GERRY SCULLION: Hello and welcome to another episode of ‘This is HCD’. My name is Gerry Scullion and I’m a human centred design practitioner based in Sydney, Australia. Before we get started I always like to acknowledge the true custodians of the land where I sit whilst recording this podcast. And as I’m based in Sydney’s CBD, I would like to acknowledge the Gadigal people of the Eora nation as the traditional custodians of the land where we meet today and pay respect to their elders both past and present.

Greg Bernada is the author of a very well-known book and I wanted to say a design book but it’s not necessarily true and it would be doing a disservice to it. The book is obviously called ‘Value Proposition Design’ by Strategyzer, something that most of us are probably familiar with. We caught up recently online, dialling Greg in from his home in Zurich to discuss a range of interesting topics such as the 20th Century mindset of businesses being exploitation versus the present and future mindset of organisations being innovation.

We speak at length about the characteristics of each and what organisations who are still lingering in that exploitative phase can do to progress the organisations forward. We ask is it possible to do both? What is innovation and where does Greg see the role of design in both exploitative and innovative phases?

Also joining me in this episode was podcast friend and supporter, Nick Coster, co-founder of Brainmates. I’m really, really happy and I was really excited to get Greg on the podcast as I’ve been following Strategyzer for years. So if I seem a little bit more excited in this episode, that’s why. Anyway, let’s jump straight into the call.

Alright today on the show we have the brilliant Greg Bernarda who some of you might know of being co-author of the excellent ‘Value Proposition Design book by Strategyzer. This book has been adopted by many service designers and product managers and business designers all around the world so it will be familiar to some of the listeners today.

Greg delighted to have you on the ‘This is HCD’ podcast.

GREG BERNARDA: Thank you Gerry, happy to be here.

GERRY SCULLION: Great so let’s kick off and tell us a little bit about yourself and what you do.

GREG BERNARDA: Oh that’s a bit of a tricky thing you know I read somewhere that if you struggle to describe what you’re working might mean that you’re working on something interesting. So you know that’s often how I feel, just because you know I feel uninterested in many things in this whole space of innovation which I work in. I feel passionate on a lot of different things but in a nutshell where I come from is that I work for AJ the World Economic Forum, the Davos forum in Switzerland and there is always an idea that I kind of fell into love there which is to putting people together from different walks of life around the table and come up with a different, better solution together. And so I took that idea with me and I ran with it and started my own practice and that’s kind of what I do with organisations. So you know innovation focus always with the idea of taking a group of people together and coming up with their own solution.

GERRY SCULLION: So how would you describe your skill set as a practitioner?

GREG BERNARDA: Yes so it’s when we talk about designing, I think what I design is I help design strategy so you know understanding strategy is one part of the skill set. I also design a whole lot of experiences around learning and around inventing something new. So you know that’s a lot about understanding what gets people to come up with new stuff, to think about new ideas, to bring ideas from different fields. So that’s all, yeah I think that’s kind of the core of my skill set. I think you know when you’re working with a group of people there’s a whole lot of diplomacy and of listening as well so I would kind of count that as part of my skill set.

GERRY SCULLION: Today’s topic is an absolutely massive one, Greg. We’ve been thinking back and forth on email for a couple of months about this and it’s most organisations still largely live in the 20th Century in a world where the key currency is for success has been exploitation. But in the 21st Century the name of the game is innovation and those are two very different capabilities. And exploitation is about excelling and executing and scaling products and services in a largely known environment. Innovation is about navigating the unknown, exploring possibilities and experimenting with new ways of creating value for people with ever evolving needs.

This sounds really close to what I do as a service designer and what Nick does as a product manager and ux-ers that are also listening and they do that as well.

So I’m really excited to get into this. So tell us a little bit about where this came about and where this topic originated, Greg.

GREG BERNARDA: You know I think spending a lot of time with organisations and I feel there’s two different worlds out there, right? I think a lot of people are talking about how everything is changing and there’s just massive transformation happening around the world and I think you have one group of people or organisations that are needing this in different ways and you can include the start-ups that are going to you know XXX05.09XXX their but not only I think their you know there’s a lot of things happening around the world that is just coming up with new stuff and at the same time you have traditional organisations you know who have been used to do business and to do what they do in a particular way and I think there seems to be a little bit of a I guess a difference in how these two groups of organisations operate. Traditional organisations a bit more you know used to operating a business, exploiting a business and these new players arriving and inventing something new; so being in this world of innovation. I think now we see that with time in the last 5/10 years we think I see that divide is becoming even more pronounced because I think you could kind of get by you know 10/15 years ago with a you know a mindset where you were doing one thing and you were kind of executing on one business model but more and more we see that innovation is touching aspect of business and society and so can’t quite hide from that. And so there’s a challenge there of transforming the practices of the traditional organisations into one that’s I guess more fit for the kind of world we live in.

GERRY SCULLION: So I’m keen to hear about what your thoughts are around innovation in itself; so what is ‘innovation’ and what are the behaviours associated with innovation cultures?

GREG BERNARDA: I think innovation is when the new value hits the market place. So there’s a lot of invention going on you know in academia, also in organisations, you know R&D about invention but innovation is when we actually solve customer problems, create new value et cetera.

And to do that I think you need to be, we like to talk about two kinds of processes, you know that you’re going to need to embrace. One is the process of searching, of exploring, right? Because when you live in the world of innovation typically you don’t know or you have very limited certainty about what you’re trying to do, you know you don’t really know what your customers want, maybe you don’t even know who they are in the first place, don’t know what technology can do, what is the right product et cetera. So you have to engage into a process of searching for the right business model, customer problem, value proposition, produce services et cetera. And then there is the process of experimentation and I think that’s when you go out with your idea, with your prototype; you go out into the world and you try and validate or invalidate the assumptions that you’ve put into your ideas, your business model, product services are the right ones. So I think these two things are essentially different from the whole world of you know exploitation which is a lot more kind of execution focused, you know focusing on making a big plan and then implementing.

NICK COSTER: And Greg, I’m just curious, what do you think you see has been the big shift between that 20th Century to the 21st Century thinking? Is it purely the internet which has triggered that new opportunity or is there something else behind that switch between exploitation and innovation as being the key driver for the business?

GREG BERNADA: Yeah I think it’s a lot of things changing at the same time. I think the internet and technology in general is one thing but you know customers preferences. I think people are changing a lot, right? There’s just massive of information and shift in behaviours going on all the time, partly because of the internet, the information that is available to consumers is now spreading more quickly around the world, people are getting educated, they’re making different choices.

So I think customer preferences and behaviour is a big thing as well and with that you have you know something like regulation is changing. Every aspect of business I think is being accelerated and partly it’s through technology but just partly because you know more information is available to more people around the world.

GERRY SCULLION: What are the signs of a business that’s exploiting? Because I know in certain circumstances you might have a business or a bank or a big organisation that may believe that they’re actually innovating but in fact they might still be in an exploitation phase.

GREG BERNARDA: Yeah, so I think one side is if you think you know what you’re doing, you know you think you know again what your customers are, what their problems are, you know what my product, my technology et cetera are I think you might be kidding yourself because by definition if you are in a space of innovation there is a huge amount of uncertainty and so it’s uncomfortable. So I think that’s a sign, you know being uncomfortable and being not sure about how you’re going to create value and how your organisation understands that new space is a sign that you are kind of dealing with this new world of innovation. If you things are too clear on paper and how you relate to customers et cetera, I think you’re still a little bit in that old world

GERRY SCULLION: I totally agree, Greg, and I think it’s just human nature when an organisation is going through this process of change that it becomes a little bit uneasy and it’s a little bit uncertain and tensions might be getting high and what have you done in the past? What has worked well to try and support an organisation through that process?

GREG BERNARDA: I think it’s about creating spaces for you know for innovation inside organisations and trying something new and because an organisation typically, a traditional organisation you know that has been in business for a long time still needs to be good at exploitation, right? We’re not asking organisations to leave everything behind and become a start-up. That’s obviously not what they’re supposed to do about what’s going to work for them. You have a business, you need to make sure that it still runs you know mostly it’s where you’re still getting revenue so you need to keep that exploitation inside working but at the same time in parallel I think it’s important to start creating new spaces for innovation within your company and there’s different ways to do that. But I think one way that we’re starting to see that works better than others is if you can really separate the two things together. You know have a set of people with a set of incentives, you know instead of businesses that are focused on exploitation and in parallel to that have a different set of people, culture incentives, processes that are geared towards innovation.

GERRY SCULLION: Yes so do you believe that it’s possible then to be both exploiting and innovating at the same time?

GREG BERNARDA: I think it is but that’s why I say that I think it has to be different spaces within organisations and I think it’s…

GERRY SCULLION: In different spaces?

GREG BERNARDA: Different spaces and different people as well. You know I read this thing about the Apple watch, you know how Apple started with the Apple watch and one can think whatever they want about the Apple watch but the process was interesting, you know I think on the Apple campus you had this new building that was supposed to house the Apple watch business and the employees of the normal Apple business were not allowed to go into that building because they didn’t want the kind of corporate Apple mentality to infect the new start-up, new innovation space. But the employees of the Apple watch were free to go through the rest of the building because they wanted to make sure that they can go and get the right technology, the right customers insights and right designers et cetera and bring them over to the Apple watch building.

So I think it’s a good metaphor for what needs to happen from an organisation design point of view.

GERRY SCULLION: Yeah before we started the podcast I was watching one of your webinars on the Strategyzer website and inside it you described a story of the Michelin tyres where they redesigned their business model and it included lots of stuff that, in the service design world that we use, the same sort of tools where you’re solving customer problems and you’re you know lots of games and resolving pains. And this to me is a fantastic example of a human centred design process.

In some instances though people listening might have uncovered similar needs within their organisations and presented it back to the business but it didn’t gain any resonance with the decision makers in the business. So what advice would you give to designers who are listening in today to get those ideas adopted?

GREG BERNARDA: Yeah I think it’s a tricky thing you know partly one answer to this is I don’t if you can convince people, I think you know the issue depends a lot on people at the top and the bias that they have and if they have kind of made up their mind about innovation being important to the company or not.

So it’s a tricky thing to convince people about that but I think at least with what we do there’s a couple of things that I can mention that have worked I think or at least you know start kind of going in that direction. One thing is I think you have to meet people where they are, right? And I think the argument around, for example understanding customers, right? It’s a very basic argument that is important in the innovation process. It’s not the whole innovation process but it’s an important one and I think it’s one that resonates with most people out there, even the ones that are not innovation minded. And I think everywhere I’ve been you know you have this thing of ‘oh yeah we need to understand customer service’. So starting with I think is a good one. And one of the ones that I feel has resonance more and more inside organisations is the whole idea that you know there’s going to myths that innovation is very risky and very costly and I think when you start employing the designer’s tool box and you know kind of what we say around this whole thing around exploration and experimentation, you realise that it doesn’t have to be that way, it doesn’t’ have to be risky and expensive. And in fact your job as an innovator is to make that whole process, XXX15.34XXX that process by doing the right thing and by making sure it goes faster and is not ultimately very costly for an organisation.

So I think that argument kind of goes to the core of someone who’s been kind of working in this exploitation world, right? Of making sure that it’s not disrupting the business, it’s not costly and so on and so forth.

GERRY SCULLION: Yeah I totally agree Greg that it’s the role of the innovator to put the sea level on the board and the leadership team at ease during that process. It can be a hard time for them so in your experience what have you done that has worked well to put them at ease?

GREG BERNARDA: What I do a lot is tell stories and you know especially if you can understand what are the references of the leaders inside these particular organisations. You know what are the hero of people looking up to Apple, to Tesla to the local company; if you tell a story that resonates on how that you know hero organisation has managed to exist and has managed to do what they do. So telling stories I think is important and the other thing that I do is give people an experience of how easy it is to start with a new business. You know start with this whole process of innovation. So you know if I have two hours or even one hour with the leadership team we can already get our hands a bit dirty in trying to play with this process of innovation and people realise that it can be a fun process, it doesn’t have to be so complicated and you know I think once they have this experience, it starts to become something that they feel they can embrace a bit better.

GERRY SCULLION: Okay great. In a previous episode with Andy Polaine from Fjord and Simon McIntyre from the University of New South Wales we discussed ‘is education broken?’ and I’m keen to hear your thoughts on what you feel the connection is between the educational process and how organisations innovate.

Is there a connection? What are your thoughts?

GREG BERNARDA: Yeah absolutely. I think education is going to have to change massively. We talk about organisations entering this phase of innovation and I think education has to be a big part of that so a couple of things I’m thinking about; so one is I think it’s very important now to get in any educational system, we start with school, to make sure that students start to understand themselves and understand what their gifts are and what are they doing in this world? What are they kind of suited to do and less suited to do et cetera, right? Because I think if you see any innovator out there or entrepreneur out there or you know successful people that have led an innovation process, created something, they’re going to have this relationship with themselves where they kind of understand what they’re doing with it and surfacing that in students at already an early young age I think is going to be more and more important, it’s going to be a necessity even I think for employees moving forward, especially if you think even now of what’s going to happen with robots, we’re going to automate a lot of things. So having employees that are conscious of what their gifts are, what their creative process is is going to be massively important.

And the one other one I would mention which I think gets mentioned often is the whole thing of being comfortable with experimentation which includes failing and understanding that whole process of trying something and XXX00.19.15XXX something out there and seeing what works, what doesn’t, progressing like that in an interpretative way.

NICK COSTER: I think that’s an area that I find really interesting, Greg. Because I think it’s one of the challenges between the almost the exploitation phase of a business and the innovation phase of a business where in the exploitation phase you’re trying very hard to avoid waste. So a lot of the leading manufacturing principles were based around taking waste out, the six things of quality control was all about removing waste in yet when you look to innovation, in some respects it’s controlled waste. It’s trying to find that experimentation, those big and small failures until you find the thing that works effectively.

How do you think you balance those two mindsets in an organisation? And going back to Gerry’s question, how that sort of plays back to the core of education to have both reduced waste and also embrace waste as part of the work we do?

GREG BERNARDA: What you mention there I really love because I think it goes to you know this whole debate again between what machines are going to do in the future, what human beings should do in the future. I was listening to someone who was saying that human beings should be comfortable with wasting time, right? And wasting kind of, of not being efficient, right? Efficient is for a machine. But us human beings we’re here to be I think creative and you know part of the creative process is trying, is not you know delivering something flawlessly and being extremely efficient and doing it but part of it is exploration and being curious and trying things out. And so I think that that should stay and that should be a whole mark of what we do in companies that are focused on innovation.

GERRY SCULLION: Yeah that’s a really, really good point. Just one of the other things that I noticed in one of your slides earlier was your projecting 18 million jobs in ten years. So Greg tell us how are we going to do it? And what role do you feel design has to pay in enabling this?

GREG BERNARDA: Yes, I think you’re referring to a story of a Chinese story of how…

GERRY SCULLION: Yeah I’m referring to there was a story in Shanghai where I think it was I can’t remember of Tao Maou is it?

GREG BERNARDA: Tao Bao.

GERRY SCULLION: Tao Bao. So tell us a little bit about that, the 18 million jobs in ten years.

GREG BERNARDA: Yes so Tao Bao is actually a part of Alibaba, everyone knows Alibaba but not a lot of people outside of China that Tao Bao is actually the biggest part of the business of Alibaba and we know that Alibaba is bigger than Amazon and eBay combined in terms of their e-commerce space it’s just, yeah it’s crazy. So Tao Bao is only in China it doesn’t get mentioned a lot outside of China but indeed they’ve created 18 million jobs both directly and indirectly in ten years and they’ve just created the whole digital economy infrastructure that obviously didn’t exist, you know we’re talking about back in early 2000s here. And I think this story is interesting because they started at a time when eBay was in China, right? And they basically drove eBay out of business, yeah. eBay left China after Tao Bao started and the CEO of Alibaba, Jack Ma, had this saying, you know he says ‘you know a crocodile loses to a shark in the ocean but it beats it every time in the Yangtze river’, right? So he was saying we are the crocodile, Tao Bao, and eBay is the shark in the ocean and if you look at what they’ve done, you know in answer to your question of how designers are going to help us through that, Tao Boa did a bunch of things that made it better than eBay in China. One thing was they made it free, they understood that that was a big obstacle, people didn’t want to pay so they did the whole thing free to start with. They started to get revenues in other ways later on. But they also did things like creating a messaging service because they understood that Chinese people were wanting to talk, you know before doing it or they did things like having the names of online moderators on the platform. They were chosen after characters in popular Chinese Kung Fu novel, right? And then they made the whole process fun, people related to that et cetera.

So these things I think they speak about you know how you get into the culture of a place and I think the designers are uniquely placed to understand, to kind of get under the surface of things and really try to get to what creates meaning for people, what drives people, what motivates people. And I think that’s a great example here of what they did which helps you know create this massive business

Designers are going to have a massive role, that’s what I think we’ve seen so far but they’re going to continue to have a massive role in understanding how to create value, create business, create value for society in general.

GERRY SCULLION: That’s good to hear. It’s good to hear that I’m going to have a job in the next 10 years.

GREG BERNARDA: Yeah you’re well placed.

GERRY SCULLION: Nick do you have any question you want to ask?

NICK COSTER: Look I’m still interested I guess in the combination of the exploitation and the innovation. I guess from a product management perspective, the way I think about it is that you have innovation first, often sparking from invention but innovation, as you mentioned before, is creating value, solving a problem for a customer.

But as that idea moved from its innovation stage to implementation and growth in the market place it has to also go through an exploitation phase. And I think that’s where a lot of organisations see a break point, you know they don’t have the innovation to start with or they don’t know how to manage the innovation into the main business.

Do you have any suggestions on how the organisations you’ve worked with have effectively managed that transition from innovation to the exploitation and then back again so they can keep repeating the process?

GREG BERNARDA: Yeah I think that’s a very good point. My example is if you look at Tesla right now, right? I mean Tesla we’ve come to kind of see as the both the child of innovation, amazing you know what they’ve created, a whole new system et cetera but now they are, if you read the news on Tesla these days and it’s not the first time, but they now have an exploitation problem. They have to deliver, they have to manufacture, they have to you know deliver on all of these orders after they’ve created a new product and even sold the product.

So it just speaks to the fact that they are two different skills and skillsets and you know I think you need to understand the fact that they are two different skill sets and make sure you have those two different skill sets inside the organisation and really understanding that you know I think you recruit differently for innovation versus exploitation, that your processes look different, that even down to your physical space looks different.

So yeah I think that being mindful that these are two different worlds and that you need to also throw a bridge between the two worlds is what’s going to make us I think successful, navigate these two worlds.

GERRY SCULLION: Okay Greg so we’re coming towards the end of this episode and I know there’s quite a lot of questions that I didn’t get through today and a lot of people on the slack channel were asking me to ask some questions but there is an opportunity for them to get to meet you. I know you mentioned earlier before we started recording that you were going to be coming to Australia at the end of this year to do a masterclass, a Strategyzer masterclass. So how can people find out more about that and where’s it going to be on and what dates and so forth?

GREG BERNARDA: Yes, so in October we’re doing a Strategyzer masterclass with two days focused on teaching the tools so value proposition canvas, business model canvas and the whole thing of what we’ve talked about. So basically this whole thing of how you use these tools and the best technology around conducting innovation processes inside companies.

We did the first one last year, last October and lots of enthusiasm so we’re coming back in October for that.

GREG SCULLION: Great stuff. So if they just go to Strategyzer.com they can sign up.

GREG BERNARDA: Yeah absolutely. Yeah.

GREG SCULLION: Okay great stuff, Greg. So we’re just going to move into the last section with the three questions from Elle.

So we’re going to ask you the first question; what is the one professional skill that you wish you were better at?

GREG BERNARDA: You know I’ll say a cheeky one but sitting at my desk and getting work done and by that I mean that you know I don’t so worried, I feel like I’m not the only one suffering from this but everyone I know suffers a bit from procrastination, when you have to start doing something you know important. So actually doing it every day I feel is a massively important skill that I’d like to do better, you know just sitting at your desk and doing your craft every day.

GREG SCULLION: Don’t worry about that Greg, I think procrastination, a little bit of it is healthy. So the next question is ‘what is the one professional thing that you wish you were able to banish?’

GREG BERNARDA: This whole world of design thinking has come up and become very popular which has been largely very great but I feel there’s a risk of using this whole thing as a technique that is detached from the kind of the core principles and the values and the philosophy and the meaning of it. And it becomes a bit of a commodity and people are using the tools, everybody is doing the xxx28.59xxx thinking but I actually feel it’s a very deep thing you know? It’s a deep practice and if you just use it as a tool or as a technique then you lose the connection with why it’s so important. So I’d love to banish just the use of tools without understanding why they’re so important to the whole process that comes with it.

GERRY SCULLION: Myself and Nick are nodding our heads; we’re like those nodding dogs in the back of a car. Alright we’ve just got one last question; what is the message you’d give to emerging design talent for the future?

GREG BERNARDA: Yeah so I think it’s very related to what I just said. I would say you know that whatever you do you have to I think it’s important to develop an intimate relationship with what you’re doing. So not using the kind of tools because they’re there and thinking that the job is done. I think the best people, creative people, innovators, designers out there, they have a very intimate relationship with their practice, with their craft and with the object that they’re working with. And that takes a lot of immersion, a lot of like curiosity, a lot of practice itself and reflection. And so I think understanding you as a designer, understanding how you fit with this whole world, what is your unique point of view, skill set et cetera. Understanding your place in this whole world is extremely important for you to create the kind of value that we expect from or that we get delighted by.

GERRY SCULLION: Yeah absolutely brilliant. Greg thank you so much for your time.

So there you have it. I hope you enjoyed this episode and if you’d like to be part of the conversation or community hop on over to thisishcd.com where you can request to join the slack channel and help shape future episodes and connect with other designers around the world.

Thanks for listening and see you next time.

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Posted by Gerry

Founder and Host of This is HCD