Insights

Everyone wants innovation, but few want change

Business Development Manager - SE
Valtech

April 22, 2015

If you're not failing every now and again, it's a sign you're not doing anything very innovative.

Woody Allen

If you don’t try and fail, you’ll never succeed, because it’s the ones who try that ultimately succeed. Most innovations are preceded by hard work and a considerable number of failures. There are no miracle cures that make a person innovative; on the other hand, hard work, and cultures and methods/processes that support experimentation and testing, in which failure is par for the course, are natural elements of innovation. What many might see as a failure, for the innovator is a successful test; a clear part of the process, and something that creates crucial data for the next phase.

*Design thinking is a way to get businesspeople to think like designers and designers to think like businesspeople. But design thinking is more than that. Design thinking is a disciplined process that can result in significant economic value creation, meaningful differentiation, and improved customer experience. It holds the core capabilities behind innovation, which are empathy, collaboration and experimentation.

Innovation is based on change. Changes generate new needs, both conscious and subconscious. Changes also create new conditions, both economic and technical, but it’s only once our expectations and behaviour change that innovation really becomes perceptible.

Design Thinking* and Service Design Thinking is about driving innovation from a human centric perspective – understanding needs, driving forces, cultures, and so on. On studying and interpreting conscious as well as subconscious needs, with a focus on improving life and making it simpler, more pleasant, and more entertaining. So before we start considering solutions and techniques, we must begin by understanding human behaviour, culture, context, and the ecosystem. This involves continuously daring to test and build in order to learn, applying a data-driven working method**; prototyping increases the pace of innovation. It’s only when we test our ideas in practice that we really obtain confirmation of their strengths and weaknesses, and the quicker we do so, the quicker our ideas develop.

**A data-driven working method might be summarised as “test in order to learn”. This is easier said than done, as many businesses suffer from endless demands for documentation and processes involving different decision points that must be passed before testing can even begin. But just as in the introduction, it’s the testing that regularly provides us with insights (data) that we can turn into valuable and crucial knowledge. And it’s only when we accumulate the data and the knowledge that we can begin to draw conclusions regarding greater changes; innovation.

There’s no doubt that digitalisation has resulted in, and continues to bring, major changes. As regards many of the changes for which digitalisation has paved the way, our expectations and behaviour have created entirely new conditions which, in turn, have given rise to demand for new products and services that have resulted in new business models – innovations.

Anna Breman and Anna Felländer write about digitalisation in “Diginomics – new economic dynamics”. Digitalisation affects both productivity, labour market and inflation and the potential productivity gains are huge. But these gains are difficult to measure and official statistics underestimate the consumption of digital services. Physical goods become digital services, digital platforms increase the efficiency of, and internationalise, what was previously local, and digitalisation makes traditional production more efficient. All in all, major changes are involved, and they are taking place at an ever-faster pace. Studies indicate that more than 50% of the professions that we know about today will probably be made obsolete due to digital technology within 20 years. Obviously, this change will create new professions and services. The only question is: how many and what will they be producing?

Just as these changes open up a wealth of new opportunities, they also create a large number of new threats. There are many examples of companies, businesses – and, for that matter, entire industries – which despite a long history, dominant position and sound financial stability, have ended up in dire straits due to changes. The difficulty of questioning a business model should not be underestimated. But with that said, it’s precisely the ability to dare to question and change a business model that is an essential characteristic of people who successfully manage to cope with change.

Design thinking is a human-centred approach to innovation that draws from the designer's toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.

Tim Brown, president and CEO

Tesla constitutes an interesting example of a company that is challenging an old, conservative industry. By totally replacing the internal combustion engine with an electric engine, Tesla has succeeded in developing a car with a 500 km range, while its competitors in the automotive industry boast about hybrid solutions with a range of 60-100 km on electric power. A great many people – not least in the automotive industry – were sceptical about Tesla, particularly on the issue of battery charging infrastructure and the feasibility of a station that could charge the battery within a reasonable time. However, Tesla has not merely focused on developing and constructing a car, they are also developing and constructing the infrastructure ̶ an impressive infrastructure, with so-called Superchargers. In addition, pilot testing (the battery-swap-pilot-program) is also underway, focused on replacing the batteries quickly (in approx. 3 minutes) and smoothly, thereby further reducing the time spent at the station.

But Tesla’s ambitions don’t stop there; the company is currently in the process of building the world’s largest and most modern battery production plant “Tesla Gigafactory”.

In addition to manufacturing car batteries, the Tesla Gigafactory will also produce batteries that can be linked together with solar cells for energy storage, something which both develops and challenges the energy industry. So, when you’re at work during the day, the solar cells will store the energy in the batteries so that you can plug in the car and charge it at night, turn on lights, make food, etc. And if there’s any energy over, your home is of course hooked up to the electricity grid so you can sell electricity.

Having a solar panel that isn’t connected to the grid is like having a computer that’s not connected to the Internet.

Ellen Hayes PG&E

Tesla is also challenging convention by sharing its patents as open source. By sharing its patents, Tesla hopes to accelerate the development of sustainable means of transport. The only question is how long it will take; the automotive giants are investing a meagre few percent of total sales on the development of electric cars. This is despite the fact that it’s 50 years since the first reports were issued on how carbon emissions are affecting the environment. In addition, Tesla is using social media in a way that creates involvement and, on their blog, among other things it’s possible to read about and see films from the upgrading of their plant. We get to know that the new robots – their “super heroes”– have been named after X-Men characters. Some might think that it’s all a bit nerdy, but to my mind Tesla has understood its target group in that particular channel.

Together we’re changing the future of transportation

Those are the closing words of the video you get with your confirmation of a test drive booking - a video worth watching in order to be prepared. In the context, it’s quite a bold promise, and the video doesn’t exactly rein in expectations. Once you’ve arrived at the site, you’re given a run through of the car, a run through of how it’s designed – chassis, engine and drive belt, batteries and charging, weight distribution, safety, etc. For this demonstration there is, of course, a chassis without a body and fittings, a supercharge station on site, and an engine hanging on the wall with all its fixtures. After the demonstration, it’s time to go down to the garage; you’re already totally sold on the concept. Once you’re in the car, there’s a run through of its functions. The car is like an app – just download the latest updates and you’ll have access to all new functions included in the car, and you can do it entirely by yourself without expensive visits to the workshop, etc.

***The customer journey means the flow/process that is formed through the various points of contact experienced by the customer from teasers to, for example, purchase. Making customer road maps, taking into account all contact points (physical, digital, etc.), is a good exercise for identifying improvement/ development areas.

Time to drive. Here, I could write volumes. Just to drive a car with approx. 400 horsepower, in which the torque is uniform irrespective of the speed you’re driving, and without a whisper. If the customer journey*** so far has promised the future, then I’m now in the future. Tesla has really succeeded! Once the demonstration and test drive are over, there’s a real sense that buying a Tesla is much more than merely buying a car. Buying a Tesla is participating and investing in the future.

For me, Tesla is an outstanding example of Design Thinking* and innovation. Tesla doesn’t just sell cars, Tesla sells a future, an ecosystem. And the digitalisation creates challenges as well as opportunities, but if you want to sees the opportunities you have to be prepared for change. And even if applying a data-driven working method* is a good start, daring to challenge – and actually daring to question – your business model are crucial if you want to succeed. But it also requires understanding of the entire ecosystem, not merely your own products or services.