Good afternoon. Its a great pleasure to be here today.

My name is Mike Kuniavsky and Im

a user experience designer at PARCs Innovation Services Group. Today I would like to
talk about two things: I would like to give you an overview of PARC and Id like to tell you
about a process we use to reduce the risk of adopting novel technologies while still
making breakthrough innovations. As any research lab, we regularly find ourselves in the
situation where we have technologies, great solutions, but without a clear idea of what
the problems. Our group, Innovation Services, has come up with several methods for
reducing risk in such situations and today Id like to share one with you.

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But first I would like to review a little bit about the history of this research lab.
Many people know of PARC as the birthplace of the personal computer, and
the ecosystem of technologies that surrounded that concept: the laser printer,
ethernet networking, graphical user interfaces, object oriented programming
were all created here during a particularly fertile period in the 1970s. Every
time one of your Chrome Web browser runs JavaScript, theres a little bit of
Smalltalk code in there that originated here 40 years ago. Since then weve
continued to innovate in ways that keep pushing the boundary forward. Our
research into lasers is in every Blue Ray player, Apple paid a nice nod to the
PARCPad, one of the first portable networked tablet computers, when they
named the iPad. When you hold an Amazon Kindle, the display is a cousin of
the electronic ink displays we developed here, and when you use Microsoft
Bing, PARCs information indexing and AI technology powers some of that.
Today we do a lot of work in energy, much of it for ARPA-E, and of course
printed electronics.
 Applying a custom combination -- of the deep knowledge and diverse experience of the best
minds in the business -- to each client engagement

An industry not academic -- perspective that has launched more than 30 new companies

Our people arent just the brightest but theyre the leading minds in their fields. Weve
authored over 2,500 patents now, were averaging 100 per year and over 4000 papers and
100 books in the physical, computational, and social sciences.

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PARC has 4 Labs: System Science, Interaction & analytics, Hardware Systems and
Electronics Materials & Devices
Each Lab has several technology areas, including printed electronics, data analytics,
networking, security, energy, interactive intelligence, and many more
In addition, because were essentially a kind of consulting company, and not a pure
academic or corporate research lab, we provide the infrastructural services necessary to
ensure that new technology we develop has the greatest opportunity of market success.
Thats where the group I belong to, Innovation Services, and our global business
development group come in.
 Due to the confidentiality of our client relationships and work, this is just a
partial list of the companies and organizations we are working with (or have
worked with).
This includes Fortune 500 and Global 1000 companies; startups we have
enabled and in some cases spun out; and government agencies or partners.

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We are also part of the original Silicon Valley DNA. PARC has been part of
Silicon Valley counterculture since the beginning. Perhaps because of the
distance from established East Coast institutions, and certainly because of
direct influence by the 1960s countercultural movement in San Francisco and
Berkeley, the philosophy here has always been to take transformative risks
and to use a combination of social science and hard science to challenge not
just what a technology does, but why it exists in the first place to solve human
problems and maximize human potential. Rather than working within existing
boundaries and with existing constraints, the Silicon Valley counterculture
philosophy, which I certainly buy into, has been to find new ways to do old
things and, when necessary, to replace those old things, whether theyre
technologies, assumptions, ways of working, or entire industries. The
Facebook philosophy of moving fast and breaking things started here.

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And the secret to PARCs success over the last 40 years is that we focus on
creating business impact and not just inventions.

We especially focused on breakthrough impact.

We believe this BI requires these 3 areas.
1. Need work class expertise we have the top scientists in the world
2. But also we develop tech that is used by people. So we need to understand
people and their context. So we need to not only solve right problems but
also solve them in the right way. Such in a way that people will want to use
it.
3. Lastly, we need to make sure to deliver value from our innovations. This
requires thinking of new business models. We have a biz team at PARC
that thinks about how we deliver value thru new business models enabled
by new technologies.

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Which brings me back to social science. When were trying to reduce the risk of
adopting novel technologies so theyre successful for our clients and their
customers, we have found that applying social science methods is very
effective. We pioneered this research in the 1980s and were still doing it
every day.

At lot of these methods get lumped under the heading of design ethnography, or
corporate ethnography, but there are a number of methods we regularly use
to research how people and technologies mix.

We do both qualitative observation work and quantitative big data behavior

research. We work online and offline and we have a pretty big toolbox.

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This work also dovetails with our open innovation model.

Open Innovation means embracing internal and external capabilities to design a wider range
of new offerings than that suggested by traditional R&D, which is focused primarily on
existing markets and customers. OI widens the lens, encouraging active consideration of
a mix of strategies that includes adjacencies and new market entry supported by organic
(develop new capabilities) and inorganic (partner for technology and/or market access)
means.
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Let me give you a an example of how this works in practice. Many of our client
engagements start with what we call the ENGAGE process.

Engage is a structured approach to exploring new business models and manage

disruptive innovation through a repeatable process...

It starts with a 2-day program that starts PARC where we get multidisciplinary
teams of researchers to helpdevelop technology and IP strategies and
roadmaps to helpsolve business challenges

We then execute on the roadmap thats developed through a rapid, iterative,

highly collaborative process that pulls in all of the relevant technical, social,
product design and business strategy talent.

Wed love to tell you more about this, so please catch us at some point and we
can give you details.

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Now Id like to switch gears and walk you through a specific technique we use as
part of the work we do after an ENGAGE project to explore where the right fit
for a technology is, from a business and customer perspective.

The core question we try to answer is: How do you know whether there's a
market for something, that people will want it and use it, without building it?

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Software used to be a physical product, too, with the same kinds of linear
waterfall manufacturing and distribution dynamics

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but about 15 years ago the Internet fundamentally changed the way that
software is deployed, and now there is a robust ecosystem to quickly design,
develop and deploy software, websites and apps to test product market fit.
The Web and app stacks are tailored around tools for rapidly evaluating how
well products work and whether they fit the needs and behaviors of their
market.

Every major digital product you use, whether its a website or an app, is heavily
instrumented and data flows from every one of your actions back to the
company, which uses it to create real-time experiments about how to
maximize factors such as engagement and shopping cart size. Every time you
use a Google product, for example, youre participating in something like 40
experiments. You probably rarely notice that its happening, but subtle
changes are made constantly in response to huge volumes of information
about peoples actions. This is what makes Amazon so successful at selling
you things and Candy Crush Saga so addictive. Its all instrumented.

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In fact, this technology has led to the dominant philosophy about how you create
successful Silicon Valley startup, Eric Ries/Steve Blank Lean Startup model.

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Unfortunately, this model doesnt yet work for hardware. If you try it for a physical
product, you realize that it is based on Internet and software assumptions that
just dont apply to todays hardware manufacturing ecosystem. For example,
maybe you can cobble together an MVP with an Arduino on a breadboard and a
3D printed plastic enclosure, but you still cant deploy it quickly or get accurate
feedback about it to measure usage. The barrier to getting past the very first part
of the very first iteration is enormous.

The best we get is this (arduino) and this (Kickstarter). Crowdfunding is

essentially only a very crude tool for evaluating the desirability of an idea, and its
a pretty messy tool where theres very little clear signal.

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The problem is that this is very hard to do with hardware.

Physical product design is still very much a slow, old waterfall development
model. After 20 years dismantling it in software, hardware today is worse than
software ever was. Product design is actually LESS agile than the LEAST
agile software waterfall model.

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Sure sometimes people will draw it as a circle, but that doesnt fix the underlying
problem.

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Developing a new connected hardware product today, the process is little
different than when Michael Porter defined it like this in 1980 for traditional
manufactured goods like coffee makers.

You get one shot and if youre lucky and all the stars align, you get to roll the dice
again, and they dont, then you shut down and have to start over. That sucks!
I want to change it.

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This waterfall-style environment has lead into a situation where I think product
development happens in one of four ways, none of which is satisfying.

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And when you go down that technology, manufacturing, launch and market
route, which is kind of like saying Ready-Fire-Aim, you typically get one of
three outcomes: 1. kinda pointless gadgets that exist because they can, not
because anyone wants them, such as this Quirky egg thing. In this situation it
doesnt matter what the question is, the answer is always Lets put a chip in
it or whatever your pet technology of choice is. This is product design by
willful ignorance. Its essentially saying: Figuring out what people actually
need and want is hard, so well just work on the stuff we know and well spend
a lot of time and money, and well cross our fingers and hope that we dont
have to sell the overstock to woot.

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2. or you get superficial formal variation with very little change of core
functionality. This is product design by fear. Its saying Figuring out what
people want and need is hard, so well make small changes to things that we
already know they want and hope that our tweaks will bring them to us instead
of a competitor.

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Or 3., the worst situation is that even if you hit on a success, its impossible to
replicate it because you dont know what you did right or wrong. Thats
product design by random walk and the big consumer electronics companies
are notorious for this. After the success of the Gameboy, Nintendo created the
first consumer virtual reality gaming system in 1995. Using 1990 technology. It
was visionary, but it was a legendary failure for the company and cost them
perhaps billions of dollars and valuable market share. Why did they make
this? Why did they go this far? Perhaps its because they didnt even know
why the Gameboy had succeeded. They had thrown things against the wall
and one of them stuck, perhaps, like in a hit movie, they treated everyone
involved in that project, especially the projects leaders, like geniuses with
some kind of magic insight and those people believed the hype. Regardless,
they were unable to recreate their earlier success because perhaps they
didnt have a process for understanding why it had been successful.

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The best option we have today is the traditional customer-centered new product
development model derived from industrial design and popularized by
companies like IDEO and frog. In the model you use a combination of
ethnographic observation, ideation and a lot of talking and analysis to identify
what sounds like a good idea; then you define personas, build storyboards,
models, customer journeys and perhaps make some looks-like and works-like
prototypes that you show key stakeholders and perhaps a handful of users.

This is as effective a process as we have right now, and most companies dont
even go through these relatively simple steps. Still, I think this approach only
produces a weak signal at best and it doesnt get at the hard part, rapidly
identifying whether an idea is even interesting to people, and throwing it away
as soon as you can if it isnt, while iterating on the parts that ARE interesting.

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So how do we design not from positions of ignorance and fear to create products
that we have a high degree of confidence that people will want? Ive been
thinking about this for a while.

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And heres the process Im currently using to help us push the bounds of existing
products and services with some idea of what people value and whats
technologically feasible. Its explicitly based on the Lean Startup approach,
but geared toward hardware.

The top layer describes a highly iterative exploratory phase that exists solely to
help us understand what experiences provide value to people and what
technology our team can reasonably deliver. Probes, which I will go to in more
detail later, are things that resemble finished productsperhaps theyre
nonfunctional apps or boxes with lightsbut exist to explore hypotheses
about what kinds of products and services people will respond well to. We
give them to people for a couple of days or a week and then we interview
them when theyve had a chance to live with them. Proofs of concept exist to
test the core technological ideas. I dont care if we have to throw a $3000
server at the problem when the end product has to cost $10, is it possible for
us to do that thing AT ALL? This kind of technical proof-of-concept is what
Alan Kay used to call a time machine. If we can do it for $3000 today, well be
able to do it for $10 in five years, so its as if were paying a bunch of money to
get a device from the future.

After this phase is done, we throw everything we did away and start designing
the real product from scratch, and thats where the prototyping process starts.
We iteratively develop prototypes with additional user feedback until were
pretty sure it represents a valuable and technologically feasible service. Then
we deliver that to our client who throws away all of our work, but uses it as a
reference design that they can then tear apart and rebuild using their own in- 28
Our approach to probes approach owes a lot to the technology probes approach
that Hillary Hutchison, whos now at Google, and others developed in the
early 2000s, and then mix it with with the hypothesis testing of Lean Startup
minimum viable products.

The Hutchinson model explicitly makes a distinction between probes and

prototypes, and defines probes as disposable explorations. I feel this is quite
liberating because it forces us to rapidly identify our assumptions and figure
out ways to invalidate those assumptions. In other words, it helps us ask
better questions.

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In summary

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Heres our current probe process. Itll look familiar from various new product
development and user centered design practices. Ive tried to emphasize
explicit hypothesis generation and evaluation because when youre making an
unknown product in a novel category for an untested market, which is where
we work, one of the only points of stability is an clear statement about what
you think the value of the idea is, and thats the hypothesis, so that when the
probe process calls it into question, that provides guidance about how to
iterate it.

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Recommend using Lean Business Model
Canvas as a quick 1 page checklist to make
sure that at least all of the key aspects of a
potential business model have been
discussed.

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So here are our results. We obviously cant tell you how this project went, but we
were able to rapidly identify a number of directions where the ideas were
valuable and, mostly importantly, a number of directions where they werent.
For our clients, I believe this information was valuable, and, I feel this is
important, we were able to get it to them quickly and without expending the
resources required to actually build the products. With this information, we
could go back and iterate on these ideas to create concepts that we felt were
much closer to what people would want,

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