In the preceding chapters, we have shown that innovation must be seen from a different angle, i.e. as the result of an actively sustained, voluntary process that can be organized, rather than as an ex post judgement. Firms wishing to innovate must manage ‘innovation capabilities’, but what exactly does this mean? Which activities are involved, who should lead them and how can their performance be evaluated?

The aim of this chapter is to show that firms which try to develop their innovation capabilities must place a new emphasis on design activities. These must be carefully organized and managed, especially in the case of innovative design. Although they play a central role in most major industrial firms today, relatively little is documented about these design activities, which leads us to believe that they have not been studied in any great detail.

There are several reasons for focused exploration and analysis of design activities. If we try to identify the actors who contribute to innovation capabilities, we automatically think of the researchers and engineers in R&D departments, whose mission is indeed to contribute to innovation by designing products and processes. However, unless we want to restrict our study to technological innovation, we should also include industrial designers, a rapidly expanding category which has an increasing influence within firms today. We should also mention specialists in communications and semiotics, such as advertisers, brand designers, etc., and in certain cases user groups should also be included. All these actors have one thing in common: they design things.

Innovation and competitiveness

The impact of globalization goes way beyond the issue of relocations of manufacturing plants. It throws firms into a new arena where competition is no longer based on product performance alone but also on the overall effectiveness of their innovation strategies. The authors' experience and the numerous discussions we had the privilege of taking part in over the past ten years enabled us to be involved in and put into practice many of the recommendations found here. The notion of organizing intensive innovation, the structuring of lineages of innovative products and the organizing of constantly evolving technological sectors have become management methods that place this ‘RID’ at the heart of the firm's strategy. One of its main advantages is to structure the long-term view whilst also giving the management sufficient confidence to manage the short and medium term.

Until the 1990s, teams in charge of managing innovation – the R&D and marketing departments – were expected to deliver results whilst roughly keeping to the specifications, timetables and budgets. This operating method was often project-based; it brought new products onto the market in satisfactory conditions and helped to keep challengers at bay. In western countries, companies managed to maintain their growth and profitability. However, outsiders then started to improve their performance: they acquired technological capacities and were quick to learn, meaning they were able to almost catch up with the innovators, who were then obliged to speed up the rate of product renewals. At the same time, the growing number of new technologies that firms had to master led to an explosion in the financial burden of innovation, introducing the need for far more rigorous management of R&D resources.

What do we know about innovation? Apart from inherited ideas and a host of scientific articles on the subject, do we now have a clear picture of the problems raised by innovation in firms today? To introduce the issue from a concrete foundation, we shall begin by describing a number of real case examples in which the authors have been personally involved and which became the starting point for several of the ‘innovation adventures’ described in greater detail later on in the book.

Contemporary innovation: received ideas versus facts

Mad ideas? Yes, but well-managed ones!

In the early 2000s, at Linköping University, Sweden, several research teams were working on a project to design unmanned aerial vehicles (UAVs) for traffic surveillance. For the project's promoters, the WITAS project was a ‘blue sky project’, i.e. aimed at stimulating the researchers' imaginations rather than designing a commercial product. The researchers' first objective was to venture off the beaten track usually trodden within their disciplines in the hope that such explorations would lead to the discovery of new concepts and alternatives for products or technologies. The research project had a substantial budget, sufficient to last several years, even though it did have a specific target for direct industrial application.

How can explorations be organized to ensure that they lead to high-value, profitable innovations such as the nail-holder, but without requiring costly learning processes? The sort of innovations which we think we could have invented ourselves. The first type of innovation field concerns this type of project. It aims to find a new value without having to make heavy investments in ‘science’ or conquer new technologies. There are many examples which fit into this category, such as customized mobile phone casings and ‘plip’ remote control car door locking systems. Projects of this sort can involve high technology, but only if its development can be planned – without surprises – or if it has already been developed. Such innovations rely heavily on user involvement, but user involvement is not a recipe in itself: it can be a solution, but it can also be a trap. In this chapter, we show how to deal with this type of apparently low-tech, high-user-value innovation.

Examples of creations of new product lineages in large firms

To illustrate the issues at stake in the context of different industries, we begin by examining the case of Telia, a Swedish telephone operator, which at the end of the 1990s was confronted with the problem of designing mobile telephone services for third generation (3G) technology. The technical norms for 3G were already well established at that time, but designers were wondering how to create value for customers.

Throughout this book we have described the key tools and organizing principles for innovative design. In this conclusion, we would like to bring the central themes into focus with a rapid overview of the main stages in our research itinerary. A few questions will serve as a thread and help understand the overall implications of our findings. How can we explain the emergence of RID in the long history of management? What does it tell us about how companies will be organized in the future? What impact does the development of innovative design tools and theories have on the major paradigms of the management sciences? Have new avenues of research been opened?

Each of these questions merits long developments, but here we will simply give a few indications for further reflection without going into detail or coming to any firm conclusions. In fact, our main aim here is to emphasize that the current progress in innovative design opens a wide debate on the evolution of contemporary management. The debate cannot be limited to a discussion on management techniques and, although we must discuss the impact of the tools used for innovative design, it is also important to carry out a wider analysis of the issue of innovation in management today. Management research is sufficiently mature to recognize that the current progress in terms of instruments and theories is ambivalent.

Should firms return to the ‘wild’ innovation model?

How can the R&D model be adapted to the contemporary challenges of innovation-intensive capitalism and become a model for innovative firms?

One solution is to return to ‘wild’ innovation, when firms set up small, unofficial teams of researchers working with limited resources, in the hope that by giving them more autonomy they will be able to explore new paths. In these rare forms of design organization, the firms count on serendipity, fortunate accidents and chance encounters in cross-functional teams, between wise experts who accept ideas from people throughout the firm as any suggestion can be worth investigating (Robinson and Stern 1997). The case of the Stephensons showed that wild innovation can be experimental and flexible; it can explore new ideas and create new values. However, wild innovation has its limits; it is in fact a poor model for the innovative firm, not least in comparison with the R&D model.

Although this type of organization can be interesting and can sometimes help new ideas emerge, it is never more than one element in a more general model, as we saw in our study of start-ups (see Avanti, Chapter 6), innovative firms (Chapter 4) and R&D-based firms (Chapter 7). Other issues must be dealt with, such as defining the functional spaces, launching the innovations and repeating them throughout lineages, and ensuring the gradual mastery of advanced technologies.

Introduction: Tefal, from the firm to the model?

An Innovation Manager's questions

As in the previous chapter, an imaginary Innovation Manager will serve as a guide to the practical issues involved in adopting the potential model.

'The Tefal model is of course very attractive, but I can see lots of reasons why it wouldn't work in our company. For example, I like the idea of two-headed project management and agree that it is really important to make sure that technical experts and product experts work together and communicate well. But there are also very good reasons for keeping separate departments and letting them work on precise, well-defined objectives. Isn't it risky to change specifications all the time to keep up with the latest market information? I'm concerned that a two-headed management system might mean too much to-ing and fro-ing, with difficulties in controlling variety and with high coordination costs. I'm not convinced that designers will be any more productive working together just because there is a two-headed project management team.

'The same applies to the specifications. Having less restrictive specifications will of course improve flexibility, but once again, I'm concerned about things going too far, with problems regarding excessive variety or simply nonconformity.

'The product committee seems attractive too on the face of it, but how do you organize a meeting of nearly eighty people – including the top management – and ensure that there are healthy discussions and not just sterile debates about major strategic options that always end up being too vague?

We were very pleased to accept the authors' request to focus on the key prospects opened up by this book. Renault, which has a fruitful research partnership with the Ecole des Mines de Paris (CGS), was directly involved in the issues covered here.

For Renault, this research has already encouraged us to set up an Innovation Centre and to develop experimental innovative design tools; today it helps build more effective ‘front-end’ functions for the firm, in terms of innovation capability and value creation. We were also very pleased to find that the experience provided by Renault for this research contributed to the results described in this book. The research partnership was even the subject of a joint communication by Renault and the Ecole des Mines de Paris in 2005, by special invitation from the Annual Conference of the European Academy of Management.

The distinction between innovative design and rule-based design is doubtless the latest idea and the one which will have the most impact on the way design systems operate in the future. It helps build innovative design teams more effectively. They will, of course, be composed of designers, engineers, product managers, researchers, partner suppliers, etc. But above all, these teams will have a wider scope for exploration and research, whilst also being better organized and more involved in our sales projects. The major contribution of the C-K design theory developed by the Ecole des Mines is doubtless to reconcile these two notions.

In the spring of 1999, osama bin laden (1957–), the head of the al-Qaeda terrorist group, agreed to support a plan submitted by Khalid Sheikh Mohammed (1964–) to use airplanes as weapons to crash into buildings, or what they came to call the “planes operation.” In the months that followed, they selected targets, including the World Trade Center in New York City and the White House, the Capitol, and the Pentagon in Washington. As the plans matured, bin Laden picked a group of young men who had attended al-Qaeda training camps in Afghanistan – Mohamed Atta, Nawaf al-Hazmi, Ziad Jarrah, Khalid al-Mihdhar, and Marwan al-Shehhi – to pilot the aircraft. The planning was done in extreme secrecy. None of these individuals knew how to pilot an aircraft, however, so two essential steps for the operation to succeed were to get them into the United States and to get them trained as pilots. Could U.S. intelligence analysts detect what was going on in time to prevent an attack in the United States?

Two of the intended pilots, Hazmi and Mihdhar, had fought with their fellow Muslims in Bosnia earlier in the decade, in addition to having traveled to Afghanistan for training. Therefore, intelligence analysts were likely to see them as suspicious. Nonetheless, they were granted visas by the State Department.

In 1941 much of the world was at war, with the united states the only major power still on the sidelines. American public opinion was strongly isolationist, but many in the government, including President Franklin Roosevelt, believed that U.S. involvement was inevitable. Roosevelt's focus, however, was on and across the Atlantic Ocean, where Nazi Germany's army had overrun most of Europe and its navy was threatening Britain's maritime lifelines. In October 1941, in two separate incidents, U.S. warships escorting shipments to Britain were torpedoed by German submarines. If either – or worse, both – of the two remaining German opponents, Britain or the USSR, were defeated or sued for peace, the United States would be in an extremely unfavorable strategic position. To prepare for a likely war, Roosevelt provided armaments to the British and Soviets, and set in motion a new building program for the U.S. Navy, among other preparatory measures.

Asia, in contrast, seemed less dangerous. Japan had been fighting to take over part of China for a decade, but the situation there had settled into a stalemate. The Japanese also appeared interested in taking advantage of Germany's victory over France and the Netherlands in 1940 and its continuing heavy pressure on Britain, to perhaps take over some of the European colonies in Southeast Asia; but it was not clear when or where this might actually happen. The U.S. government did not want a new and expanded round of fighting in Southeast Asia.

In april 1978, a pro-soviet government took over afghanistan after a coup. Afghanistan had been drifting away from a nonthreatening neutrality and Moscow used the influence it had through Soviet-trained military officers, a local communist party, and economic aid and advisors to obtain a government more in line with its interests. The new Afghan government immediately started to implement a leftist program, including land and education reforms that were anathema to much of the population, who wanted to maintain their Islamic traditions. A dramatic increase in the number of Soviet military and civilian advisers in the country also created animosity against the central government. By November 1978, tribes in the countryside were in open revolt.

Therefore, there were two questions for analysts: (1) Would Moscow allow a client state on its borders to slip out of its control? and (2) If the Soviets decided to reassert their influence, what steps would they take?

The possibility of increasing Soviet activity in Afghanistan caused concern in Washington. As early as March 1979, U.S. intelligence detected Soviet troops and equipment moving closer to the border with Afghanistan in limited numbers, apparently in response to the recent death of some Soviet advisers in the fighting. There was a debate among analysts in Washington over the meaning of these indicators, and several hypotheses were considered. Most believed that this was an exercise, but others were concerned that it was an unprecedented level of activity in a usually quiet sector.

The vietnam war of the 1960s and 1970s was a long and complex conflict, with one of its key elements being the role of intelligence. In contrast to intelligence analysts' work on the massive Soviet conventional and nuclear forces, the conflict in Southeast Asia required dealing with an insurgency. There were spirited debates among analysts over whether the communist effort to take over South Vietnam was better understood as a leftist social revolution, with significant control from Moscow and Beijing, or a nationalist struggle for independence, with the key decisions being made in Hanoi. Was this a largely military conflict, in which factors such as numbers and firepower would be decisive, or was it a broader undertaking, in which the political, economic, and social aspects would be important? Intelligence analysts working on the Vietnam problem also had to be careful that their assessments were not perceived as criticism of U.S. military strategy or policy in general.

When looking at the conflict in broad, strategic terms, some analysts believed that the North Vietnamese were not likely to give up their effort to take over South Vietnam in response to the level of force that the United States was willing to apply. Many in Washington disagreed, believing that U.S. technology, numbers, and will could prevail. Analysts' assessments that Hanoi's staying power could turn out to be greater than Washington's were confirmed in the long term.

Deciding can often be hard; there are so many possibilities. What do I want for dinner, or what movie do I want to see? Making a decision can be even more difficult when there are high emotional or financial stakes. Whom do I want to marry? What is the best house or career? Even in marriage, housing, or careers, however, there is usually a finite number of options and a reasonable amount of information about them. How challenging is it, then, when the stakes are huge, the information confusing, the deadlines short, and the outcomes momentous, such as when a law enforcement officer is determining which suspect to arrest, a company is considering a new product, or, even worse, a government is trying to decide whether to go to war?

There are four interrelated aspects of decision making that are particularly troublesome: the uncertainty of the current situation, the unpleasant fact that from time to time there are surprises, the strong possibility that someone is trying to deceive, and the imponderable future.

Uncertainty

One of the main reasons why decisions are so hard to make is the nature of the situation in which choices are made. This is especially the case in the three areas in which intelligence analysis is most widely used: national security, law enforcement, and business. For even a simple decision, the environment can be complex, shifting, and uncertain. There is so much information to consider and so little time to deal with it.