regular and unpredictable new entrants creating great difficulty for incumbents to sustain competitive advantage. According to Richard D’Aveni (1998), who coined the term, this environment arises due to four main factors:

• individualisation of customer tastes,
• rapid pace of technological progress,
• globalisation of markets, and
• the rise of giant corporations with deep pockets.

The rules of competition are continuously in flux. Incumbents no longer have power to block new entrants. Barriers to entry are diminishing. There is easier and lower-cost access to sophisticated manufacturing for small firms and individuals; advancements in technology are eliminating cost barriers to developing and testing new offerings, using technologies such as 3D printers, open source CAD packages, software wire-framing and artificial intelligence. Powerful high-street chains no longer control routes to markets; the internet and ecommerce ensure the little guy can appear to the consumer as big and powerful as the incumbent. The small business in Ireland can easily reach markets in Australia, Asia, and the US. Startup businesses are now regularly ‘born global’.

The lesson for business in an increasingly hypercompetitive environment is that traditional competitive strategies cannot be relied on to sustain competitive advantage. Traditional approaches presumed greater stability of consumer preferences, sectoral boundaries, markets and competition. Constant innovation is necessary, not just for attaining new market positions but also to retain the market positions of successful incumbents.

Alongside hypercompetition, the acronym VUCA (Volatile, Uncertain, Complex and Ambiguous) is now in widespread use, especially to describe the digital economy. It is a highly disruptive environment characterised by shifting landscapes, which can be punitive to organisations whose focus is merely on incremental innovation.

Kim and Maubourgne's famous book, Blue Ocean Strategy (2014), advocates seeking out new spaces in which to do business. These are uncontested markets or blue oceans, where you can offer new value at uncontested prices, instead of trying to compete in the established, highly competitive, ‘shark-infested’ red oceans. Breakthrough innovation moves the competitive goal posts and changes the rules of competitive advantage to your favour.

There are numerous examples of the rules of competition being changed, through introduction of new technologies or new business models, or both. This has enabled Uber, for example, to become the largest public transport company in the world without owning vehicles. Likewise, Airbnb has become the largest accommodation company without owning property.

Nowadays, more new businesses achieve success through paying very close attention to prospective customers, their behaviours, needs and experiences and through ensuring they design solutions that make the customer's life easier. So, Nest built a business using latest technology to improve the domestic experience of temperature control as well as fire and smoke safety. Nest was founded in 2010 and was acquired by Google in 2014 for a reported sum of $3.2 billion.

While user empathy and understanding are now more commonplace as tools for successful innovation, their use is not an entirely new phenomenon. In the late 1980s, Intuit made life easier for the owners of small businesses trying to manage their business accounts. Intuit's early product Quicken and subsequently Quickbooks spoke to business owners in their own language, rather than as accountants, and enabled them to do more efficiently what they were already doing manually. Intuit has become one of the largest suppliers of business and financial software for small businesses, self-employed individuals and consumers.

Dollar Shave Club was launched in 2012 and provided razors as a service through the post, for a modest subscription price, promoted by a hugely successful viral video campaign. In doing so they helped disrupt the market for men's razors and dislodged dominant incumbents such as Gillette, whose global market share of men's razors and blades fell from a dominant 70 per cent in 2010 to 59 per cent in 2015. In 2016, Unilever acquired Dollar Shave Club for a reported $1 billion.

INNOVATION AND TECHNOLOGY

There is strong statistical evidence that innovation and R&D help make businesses successful. In 2016, the Irish Government Department of Jobs Enterprise and Innovation conducted a study of the economic impact of R&D in firms, covering the years 2003 to 2014. They concluded: “In this study, evidence … indicates a clear correlation between firm engagement in R&D and stronger sales, exports, value added and employment performance for both Irish-owned and foreign-owned agency firms”. Ireland has shown very strong growth in national economic performance over the decade since 2010, based on its innovation culture.

In Figure 1.1, R&D is assumed to be a proxy for innovation, as is common in many national economic statistics.

FIGURE 1.1 Economic and Enterprise Impacts from Public Investment in R&D in Ireland.

Source: Irish Government Department of Jobs Enterprise and Innovation, October 2016.

However, it is also clear that innovation involves a lot more than just new technology, which was a simplistic default perspective of many people, organisations and governments until recently. The innovation consultants, Strategy&, which is now a division of consulting company PwC, has produced a report every year since 2005, where they study the performance of the top 1000 spenders on R&D among the world's companies. They find consistently that there is no clear correlation between R&D expenditure on the one hand and company financial performance on the other. The conclusion is that R&D alone rarely translates to economic output. This means that, unlike many corporate capabilities, money alone cannot ‘buy’ successful innovation.

Strategy&'s Global Innovation 1000 report has found the best innovator companies engage in many other complementary activities, besides R&D, that help them consistently outperform those companies focused on R&D spend only. The chart in Figure 1.2 below, adapted from the 2017 report, shows the performance of the top 10 ‘innovator’ companies compared to the top 10 ‘R&D spenders’, across three financial criteria.

FIGURE 1.2 Comparison of the performance of the Top 10 innovator companies with the Top 10 R&D spenders.

Source: Adapted from 2017 Global Innovation 1000. Strategy& | PwC, October 2017.

WHAT IS INNOVATION?

Innovation is a simple concept. An innovation is something new that is put to use. To be more specific, for an economist, business manager, entrepreneur or designer, innovation is doing something new that adds economic value through being adopted by a user. With the same conceptual basis, Intel favours the description ‘turning ideas into invoices’.

Note that the term innovation has a variety of meanings for other groups in everyday language. So, an engineer or scientist might refer to innovation as inventing or discovering something new. And an ordinary person reading a newspaper headline might understand innovation to be, simply, anything new. These are all legitimate in their context, but the latter contexts are not what we discuss here.

In this book, which is a book for business innovation practitioners, our understanding of innovation is always a new value proposition with the following attributes. It is …

	put to use by	→	a user,
	provided by	→	a firm (or organisation or individual),
	enabled by	→	a technology (proprietary or codified know-how),
and	delivered to	→	a market (that can support a sustainable business model)

There are many different types of innovation. The Oslo Manual (OECD and Eurostat, 2005), which is the handbook for national and international measurements of innovation, describes four key types. They are Product Innovation, Process Innovation, Organisational Innovation and Marketing Innovation. Perhaps more revealingly, the business consulting firm, Doblin, which is now part of the Deloitte company, ha...