Chapter One. What Drives New Product Development

Breakthrough products result from the appropriate combination of style and technology and help to create experiences that people find both rewarding and valuable. In this chapter, we focus on the first step in developing a breakthrough product: learning to interpret the interconnected factors of Social change, Economic trends, and Technological innovation, otherwise known as SET Factors. Interpreting these SET Factors leads to identifying Product Opportunity Gaps (POGs) in the marketplace. Converting product opportunities into breakthrough products requires a combination of vision and sound methodology. As highlighted in the case studies in this chapter, the comprehensive approach introduced in this book applies equally to the development of products, services, and product-service systems through the new integration of products, interaction, and service.

We have found the process of product development to be analogous to rock climbing, a challenging, invigorating, and empowering experience. To succeed at rock climbing, you need to have a set of appropriate tools, a good plan for the climb, and an interdependent team that works together to use the tools when appropriate. The climb is constant and well thought out, but the team has the training to adapt to issues that emerge along the way. Successful product development also requires a well-planned process using tools to help you negotiate difficult terrain. Teams of engineers, designers, and market researchers must work in unison to recognize promising product directions and work through the Fuzzy Front End of the product development process to create a product that meets the needs, wants, and desires of the customer.

Managing the Fuzzy Front End is an underlying theme in this book. The Fuzzy Front End is the part of the product development process that starts with the general goals of the program and covers the early stages of new product development. Making the most of the Fuzzy Front End is essential in creating breakthrough products. Companies that see the process as a climb see every part as essential and understand that the preparation and the climb have equal importance. The process requires the skill and patience necessary to use the tools successfully to develop products that you are confident will succeed in the marketplace.

Many companies approach product development as if it were parachuting instead of rock climbing. They have a core technology (their plane) and capital (the parachute), and then they free fall through the Fuzzy Front End to quality programs for manufacturing, expecting a smooth landing. These companies think the free fall will take care of itself—or, in product terms, they quickly focus on one product concept that they think will become a marketable product if it meets manufacturing or production quality standards and is then branded by an ad agency. Product development in this way succeeds only by chance. Failing to maximize the Fuzzy Front End causes these well-produced products to fail in the market because they do not respond to customers’ needs, wants, and desires. The result is a loss of brand equity, profit, time, and investor confidence.

New product development is a climb, not a free fall. The more prepared you are for the challenges of the terrain, the better the climb will be. This book helps you climb through the Fuzzy Front End of the product development process and gives you the tools that make your product more likely to succeed in the marketplace.

A number of challenges make it difficult for companies to maintain a leading position in a particular product category. These challenges are forcing companies to redefine the bottom line and the path to get there. The goal is to increase profits while simultaneously maintaining a healthy internal structure that balances innovation and continuity. So as companies are trying to realize their stated goals in sales and profit projections, they are also trying to resolve the following issues:

• Finding the right opportunities for new products and appropriate innovation to improve existing products

• Maximizing front-end decisions to minimize downstream corrections

• Reducing cycle times without reducing innovation and quality

• Building and maintaining brand equity through a strong product

• Integrating design, marketing, and engineering by reducing “perceptual gaps” and producing products that are considered useful, usable, and desirable by the customer

• Appropriately positioning the role of technology in product development

• Recognizing the significance of industrial and interaction design in the product development process

• Attracting, preparing, and retaining the best people

To successfully meet these challenges, a shared vision must flow from top management through middle and lower management down to individual members of product development teams. Although an opportunity for new products can be identified at any level, the vision of the product potential must be shared and championed at all levels. Not only do successful products help customers create maximum experiences in their everyday lives, but the process of developing the products themselves must be an equally powerful and rewarding experience for the product team. Developing products should be a form of serious fun. If everyone on the team is enjoying the process, it usually means that everyone in the company profits from the experience.

People use products to improve their experience while doing tasks. They relate these experiences to their fantasies and dreams. Successful products fulfill a higher emotional value state, whether it is the security of a child relaxing during an MRI experience, the comfort and effectiveness of cooking in the kitchen, the relaxation and escapism of sipping coffee in a coffeehouse, or the empowerment of a person taking control of the weight loss experience using a body-monitoring device. The mantra that form follows function is no longer relevant; we are now in a period where form and function must fulfill fantasy.

What makes some product programs fail and others succeed? How did Kennametal reinvent the machining of titanium to support the manufacture of Boeing’s Dreamliner while making the process more economical and better for the environment? How could GE Healthcare make the frightening MRI experience fun and calm for kids? How could Jarden introduce the Margaritaville brand to bring Jimmy Buffett’s Key West lifestyle fantasy to Baby Boomer consumers for less than $300? How could BodyMedia, a small upstart company, pioneer the industry for consumer self-care through technology? How does Starbucks, initially a small coffeehouse in Seattle, continue to remain innovative, building on its ability to reinvent how Americans drink coffee while refining its process and products and even experimenting with new nonbranded stores? How could Navistar’s International Truck Division rejuvenate its brand and redefine the long-haul truck industry with the introduction of a big rig that pays as much attention to the driver when he is not working as when he is? How could UPS redefine the package delivery industry to one of logistics positioned for the Internet age?

In evaluating the value impact of all these products, we found that they were all highly successful in communicating value in the key categories that connected them to their customers and moved them ahead of their competition. If you look at most positioning maps, the optimum quadrant is usually the upper right, where each positioning attribute is maximized. In this book we introduce a Positioning Map (see Figure 1.1) that charts style against technology through added value. The Upper Right, with integrated style and technology, and the only place with significant value, is where a company must move and be positioned to best differentiate itself from the competition and to succeed. All of the breakthrough products just mentioned are positioned in that quadrant. Getting there is not easy because of the third dimension, which acts as a cliff that needs to be climbed. As mentioned previously, product development is akin to rock climbing. This Sheer Cliff of Value is the rock that the product development team must climb to succeed. Every progressive company sets its strategy to move there, but it often fails to find the methods to achieve the goal. This book helps you get there. We call this approach moving to the Upper Right.

Figure 1.1. Positioning Map of style versus technology; great products are value driven and found in the Upper Right.

In this new edition of Creating Breakthrough Products, we specifically address service design. Chapter 8, “Service Innovation: Breakthrough Innovation on the Product-Service Ecosystem Continuum,” directly maps the tools for innovation to the service industry. However, products and services are intertwined. Even physical products alone directly provide a service that enhances human experience; it is always part of a company that provides a service to its customers. That is why Xerox became “the document company” (and then the technology/document management/consulting company). The service it provides is the production of documents, which it does by producing printing and copying equipment. A service is an activity that enhances an experience; it often requires an array of products to deliver its core activity. If your company is a Web service provider, you use and produce products to provide that service. If your company produces automobiles, the service you provide is transporting people and things. The auto industry produces automobiles; however, one of the highest-profit areas for GM is financing automobile purchases, which is a service. Where would UPS, a delivery service, be without its brown trucks, jets, and information-management products?

We discuss both products and services in this book, for the issues that make a product or service successful are the same. However, the intertwining of products and services is a still-emerging opportunity for companies. In Chapter 8, we bring together the methods in this book to address what we call product-service ecosystems: The products produced and the systems that deliver intangible benefits work in concert. The interaction between the physical products and services is delivered through interfaces—Web-based, human-based, artificial intelligence-based. Both products and services and their ecosystem are connected through understanding the experience that the end customer wants and then translating that understanding into a product or service that enhances a particular interaction with objects, environments, and/or other people.

It sounds simple, but understanding customers and then translating customer understanding into products and services is extremely difficult. In general in this book, when we refer to a “product,” we refer to both the physical product and the service, and the system that delivers both. An enormous number of people and resources must be brought together to produce a successful product. The complexity of this task explains why so many product attempts fail. In larger companies, by the time a customer buys a product, hundreds or thousands of people and thousands of person-hours have gone into the identification, planning, development, production, distribution, and sales. A large company can easily lose understanding of the customer in the product development programs as secondary factors come to dominate decisions about cost, features, and form. Small companies have a better chance of keeping the customer in the loop throughout the process, but they often lack the balance of disciplines necessary to generate the research and development of product characteristics for the market. No matter what the size of the company, all of the people involved are stakeholders in the product development process, and the success of the product depends on the coordinated involvement of all of them.

We also see products and services as the core element of a company’s brand (discussed in detail in Chapter 4, “The Core of a Successful Brand Strategy: Breakthrough Products and Services”). If all elements of a brand are effective, they all play a roughly equal role. The interaction of a customer with the product or service is the heart of the brand delivery. Corporate mission, strategic planning, advertising, and identity programs are all essential, but they cannot offset weak, noncompetitive products or services.

We have found that four key factors must be present to guarantee the highest potential of success:

• First is the ability to identify product opportunities. As cultures continue to change, opportunities emerge for new products. These products do not just solve existing problems; they also create possibilities for new experiences.

• Second is a heightened understanding of customer needs translated into actionable insights that define attributes. These attributes serve as a guide in developing the product’s form and features. For products to succeed, they must have features and forms that consumers quickly recognize as useful, usable, and desirable.

• Third is a true integration of engineering, industrial and communication design, and marketing. Merely putting teams together in a multidisciplinary context is not sufficient. They must be supported and managed effectively in an atmosphere where each discipline respects and appreciates the perspective of the others.

• The fourth factor involves understanding the connection between products and services and the role that interaction touch points play in that relationship.

Failure to achieve success in any one of these areas can significantly jeopardize the success of a product, yet most companies are fortunate to be good in even one area. The successful companies have found ways to incorporate the product development quality trends of the 1980s and ’90s into new ways of developing products by including deeper consumer insight and better integration of teams. These companies have strategically “moved to the Upper Right.”

Many companies claim to use a customer-centered interdisciplinary approach, but they have failed to make a total company commitment to this approach. Their management structure encourages a turf mentality through a vertical, or “silo,” reporting structure. Customer characteristics are often generated by mass-marketing methods that provide limited insight because they are based solely on highly quantitative surveys. These companies are often hammers looking for nails as they seek new ways to package or repackage impressive but inaccessible technologies. For companies to succeed, they can no longer afford to be either marketing, technology, or design driven. To stay competitive, they must integrate the way designers, engineers, market researchers, and market strategists work. Corporations can no longer rely on large statistical surveys, search for applications for promising technologies, or create products that are attractive but not meaningful. Instead, qualitative research tools have proven to be an excellent source for deeply understanding the potential customer and product opportunities. This approach means that companies should plan technological innovation around an insightful understanding of consumer trends and the constant changes in the needs, wants, and desires of the customer. Companies must learn to identify opportunities for the potential of products before they think in terms of concrete product concepts.

Figure 1.2. Scanning SET Factors leads to POGs.

The social factors focus on culture and social interaction and include these:

• Family and work patterns (for example, the number of single parents with two jobs or the number of double-income households with flexible hours)

• Health issues (for example, people living longer with more active lives)

• Use of computers and the Internet

• Political environments

• Successful products in other fields

• Sports and recreation (for example, Gen-X snowboarders creating a new “loose-fitting grunge wear” fashion aesthetic and lifestyle)

• Sporting events (for example, the emergence of new, retro, or ultramodern state-of-the-art facilities and the athletes who perform in them)

• The entertainment industries, including film and television

• Vacation environments (for example, the fantasy fulfillment provided by Disney World, Las Vegas, and Club Med)

• Books (for example, Oprah’s Book Club)

• Magazines

• Music (from hip-hop to new classic-chic)

• Environments at work (that raise quality of workplace standards)

The second major SET Factor is Economics. The economic factors focus on real or perceived excess income that gives people purchasing power. This results in a state we call psycheconometrics: the spending power people believe they have to buy the products and services they believe will enhance their lifestyle. These factors are influenced by the overall strength of and forecast for the economy, fuel costs, raw material costs, loan rates, availability of venture capital, the stock market and its forecasts, and real disposable income. Other economic issues that influence product development come from understanding who has the income, who is doing the purchasing, and for whom the purchasers are buying. As social factors change, where people spend their money changes.

The Technology factors focus on direct and imagined results from new scientific discoveries in corporate, military, and university research and the implied capabilities stemming from that research. These factors include the amazing growth in computing power predicted by Moore’s Law (Intel co-founder Gordon Moore’s prediction in 1965 that the number of transistors per square inch on integrated circuits would double every year) and the analogous reduction in physical size of peripherals and supporting functions; new material and manufacturing advances; electrical, mechanical, and chemical innovations; aerospace and military technologies; film and sports entertainment technologies; and micro-, nano- and biotechnologies. The capability for sensors within products to consistently connect to external systems in real time has generated a plethora of new product service options.

The SET Factors generate opportunities for producing new products that can have an effect on the way people live their lives at any given moment. The goal is to create products and services by identifying an emerging trend and to match that trend with the right technology and understanding of the purchasing dynamics. The window of opportunity is often small—a product that comes out either too early or too late can fail even if the opportunity existed initially. For example, in the 1970s, AMC introduced the Pacer, a shorter, wider car with a larger window area to maximize the internal sense of space. Many of the attributes that the Pacer incorporated became the goal of all car manufacturers in the two decades that followed. As another example, the Apple Newton was an early PDA with many of the attributes of smartphones today, but cost and size compromised its appeal beyond the lead users and early adopters.

Perhaps the most salient example of introducing products too late is the U.S. automotive industry’s failure to understand the potential growth in small, well-made, fuel-efficient cars, which allowed Japanese car manufacturers to dominate the four- and six-cylinder-engine car market for decades. American car manufacturers generated their profits from small trucks and SUVs rather than the smaller fuel-efficient vehicles, partly leading to their collapse through the economic bust of the 2000s. The American car companies apparently have read the SET Factors and are introducing a wide variety of smaller, more efficient, and more intelligent vehicles, coupled with a leaner, more efficient approach to production.

Successful new products become necessary once they hit the market. Most consumers are not even aware they need the product because they are immersed in the trend. If the company hits the trend at the point it is just catching on, the product will become instantly desirable. The length of a trend, combined with the product’s attributes of use and usability, determines the lifetime of the product. Las Vegas has continued to be successful by complementing the fantasy and dreams of gambling with the characteristics of a family amusement park; Disney World has extended its market by creating vacation programs and packages for adults as well as kids. Coca-Cola has been able to maintain its position as the leading soft drink for an entire century; contrast it with Tang (the drink of astronauts), which was a hit when NASA was a major cultural influence but has now been replaced by Gatorade. Gatorade has responded to the SET Factors and evolved into the G Series, with a range of products and sports stars to promote the system of products. Barbie has lasted decades and American Girl has become a successful option for parents and children; the frenzy surrounding Cabbage Patch Dolls, on the other hand, lasted only a few years.

Figure 1.3. 1957 Chevy and 1959 pink Cadillac.

(Reprinted with permission of General Motors)

Changes in the SET Factors produce Product Opportunity Gaps (POGs). After identifying a POG, the challenge becomes translating the POG into the development of a new product or the significant modification of an existing product. In both cases, these products are a hybrid combination of a new aesthetic and a set of features stemming from the possibilities of new technology that match emerging shifts in consumer preference. An example of a product hybrid that successfully filled a gap was the first Apple iMac. Integrating the monitor and CPU, and using translucent plastic combined with a variety of bright candy colors, made the iMac easier and more fun to use than other computers. The iMac evolved with and continued to define the aesthetics of offices and homes, which look sharp with an iMac on the desk. Setup was a breeze, and cable-management issues virtually disappeared. The Apple desktop has continued to use the integration concept and is now an elegant thin, soft-cornered rectangle with a minimal aluminum base.

You might not find that all of the products and services included in this book are ones that you would buy. This is an important point to make. The products that we include are highly successful within their intended markets. Understanding how your views differ from the users’ views is critical to the development of successful products. The SET Factors identify POGs for a targeted user group—that target might not be you.

At the core of the Margaritaville fan base, Parrotheads are the Baby Boomer fans who have followed Buffett since the 1970s. The original Parrotheads are now parents and have handed down the fanaticism to the next generation. Buffett has a transgenerational fan base and a great market opportunity. Parrotheads In Paradise Inc. is a network of 200 clubs in the U.S., with additional clubs in Canada and Australia. It is a not-for-profit organization dedicated to the laidback lifestyle exemplified by Jimmy Buffett and his music. In the last decade, the Parrotheads have raised more than $26 million for charity, logging almost 3 million volunteer hours. At the same time, the Buffett enterprise has included the Margaritaville restaurant chain and a similarly named chain of stores selling Jimmy Buffett–themed merchandise, encompassing clothing, accessories, cocktails, beverages, food, and home appliances. The SET Factors set the stage with a great POG for Jimmy Buffett–inspired products for the Baby Boomer fan base (see Figure 1.4).

Figure 1.4. SET Factors for Margaritaville Frozen Concoction Maker.

It’s interesting to contrast the Buffett enterprise with another 1970s musical group with a fanatical following, the Grateful Dead. Similar to the Parrotheads with Buffett, Deadheads followed the Dead from city to city, enjoying the Dead experience. Unlike Buffett, however, the Dead never saw the potential for developing and merchandizing their brand. Only in later years did Jerry Garcia’s art end up on ties that Boomers could wear after they gave up their Birkenstock sandals for a suit and tie and a 9–9 job.

When Jarden Consumer Solutions brought the opportunity to create a margarita mixer to Altitude, founder and CEO Brian Matt realized what needed to be done. The team had to develop an empathic understanding of the Margaritaville subculture. According to Matt, his team at Altitude immediately conducted “extensive research into the atmosphere, activities and social models of party settings and communal dining restaurants.” A small team at Jarden worked closely with Altitude, participating in the research process and working together to “develop the DNA of what Margaritaville meant as a durable product,” according to Alejandro Peña, Senior Vice President and General Manager of Global Appliances at Jarden. They then focused on developing a strategic approach to conceiving a set of products and determined that the first product would be the Margaritaville Frozen Concoction Maker (see Figure 1.5). This was the first of five versions now on the market. The final design of the first product combined engineering insights to produce the perfect shaved ice with a mechanism that would allow the product to come in at the right price point. Extensive experimentation on the part of Altitude’s engineering team perfected the precision choreography of shaving the ice and blending the ingredients.

Figure 1.5. Margaritaville Frozen Concoction Maker.

(Courtesy of Altitude and Jarden)

To determine the visual brand characteristics—the right look and feel—the firm conducted additional consumer ethnographic research. The final design merges the rugged quality of commercial equipment with the approachable character of a small home appliance. As customers have described it in their reviews, the mixer has a “power tool” vibe that all men appreciate. Details such as brightly colored accents and maritime-inspired markings evoke relaxed afternoons by the pool or on the beach.

Interestingly, no similar product was on the market. Competitors were either low-end consumer blenders or high-end commercial drink mixers for restaurant use. The commercial mixers were too large, expensive, and heavy duty to be used at home. The typical blenders used at home did not have a strong motor capable of crushing ice consistently and easily burned out after a few hardcore ice-crushing cycles. In addition, they were chopping ice rather than shaving it, which made the drink watery and inconsistent. The team identified this opportunity as an unfulfilled market and approached it with a new solution.

The unprecedented functionality and distinct look of the drink maker makes it enormously appealing and easy to operate (see Figure 1.6). This mixer is equipped with two motors: one is located on the top and is responsible for shaving the ice into a silky mixture (which stays silky even as it melts); the second motor is placed in the lower part and simply blends the shaved ice and liquid ingredients in an automated sequence while placing very little stress on the motor. The other innovative aspect of this mixer is a reservoir located on the back. The water from melted ice is channeled into this reservoir, so as to not be mixed with the drinks. This results in thick and consistent drinks every time the device is used.

Figure 1.6. Concept sketch indicating features of ergonomics, manufacturing, technology and styling.

(Courtesy of Altitude and Jarden)

Users need only fill the ice in the top compartment, pour their desired drink into the pitcher, turn the dial to the appropriate drink selection, and choose the number of drinks to prepare. The device automatically shaves the ice, pours it into the pitcher, and then blends the ingredients. Although the entire process can be done automatically, the mixer has options for manual control of shaves and blends, to add a personal touch for users who want control over the final outcome. The product was an instant hit with both Parrotheads and Parrothead wannabes, the far larger group of people who enjoy the fantasy of the Buffett lifestyle without visiting Key West or traveling city to city to see a Buffett concert.

The product gave Jarden both a presence in the backyard entertainment consumer market and a new product that was a top seller overnight. According to Peña, the decision for Jarden to develop and produce the Frozen Concoction Maker was a risk: The company had previously only dealt in mass-merchandized products for stores such as Walmart and Kmart. Making the decision to develop a luxury durable good paid off handsomely. In the first six years of production, the Frozen Concoction Maker resulted in more than $100 million in sales for the company. It also changed the culture of the company, indicating to employees that they could be innovative and that such innovation would pay off.

BodyMedia’s initial product was to compete with high-tech clinical services in the area of energy expenditure (a.k.a., calories burned) analysis. The growing cost of healthcare was partly caused by the prices of maintaining and using medical facilities. In sleep labs, people spend the night with many leads attached to their skin, monitoring their physiological functions while at rest. Metabolic carts also measured energy expended both while at rest and while active. Both of these approaches required the subject to be in the lab facility, using large pieces of technology—the sleep lab with EEG leads to capture brain functioning and ECG leads to capture heart information, among other details, and the metabolic cart with tubes in the subjects’ mouths to capture and analyze ECG, pulse-oximeter, breathing, and other functions.

BodyMedia introduced an alternative, a product with state-of-the-art but lower-level, low-cost, and low-power sensors specifically designed to track body functioning during activities or rest. The device wrapped around the upper arm and captured information that was then downloaded to the computer. Instead of being invasive, or at least annoying, BodyMedia introduced a simple, comfortable device that could be used at home and continuously throughout the day, the SenseWear System. The company had expertise in wearable technology and understood how to integrate sensors into that technology. However, it also had to develop the ability for sensor fusion, or the ability to use accelerometers, galvanic skin response, temperature, and heat flux sensors in an integrated way to provide highly accurate, useful, and affordable feedback, based on an external skin interface. The approach required integrating engineering, design, and computer science including advanced machine learning methods that were brought into this new field. The company founders also had a background in industrial design and recognized that, even in the clinical and research markets, ergonomics for comfort and attention to style would improve compliance and long-term use.

The SenseWear System (see Figure 1.7) demonstrates an effective effort to integrate style and technology in a clinical environment. Healthcare clinicians and researchers made sense as the target to introduce the product because they tend to be early adopters who have the financial resources to try new technologies. They were also willing to work with the technology supplier, providing feedback and working to improve the treatment’s effectiveness. Integrating four sensors into a small, light, and robust form factor was challenge enough. Recognizing that the look of the product was also critical to its compliance if people were to wear it in public or at home made for an even larger task. And as a startup with limited funds, the company had to develop the product in parallel with bringing it to production, furthering the challenge for success. However, because the company was able to read the SET Factors and anticipate the emergence of both information technology and people’s desire to learn about and take care of their health (see Figure 1.8), the product became an initial success. Today the clinical market continues, and the SenseWear System serves as a means for new data collection internationally, giving healthcare professionals and researchers new insights into patients’ bodies and their lifestyle behaviors.

Figure 1.7. Original SenseWear System from BodyMedia.

(© Image courtesy of BodyMedia, Inc.)

Figure 1.8. SET Factors for BodyMedia clinical product.

Although the clinical market continues for BodyMedia, the bigger goal was to cross the chasm into the consumer market. As cofounder Chris Kasabach tells it, the company followed a mantra that “people knew more about their cars than their bodies; could the company make a dashboard for the body so that people could take care of themselves?” The company again read the SET Factors, an extension of those in 1999 for the consumer market (see Figure 1.9). Americans were becoming more aware of their health, particularly diabetes and other effects of being overweight. Two thirds of Americans were obese or overweight. People were willing to spend money to improve their health. Technology also had advanced; sensors were getting smaller, and the company had gained one of the world’s leading capabilities in externally sensing body functions. Of course, people would be pleased to lose weight, but they preferred to do so their own way and at their own pace. Emerging communications technology via low-power wireless protocols, more prevalent Internet in people’s homes, and larger server capabilities meant obtaining and processing data was easier.

Figure 1.9. SET Factors for BodyMedia consumer product.

In 2004, a culmination of circumstances took place. BodyMedia had developed a smaller, comfortable, and ergonomic sensing band that consumers could use. Downloading data and receiving information on progress toward a health goal was easy. The Biggest Loser, a reality TV competition between obese people to lose the most weight and become healthier, became a hit. The movie Super Size Me was released, illustrating the negative effects of fast food on obesity and its link to diabetes. People were actively using the Internet to search for information about health concerns. And Facebook was launched, allowing people to readily connect about health issues. BodyMedia correctly read the SET Factors and was well positioned for this growing and eager market.

At that time, a partnership with 24 Hour Fitness developed. After winning the IDEA Gold Award in clinical science in 2002, the company began its foray into the consumer market with several partnerships, including Apex Fitness, a supplement manufacturer (owned by 24 Hour Fitness). The company then could begin to interact in the consumer market in a controlled fashion. BodyMedia developed its consumer-focused product, now called the BodyMedia FIT System¹, focused on tracking calories (see Figure 1.10). Apex branded the product as bodybugg, but BodyMedia maintained a cobranding much like Intel does with “Intel inside.” Soon the company became established in the consumer market. 24 Hour Fitness was a sponsor of The Biggest Loser. The participants in the show started using the bodybugg and several times even spoke about the product on the show. Talk about national exposure! The product, eventually under the BodyMedia FIT System name, became available at retailers across the U.S. in stores such as Dick’s Sporting Goods, technology retailer Best Buy, membership warehouse Costco, and online at Amazon.com. A business model made the product affordable to the masses by selling the physical armband under $200 but requiring a monthly subscription starting at $7 to process the data and provide feedback to the user. New partnerships with popular weight loss provider Jenny Craig and the Jillian Michaels exercise program further aided reach into the consumer market. In 2012, more than half a million people had used a BodyMedia system.

Figure 1.10. The BodyMedia FIT System.

(© Image courtesy of BodyMedia, Inc)

The FIT sensor device elegantly integrates the multiple sensors into the small device (see Figure 1.11). However, the FIT System is an illustration of the blurring between physical product and services. Without the FIT armband, there can be no service. Likewise, without the service of obtaining, storing, processing, and interpreting the data over time, the drive toward better health is cumbersome and far less effective. The symbiotic relationship between the physical product and service product is prominent in today’s new product innovation, a characteristic we see throughout this book.

Figure 1.11. Product details of FIT, showing technology integration.

(© Image courtesy of BodyMedia, Inc)

Starbucks filled a POG that started in one city, Seattle, and then spread exponentially across the U.S. and internationally. It has had the same effect at the turn of the twenty-first century that Coca-Cola had at the turn of the twentieth century and McDonald’s had at mid-century. What factors allowed Starbucks to become the last great food specialty retailer of the last century? If you have ever traveled to Seattle, you will notice a city with some unique attributes. The city not only started the new coffee culture, but it also helped to start the new beer culture with the development of microbreweries. Seattle has a gray, cloudy climate and stays fairly cool throughout the year. Many people commute using the ferry system and then drive or walk to work. Americans, in general, rarely have time to eat breakfast before they leave the house; breakfast on the run is a common experience. Early morning fatigue is also common for most commuters, especially in Seattle’s climate. Drinking coffee is customary for many Americans to ramp up for the day, maintain momentum during the day, and relax at the end of the day. Seattle is also one of the primary new centers of the Information Age and, as home to Microsoft and Amazon.com, is the land of expendable income. Howard Schultz, the visionary and CEO of Starbucks, saw the POG after experiencing the espresso bars in Milan. Given the Social (S) and Economic (E) factors that are both highlighted by Seattle inhabitants and more recently shared by the rest of the U.S. and the world, it is not surprising that Starbucks started in the Great Northwest and spread to the rest of the country and beyond (see Figure 1.12). It is now possible to get a cafe latte in local neighborhoods, on university campuses, on turnpikes, and in Taipei, London, Istanbul, and even Sri Lanka (see Figure 1.13). Now that is what we call a global brand!

Figure 1.12. SET Factors that led to Starbucks’ success.

Figure 1.13. Starbucks’ global positioning shown through unique mug designs from international cities: London, New York, Taipei, Vancouver, and Boston.

In lower Manhattan, Canal Street separates Little Italy from Chinatown. Both areas are favorite sites for both New Yorkers and tourists. For a long time, guests have ordered espresso and dessert at many little restaurants in this area, often after eating dinner in Chinatown. This concept had never expanded outside of Little Italy, except in other Italian neighborhoods in other big cities.

Berkeley, California, home of UC Berkeley and the 1960s revolution, has for years had coffeehouses in which students and faculty pontificated, studied, and hung out. Peet’s Coffee began there in 1966 and preceded Starbucks. In fact, Alfred Peet trained the founders of Starbucks in the art of roasting arabica coffee beans. An addiction of locals, Peet’s is well known to anyone who has lived in or visited Berkeley. Once, before Peet’s expanded outside Berkeley, a Berkeley resident rented a ski chalet in the Swiss Alps; it turned out that the chalet owner had lived in Berkeley and regularly mail-ordered Peet’s coffee all the way to Switzerland.

Why didn’t one of the restaurants in Little Italy become the original inspiration for Starbucks? Even though eventually Peet’s became the coffee of choice for some chains, why wasn’t Peet’s Coffee the first to expand across the country? The SET Factors were not right in New York, and no one in the Bay Area either saw or acted on the potential that Starbucks’ visionary Schultz saw in Seattle. Not only do the SET Factors have to be right, but they also have to be scanned, interpreted, and developed with a vision.

Part of the technology of Starbucks lies in the machines used to prepare the coffee. The best machines for producing hot or cold coffee (and now tea) drinks are used and promoted along with the sounds they produce. Each Starbucks is a retro factory, hissing and steaming away, producing espresso and lattes at a constant rate. Other aspects of technology include special water-filtration systems in each store and sophisticated roasting facilities. Their investment and partnerships in R&D have led to innovations such as a process to extract the essence of their coffee for use in products such as Frappuccino and ice cream.

The interiors of Starbucks stores have been designed to transcend the original concept of an Italian brasserie and to combine the global nature of coffee bean production with a comfortable old college coffeehouse, with sophisticated contemporary colors, graphics, and furniture. A Starbucks store is inviting to walk into as an individual or with others. When you are in Starbucks, you are not just drinking coffee—you are having a mind-altering experience. Even if you order a drink to go, you can leave with a sense of the store experience while holding on to a cup with a protective corrugated holder that clearly states it was made from recycled paper. It doesn’t get any better than that. Starbucks has developed a flexible brand identity (discussed in Chapter 4) that uses a consistent color theme that allows for variation in secondary graphics for packaging, products, and store interiors. The response to Starbucks has been equally impressive, with the emergence of a number of national, regional, and local competitors fighting for their share of this lucrative market. As traditional coffee makers have responded to the trend, Starbucks has countered by extending its products into grocery chains, offering dark arabica coffee beans and even a range of ice cream flavors. Using new technologies, they revisited and reinvented the freeze-dried coffee made famous by Nescafe.

In his book Pour Your Heart Into It,² Schultz chronicles the evolution of Starbucks. Starbucks is a company that epitomizes the characteristics found in a company in the Upper Right. The company sees its product as the coffee, the people who work for the company, and the experience of buying and drinking coffee in the stores. Starbucks maintains a high standard of values, from the CEO to each employee, and connects to the values of its customers. These values are clearly articulated in a corporate mission statement. The company sees its people as core to its brand, in parallel with its coffee, and recognizes that its long-term success depends on high standards for both. Each employee of the company is called a “partner” and is given stock options. Even part-time employees are given full healthcare benefits. Starbucks initially relied on the power of its experiential brand, loyally conveyed by its customers, to promote the company, and it fell back on advertising only once the company was well established. As Schultz says, “Starbucks built up brand loyalty one customer at a time.” Finally, the company is constantly looking for the next new product to “surprise and delight” the customer, from new coffee drinks, to Frappuccino, to ice cream, to jazz CDs.

Both Dunkin’ Donuts and McDonald’s countered Starbucks, but in different ways. McDonald’s began to offer coffee with arabica beans and introduced the McCafé with a variety of lattes, cappuccinos, and more. Dunkin’ Donuts took a different approach, leveraging its popular coffee to create the counterculture to Starbucks: the coffee for the everyday working person.

Upper Right products, services, and companies merge style and technology in a way that creates strong customer value and promotes a positive user experience. Strong brand, corporate values, and connection to customer values lead to both short-term and long-term customer satisfaction. Many breakthrough products stay in the Upper Right through the constant injection of useful, usable, and desirable features for the customer. The end result is greater profits to shareholders.

The SET Factors (see Figure 1.14) highlight the increased cost of medical care, especially the wasted resources for ineffective studies and the potential costs for sedation. The technology of the product is state-of-the-art and will not change. What will change is the social impact of a new product that results from an empathetic approach to medical care for children and thus their parents, along with the ability to make an anxiety-producing experience more calming. The result is the POG to humanize medical technology for children.

Figure 1.14. SET Factors that show the opportunity for an empathetic medical product for children.

Fulfilling this opportunity required integrating play into a medical process by enabling a child to relax while not compromising the procedure. At GE Healthcare, Dietz felt highly motivated to design this transformational space as a result of observing the children, who, while already traumatized by a serious illness, were asked to submit to a procedure that scared them. He saw the potential for play in what is at times a traumatic event. He partnered with staff at UPMC Children’s and with GE engineering and manufacturing. He recognized that nurses, empathetic to the patient, often know what types of intervention could help better than designers alone. Working with designers, they provided insights to generate more sophisticated and comprehensive solutions. Another breakthrough came from choosing an atypical advisor and resource to understand the nature of play and how museums create play experiences. GE sought help from Milwaukee’s Betty Brinn Children’s Museum for guidance, pointing to its interactive exhibits and educational resources that promote the healthy development of children in their formative years from birth through age 10. From this interaction, designers learned theories of play and how museums keep kids engaged.

The resulting design was a breakthrough in thinking that led to fusing an Adventure Land ride at Disney with a medical procedure. Dietz and his team integrated medical knowledge with a Disney Imagineering approach to break a paradigm. This approach is part of a new way of thinking referred to as empathic innovation in medical care.

In creating this new interface, a global design team at GE, in conjunction with the hospital and museum advisors, began to imagine a scan procedure with less anxiety and fear. The first step was to gain invaluable insight that children’s hospitals face every day: Kids have specific challenges and a unique set of needs, especially when it comes to imaging. Next, observational research was conducted by visiting leading children’s hospitals to analyze and dissect imaging processes and best practices. Finally, targeted focus groups that included kids were conducted. At that point, the children expressed themselves with pictures and personal stories. The findings were enlightening. Most children view big imaging equipment as scary, but the machines were especially scary for those between the ages of 4 and 9 because they lack the cognitive reasoning skills to understand what is happening and why. The team discovered simple details that often get overlooked. For instance, some of their most effective insights came from kneeling and looking at rooms from the height of a child. The team was pushed to think in terms of what kids see and how they relate to the world. After the research, the concept behind the pediatric imaging began to materialize.

In developing new products, it is critical to understand the stakeholders who most influence the success of a potential product (see Chapter 7, “Understanding the User’s Needs, Wants, and Desires”). In this case, three categories of stakeholders were identified: children, their parents, and the nursing and technician staff, who, as mentioned, identified the problems of keeping kids still and calm. Parents have high expectations when a child’s health and well-being are on the line. They expect quality healthcare and an experience that puts their child first. When families go out of their way to choose children’s hospitals over local alternatives, they look for “kid-friendly” care.

For kids, the proposed solution must provide a setting that not only keeps a child still during the imaging process, but also makes the child feel more relaxed and engaged with the MR radiation technologist so that the scan can be performed. Furthermore, it must address the way kids perceive the world around them: through colors, lights, sounds, materials, temperature, and smells. Storytelling is also highly effective. So if an imaging experience were to be truly fun instead of scary, these elements needed to somehow be incorporated.

Through their research, the GE team identified anxiety points or aspects of the experience that were hard for a child to understand, such as the noise of the machine, the hospital smell, and the need to remain still. They thought of imaginative ways to make sense of these anxiety points from kids’ perspectives, and they tried to distract kids through visuals, appropriate lighting, reduced anesthetic smells, and props when they came into the room for imaging. The intention was to make them feel as if they were on an adventure and had no need to panic; patients then could leave the room with a positive feeling after the procedure.

The result was eight room themes, called Adventure Series (see Figure 1.15), developed to use sensory tools to create an imaging experience that children find more welcoming. The rooms employ sensitivity tools to help soothe and reduce a child’s anxiety along the way. Examples of room themes were a jungle, a pirate island, a coral city, a campsite, and a sunset safari adventure; their names associated an adventure with the medical procedure, as in X-Ray Fluoroscopy Cub River Falls Adventure, CT Pirate Island Adventure, and MR Space Adventure. Each one of these themes could distract kids’ attention from anxiety points by using different techniques. For example, the MR room’s space theme was specifically chosen to target the MR scanner’s noise. In this room, where the scanner is disguised as a spaceship, children do not have to understand why the MR scanner makes noise because they can imagine a spaceship rumbling through space. Another example is the Cub River Falls Adventure: The table is a raft, so children do not have to understand why the fluoroscopy table may move—instead, they can imagine riding the rapids.

Figure 1.15. The GE Adventure Series CT scan.

(Courtesy of GE Healthcare)

In addition to developing the Adventure Series room themes, the GE design team created a set of friendly characters to accompany the child through the scan process. These characters, with their own personalities, are playfully integrated into the room themes to ease the potential for anxiety of both patients and parents. A hands-on coloring book explains the procedure from a child’s perspective, while field guides assist staff in weaving the adventure into the scan procedure.

Working with the UPMC team also allowed the process to be tested and assessed for effectiveness; there was a significant reduction in the number of children who needed to be sedated for this type of scan with the Adventure Series. Children do not go to a hospital because they want to be part of an adventure. Instead, Adventure Series is about acknowledging patients and their needs beyond medicine, elevating them beyond just another patient, and addressing their needs as individuals.

• Breakthrough products merge style, technology, and value.

• A combination of vision and sound methodology is necessary to successfully develop breakthrough products.

• These ideas and methods apply to both tangible products and intangible services.

2. H. Schultz and D. J. Yang, Pour Your Heart Into It (New York: Hyperion, 1997).