Applying Design Knowledge to Create Innovative Business Opportunities

Transcription

1 Jose Carlos Teixeira BA Graphic Design Master in Design Theory Ph.D. Student Institute of Design - Illinois Institute of Technology 350 North LaSalle Street 4 th Floor Chicago, IL 60611, USA Tel. +1 (312) Fax +1 (312) Home Address: 532 West Roscoe St., 262 Chicago, IL 60657, USA Tel. +1 (773) carlos@id.iit.edu Applying Design Knowledge to Create Innovative Business Opportunities Identifying possibilities of how design knowledge can contribute to organizational knowledge to identify innovative business opportunities Abstract The goal of this study is to present mechanisms by which design knowledge in understanding "how" and "why" users interact with products can contribute to organizational knowledge to identify new business opportunities. Based on the analysis of product development cases the study validates the hypothesis that design knowledge is seldom applied by organizations to identify new business opportunities. Therefore, based on discoveries and insights from the cases, this study proposes two processes through which design knowledge expertise in understanding "how" and "why" users interact with products can contribute to organizations: (1) it can contribute by researching existing user needs, desires and expectations to identify opportunities to improve existing business; and/or (2) it can help to "discover" innovative business opportunities through the analysis of user values and behavior to develop products that offer a new value proposition for users. 1

2 Introduction This study presents the mechanisms by which design knowledge in understanding "how" and "why" users interact with products can contribute to organizational knowledge to identify new business opportunities. The study investigates through the analysis of case studies the hypothesis that design knowledge is seldom applied by organizations to identify new business opportunities. Based on the discoveries and insights from the cases, this study presents two processes through which design knowledge expertise in understanding "how" and "why" users interact with products can contribute to organizations: (1) it can contribute by researching existing user needs, desires and expectations to identify opportunities to improve existing business; and/or (2) it can help to "discover" innovative business opportunities through the analysis of user values and behavior to develop products that offer a new value proposition for users. Design Knowledge Design knowledge is a fluid mix of designers' experience, their values, contextual information about the production and use of products, and the combination of structured methods and designers' intuition that provides a framework for conceiving a product, fashioning the means to carry it out, and estimating its effects. This short and pragmatic definition immediately makes clear that design knowledge is neither neat nor simple. Therefore, to present a more detailed understanding of design knowledge, an in-depth description of its characteristics is needed. The characteristics of design knowledge were identified by comparing the characteristics of knowledge in general against the characteristics of the design activity. Knowledge characteristics were collected from the studies of Davenport and Prusak ("Working Knowledge"), Nonaka and Takeuchi ("The Knowledge-Creating Company"), and Keith Devlin ("InfoSense"). The characteristics of the design activity were collected from the studies of Heskett ("Industrial Design", class notes and personal conversations), Dormer ("Design Since 1945"), Woodham ("Twentieth-Century Design"), Papanek ("Design for the Real World"), and Jones ("Design Methods"). The in-depth analysis of design knowledge characteristics is presented through four major categories: expert insights, design experience, design values, and contextual information. 2

3 Expert insight Knowledge exists within people, part and parcel of human complexity and unpredictability. Knowledge works through flexible guides to action that are developed through trial and error over long periods of experience and observation. These flexible guides are shortcuts to solutions to new problems that resemble problems previously solved by experienced people (Davenport & Prusak 1998, 10-11). Therefore, knowledge is information that a person possesses in a form which allows immediate use (Devlin 1999, 2). Knowledge is fluid as well as formally structured; it is intuitive and therefore hard to capture in words or understand completely in logical terms (Davenport & Prusak 1998, 5). In the design activity, knowledge exists within designers, whose activity is a mix of intuitive and systematic procedures for defining a problem, negotiating ideas and solving the problem (Woodham 1997, 180) (Papanek 1971, 288) (Jones 1970, 8-11). Problem definition is an analytic sequence in which the designer determines all the elements of a problem and specifies the requirements that a successful design solution must have. Negotiation is a dialectic process of identifying a problem and negotiating the terms that might successfully solve the problem. Problem solution is a synthetic sequence in which the various requirements are combined and balanced against each other, yielding a final plan to be carried into production (Buchanan 1996, 13-14) (Heskett 1980, 10) (Jones 1970, 11-12). Therefore, the mix of intuitive and systematic procedures for defining and negotiating a design solution happens through a process that mixes two types of knowledge: fluid or tacit knowledge, and formally structured or explicit knowledge. Design methods Transmitted across individuals formally and easily, explicit or "codified" knowledge refers to knowledge that is transmittable in formal, systematic language (Nonaka & Takeushi 1995, 59). It can be articulated in formal language including grammatical statements, mathematical expressions, specifications, manuals, and so forth. When designers generate insights by representing their ideas explicitly, then analytic and synthetic methods are the driving forces of the design activity to promote the development of a design solution through formal structures (Woodham 1997, 180) (Papanek 1971, 288) (Jones 1970, 8-11). Moreover, designers articulate 3

4 a design solution through formal and systematic language (Woodham 1997, 180) that enables a product concept to be transmitted, negotiated, and defined across individuals. Design intuition Unlike explicit knowledge, tacit knowledge is personal, context-specific, and therefore hard to formalize and communicate (Nonaka & Takeushi 1995, 59). It is personal knowledge embedded in individual experience and involves intangible factors such as personal beliefs, perspectives, and value systems (Nonaka & Takeuchi 1995, viii-ix). Tacit knowledge can be segmented into two dimensions: (1) the technical dimension, which encompasses the kind of informal and hard-to-pin-down skill or craft captured in the term "know-how"; (2) the important cognitive dimension, which consists of schemata, mental models, beliefs, and perceptions so ingrained that we take them for granted. The cognitive dimension of tacit knowledge reflects our image of reality (what is) and our vision for the future (what ought to be). Though they cannot be articulated very easily, these implicit models shape the way we perceive the world around us (Nonaka & Takeuchi 1995, 8). When designers generate insights based on their intuition (Dormer 1993, 199) (Papanek 1971, 133), then technical know-how, personal experiences, mental models, value systems, beliefs, and perceptions of what a product means and what its meaning ought to be are the driving forces of the design activity to promote the development of a design solution through technical and cognitive dimensions (Heskett 1980, 8). In this case, the design activity is an implicit process of generating product ideas that are hard to formalize and communicate, and reflects the designer's vision about what the product's attributes should be. Tacit and explicit knowledge interact with each other in creative activities. The interactions between these forms of knowledge result in the creation of new knowledge (Nonaka & Takeuchi 1995, 61). The creation of knowledge derives from information as information derives from data. If information is to become knowledge, humans must do virtually all the work (Davenport & Prusak 1998, 10-11). In the design activity, knowledge about a product is created through expert insight by combining intuition and structured methods for conceiving of it, fashioning the means to carry it out, and estimating its effects. This transformation is possible through comparing information from different situations, analyzing the consequences of information to decisions and actions, creating connections between different bits of knowledge, and promoting conversation with other people about their thoughts in relation to the information assembled (Davenport & Prusak 1998, 6). 4

5 Designers' experience Experience refers to what we have done and what has happened to us in the past (Davenport & Prusak 1998, 7-8). Design experience refers to the cumulative experience of designers or design-groups in mastering competence in developing products over a long period of time in many diverse circumstances. Therefore, experience is information about products that a designer possesses in a form that can be immediately used for developing new product concepts. Moreover, experience has four major components that are related to the design activity. They are: historical perspective, comparison, pattern recognition and knowing what works. Historical Perspective Diversity of past design experience enables designers to understand how new situations relate to existing products. Designers apply their knowledge to define criteria for the development of new products not only in traditional areas of competence such as materials and manufacturing process, but also in new areas such as marketing strategy, consumer aspiration (Woodham 1997, 66), and the user's cognitive and emotional relation to products (Margolin 1997, 277). Comparison of new situations Comparison is one of the mechanisms that transforms information into knowledge. The use of past experience can be beneficial when applied to making comparisons and analyzing new information. The main question to be answered in this case is "how does information about this situation compare to other situations we have known?" (Davenport & Prusak 1998, 5-6). The cumulative experience of designers' activity through different periods and contexts provides a framework for designers to compare and understand how new situations relate to existing products. This is done by using models to extrapolate from past behavior, in the presence of existing designs, to future behavior (Jones 1970, 8-9). In this case, intuition, memories, experiences and desires are the fundamental instruments to guide the designers' work (Dormer 1993, 199). Recognizing patterns Knowledge born from experience recognizes familiar patterns and can make connections between what is happening now and what happened then (Davenport & Prusak 1998, 7-8). Pattern recognition is an application of designers' knowledge to take advantage of their experience in recognizing familiar patterns 5

6 in the relations between the factors that influence the development of new products (Heskett 1980, 8). In this case, designers look beyond the influence of their beliefs, talents and skills into the development of new products to search for meaningful connections in the complex mix of social, cultural, and technological factors that establish the significance and value of products. Understanding which factors affected the development of new products in the past and how it is different in the present provides designers important information for the development of new product concepts. Knowing what works Experience changes ideas about what should happen into knowledge of what does happen. The analysis of the gap between "should" and "does" involves an examination of what was supposed to happen and what actually happened, why there was a difference between the two, and what can be learned from the disparities. In most cases, there is a gap between rational analysis (should) and grounded truth (does). The analysis of such a gap enables the development of new knowledge. In this case, the cumulative experience of planning, performing and reflecting enables knowledge regarding what really works and what doesn't (Davenport & Prusak 1998, 8-9). In design, the principles about "knowing what works" is usually an implicit knowledge, because those principles are usually not coded. This creates difficulty for designers' past experience to be shared or tested in different circumstances (Kalman, Miller & Jacobs 1994, 26). Nevertheless, the experience of designers or design-groups in planning, performing and reflecting about what should happen and analyzing what does happen provides designers with valuable implicit knowledge regarding what works in the development of a new product concept. Design values Values and beliefs are integral to knowledge, determining in large part what the knower sees, absorbs, and concludes from his observations. People with different values "see" different things in the same situation and organize their knowledge through their different values (Davenport & Prusak 1998, 12). Designers' values, which means what designers see, absorb and conclude from their experience in developing products, directly or indirectly, is manifested in the development of a new product concept. Therefore, the influence of different designer's values generate different product concepts. Moreover, different values 6

7 produce different criteria to evaluate the implications of a new design concept (Jones 1970, 4). This is possible because knowledge contains judgment. Not only can it judge new situations and information in light of what is already known, it judges and refines itself in response to new situations and information. Knowledge can be linked to a living system, growing and changing as it interacts with the environment, unlike dogma that refuses to examine itself and evolve (Davenport & Prusak 1998, 10). The way designers analyze and synthesize new product concepts is based on five major values: aesthetic, functional, user satisfaction, sponsor satisfaction, and creative. Aesthetic values When designers' main value is aesthetics, their knowledge about products are organized through processing information of product form, shape, color, and style (Woodham 1997, 7) to create product identity through its formal attributes. In some cases, the formal attributes of products relate to the designer's self-expression. Some designers emphasize the role of the individual and the idea of "selfexpression" as the driving force for creating and evaluating products (Dormer 1993, 7). The emphasis is placed on individual achievement, and the analysis of products is focused on identifying unique qualities of external form (Heskett 1980, 7). In other cases the formal attributes of products are not related to the designer's self-expression. Although designers' main value is still aesthetic, designers also work as mediators and apply their knowledge of form, shape, color and style to promote someone else's identity. Functional Values When designers' main value is functionality their knowledge about products is organized through processing information of product material, function, feature, capability, potential, and physical constraint and limitation to determine if a particular design concept is physically feasible (Petroski 1996, 90). The design activity is oriented towards developing laboratory experiments on materials and components to define appropriate functional attributes (Petroski 1996, 89). Therefore, calculation and prediction are two major driving forces of designers' activity. The ability to calculate is the ability to predict the performance of a design before it is built and tested. Understanding how and why a proposed design might fail, allows the design to be modified until it is ready to be realized (Petroski 1996, 90). User values When designers' main value is to create products that promote user satisfaction, designers' knowledge is organized through processing information of "how" and "why" users interact with products, user values and 7

8 behavior, and the context in which products are used, providing information that enables designers to develop products that please users according to their own criteria (Heskett 1980, 8). In this case design plays the role of a "facilitator" that can bring the needs of the people to the attention of manufacturers, government agencies, and the like (Papanek 1971, 94) to develop products that are meaningful from a user viewpoint. Sponsor values When designers' main value is to create products that promote satisfaction for their sponsors, designers' knowledge about products is organized through processing information about sponsors' values and objectives to define product concepts that support the sponsor in achieving their goal (Heskett 1980, 8) (Jones 1970, 9). Therefore, designers play the role of an "expert" or "consultant" in product-related issues, presenting a strategy or a plan to help their sponsors achieve the desired results. In some cases the sponsor of the design activity can be an organization whose main value is to generate profit (Papanek 1971, 92) (Heskett 1980, 144). In other cases, it can be a governmental organization, whose main value is to intervene in problems of a dimension and magnitude beyond solution by individuals and voluntary groups (Heskett 1980, 182). Moreover, it can be a single person or a group of people, whose main value is uniqueness or personalization (Papanek 1971, 92). Nevertheless, it can also be the designer alone, whose main value can be independence from any sponsor (Dormer 1993, 7). In this case, the designer becomes their own client. Creative value When designers' main value is to create products that represent the result of a creative process (Heskett 1980, 9) (Dormer 1993, 14), their knowledge is organized through processing information of products' conceptual differentiation, uniqueness and originality (Friedman 1994, 52-53). In order to be creative, designers look to "discover" the existence of a new problem to define and solve (Papanek 1971, 133). The process is to see trends-as-a-whole, to extrapolate from established data, and interpolate from future scenarios (Papanek 1971, 288). The design activity is seen as the result of understanding a historical mutation of product attributes and of envisioning new solutions to define product attributes that demonstrate the design capability of thinking differently from current standards (Papanek 1971, 288). In this case design plays the role of a "creator" in product related issues (Jones 1970, 10-12), whose main goal is to contribute new ideas and innovative perspectives about product attributes through challenging established criteria (Papanek 1971, 133). 8

9 The following chart summarizes the various approaches of design values: Values Approach Goal Organizational knowledge Aesthetic Functional User Sponsor Creative Product form, shape, color, and style Product material, function, feature, capability, potential, and physical constraint and limitation "How" and "why" users interact with products, user values and behavior, and the context in which products are used Sponsors' values and objectives Products' conceptual differentiation, uniqueness and originality Create product identity through its formal attributes Determine if a particular design concept is physically feasible Develop products that please users according to their own criteria Define product concepts that support the sponsor in achieving their goal Develop new ideas and innovative perspectives about product attributes Definition of unique qualities of external form Definition of appropriate functional attributes Identification of users needs and desires Strategic definition to achieve the desired result Differentiation from existing standards Contextual information Data becomes information when its creator adds meaning. While information has a sender and a receiver, the receiver, not the sender, decides whether the message he gets is really information - that is, if it truly informs him (Davenport & Prusak 1998, 3). Information is meant to change the way the receiver perceives something, to have an impact on his judgment and behavior. Unlike data, information has meaning. Not only does it potentially shape the receiver, it has a shape: it is organized to some purpose. Data is transformed into information by being (1) contextualized, adding the purpose for gathering; (2) categorized, selecting units of analysis of the data; (3) calculated, analyzing mathematically or statistically; (4) corrected, removing errors from the data; and (5) condensed, summarizing the data in a more concise form (Davenport & Prusak 1998, 3-4). In the design activity, data about products is organized and synthesized according to two distinctive interpretations of product utility (Papanek 1971, 133). That's because the design activity happens in the space between the product s producer and user. Users think about products very differently from the way products are bundled and sold in the physical marketplace. Users think in terms of activities, while producers think in terms of product production, distribution, etc. Activities that are logically related in cognitive space may be spread across very diverse providers in the marketplace (Sawhney 1999, 3). The 9

10 difference between producer and user understanding of products requires designers to address a dichotomy, collect and interpret data about products from two distinct contexts: the context of production and the context of use. Context of production The context of production refers to a product's economic value, technological opportunity, and the institutional context in which the design activity takes place (Heskett, 1998). When the context of production (Woodham 1997, 66) is the designer's main reference from which to collect and synthesize data about products (Jones 1970, 11-12), then their knowledge about products is organized through processing information about adding and creating new value for organizations through the development of new products (Keeley 1998, 100); converting a product concept into market reality (Bijker & Pinch 1989, 17-50) (Gauthier 1999); and managing the design contribution to the organization in which design resides (Keeley 1996, 134) (Woodham 1997, 65). Context of use The context of use refers to a product's utility, symbolism, and the systemic compatibility of products to the context in which they are used (Heskett, 1998). When the context of use is the designer's main reference (Heskett 1980, 175) to collect and synthesize data about products, then their knowledge about products is organized through processing information about the potential use of a product for a particular purpose or task (Margolin 1997, 276); the values and meaning of products (Csikszentmihalyi 1996, 125); and the tangible and intangible constraints that establish criteria by which products will be judged suitable for an intended working purpose (Bijker & Pinch 1989, 17-50) (Gauthier 1999). Design knowledge and organizational knowledge Organization knowledge is the operational framework that enables an organization to connect different sources or types of information and create a meaningful and useful understanding of a given reality in order to make decisions. In organizations, knowledge often becomes embedded not only in documents or repositories but also in organizational routines, processes, practices, and norms (Davenport & Prusak 1998, 5). Consequently, different types of organizational knowledge produce different routines, processes, practices, and norms. 10

11 Embedding design knowledge into organizational knowledge helps organizations look forward to achieving desired results in the future, to shape and define a set of assumptions concerning what its business is, what its objectives are, how it defines results, who its competitors and suppliers are, who its customers are, what customers value and purchase. In this case, the design knowledge contribution to productive use happens through embedding the design activity into the routines, processes, practices, and norms of organizations to identify business opportunities and create new products or improve existing ones to add or create new value for organizations. Case study analysis methods In order to analyze how design knowledge contributes to organizational knowledge, an analysis of fifteen product development case studies identified how designers' insight, experience, values, and information were applied on product development projects. The fifteen cases analyzed by this study were the Executive Summary Case Studies from the Case Study Program at the Design Management Institute's Center for research (DMI, ). The reason for selecting the Design Management Institute case studies is because they are centered on the understanding of how organizations manage their design competencies, how design relates to other functions in organizations, and how design decisions affect different aspects of organizations. First, the design knowledge components previously defined and presented in this paper were applied to the case studies to systematically identify designers contribution to organizational knowledge on product development projects. Once collected and organized, the analysis of the evidence consisted of searching for patterns that enabled designers contribution to organizational knowledge to be structured in a meaningful way. The patterns that emerged from the analysis of designers contribution to organizational knowledge can be clustered in three areas of expertise. They are: product feasibility, product viability, and product desirability. 11

12 The following diagram represents the three areas of product expertise (feasibility, viability, and desirability) that design knowledge contributes to organizational routines, processes, practices and norms. Design knowledge values information experience insights Organizational Knowledge feasibility desirability viability Areas of product expertise Designers contribution to product feasibility means that designers oriented their knowledge about products towards organizing product-related information to convert abstract concepts into tangible material reality. Designers applied their methods, intuition and experience to identify, negotiate and solve problems related to product materials, functions, and features. Designers contribution to product viability means that designers oriented their knowledge to organize product-related information to identify and implement new business opportunities. Designers applied their methods, intuition and experience to identify, negotiate and solve problems related to product economic value and its positioning in the marketplace. Designers contribution to product desirability means that designers oriented their knowledge towards organizing product-related information to understand "how" and "why" users interact with products. Designers applied their methods, intuition and experience to identify, negotiate and solve problems that 12

13 embrace understanding of user behavior and values to define product attributes that please users according to their own criteria. In order to test the hypothesis that design knowledge is seldom applied along with organizational knowledge to identify new business opportunities, the data collected from the case studies was analyzed through quantitative and qualitative criteria. The quantitative and qualitative criteria took into consideration an interpretative analysis of the case studies to identify if and then in what cases design knowledge expertise in product feasibility, viability, or desirability is described as being applied by designers during the product development process. The results identified that in fifteen cases (15/15), design knowledge was embedded into organization routines, processes, practices and norms to provide an expertise in developing product feasibility. The results also identified that in fifteen cases (15/15), design knowledge was embedded into organizational knowledge to provide an expertise in developing product viability. But despite design participation in product viability, in only in three cases was design knowledge applied to identify business opportunities. In all the other cases designers were required to orient their knowledge towards providing the means to implement a business opportunity, not to identify it. Moreover, the results identified that in seven cases (7/15), design knowledge was embedded into the organizational knowledge to provide an expertise in developing product desirability. Designers were the ones that in addition to their "required" contribution to create feasible and viable products, championed product desirability as an important issue for the development and evaluation of product success. Designers were strong advocates for embedding the users' values into to the problem definition. Principles and insight from the analysis of the case studies Based on the analysis of the case studies, it is possible to demonstrate and validate the hypothesis that design knowledge is seldom applied by organizational knowledge to identify new business opportunities. The case studies demonstrate that in most situations design knowledge was oriented by organizations to provide expertise in establishing product feasibility and viability. Moreover, the insights demonstrate that product desirability only participated in the problem definition when designers brought user values and expectation into the discussion. This demonstrates that product desirability is a unique design knowledge 13

14 contribution to product development. Last but not least, the cases demonstrate that only a few cases (three out of fifteen cases) took advantage of applying design knowledge to identify new business opportunities. This is an area in which the application of design knowledge has been underestimated. What it also demonstrates is that design knowledge is not taken as important when the task is to identify new business opportunity. That may be the case because design knowledge strength has not been in the identification of product economic viability. Nevertheless, design weakness in identifying product economic viability doesn't eliminate the possibility of having the ability to contribute unique expertise in product desirability to enhance organizational method, process and criteria for identifying new business opportunities that are different from identifying business opportunities from understanding product feasibility or viability. Therefore, the results collected from the analysis of the evidence through quantitative and qualitative criteria not only enable the validation of the hypothesis that design knowledge is seldom applied by organizational knowledge to identify new business opportunities, but also identified new opportunities to leverage design knowledge contribution to organizational knowledge. 14

15 Research opportunity diagram A Design Knowledge Expert insights Experience Values Contextual information B Embed design expertise in product desirability to identify business opportunities C Organization Knowledge Routines Processes Practices Norms H Understand user values and behavior Z Determine product D feasibility and viability ProductsÕ utility Symbolism Systemic compatibility Context of Use G Development of products that are meaningful for users and profitable for organizations F ProductÕs economic value Technological opportunity Institutional context Context of Production E Z New business opportunities The opportunity identified in this study presents an intriguing new research avenue that focuses on exploring the mechanism in which the unique expertise of design knowledge to understand user values and behavior (H) can influence organizational knowledge (B) in its identification of business opportunities (Z). As a starting point for future research, the exploration of designers' unique expertise in understanding user values and behavior can be used to overlap the context of use (G) with the context of production (E) to identify innovative business opportunities for organizations (Z). The proposal is to explore ideas of how the creation and delivery of meaningful and therefore valuable products for the user can generate economic value for organizations (F). It also highlights the need for a deep understanding of how organizations apply their knowledge to identify new business opportunities (C) and define a clear proposal of how designer insights, experience, values and information (A) can be embedded into existing organizational routines, processes, practices, and norms (C) to enhance its knowledge (B) in identifying new business opportunities 15

16 (Z), developing new products, improving existing ones to add or create new value for organizations and users (F). Applying design knowledge expertise in product desirability to identify business opportunities Based on analysis of the study of Drucker ("Management Challenges for the 21 st Century"), Kim and Mauborgne ("Strategy, Value Innovation, and the Knowledge Economy"), Christensen ("The Innovator's Dilemma"), and Hamel and Prahalad ( Competing for the Future ) it is possible to detect two distinctive ways through which organizations structure, or should structure, their routines, processes, practices, and norms to develop new products, improve existing ones to add or create new value for organizations and users. The two distinctive ways are: (1) improving existing business; and (2) creating new business. Next, the two distinctive structures of organizational routines, processes, practices, and norms to develop new products are presented. In addition, applying the findings from the cases studies above, a proposal follows that presents how the application of designers' insight, experience, values and information about "how" and "why" users interact with products can be embedded into the two distinct structures just mentioned. Design contribution to identify opportunities to improve existing business When market research orientation is to identify business opportunities to improve existing business, the primarily focus is to analyze the current situation to identify opportunities to improve existing products according to market conditions. This reasoned approach is feasible under circumstances where the size and growth rates of the markets are generally known, trajectories of technological progress have been established, and the needs of leading customers have been well articulated. Under these conditions organizations are able to clearly define what its business is, what its objectives are, how it defines results, who its competitors and suppliers are, who its customers are, what the customers value and pay for. In this case, market research and good planning followed by execution according to plan are known as the hallmarks of good management. Therefore, to identify opportunities that focus on improving existing business, market research must target known markets in which customer needs are understood. In this case user behavior and values can be identified because the reasons "why" and "how" users interact with certain products happens repetitively and habitually, which to some extent are automatic, inflexible, and can be articulated by users. Moreover, 16

17 customer inputs can be reasonably reliable and their needs understood. Market research identifies market demands, and resources are allocated to design and build higher-performance, higher-quality products that will yield greater profit. In order to implement these opportunities, plans must be made before action is taken, because forecasts can be accurate, and customer inputs can be reasonably reliable. In this case, a planned, researched approach to evaluating, developing, and marketing innovative products is not only possible, it is critical to success. Careful planning, followed by aggressive execution, is the right formula for success in improving existing business. As the business plan is to identify market demands in which users behavior and values are known, design knowledge expertise in understanding "how" and "why" users interact with products contributes to organizations by researching user needs. User needs, desires or expectations are the gap between activities exhibited by users in order to achieve a specific goal, and the offers of current products to support user activities. The gap highlights the weakness of existing product offers and the demand for better solutions. The identification of the gap presents opportunities to improve existing products or create new ones that deliver more value for users. Under these circumstances, design operates as an established procedure (application of existing knowledge) to implement incremental changes on existing product offers to meet the demand for better solutions that close the gap between current product functions and user expectations. In this case design knowledge contributes to organizational knowledge by adding value to organizations through the identification of opportunities to improve existing business. Moreover, design adds new knowledge to the existing organizational knowledge through its expertise in understanding user values and behavior. Design contribution to identify opportunities to create new business In a world in which industry conditions no longer dictate corporate well-being because companies can transcend these conditions through the systematic pursuit of innovation, a firm need not compete for a share of given demand - it can create new demand (Kim & Mauborgne 1999, 44). Therefore, when market research looks to identify opportunities to create new business, the primary focus is to develop new knowledge to create new products that generate new economic value for organizations. The main characteristic of those opportunities is that they look for mechanisms to create new demands through the offer of new products that present a new value proposition for users. 17

18 One cannot create market research for the truly new. The assumption is that markets that do not exist cannot be analyzed: organizations, suppliers and customers must discover them together. This requires the exploration of new business under an explicit assumption that no one - neither organizations nor users - can know whether, how, or in what quantities a new product can or will be used before they have experience using it. In this case organizations cannot know in advance what is the size and growth rates of the markets, trajectories of technological progress, and the needs of leading customers. Under those conditions organizations are not able to clearly define what its business is, what its objectives are, how it defines results, who its competitors and suppliers are, who its customers are, what the customers value and will pay. The development of new business in its initial phases is largely an unknown that emerges and takes form when exploratory research is done to unfold uncertainties. Therefore, a different approach to strategy and planning is required that recognizes that the right markets, and the right strategy for exploiting them, cannot be known in advance. Because much less can be known about what markets need or how large they can become, plans must serve a very different purpose: They must be plans for learning rather than plans for implementing. This process enables the development of knowledge about new customers and applications through discoverydriven expeditions into the marketplace. This process identifies problems and opportunities that nobody anticipated. By developing a new business with the understanding that they can't know where the market is, organizations identify what critical information about new markets is most necessary and in what sequence. Project and business plans mirror these priorities, so that key pieces of information are created, or important uncertainties resolved, before expensive commitments of capital and time are required. Investing and managing under such assumptions drives organizations to develop plans for learning what needs to be known, which is a much more effective way to confront the development of new business. Action must be taken before careful plans are made. Failure is understood as an intrinsic step toward success. Organizations expect to fail early and inexpensively in the search for a new business. New business emerges through an interactive process of trial and error, learning from mistakes. Therefore the strategies and plans that organizations formulate for developing new business are plans for learning and discovery rather than plans for execution. This is an important point because organizations that believe they know a market's future will plan and invest very differently from those who recognize the uncertainties of a "unexisting" market. 18

19 Because the business plan is to identify new business opportunities, assuming that market conditions are "unknowable" in advance, customer input is speculative, and no reliable design knowledge is available to understand "how" and "why" users interact with as yet undeveloped products, a new strategy is needed. This new strategy can be developed through the process of confronting user values and behavior with novel value propositions, investigating how users weigh alternatives and how they analyze the consequences of a new proposal. Moreover, new knowledge can be created through understanding how user values and behaviors change, adapt or transform according to their interaction with new value propositions. The development of new knowledge identifies opportunities to create new products that deliver a new value proposition for users that will better support user activities and reshape the perception users have about their needs. In order to create products that reshape user values and behavior, design operates as a trial and error process responding to unknown conditions to test new products, create new information, and resolve important uncertainties in order to create new demands. In this case design knowledge contributes to organizational knowledge through its: (1) expertise in exploring user values and behavior in a novel situation; and (2) systematic reduction of uncertainty. The following chart summarizes how design knowledge expertise in product desirability can contribute to organizational knowledge to identify new business opportunities: Design expertise Identify user needs and expectations Confront user values and behavior with novel value propositions Design plan Incremental changes: improve existing products or create new ones that deliver more value for users New systems: create products with a new value proposition that reshape user values and behavior Design strategy Improve existing business Create new business Business plan Market research and good planning followed by execution according to plan Plans for learning and reducing uncertainties rather than plans for implementing Business strategy Meet demand, compete, increase market share Create new demand / new market space Design contribution Add value Add knowledge Create new value Create new knowledge 19

20 Conclusion The conclusion presents a synthesis of the benefits collected through this study of the possibilities and implications of embedding design knowledge in understanding how and why user interact with products into organizational knowledge to identify new business opportunities. The conclusions are that design knowledge can contribute to organizational knowledge in (1) operating in any kind of circumstances that an organization selects, (2) allowing for ambiguity and uncertainty by being flexible and able to adapt to new circumstances, (3) promoting different types and scales of innovation through understanding user values and behavior, (4) adding or creating new knowledge through the cumulative experience of an organization in creating and improving products, (5) and promoting customer loyalty by providing satisfaction through meaningful and useful products. The result of all these benefits is that design knowledge can be embedded into organizational knowledge not only to add value but also to develop the process of creating economic value for organizations. 20

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