On Ideation
According to Nadel, organizations can innovate in a variety of ways. The first comes from simple “readiness” and being positioned to discover new insights and generate ideas at any time. The second is more proactive and seeks discovery through research, such as the practice of ethnographic methods or traditional market analysis. Finally, there is perhaps the most effective form of innovation, which is “aggregative innovation”, seeking opportunities to connect products and services that already exist within an organization or market.
On Innovation
For Nadel, the real key for organizational innovation may be in the seeking of “discontinuity”. By discovering and capitalizing on disconnects between market expectations and offerings, organizations can create completely unexpected yet welcomed systems of value. Apple, for instance, has done this masterfully over recent years with their suite of media devices and digital services.
These devices did not stem from problems, so to speak, but from opportunities that were created by technology markets that did not quite align with the intentions of its customers. Beyond isolated devices, however, the smart organization creates a system around the solution to that discontinuity. In other words, it’s not the iPod that enabled people to build, manage, and enjoy their digital music library, it was the system created by the integration of the iPod device, the well-designed digital interface, and the easy access to the iTunes music library.
These devices did not stem from problems, so to speak, but from opportunities that were created by technology markets that did not quite align with the intentions of its customers. Beyond isolated devices, however, the smart organization creates a system around the solution to that discontinuity. In other words, it’s not the iPod that enabled people to build, manage, and enjoy their digital music library, it was the system created by the integration of the iPod device, the well-designed digital interface, and the easy access to the iTunes music library.
On Design
Nadel discussed the trends of design and how “the new design is service design”. This is a subtle yet powerful shift from physical and isolated aesthetic design to a more dynamic and human-centric service design. However, one must not confuse this viewpoint as a comparison between the physical product and the digital service. In Nadel’s view, “the device is the service, and it’s the service that people care about”.
On the Economic Benefit of Eco-systemic Thinking
Nadel explains that the real competitive edge is in “eco-systemic thinking”. The key is to look beyond isolated products to look holistically at all the connections with complementary products and supporting services. By doing so, an organization can create real value for their customers.
Organizations benefit tremendously from this systemic approach for a variety of reasons. The primary one is due to the profit margins that an organization can make on selling services compared to selling isolated products. According to Nadel, “smart companies get recurring revenue and as a result, better margins”. Consider Apple as an example, an organization which makes tremendous revenue on sales of its iPhones and iPad, but margins are thin when compared to sales of mobile applications and digital media. In Nadel’s words, “value equals margin”, which in turn, creates a “fiscal aspect for innovation”.
Quite frankly, the key point of this systemic approach from a standpoint of business strategy is that “you can’t make money just selling little pieces”. An organization must think systemically and not in isolation. As one can see from the Apple case, they have been able to capture value through their patterns of systems thinking, creating ecosystems of services around integrated devices. In Nadel’s view, Apple has been “remarkably holistic”.
Success in systemic thinking should really come from the top in Nadel’s view. The key is “strong leadership with a eco-systemic view that is thinking in a connected way”.
