There was an example of Prius in the class and as I’ve just come across it in another occasion, I thought to share this with you. I’m currently reading Change by Design, a book by the CEO and president of IDEO, Tim Brown. The book is about design thinking and it also uses Prius as an example.
Brown gets to Prius via describing how to use design thinking to manage an innovation portfolio. He presents a matrix tool that evaluates different innovation efforts within an organization. On the horizontal axis are the users, on the vertical axis the offerings.
Projects in the bottom left quadrant are incremental: improvements to existing products and extensions of existing ranges. This type of innovation often secure the company’s base as they’re rather low risk. The book uses the variety of toothpaste flavors as an example of incremental innovation. Brown also points out that focusing too much on this section might lead to trouble, as the world changes.
Prius comes to the picture in the top left/ bottom right quadrant. It is an example of evolutionary innovation; a project that stretches the offering base into new directions. It can be done by extending existing offerings to meet the new needs of current customers or adapting them to the needs of new customers or markets. With Prius, Toyota captured the emerging demand for energy-efficiency when the SUVs were still prevalent in the American market, right on time as fuel prices started to rise.
Another example of evolutionary innovation is Tata Nano, the microcar. Low-cost, low-emission, it is aimed at the Indian market previously inaccessible to car manufacturers.
The riskiest and most challenging type of innovation is revolutionary innovation, where both the product and the users are new. Sony’s Walkman and Apple’s iPod are used as examples of products that create entirely new markets.
In his book (I’m still in the middle of it, so I can’t offer any profound truths about it) Brown introduces design thinking as a tool for addressing a wide range of issues and concerns. It would be interesting to hear other reflections on how marketing, innovation and design thinking connect.