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Continual Innovation vs. Economies of Scale December 10, 2009

Posted by Graham Pingree in Design Thinking.
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Over the course of the readings on Design Thinking, it struck me that one of the biggest challenges in managing the transition from ideation to implementation, ie knowing when to move towards execution of a particular idea. I think this decision is particularly difficult when balancing continual product improvements vs. economies of scale. This was one of the most frequent problems I encountered during my internship this past summer. The company I worked for made prefabricated, modular green building systems, so part of the business model relied on achieving scale efficiencies from our steel fabricators who manufactured the parts of the buildings. The tension in the model arose because of the continuous innovation of the product design team, who worked hard to come up with new ways to improve the design of the building. While these improvements contributed to some efficiency gains on the production side, the frequent changes made it difficult to generate enough of a single part to reach minimum efficient scale – each part could become obsolete before the necessary scale was realized. I think the concept of Design Thinking and the encouragement of continual innovation can be consistent with a model that relies on economies of scale, but the solution requires a move towards a “versioning” approach, where a design is frozen for a current version until the necessary volume is sold, and the next version that is released is more significantly differentiated.

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Comments»

1. Pedro Kudrnac - December 13, 2009

I found interesting the fact that the author constantly repeats the importance of putting HUMAN BEHAVIORS at the center of the creative process.

Another highlight of the article that I liked was the idea of blending big and small projects. I think that the accumulation of small improvements to a product, experience or business model maintains the team on an exploration mood that can lead to great innovations. This is great to keep on surprising customers and always staying ahead of the competitors.

Finally, I remember Tom Kelly at O-week mentioning the importance of looking at the world with the eyes of a tourist. Being able to see what’s going on next to you with fresh eyes. It is great not only to innovate, but also to understand how people take decisions, think or do things.


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