Innovation has gone through a metamorphosis over the last decade as it has transitioned focus from efficiency to the customer. There is still plenty of room for innovation to happen at the efficiency level, much of which is incremental and formulaic.
As the customer has taken center stage, design has been elevated as a strategic approach towards innovation. Design innovation's unique, customer-centered approach addresses the increasing disconnect that many companies experience with customers.
Much of the design innovation effort is focused around creating new offerings, whereas efficiency innovation tends to focus on existing systems. That doesn't mean that existing systems can't benefit from design innovation, however.
Vijay Kumar illustrates an ideal opportunity for design innovation to refocus existing systems towards the customer in his insightful article "Daily life, not markets: customer-centered design" for the Journal of Business Strategy.
Ignoring this trend often looks like this:
The organization creates more and more features, for fewer and fewer customers, until they’ve created everything for no one. (Read more about holding onto a product vision here.)
Design innovation addresses the downward trend as it relates to the offering and understanding the customers needs.