People don't buy products. People buy meanings

People buy meanings. This emerging perspective of thinking about products and their users is the key to understanding that digital transformation and innovation within companies cannot be accomplished with a merely technological push. It has to be driven by a structural approach to the idea that design and technology are both inextricably linked and equally important.

We must think about technology more comprehensively

For decades, innovation has been identified as technological progress based on efficiency and production speed. Quality was no longer a top priority - it was still mandatory, but not strategic. Moreover, the last ten years can be broadly viewed as the “Rise of the Developer”, as power shifted from management to the hands of coders.

This marginalization of the value of design resulted in a specific understanding of innovation, driven by two general strategies:

  1. Groundbreaking technologies generate developmental leaps in product performance.
  2. Users’ needs analysis drives the improvement of products.

The first strategy is the domain of radical innovations caused by technological jumps; the second applies to innovations induced by market demand.

However, this doesn’t mean that technology has been disconnected from user needs. R&D teams have always been more than aware that technology is developed for humans and humans are the ultimate subject of a technological shift.

And so, in the last few years, a user-centered approach to technology development has resulted in a better understanding of how customers use objects. However, in the studies on radical innovation, the analysis of MEANINGS was missing.

User-centered innovation based on meanings

People buy meanings. This hypothesis, formulated by Roberto Verganti in “Design Driven Innovation: Changing the Rules”, is a clue to understanding that in the Digital Age, a simple realization that technology and humanism have to be combined is no longer enough. We must consider HOW to incorporate this user-centered thinking into organizations’ processes and innovation creation.

… people do not buy products but meanings. People use things for profound emotional, psychological and sociocultural reasons as well as utilitarian ones.

That perspective marks a clear path to innovation management. If people use products or objects due to emotional, psychological and sociocultural motivations, among other reasons, then companies have to look beyond features and performance and embrace the true meanings given to products by users.

As clear as it is, this path isn’t easy to walk. Meanings are not something we can control or plan for without realizing what their true source is:

  1. Meanings result from cultural context, social environment, habits, norms and associations.
  2. Meanings can’t be inspired or created without including these subtle contexts.

You can’t achieve true innovation merely by technological advance. Innovation needs to be based on radical internalization of meanings. Providing users with a better interpretation of what they already have is not enough. Providing them with a prettier object is not enough. Companies have to propose new meanings - products which resonate with people’s needs and improve their well-being.

Innovation has to be design-driven.

Does design-driven innovation generate value?

You may think: ok, meanings, design, all good. But how can it help innovating in business? Is this radical design-driven innovation applicable here and now?

The quick answer is: YES. Design-driven strategies generate real value for businesses. Let’s look at the McKinsey Design Index. According to a study conducted with three hundred companies over five years, there is an undeniable link between financial performance and how strong they are at design.

The study notes that companies from the top-quartile of the McKinsey Design Index have higher revenue and higher total returns to shareholders:

How can companies benefit from a design-driven approach?

By incorporating design strategies based on four principles:

  1. Analytical leadership. Design is a top management issue, and its performance has to be assessed with the same rigor as revenue and cost tracking.
  2. Cross-functional responsibility. User-centered design is everyone’s responsibility.
  3. Continuous iteration. Listening, testing and iterating with the users.
  4. User experience. Physical, Digital and Service design treated as a whole.

And now let’s add to this formula the actual realization of meanings. In practice, it just means that instead of copy-pasting the technical specs from the last product, you need to map the customer journey, gather and analyze customer insights, and most importantly, understand them on a deep level. But, according to McKinsey:

Yet only around 50 percent of the companies we surveyed conducted user research before generating their first design ideas or specifications.

Superficial incorporation of just thinking about design is not enough to be a real catalyst of innovation. It is one thing to know what is necessary, but it is an entirely different matter to actually start implementing the change.

Design is not what it looks like and feels like. Design is how it works

This quote from Steve Jobs is often repeated without a deeper understanding of what it stands for. In the context of radical innovation driven by design, this sentence should end with “…and what it evokes.”

Only companies which make an effort to identify how design can impact users on a more profound level - their reactions and emotions, and the causes - will be ready to embrace the Digital Age.

It is not that difficult to find specific examples of innovation driven by design in recent history. Let’s see how design has impacted the PC industry. Apple was one of the first companies which were building personal computers and at the same time paid attention to how they looked. The Windows-based PC market didn’t follow this trend and was shipping perhaps functional, but ultimately ugly devices.

At some point, customers began to want something more than just specs. The rise of the ultrabooks segment was the first step toward embracing the need for design in the way that Apple had. Now no one wants an ugly laptop, and companies compete not only with specs but also with design.

You might be also interested in the article:

What is even more critical to an understanding of this change is that the implementation of design principles didn’t result only in delivering prettier computers to customers. It has triggered new needs among users and stimulated demand for beautiful personal computers among different types of customer. People want to satisfy their unique needs by possessing a well-designed device, especially when this device makes them FEEL better.

That is precisely how we need to think about design. It is not just making things more beautiful or more desirable but the design has to give a customer the space to give the object unique meaning.

With the rise of technological complexity, design becomes more crucial than ever

The disruptive innovations building the new digital economy 4.0, lead to entirely new problems of such complexity that new principles and processes are required. The network of factors to be considered evokes the need for a more holistic approach and thinking, to pull everything we know about the problem together, understand it and work out a solution.

The tool for that can be design, understood as a decoder of meanings.

Design principles are particularly applicable to problems that are socio-technical in nature, that is, they involve people and technology, having to deal both with complex technical, business and societal infrastructures and human behaviors.

The design which rethinks experiences from the ground up can help truly connect technology with the user - a human - in their full complexity and conditioning.

Technology without a design is an exclusion

Why is it so important to treat design as an integral part of innovation despite the temptation to reduce digital transformation merely to its technological aspects?

I think that John Maeda has provided the best response to this issue and a perfect summary in his “Design in Tech Report 2018”:

Computers aren’t good at inclusion. They’re good at exclusion because they’re only based on past data. The business opportunity for the future-thinking designer is in inclusion.

The idea behind this statement is that algorithms are based on historical data. But these data are very often flawed because they don’t adequately reflect the current personal and sociocultural complexity of people. Relying only on historical data results in exclusion based on the fact that most of these data reference white, male users. As a result, algorithms working on these datasets to find patterns make faulty decisions.

From a perspective in which innovation is driven only by technical progress, we limit ourselves to a one-dimensional reality, sterilized from meanings, far from what is really happening and what people really want and need. From a business perspective, it manifests in products which don’t meet customers needs because they don’t recognize them.

Without design as a decoder of meanings, innovation cannot be truly inclusive, nor radically progressive.