Design Innovation in Four Stages: Step 1 Improving Profitability

Design Innovation in Four Stages: Step 1 Improving Profitability

This post focuses on step 1 of the design innovation process, improving profitability of products for new and existing businesses. In its original context, the diagram from Cheskin Research, was probably conceived to illustrate how Cheskin might help an established business along the path to innovation. Today I look at this diagram and think how an entrepreneur might transpose this information and use it to dream up ideas for a new company.

The diagram shows four stages of design innovation along a continuum. The continuum starts at making improvements that increase profitability and extends to radical invention and the birth of a new market or organization.

Planning the design of innovation, in any size of company, is a modern day strategic imperative. In a world where change is a constant, what serves as a viable, desirable and feasible product one day may change the next. Sustained business growth demands a ruthless commitment to innovation. So lets look at stage 1 of the design innovation continuum.

Stage 1 Improving the Bottom Line

The goal of improving an existing product or service is to create greater efficiency and profitability. Its about building and sustaining the heart of a business by keeping it in a state of continuous market innovation.

When web portal Excite@Home improved its online registration with a customer informed redesign of the new user sign up form; more new users were able to join the service drawing new incremental revenue.

Design Innovation of Excite Registration Form. Before and After.

For an entrepreneur without a product to improve, the design innovation would be in finding an existing service, product or process they felt they could improve upon. For example, coupons and collective buying power are well known established business practice.

The entrepreneurs at Groupon innovated the practice to solve the problem city dwellers have knowing what they want to spend their time and money on. Three years after its launch, Groupon’s shows city dwellers the best stuff to do, see, eat, and buy in 43 countries. Who says taking an established idea and innovating it can’t grow your bottom line.

So if you an established business looking for a way to improve efficiency and profitability, walk in your customers shoes for a day. Take the funnel you built for them and look at how well your process for educating, engaging and enlisting new customers might be improved.

If the redesign of a new user sign up form could move the bottom line for Excite@Home, what improvement might you make for your new users to make the process easier? How do you greet them? What tone of voice do you use? What small thing could you improve to make a positive difference to the customer experience?

If you are an entrepreneur wrestling with a desire to build the next great thing, spend a day thinking about the things in your life that you truly deeply care about. Ask yourself, “what do I care about, that I am fully committed to beyond all logical reason?” As the guys from Venture Hacks wrote this week “Before product-market fit, find passion-market fit.”

Discovering your passion may lie in something you really care about. In the case of Groupon, what the founder really cared about, was improving fund raising through group action. Its called the Point and it helps people raise money, organize people, or tries to influence change for the better. From the Point, Groupon was born.

What is your true passion?

Can you visualize yourself telling the story of how the idea for your company came into existence to a panel of prospective investors. Can you describe with clarity, confidence and conviction what problem you are solving? What opportunities it affords and why investors should care to back your ideas?

Practice discovering your passion, because if it involves improving something you care deeply about, chances are it makes life better for all of us.

Along the design innovation continuum, improving a product, service, or process for profit, is the perfect place to focus your work whether you are an established business or just starting out.

Look out for my next post which is on step 2 of the design innovation continuum and discusses how to apply design innovation to evolve your business or startup.

Leave a Reply

Your email address will not be published. Required fields are marked *