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• 88 Harvard Business Review January–February

Roberto Verganti is the author of Design-Driven Innovation: Changing the Rules of Competition by Radically Innovating What Things Mean (Harvard

Business Press, 2009) and Innovation of Meaning (forthcoming from MIT Press). He is a professor of leadership and innovation at Politecnico di Milano.

JUDGMENT, NOT IDEATION,

IS THE KEY TO BREAKTHROUGHS.

BY ROBERTO VERGANTI

IAN WHADCOCK

The Innovative

Power of Criticism

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January–February 2016 Harvard Business Review 89

unpredictability of family life in America had made it nearly impossible to program a thermostat with a regular schedule. In addition, they saw that the tech- nology of sensors and mobile phones had matured to the point where temperatures could be set through simple interactions, which would appeal to people fed up with complicated interfaces. Users switch the thermostat on or off with its straightforward rotary interface or a smartphone; the device requires no programming. Equipped with sensors that detect whether people are in the house, it automatically adjusts the temperature to save en- ergy when no one is home. In a few days, the ther- mostat learns the habits of the household and takes care of the temperature settings itself. The software platform is open, allowing third parties to build com- plements for the thermostat. Although Nest does not release sales figures, it claims to have sold millions of its thermostats, which retail for about $210 to $250. In 2014 Google bought the company for $3.2 billion. It is highly unlikely that Nest’s geeky founders, who initially had vague ambitions to create a “smart home,” would have pursued their thermostat if they had relied on currently popular methods of innova- tion. Generating lots of ideas works well for improve- ments, but it doesn’t help to spot new directions. If companies don’t change the lens through which they assess ideas, they won’t be able to identify the outsiders they should seek, know what questions to ask them, and recognize their most valuable in- put. As a result, they will tend to pick customers and other outsiders who support their current directions and dismiss ideas that lie off the beaten path. Indeed, most of the ideas incorporated in the Nest thermo- stat were already known to the industry, but none of the existing players recognized their potential. In order to find and exploit the opportunities made possible by big changes in technology or society,

we need to explicitly question existing assumptions about what is good or valuable and what is not—and then, through reflection, come up with a new lens to examine innovation ideas. Such questioning and reflection characterize the art of criticism. “Criticism” comes from the Greek word krino, which means “able to judge, value, interpret.” Criticism need not be negative; in this context it in- volves surfacing different perspectives, highlighting their contrasts, and synthesizing them into a bold new vision. This is a significant departure from the ideation processes of the past decade, which treat criti- cism as undesirable—something that stifles creativity. Whereas ideation suggests deferring judgment, the art of criticism innovates through judgment. In my four-step process, individuals question their assumptions and come up with new interpre- tations of customer problems that their company could solve. Then people work together in pairs to refine their visions before moving into a larger group for discussion. Finally, the best ideas are tested by users and by internal and external experts in a wide range of fields. Because none of the original 24 com- panies behind the method employed all the steps, I will illustrate it with several cases, including Vox, a mid-size furniture manufacturer in Poland; Nest; Microsoft; and Alfa Romeo.

Individual Reflection Imagine that you’re a manager who perceives major transitions under way and big opportunities emerg- ing. How can you spur innovation so that your com- pany can capture those opportunities? Piotr Voelkel, the founder and chairman of Vox, faced this ques- tion. He was concerned by major changes in cus- tomer demographics, particularly the aging of the European population. He felt that in order to prosper in the future, Vox needed a novel interpretation of

Idea in Brief

THE PROBLEM

Traditional ideation methods,

such as crowdsourcing and

design thinking, result in an

overabundance of ideas for

new offerings and business

models. But managers lack a

method for capturing the most

promising possibilities.

THE SOLUTION

Identify fundamental changes

in society and technology

that might alter what

customers will value. Then

develop a new direction your

company could take. To create

this screen for assessing

ideas, employ an inside-out

process that relies on the

art of criticism, not ideation.

THE STEPS

(1) Ask employees to reflect

on their own about potential

new directions. (2) Pair people

who feel comfortable working

together to refine their visions.

(3) Discuss the results in

groups of 10 to 20 people.

(4) Solicit input from a wide

range of outsiders to help

strengthen the most promising

new directions.

NEST’S THERMOSTAT

It learns the habits of a home’s inhabitants and automatically sets the temperature. Nest’s founders saw that the unpredictability of family life, exasperation with complicated interfaces, and technological advances had made possible a new COURTESY OF NEST value proposition.

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THE INNOVATIVE POWER OF CRITICISM

what furniture should be. To come up with it, Voelkel chose 19 people in his organization, including him- self, and asked each to reflect on how Vox could cre- ate a new offering for an aging population. He was careful to assemble a heterogeneous group: Some held senior positions; others were promising young talent. Some had long experience in the industry; others had come from outside it. They represented a variety of departments, including sales, marketing, product development, manufacturing, design, and branding. Some were more analytical by nature; oth- ers were more intuitive. What they had in common was that their roles in the company or their personal interests were likely to have led to insights. After a briefing, Voelkel asked the members of the group to spend time thinking about one or more proposals for products or services or business mod- els. To ensure that they would focus on new direc- tions rather than mere improvements, he gave them a strict directive: Solutions should be based on

brand-new concepts of value. To make the new di- rection explicit, each proposal should contain an arrow indicating the change from the existing value proposition to the proposed one. This approach differs from popular innovation methods in several ways. First, Voelkel did not ask his people to start with the insights of customers or other outsiders; he asked them to start with their own. We all sense changes in our environment, and we all have hunches, both conscious and subcon- scious, about how the world might become better. We often keep these personal hypotheses private. Voelkel understood this, so he asked the members of the group to make their hypotheses explicit. Once made explicit and then challenged, those intuitions

would become precious raw material for creating new visions. And the process would combat the natural tendency of individuals to let their subcon- scious intuitions affect how they perceive the in- sights of others. Voelkel realized that participating in the exercise himself would enable him to more clearly see and objectively consider visions that would ultimately have been proposed to him. Second, Voelkel asked everyone to reflect alone rather than as a team. This allowed people to dig deep into their own insights and not dilute or with- hold them, as they might in a group brainstorming session. It gave each person freedom to perform the task as he or she saw fit—relying on a particular analytical framework, on data, or simply on intu- ition. This increased the likelihood that the 19 would propose diverse directions. Third, he gave people one month for reflection. They were expected to keep performing their regular jobs, but the time was sufficient for each individual to sketch out thoughts, let them percolate for a few days, and then refine them and add new ones. This is espe- cially important for coming up with provocative or out- landish hypotheses—those that are often so blurred in the early stages that they can be quickly dismissed. One person suggested that Vox think about bedrooms—the focus of only minor innovation in recent decades, but a place where elderly people spend a significant amount of time, especially when sick. He suggested transforming bedrooms from places for rest into places that contribute to health: For example, the beds might contain devices that the elderly could use to do simple exercises. Inspired by projections of decline in the birth rate as well as growth in the elderly population, another par- ticipant imagined a day when grandparents would compete for time with their rare grandchildren. She envisioned a change in home furniture from be- ing decorative and functional to being a means of socializing with relatives—for example, tables that could be easily converted into spaces for cooking, painting, or playing. When the month was up, the 19 people had envisioned 90 possible directions (seven of them Voelkel’s).

Sparring Partners In the second step each person subjects his or her vision to the criticism of a trusted peer. The peer acts like a sparring partner, providing a protected environment in which the person can dare to

Trusted peers provide a

protected environment

in which people can

dare to share a wild or

half-baked hypothesis

without being dismissed.

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THE INNOVATIVE POWER OF CRITICISM

relationship, as Fadell and Rogers did. Nor must com- panies rely on serendipity (Blackley had been hired just a few weeks before he started to collaborate with Bachus and the others). The odds can be improved with a sort of speed-dating process whereby people with similar visions can find each other and agree to work together to polish their ideas. After step one, in which individuals reflect independently on possible directions, invite them to a meeting and ask them to briefly illustrate their ideas, which can be posted on a wall. Then have each person choose another’s idea that he or she would like to explore. If more than one person chooses the same direction, ask them to indi- cate a second and, if necessary, a third choice. Voilà, you have your pairs.

Radical Circles In step three these promising hypotheses are sub- jected to deeper criticism through discussion in a group of 10 to 20 people who have envisioned other new directions. I call this group a radical cir- cle. Its purpose is not to decide which hypotheses are right or wrong; it is to judge why and how they are different, what important underlying insights might have been overlooked, and whether a value proposition even more formidable than all the hypotheses might be found. This exercise, which can be held in an intense two- or three-day workshop or over the course of four weeks, needs to be conducted carefully so that it is constructive, not destructive. Clashes should push people to dig deeper and identify more inno- vative spaces, and shouldn’t constrain thinking or compromise good ideas. The circle should include people with a variety of backgrounds, perspectives, and personalities—like those of the 19 people at Vox. At Microsoft, about a half-dozen managers joined Blackley, Bachus,

Berkes, and Hase in plotting the company’s gaming path. Blackley and Bachus had the most radical vi- sion: Abandon Windows and don’t make game mak- ers pay royalties. The vice president of Microsoft’s hardware division wanted to create something that was compatible with Windows. In the middle was James “J” Allard, a respected figure within the com- pany who had successfully championed big transi- tions in the past, including Microsoft’s embrace of the internet in the mid-1990s. You can keep the process positive and creative by having the radical circle focus initially on where everyone believes the company should not go and who its enemies are. Often members can converge more easily on what they dislike than on what they like, and a common enemy is a powerful incentive to come together and articulate a new direction. Although the members of Microsoft’s radical circle had different visions, they agreed that the enemies were Sony and its new PlayStation 2 console, along with their own company’s strategy of pursuing a generic, PC-based approach to games. (The team named the Xbox endeavor Project Midway, after the sea battle between the U.S. and Japanese navies that was a turning point in World War II.) Then contrast the visions and try to combine them, two at a time. Are there places where they overlap? Are there strong elements of the individual visions that didn’t occur to others? At Vox, after the 19 had independently developed their hypotheses, they got together for a three-day workshop. The strategy that the company ultimately pursued grew out of a combination of the two unrelated directions mentioned above: an active role for bedrooms, and home furniture that offered possibilities for social- ization. It was called the “living bedroom,” a central space in a house where the elderly could pleasurably spend time with relatives and friends. One product, launched in 2012, is a bed that incorporates a large bookshelf, space for visitors to put their shoes, and a folding screen for projecting movies. As of this writing, Vox had sold nearly 3,600 of these beds in Poland and neighboring countries, and unit sales were growing at 88% a year. Alfa Romeo, too, created a vision. The brand has a legendary history: It was the first to win a Formula One race, and it produced such famous models as the Spider Duetto convertible driven by Dustin Hoffman in the movie The Graduate. But for a couple of decades the company struggled to

A common enemy is a

powerful incentive

for people to come

together and articulate

a new direction.

94 Harvard Business Review January–February 2016

compete in the premium segment, which German manufacturers dominate. To address this challenge, Alfa Romeo launched an innovation project in 2010 that involved a radical circle of about 20 people. One proposal was to move from the prevailing notion that people buy premium cars to display their wealth (cars as luxury goods) to a concept of premium cars as a means for people to express their passion for driving. Another was that a car’s agility and respon- siveness to the driver’s commands—rather than a superpowerful engine and a high maximum speed— would be critical elements of the value proposition. The team combined the two ideas and proposed that the company focus on building responsive cars for skilled, passionate drivers. One member used a helpful metaphor, comparing the premium car industry to the Michelin Red Guide, which recom- mends luxury restaurants to inexpert tourists. The vision that emerged was likened to the Lonely Planet guide, which passionate expert travelers use to find restaurants off the beaten path. An instantiation of the resulting strategy is the Alfa Romeo 4C, launched in 2013. Compared with many other sports cars on the market, it is less ex- pensive, has a small engine, and is light—thanks in part to an extensive use of carbon fiber and stripped- down equipment (for example, the car has neither an assisted-steering system nor carpets). But its power- to-weight ratio is comparable to that of much more expensive sports cars, such as Ferraris. The concept was a hit: Within a few weeks of the car’s release to the market, the entire first year of production had been booked by consumers.

Outsiders A radical circle may converge on one or a few pos- sible directions, which should then be subjected to the criticism of outsiders—step four. Remember that, unlike open innovation approaches, involving out- siders is not intended to generate new ideas. Rather, it is meant to raise good questions—to challenge the innovative direction you propose in order to help you strengthen it. In addition to targeted users, out- siders should include experts from far-flung fields with novel perspectives. I call them interpreters, be- cause of their ability to find meaning in trends that might not occur to the product’s users. After considering more than a hundred candi- dates, Alfa Romeo tapped 14 interpreters of the travel experience. Most came from outside the auto

industry’s typical networks: Among them were, for example, a maker of leather goods, the CEO of a high-end resort, a manufacturer of fitness equip- ment, and a theater director who had just written an irreverent piece about how modern wealthy people perceive themselves. The Alfa team briefed them on the hypotheses underlying its novel vision and then met with them to discuss and challenge those assumptions. Similarly, when Philips Electronics was devel- oping its Ambient Experience for health care, a breakthrough application for reducing the anxiety that patients often experience when they undergo medical scans, it tapped a wide range of interpret- ers—both the usual suspects (doctors, hospital managers, engineers of medical equipment, mar- keting experts) and people from unusual domains (architecture, psychology, contemporary interior design, LED technology and video projection, in- teraction design, interactive hardware and soft- ware). A child psychologist refined Philips’s vision by addressing anxiety not only during the exam but also in the waiting room beforehand. And in Vox’s bed project, a spa and aromatherapy specialist ad- vised against designing the bed explicitly for elderly people and suggested making it attractive to all kinds of customers. In addition to expanding sales to other market segments, this idea increased the bed’s appeal for the elderly. In “Designing Breakthrough Products” (HBR, October 2011), I describe how to find good interpreters. Classic strategy-analysis tools, such as Kim and Mauborgne’s strategy canvas and Alexander Osterwalder and Yves Pigneur’s business model can- vas, are another means of challenging new directions. So is the large amount of data available from the web— for example, on customer preferences. You might con- sider assembling two data analytics teams, one to find data that supports the hypotheses of a new direction and the other to find data that undermines them, and then determine which results are more compelling.

WHEN SEEKING new solutions to existing problems, criticism may hamper the ideation process. But if it’s properly applied in discovering new problems and redefining value, criticism is an engine of inno- vation. By finding a new direction, a company can make sense of the myriad ideas for offerings and business models and recognize the handful that will really make a difference. HBR Reprint R1601G

ALFA ROMEO’S 4C

SPORTS CAR

To compete in the premium segment, the company came up with a new concept: a car that would allow people to express a passion for driving, rather than their wealth, and would be agile and responsive, rather than superfast and superpowerful.

COURTESY OF ALFA ROMEO FCA

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