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Thanks to powerful ideation approaches such as design thinking and crowdsourcing, it has become incredibly easy and relatively inexpensive for companies to obtain a vast number of novel concepts, from both insiders and outsiders such as customers, designers, and scientists. Yet many organizations still struggle to identify and seize big opportunities. That's because major changes in society and technology fundamentally challenge the conventional understanding of what is valuable, rendering obsolete whatever criteria companies are using to identify customer problems they could address. To see which ideas truly have potential, managers need new assessment criteria. From studying and working with 24 companies that have succeeded in capturing big opportunities, the author has devised a process to create such criteria--one that is rooted not in the art of ideation but in the art of criticism. It engages a company's own employees and helps them articulate their individual visions. These are then compared and discussed, first in pairs and later in a group, in order to distill them into a handful of even better proposals. The views of outsiders are sought only at the end.

Thanks to the collaboration that the internet has made possible and the open innovation that it has spurred, we live in a world where ideas and solutions are abundant. The main challenge facing innovation managers today is how to take advantage of this wealth of opportunities, says the author, a professor of innovation management. He contends that being first to launch a new technology is less important than being first to envision its greatest untapped market potential. Most companies focus on employing new technologies to better serve customers' existing needs. Those that have technology epiphanies strive to create products and services that will provide customers with a completely new reason to buy a product. Well-known examples include Nintendo, with the Wii; Apple, with the iPod; and Swatch, with its fashionable and affordable watches. Verganti explains how companies can systematically produce technology epiphanies. He illustrates the process with the story of Philips Electronics' creation of Ambient Experience for Healthcare, a system that uses LED displays, video animation, radio-frequency identification sensors, and sound-control systems to relieve the anxiety of patients undergoing CT, MRI, and other scans, creating an alternative to the risky, time-consuming, and costly practice of sedation.

Nowadays, virtually no companies innovate alone. Firms team up with a variety of partners, in a wide number of ways, to create new technologies, products, and services. But what is the best way to leverage the power of outsiders? To help executives answer that question, Pisano, of Harvard Business School, and Verganti, of Politecnico di Milano, developed a simple framework focused on two questions: Given your strategy, how open or closed should your network of collaborators be? And who should decide which problems to tackle and which solutions to adopt? There are four basic modes of collaboration, say the authors. An elite circle is a closed network with a hierarchical governance: One company selects the participants, defines the problem, and chooses the solution. For instance, Alessi, an Italian home-products company, invited 200 outside experts in postmodern architecture to contribute ideas for new home-product designs. An innovation mall is hierarchical but open: Anyone can post a problem or propose solutions in it, but the company posting the problem chooses the solution. An example is InnoCentive.com, an eBay-like site where companies post scientific challenges. An innovation community is open and decentralized: Anyone can propose problems, offer solutions, and decide which ideas to use - as happens in the open-source software community Linux. A consortium is a private group of participants that operate as equals and jointly select problems, decide how to conduct work, and choose solutions. IBM has set up a number of consortia with other companies to develop next-generation semiconductor technologies. No one approach is superior; each involves strategic trade-offs. When choosing among modes, firms must weigh their advantages and challenges, and assess which will work best with their strategy, capabilities, structure, and assets.

In 1985 the architect Michael Graves designed his first consumer product--a now famous teakettle--for Alessi, the northern Italian home-furnishings manufacturer. Although Graves later designed a knockoff for Target that goes for one-fifth the price, Alessi has sold more than 1.5 million of the original version, which grew out of a process that Roberto Verganti calls "design-driven innovation." Alessi, the lighting manufacturers Flos and Artemide, the furniture maker Kartell, and a handful of other firms based in the Lombardy region ignore the design industry's two norms: "tech push," whereby an improvement in performance and functionality dictates a modification in design, and "market pull," whereby the design accommodates consumers' demand for new features. Instead, they favor an R&D operation in which a community of architects, suppliers, critics, publishers, artists, designers, and others immerse themselves in a discourse about the role, identity, and meaning of a product well before they address its form. The products that result often represent a dramatic break from their predecessors--giving them longer commercial lives and creating high consumer expectations for the brand's future offerings. A familiar example of how a change in a product's meaning can lead to a change in its design and identity is the iMac, whose friendly colors and ovoid form declared it to be, in contrast to the typical desktop computer, an appliance for the home. The author's eight years of research into seven European design communities revealed the Lombardy cluster's special strengths: the number and quality of the links between components of the design system, such as schools, studios, and manufacturers. In addition, Lombardy is strong on imagination and motivation--qualities within reach of any group of businesses. Verganti uses the Finger Lakes region of New York State to demonstrate that the potential for a design discourse exists almost everywhere.