Hello, everyone. Today we will talk about one specific aspect of comprehensive innovation strategy, which focuses on product innovation. So we'll talk about that in three parts. And today's presentation is about part one of this comprehensive innovation strategy. So as we've talked about before, any form of innovation, which needs to be comprehensive, holistic, broad in its perspective, needs to look at product innovation, also needs to look at service innovation. We cannot forget about the business model innovation, as well as the brand experience. All we have to keep in mind the notion of sustainability and finally, the idea of an internal process of innovation. So these, as we know, these components make up our comprehensive innovations strategy. Of that, today we'll focus on product innovation. And what we mean here by product innovation is essentially is a tangible, physical device, an object. A thing in which could be your car as you see in this case. It could be a piece of furniture, it could be a medical device. It could be this stylus, it could be this computer. Anything that you could think of as a physical device is a part of what we'll refer as product innovation. And when you think about innovation, for example in this case, of a car what could be innovative about this? It could be the overall shape of the vehicle, it could be the materials of which it is made, it could be its performance and the engine inside it. If you start looking at the inside it could be all the design, all the seats inside, the materials that they used in the interior, the dashboard design, the steering column, the steering wheel. So all of those aspects of the product outside and inside, in this case of the car can be innovative and when we think of product innovation that is exactly what we focus on. So what we'll do today is talk about various aspects of product innovation. And in part one, we'll cover some of them and we'll continue in part two and three with the rest of them. So let's look at what all the components could be with product innovation. The first one is what we refer to as platforms, where it's not one product, but it's a series of products. The second one is aesthetics, what something looks like, what its experience is like from an aesthetic point of view. The third one is price, which also is really important factor in innovation that's sometimes not talked about. The fourth one is materials, what kind of materials you select for the physical product or the device. Next one is safety, clearly we want to design and create products that are safe for everyone that uses them. The sixth is ergonomics which essentially refers to the relationship between the human body and the product and how it's designed to be safe and comfortable and convenient etc. The next one deals with packaging. So every product has to be somehow packaged, somehow shipped, somehow transported displayed in a store. How do you package the product? The next one focuses on graphics how do you design graphics that go on the product or on the product in the product. Next we'll do the performance. What are all the features and functions of the product? How long does the battery last? What is the weight of the product? How fast is the processor? How fast does the car go? What is the gas mileage? All of those performance characteristics. And then last one in this case is technology. What kinds of technologies are used in the product? And can we come up with innovative technologies that will make all of the rest of the stuff happen really, really, really well. And those are some of the aspects of innovation, focused on a product. And in this part one, we will look at the first three which is platforms, aesthetics and price. So let's get in to it by starting to talk about platforms. So what does a platform mean? A platform essentially means that you have a base, a foundation, a framework, almost like a layer. And on top of that layer, and this layer could be technology, could be the market, could be anything that allows you to create a series of products that rely on that one platform. What ends up happening is it creates a product system, it allows a company to create a product system which makes it easier, cheaper, but also relates all the products to each other. And if you take a look at something like this product that you see here. This is in a sense all the variations of the iPod Shuffle that was done by Apple Computer. And essentially, what you see here is variations on the device. So if you have one platform, a set of technologies that use in a device, in a product. You can then create variations and that gives you your product platform. Another example here is if you think of not just the iPod Shuffle or not just one specific product category but a series of products. For example you could have a laptop which is part of a system that includes a tablet, which also includes a desktop or a monitor and a mouse and a keyboard. So you can create a system which is all interconnected. One of the terms that are used very often these days is IoT or what's also called the Internet of things. Where you have devices across the board. It could be the phone connected to the system in your house that controls the security could be connected to you laptop could be connected to some other thing in your house. So all of that becomes a part of a larger platform. Sometimes it put to as part of larger product ecosystem. You can also see this with devices like this. See this are all non-digital very mechanical devices, and they also are part of a system and platform. So if you look at most of these. Take a look at the handle designs on these, they're all very similar because there's some variation in terms of size but otherwise the overall design of these is quite similar. So you get a company gets to create a platform or a suite of offerings that relate to each other and that create a holistic approach in terms of a platform strategy. This could also extend to software, right? So you have of course physical devices, but in this case you see Google. And you see everything from Google+, to Google Hangouts, to Google Keep, to Drive and all of these services. From Google that make it a part of a larger ecosystem, part of a platform of services. So this notion of platforms means it could be something that's offered which allows you a suite of offerings. It could happen at the software scale, as you see in this case, could happen at the scale of digital devices, physical devices. But also highly mechanical devices and that's essentially what a platform or a product system refers to. All right, so there was one of the areas in which you could come up with product innovations. The other area is that of aesthetics. Now what does aesthetics really mean? What does this phrase mean? It comes to us from philosophy, but essentially aesthetics refers to the notion of the nature of beauty. We all would agree that we want to fill up this world with beautiful products and beautiful systems. We don't want to create anything that's ugly. So how do you go about creating things that are beautiful? Aesthetics has some other meanings as well as opposed to the judgement of taste. Some people might have a more refined judgement when it comes to certain wine, some people might have a more refined judgement when it comes to judging paintings, right? So we all have some level of judgement in terms of what we like or don't like. What we think is critically good or critically not so good. So that also reflect to what aesthetic means. Aesthetic also is a definition of art and craft. So how wonderful or beautiful or how well is a certain piece of art and craft done. One thing to keep in mind with anything that we can refer to as aesthetically beautiful or aesthetically pleasing is that it's highly, highly subjective. That subjectivity of aesthetics of beauty depends upon several things. It depends on culture or ethnicity depends upon time. Something that was beautiful many years ago may not be beautiful today. It depends upon geography. What's beautiful in one part of the world may not be beautiful elsewhere. So you have to keep in mind that subjectivity is important to consider when you're thinking of aesthetics. And what do designers do when they come up with new innovation if they are focused just on aesthetics. Well, you have to focus on the user. Who is this designed for and how can you make sure that their ideas and expectations of beauty match with the product or the object that you are designing? That’s kind of important to think about, very important to think about. Tucker Viemeister, who is a product designer, he says, beauty is the number one criteria for good design, right? So he believes that in spite of other aspect of design that are also important, like overall innovation, environment impact, and other things. But beauty is really important because, again like I mentioned earlier, you want to make sure that we fill up the world with beautiful devices not ugly devices. So you may have heard this term some time before form follows function. This is a very popular term in the design world, something that Louis Sullivan came up with. What it refers to is that the shape of any object, it's overall form, what it looks like, should always follow its function. So what something does, what it's functionality is should come first and that should lead or guide the overall formula expression of that device. I tend to think that doesn't necessarily really have to be this way. I think form and function are equally important. We don't need to say that function should come first and then form should follow, but they should be designed together. When innovation happens, it should happen in the functionality of product, but it should also happen in the form of the product and these should happen together, right? So form does not necessarily follow function. In my humble opinion, it is something that I think should happen together. But what's been happening is very often people say that functionality is not that important. People buy products not because they're functionally good, but because they sometimes do other things. So there's this phrase that's come up, form follows fun. People want to have fun with the things that they buy and therefore that's upmost important. So the shapes of things should be playful and lively and enjoyable and fun. The other terms, people buy things because it makes them feel good in an emotional sense, so form should follow emotion. I think what's really important is we need to understand the meaning. What does something mean to someone? So if you're designing something new, if you're coming up with a new product innovation, think of what does it mean to the person that you're designing for. What does it mean to them? And then come up with the appropriate aesthetics that allows them to have that specific meaning to that specific product. And that's where I think innovation can play a very big role. So when you think of aesthetics, think of three key things. One, it's considered the practice of art, so doing aesthetic practice means you're creating something artistic. And here the term art is used very broadly, it could also mean design, could mean craft, etc. The other thing is also it could be referred to as the aesthetic property of things. It could say that's a beautiful product, that's a beautiful chair for instance. That's aesthetically pleasing chair, which means that that chair has certain properties, in which we'll talk about in just a bit, that make it an aesthetic object. The third thing that I think is really important for us to think about is the aesthetic experience. How can you come up with new innovations as a designer, as an innovator, as an engineer, as a business person? It could be anything. How can you come up with something that you offer to people that gives them an aesthetic experience, right? And when you think of an aesthetic experience, when you think of aesthetics in general, very often we tend to focus just on the visual aspect of aesthetics, color, the shape overall, what it looks like. But keep in mind that aesthetics is a lot more than just visual. Think of all of our five senses, right? We have vision, but there's also smell, there's touch, there's how you hear things, and then there's taste. Maybe taste may not be that important unless you're designing something that someone eats. But otherwise, when you think of esthetics, when you think of an esthetic experience, think of the fact that you want to give people a good experience across all five senses. If you go back quickly to the example of the car, when you get into a car and you close the door the sound of the door could also be an aesthetic experience, the sound of horn, or the feeling of the seat as you sit on it. The look of the dashboard, in some cases, a good smell in the car is also important. So keep in mind that the aesthetic experience is all of our senses involved in making something beautiful, right? So that beauty relates to all of our senses. So what do innovators and designers do? They don't want to sell generic products, right? If you look at this, this is just a generic bottle, it's a very generic shape, there's no graphics on it, there's no color, it's a simple clean bottle. But as you start thinking of product aesthetics, as you start thinking of how do I give this some form, shape, color, touch, smell, etc. That will make it an aesthetic experience, a beautiful experience for people. That's where product aesthetics starts to become really, really important. If you think of color, just for instance, when designers think of color, they think of a range of tinted hues, a whole series of PANATONE colors. Pantone is a company that creates color guidelines, right? And these you can see that there's a really, really broad range of just within the range of green, you see a whole range of colors. So designers spend quite a bit of time selecting color, making sure it's the most appropriate color for that product for that experience for that technology, for the function, etc. So that's really important for us to keep in mind that color is an important part of a product. But overall, when you look at an object, like a shoe for instance, it should be aesthetic in terms of the way it fits, the way it looks, it's weight, the feeling on my feet inside. All of that is part of giving people an overall aesthetic experience. But let's take an example of a wheelchair, right? So this is a very standard, a very typical wheelchair. It is very industrial looking, it looks like it was made in a factory with not too much consideration for the people that it's designed for. So it's a really quickly put together object in my opinion, right? But if you look at something like this, this is a design for a wheelchair, which has a lot more aesthetic considerations taken into account. It's vastly different from the one we saw in the last slide. So what the designers have done is they looked at form, right? The overall shape of the back, of the seat, of this handrest that's kind of flowing down and becoming the footrest. All of that has been carefully taken into account in terms of the overall form of the chair. Another thing to keep in mind is color, right? The earlier chair that you saw and blue pipes and the rest was black and chrome and white. In this case, the color has been taken into account for the seating and the back of the chair. The texture, if you look carefully at the armrest, which becomes, flows down into the footrest. They kept in mind the fact that this is made from carbon fibers, so there is a texture that changes that's visible on the device. If you think of materials, there's a few different materials that have been taken into account for the device itself. Details, and these details are, for example, if you look at this section here, you'll see that there's a cutout, which is really interesting. There are some graphics over here, the name, the attached lift. And then in addition to that, you also have to think of the personality, right? So if you look, if you remember the last chair that we saw, it looked very industrial. In this case, this chair is a lot more user friendly, it's a lot more welcoming. It looks a lot more contemporary in its design. So the aesthetics of a device, which includes form, color, graphics, texture, materials, etc., gives it a certain personality. And that personality is worth then makes the appropriate for certain kinds of users and that's the very important to keep in mind With product aesthetics. Why should we get involved in aesthetics? Why is it important? Here's something where you can look at, at least six different benefits. Number one, the first one on the top left is, it affords protection from competition. You can actually protect your design by applying for a design patent. Then nobody else can give their product the same shape or form, color, texture or materials that you have for your specific products, you can protect yourself from competition. It allows for premium pricing. If you design something that's really, really beautiful, you can create a distinction and then charge a little extra, giving it some more pricing. Can create loyalty, some people will keep buying products from the same company, why? Because they think that there's a certain aesthetic experience that they like from that company. It can also cut through information clutter. What this means here is that something that's cleanly designed, beautifully designed, it doesn't look confusing, it doesn't look difficult, it can make it easier to use. You can actually increase productivity, which is the next benefit. It could save costs, if you spend time designing something carefully, beautifully and well, you don't have to go back and redo things and that could end up saving costs in the long run. These are some of the benefits of thinking about aesthetics for products. The last consideration for this presentation is the question of price. Competitive pricing is something really, really important for companies. When you're introducing a new product, you want to be innovative in the way it's designed in terms of aesthetics, functionality, etc. But you also want to say, how can I be competitive in pricing? What innovative strategies can I come up with to create a good pricing model for the product? If you think about how prices are determined, if you look at this graph, you have price versus market segments. Let's say you're designing a device like a pen, for example. You have a pen that you've created and this pen, you want to sell for a certain price. If you assign a specific price, let's say, it's $50 regardless what the price is. When you think about market segments, let's say, for example, you have a market segment over here, it's people who maybe want to think of more affordable products. You have a group here that wants an affordable market segment. These people don't want to pay too much money for a product. Then you could say you have a group here which is, let's just use the term regular. These are your regular customers that will pay a certain price for the product. At this end, you may have, let's say, high end or luxury customers. These are people who are willing to pay maybe a lot more for a certain product. What happens if you have a product that is priced over here but it has customers who might have to pay a little bit more than they want typically to pay? Or may see that it's priced kind of low. This is not something that I'm interested in, it's not in my range. What happens in this case is you have a pricing strategy that meets only one specific user group's needs. Very often what companies do in this case is they create a flexible pricing model, or they'll create three different versions. There will be one model over here which maybe doesn't have as many features and functions. There's something else here that has more features and functions, different materials, it's more classic looking. By changing the design, by being innovative and thinking about how do we present these three versions, we could create a marketing strategy where you have three different user groups, with three different products. This can be a platform, like we talked about earlier, where you don't have to make too many changes to them but by making minor changes, you can create three different products, three different innovations that address the needs of three specific markets. This could be a really interesting strategy to think about. What do companies do? What are they doing these days? They're thinking of new pricing models. If you look at General Electric, that's a company that does a whole bunch of things but they do design and manufacture and maintain aircraft engines. Those big jet engines that you see on aircrafts, many of them are designed by GE. Rolls Royce does those, as well. It used to be their pricing model was to sell the engines and then they would maintain them and sell spare parts. They would charge almost 300% or more for these spare parts, so that's how they made their money. But they have shifted their model now and they call it power by the hour. What that means now is you don't pay for the engine itself, you pay for using it and depending on how much you use, your cost goes up. For companies, it's a really good model because they don't want to pay for the object. What they care about is can I use this? Can I get power from these engines? BASF, which is a chemicals company, they do paint. They were selling paint to car companies. Initially, they were selling paint by weight, so kilograms or pounds. They then started pricing by amount of paint per painted car. A company might say, I only used five pounds of paint for a vehicle but you're selling me eight. What I do with the three? Why am I paying three more? In this case, it's a lot more appropriate for the manufacturers. Adobe, which creates software, they used to sell software in a box. You get a set of CDs or something like that when you buy the software. Now, they're doing a subscription model. You pay a monthly fee and the software gets downloaded to your computer or you access it on the cloud. Michelin Tire Company, they used to sell tires. When you buy four tires, you pay for those four tires. What they decided, they're doing is you pay by distance traveled. In this case, it includes maintenance. But you're not really paying for the tire because you don't really care about the tire in a sense, what you care for is can it travel, can it go a certain distance. And finally Sales Force, which is another software company. They used to also, like Adobe, sell software in a box but now they sell software as a service. What you pay for is what you use, you don't pay for things that you don't use. These are some interesting new pricing models, these are innovations in pricing, they could be very interesting from a business model perspective, that make or break a product. What we looked at today in this presentation is three out of these product innovations, we looked at platforms, we looked at aesthetics, and we've looked at price. These three are the first in a set of product innovations that we'll talk about over the next sessions, two and three. Thank you.