Alessi Creativity Marketing Risk

McKinsey publishes an interesting interview with Alberto Alessi, the 3rd in family line at the helm of the Italian design house Alessi. From that interview, here's an excerpt about how Alessi quantifies the odds of a new product success, testing, and how marketing informs decision making:

When I tried to explore the reasons for each product’s life, I came out with four parameters. All four were equally important for the final customer, but only two were central parameters for Alessi; the other two were peripheral for us.

1. The first central parameter is the degree to which people say, “Oh, what a beautiful object,” which represents the creation of a relationship between the object and the individual. We call this SMI, which stands for sensation, memory, imagination.
2. The second is the use that people can make of an object in order to communicate with other people. By this I mean that objects have become the main channel through which we convey our values, status, and personality to others—fashion is a typical case in point. Because people freely choose certain objects from the ones they come across, they tend to charge them with social meaning, as signs for communicating—in a visible, intelligible way—their distinguishing values. Objects can have status value or style value. By way of example, a gold Rolex watch is a status symbol, which suggests economic wealth, whereas a style symbol may be exemplified by an Aldo Rossi teapot, which reveals cultural sensitivity and familiarity with the architectural domain. Jean Baudrillard, a French sociologist, brilliantly expounded concepts like these.

3. The peripheral parameters are function and price. Each of these parameters has five degrees.

The formula doesn’t work for everything. But when we have a long history with a product, it works perfectly. If I have to evaluate a pot or a coffee maker or a kettle, for example, the score indicates exactly the number of pieces that we can sell.

When we are exploring a new area—for example, when we were designing a pen, which was completely new terrain for Alessi—then it becomes more difficult. The formula needs to be tuned in a different way. But the principle is the same.

The Quarterly: How does the formula differ from traditional consumer testing or market research?

Alessi: Testing isn’t really appropriate as a description. Unlike typical market research, which is often conducted by outside experts, this is organized by us, drawing on our experience. Our reactions to the test are very different too: a lot of companies would develop a prototype and test it with consumers, and, if the initial consumer reaction was negative, they would pull the plug on that product.

On the other hand, we and our designers are extremely interested in understanding, in advance, what the reaction of final customers would be—but not necessarily to help us decide what to produce or not produce. If I believe it is a good project and that it has to be done, I will support it. But negative feedback can be useful in helping the designers to modify something. Not all the time, but sometimes.

Fundamentally, we use the formula so we can afford more risk. I don't want to reduce the risk. Given my business, it makes no sense for me to reduce risk. I just need to determine where I am in order to have the opportunity to take a bit more risk.