Innovation in Commercial Furnishings

“If I had asked people what they wanted, they would have said a faster horse.” Henry Ford on innovation.

When asked what innovation means to their business in a recent survey, respondents didn’t hold back:

“Innovation is the engine of growth, it’s how we capture the attention of our customers and maintain relevance in a changing world.”

“It is the lifeblood.  We don’t survive without it.”

Which is more innovative:

• The first phone booth / pod meeting space?
• The floor-to-ceiling products that preceded it?
• The refinements that come after it?
• Or, is it the way space is now planned?
• The change in the cost to provide meeting space?
• The fact that it is not really furniture? Or, is it?
• The idea that these products aren’t made by the major OEMs?

The innovation process is necessarily an iterative process.  An innovative idea is sparked.  Blood, sweat and tears are the work required for it to become reality.  At some point, it reaches the market.  Its inefficiencies are discovered.  Its weak points are identified.  Opportunities to improve the idea come to light.  One step at a time, the idea gets better as competitors incrementally put their mark on the idea.  The market teaches lessons about innovation that are learned by the innovator and by their competitors.

Business decisions get made to invest into an innovation that becomes Generation I.  The investment is often made to earn money, but more often the result is to learn what Generation II should be.  Gen II makes money on the down payment of Gen I.  Not only must the innovation be pruned and nurtured in order to grow, but the businesses that interact with it must also learn how to adapt to it.  The iterative process is not just for the product, but for the company, and for the market.  (Thank you to Matthias Buch of LOGICDATA for this insight.)

Most of us are familiar with the Diffusion of Innovations curve, formally developed in 1862 by sociologist Everett Rogers.  While it is most often used to help understand how long it can take for an idea to be adopted and create industry-changing volume, it serves another purpose as well.  It helps us understand the difficulty in driving innovation into the market.  Think of the mass numbers – 97.5% of the potential market – that are basically fighting to keep your innovation from being adopted.  They are fighting because innovation is disruptive, and it is costly to installed business systems and processes.

The curve reminds us that the innovators curve presents hardships to even leading corporate entities in getting innovations adopted.  The curve is exacting, ruthless, and efficient.

From the back cover of The Innovator’s Dilemma by Clayton M. Christensen:

“Focusing on “disruptive technology,” Christensen shows why most companies miss out on new waves of innovation. Whether in electronics or retailing, a successful company with established products will get pushed aside unless managers know when to abandon traditional business practices. Using the lessons of successes and failures from leading companies, The Innovator’s Dilemma presents a set of rules for capitalizing on the phenomenon of disruptive innovation.”

As our parents taught us, good is the enemy of better, and better is the enemy of best.  Being willing to let go of what is good in order to obtain what is better separates leaders from managers.  Being willing to let go of what is better in order to obtain what is best separates gurus from leaders.  It is not easy – our emotions scream at us to protect what we have where we are.  Our cultures – no matter what we say – provide the biggest obstacles to our own success.

Apple’s iPhone just celebrated its 10^th anniversary.  From the original product to the iPhone X, there have been multiple generations of the phone.  Two or three stood out as major advances, with the others representing iterative work that advanced both expectations and the product along a predictable line of development.  A new product every year.  And in between, the iOS changed and changed and changed, with multiple updates coming to single generations of the same phone.

The commercial furnishings industries are not structured for this level of innovation.  Change is difficult, it is expensive, the value chain was not constructed to support it.  We like to create iconic products that dominate the market for 10-15 years.  Our innovation cycle – the diffusion of innovation in to our industry – is more like 10-year trends, not change the world every 6 months.

Innovation may be the holy grail of advancing business interests, but it can be just as elusive as that mythical cup.  Henry Ford held up the idea of the “golden gut”, the person whose gut instincts on what buyers value were so true and so piercing that they changed the world.  We see the Bill Gates’ and Steve Jobs’ of the world, and are enamored of their transformational visions.  It is easy to forget that Henry Ford famously gave up his huge market share lead because he refused to offer his automobiles in any color other than black.  It is inconvenient to be reminded of how Bill Gates had to realize that he had become the obstacle to Microsoft advancing, or how Steve Jobs almost drove his company into the ground.

Innovation is messy.  Institutional investors and professional managers like predictability, not messy things.  If innovation was predictable, everyone would be great at it.  One reason the vast majority of new product launches are either “me-too” or marginal improvements stems from the unpredictable and messy nature of innovation.  If the flip side of innovation is failure, this may explain why true innovation is hard to find.

In fact, innovation requires a golden gut.  It also requires intimate knowledge of user requirements.  It thrives in live markets where communities can respond, have input, can evaluate, and can contribute to the process.  It requires structure and discipline, especially in designing the problem being solved and remaining focused on solving it.  Golden guts and business process are natural enemies, and both are required for innovation to succeed.

Technological innovation has democratized the innovation process.  Small businesses can be successful with innovating in distribution, product design, marketing and value propositions.  Products like OnShape support real-time, cloud-based community CAD drawings.  Augmented reality allows us to superimpose our ideas onto concrete environments.  Artificial intelligence allows us to collect data and transform it into insight in ways that were unimaginable a couple of years ago.  The toolbox of innovation is both mind-boggling and accessible at the same time.

What is required is imagination, structure, a contributing community, and guts.  Innovation is difficult, because it requires the supporting infrastructure – the elements of the value chain – to change along with it in order to deliver its value.  How many great ideas have we seen that were rejected by the market chain because they didn’t fit what designers and dealers were doing, or knew how to do?  Imagination is where innovation begins, the guts to engage, but then buy-in from the community infrastructure is required for it to be successful.  This is difficult enough for the major OEMs to pull off – just think what it is like for a small innovator with the entire industry working to hold them down.

“A bad corporate innovation system will beat a good innovator (almost) every time. Period.” According to Ralph-Christian Orr’s take on W. Edwards Deming’s famous quote, innovation is at the mercy of those who design the systems they must migrate through to see the light of day.  Business systems, of course, are designed and controlled by management of the business.  Being an innovator in most businesses is a bit frustrating, as the business systems typically are not designed to encourage or support the innovation process.

Writing in Harvard Business Review, David Burkas says that innovation is not an idea problem; it’s a recognition problem.  It is not that great ideas don’t exist in your organization.  It is that we all share a bias against new and creative ideas for a simple reason: uncertainty.  This is according to research conducted by Jennifer Mueller of Wharton.

“If such a negative bias against creativity is present in times of uncertainty, it might explain why so many notable innovations were initially rejected.  The implications for today are particularly relevant, as few executives would claim that they’re not working in an uncertain industry.  The same uncertainty that triggers the need for companies to innovate may also be triggering executives to be rejecting the discoveries that could help them gain a competitive advantage.  The ideas that could keep a company alive are being killed too quickly”, according to Burkas.

Business managers love the results of innovation when it works, but the process unnatural and uncomfortable because of the risk involved.  Systems that are operationally functional do not like risk, so systems typically kill most innovations.

Innovation is measured in the gap between customer expectations and what we deliver.  The closer what we deliver comes to meeting customer expectations, the more innovative we are.  The further away hopes and reality are, the less innovative.  What do those who took the survey have to say about our level of innovation?

“I believe 10 years ago there (were) more innovative ideas hitting the market.  Today, it seems to be a retread of the old ideas.”

“More every day.  Technology integration is driving tons of innovation.”

“More innovative, but still too much ‘me too’.”

While most of us think of innovation being driven by the OEMs in designing and producing product, several survey respondents laid responsibility for innovation at the feet of interior designers and dealers, as they are closer to the customers.  A two-edged comment: on one edge, innovation may not be so much in the design of products as in the application of those products in meeting customer needs; on the other edge is the need for OEMs to improve not only the involvement of customers in the product design process, but to bring the resulting ideas to market faster than the current three-year product development cycle allows.

Sometimes, innovation drives us to look in different directions.

In a recent Steelcase blog by Angela Nahikian dealing with the circular economy, (https://www.steelcase.com/research/articles/topics/sustainability/circular-economy-invisible-now/) the author pointed to the idea that perhaps product design should migrate towards the combination of unique components that result in a product.  As technology or fashion or function requirements change, instead of changing out the entire product, only certain components might require change to meet the ever-changing requirements of technology-driven users.

Business model innovation may be the most courageous of all, as it causes us to change our behavior in response to a new value proposition.  Amazon will not be the first company to try to digitize groceries or home delivery, but its value proposition and value chain will certainly advance the ideas much faster than entrenched competition not sold out on its success.

Tesla may – or may not – be the big winner in the electrification of transportation.  But, without their commitment to change the value proposition and the risk of delivering on it, the momentum in the market being experienced today would not be happening.  The entire industry is now not just in the process of innovation, but of transformation.

And, while the rest of the automotive industry was focusing on what Tesla was doing to make electric vehicles suitable to drive, Tesla created a value chain ecosystem that raised the concept from a product-driven solution to a systems-driven solution.  Perhaps their biggest innovation is that we can now create energy (solar shingles), store and transfer it (garage-based storage batteries) and then apply it (cars we drive).  That is systems-driven innovation.

Our industry sells into a physical and technological business systems environment.  Selling a chair – even an innovative one – can achieve sales.  But, does it answer the most basic needs of customers of the industry?

Our customers live in ecosystems.  We sell products, and at times these products propose changes to those ecosystems.  When they become its core, and when they create a new and more relevant value proposition, the result is innovation where the customer lives – at the ecosystem level.  On occasion, these ecosystem-based innovations lead to transformation.

Not all innovation leads to transformation.  But transformation is built on innovation.  Transformation requires disruption, causing major headaches to legacy stakeholders.  Innovation happens with some regularity.  Transformation, not so much.  The cost to the entrenched system is too high.

Benching is our latest innovation.  Stripping away everything from systems that was not valued by customers, and then eventually beginning to add some of the elements back (such as storage and acoustical privacy) is innovative.  It creates a new value equation, eliminates costs driven by overdesign, and simplifies the ownership experience of office furniture over the systems products it replaced.

Are benching systems transformative?  Not yet, it would appear.  The distribution mechanism is largely the same as before.  The product life cycle has been reduced, but the product is still the product.  It is a collection of products that can be reconfigured and transformed to meet new requirements.  However, systems furniture was the “be all – end all” in the office.  Benching is just one of a broad range of required solutions.  While it is part of a transformational process of emphasizing common or third spaces, it is not the driver of the move.

Jernej Zenko leads LOGICDATA’s electronics and software R&D team in Maribor, Slovenia.  He believes the creative spark required for innovation requires a degree of freedom to think, to learn and to explore.  As innovation is almost by definition chaotic, it could be thought of as an entrepreneurial activity based on a trust that may not drive an immediate return on investment.  We often think of processes that create that spark, but process is more typically how that spark is managed inside of a business structure.

Creating the conditions for the spark is where the freedom to think, learn and explore come in.   Some companies invest heavily into those freedoms through primary research, through education, through relationships and other avenues where deep knowledge can be developed and where different knowledge resources can come together to discover opportunities for innovation.

In asking Jernej what he looks for to hire someone who may have that creative spark, he always asks the same question: “If everything is possible, what would you like to do?”  The answer to that question compliments deep learning and skills in a defined technology area, a feeling for other industries and sciences, and the ability to connect between reality and the digital world in order to discover solutions.  He likens the hiring process to putting together a SWAT team.

If everything is possible, what would you like to do?

Perhaps our customers aren’t asking for a faster horse.  Perhaps they are looking for a more integrated approach to innovations, an ecosystem that not only supports how they work and their technology, but that can adapt and grow in capability like their technology does.  Perhaps they are looking for a circular product system as proposed by Angela Nahikian.  The benefits are not only felt on a sustainability level, but on keeping products up to date with user needs.

Our industry talks about systems thinking and systems design.  Innovation thrives within an ecosystem that supports it, encourages it, and rewards it.  It thrives in an ecosystem prepared to market it, support it, leverage it.  In an industry that can be slow to embrace change, that likes the familiarity and predictability of 10-year product lives, and that often focuses on aesthetics over function, it can seem the deck is stacked against innovation.

But the industry is also full of a lot of smart people, and we are attracting smart disruptors from outside the industry.  Our customers are rewarding innovation from providers from other vertical markets.  Overcoming the status quo and the fear that too often holds innovation back can result not only in meaningful innovation, but perhaps transformation.  Our lack of growth is reminding us that perhaps the time has come for moving beyond faster horses.

Words by Doug Gregory
Originaly published on Business of Furniture – November 8, 2017