As companies seek more and more help to find breakthrough products and to speed up development, they're increasingly turning to design consultancies such as Palo Alto (Calif.)-based IDEO very early in the process. Rather than just provide prototypes based on a company's conceptual design, IDEO now tends to be brought in at the early innovation phase, working with a client's engineers and product managers to study the consumer needs and conceptualize products to fit those desire.
Design consultancies also are working early on with other partners that are playing bigger roles in innovation, such as Taiwanese original-design manufacturers (ODMs). IDEO CEO Tim Brown recently explained these developments in the innovation process to Senior Writer Pete Engardio. Following are edited excerpts of their conversation:
Q: What are some of the big changes you see in the way innovative products are being developed?
A:For one, there's a big move to design platforms. Companies are establishing design themes that evolve but are not replaced each time a new product is developed. This enables them to bring new products to the market really fast by speeding up their development cycles.
Q: Why do companies need outsiders to help do this?
A:Even the largest manufacturers are having a hard time getting all the resources and decision-making structure lined up to get goods to market quickly enough. In order to innovate quickly, you need a richer set of ideas in the first place. You need a conscious realization that you can't only rely on your own abilities to generate enough ideas on your own.
That is one reason companies come to us. We work with 35 different industries. That means we can tap into 35 different ecosystems in the idea process.
Q: How are companies using consultancies like IDEO differently than before?
A:Companies used to come to companies like us mainly for engineering. These days we're working more collaboratively. We recently worked with a group of surgeons that had technology for a medical device, for example, but needed help designing how that technology would be used. We had designers watch doctors in a surgery room and observe how they held the instruments during procedures. Then one of the designers made a little model using materials that were lying around and said, "Should it look like this?"
Also, we now tend to do more projects similar to a concept car that helps drives the consumer understanding about what to do with a project. This is new. They're having us help develop concept products as a way to get the original-design manufacturers excited about a new technology.
For example, we are working on the Florence [a concept design project with Intel (INTC ) aimed at turning the laptop PC into a better consumer multimedia device]. We're seeing this happen more and more as companies try to speed up the conversation with new technologies with players who are downstream.
Q: How does the rise of countries like China and India affect things?
A:Right now, all of the influence that China and India are having in industries relates to outsourcing. But over the long term, they'll have a much more interesting influence on the market. If you look back historically at the way Western Europe emerged as a market, it had do to do with a working class that became the middle class. This whole process is getting compressed today in China and India. How we address the emergence of these markets will be real issues.
Q: What are the risks posed by the new model of outsourced innovation?
A:You have to wonder where, ultimately, influence over margins and brands will end up. If you look at what's happening in retail, the Wal-Marts (WMT ) and Best Buys (BBY ) are rising in influence and power as they go into brands themselves. With the big classical manufacturing brands, and tech providers as well, you have to wonder who's going to win. Who will protect their margins the most and build the relationships with the consumers?
The old way of thinking was the original-equipment manufacturers did this. But there's a risk that the OEM will lose control of the experience with the customer.