Hemispheres Magazine

Case study:  How America’s leading design firm maintains a culture of continuous innovation—and teaches other companies to do the same

It’s the toughest problem a company has to tackle:  how to boost shareholder value and expand its business, especially when the economy is in the doldrums.  The choices are limited.  Mergers and acquisitions are difficult to accomplish and often fail to realize the synergies promised in the first place.  Cost-cutting saves money but few companies cut their way to greatness.  “People need something new to compete, and that new thing is innovation,” says Tom Kelley, general manager of IDEO.

Why would companies like McDonald’s, Pepsi-Cola and Steelcase International ask a design consultant firm for advice on innovation?   “Until innovation reaches the marketplace, it’s of no value to business,” explains IDEO president Tim Brown.  “We put things out into the world.” IDEO, praises Steelcase CEO Jim Hackett, “can take raw ideas from concept to market faster than any entity that I’ve ever seen.”

If any company knows about implementing innovation, it’s IDEO. When BusinessWeek published its acclaimed Industrial Design Excellence Awards (IDEAs) this past June, the Palo Alto, CA-based design firm blew away the field with a total of 14 awards.  BusinessWeek termed its achievement “astonishing,” but what is truly astonishing is that these latest awards extended a ten-year winning streak totaling 58 awards, almost double that of its nearest competitor.

IDEO is a creativity factory.  About 350 people working in a network of offices stretching from San Francisco to London to Tokyo pump out over 100 new products each year.  The 24-year-old firm is credited with envisioning and implementing a stupendous list of firsts in a wide variety of fields:  the first computer mouse, the first laptop computer, the first stand-up toothpaste tube.  It helped design Polaroid’s I-Zone instant camera, the Palm V organizer, portable defibrillators, flexible shelving, self-sealing sports bottles, Oral-B’s Squish Grip children’s toothbrushes, beach chairs that swivel to track the sun and the 25-foot robotic whale for the movie “Free Willy.”

In the past five years, IDEO has turned its innovative eye to services and experiences as well as products.  It designed Dilbert's Ultimate Cubicle, the De Paul Hospital emergency room in St. Louis, and the interior of Amtrak's Acela high-speed train service between Boston and Washington.   IDEO worked with Rem Koolhaas at OMA/AMO (no -- Office for Metropolitan Architecture (HAVE TO CREDIT BOTH) to create the invisible technology that lies at the heart of the shopping experience for the recently opened Prada "epicenter" in New York City.  And it helped streamline McDonald's "Made for You" operating system, ultimately cutting the number of steps in the process nearly in half and inventing a toaster that browns buns in 15 seconds.

In the past five years, IDEO has turned its innovative eye to services and experiences as well as products.  It designed the interiors of Amtrak’s Acela high-speed train service between Boston and Washington and  Steelcase’s Work/Life Center in New York City, an interactive theme park-cum-exhibition hall of office furniture and work settings.  It helped streamline McDonald’s “Made for You” operating system, ultimately cutting the number of steps in the process nearly in half and inventing a toaster that browns buns in 15 seconds.

How IDEO maintains its record for consistent creativity is the lesson that other companies want to learn.   

General manager Tom Kelley describes the process that generates, identifies and implements the appropriate ideas in his best-selling book, The Art of Innovation (Currency/Doubleday, 2001).  But, he’s quick to say, “The magic is not in the steps of the ‘what,’ it’s over in the ‘how.’  If ‘what’ is the methodology, then ‘how’ is work practices.” 

Take one of the first and most important steps in the process:  understanding and observing.  One of IDEO’s favorite sayings is, “Innovation begins with an eye.”  IDEO tends to see things differently because it literally sees different things than what focus groups and other conventional forms of market research typically turn up. 

“The popular notions in the last decade were for companies to become customer-centered,” explains Steelcase’s Hackett.   “Theories abounded that if you pay attention to what your customer wants, you can’t go wrong.  But the truth is that customers often ask you to do wrong things, not because they’re difficult to deal with but because they just don’t know.  The distinction is moving from customer-focused to user-centered, and the ability of a company to understand the users of its products to its advantage is a cultural shift that corporations have to make.”

IDEO’s belief is that innovations tend to be more appropriate when you’re standing in the shoes of the users.  Being user-focused is a skill which IDEO hones by employing teams of experts in human factors—anthropology, ethnography, psychology—to observe how real people actually use a product or approach a problem, whether it’s a diabetic taking a daily dose of insulin, a work team huddled around a flip chart or a person buying a can of Pepsi. “We watch how people do things, warts and all,” says IDEO’s Kelley.

Recently, Pepsi called IDEO in to take a fresh look at vending.  “We came at it from an operational standpoint—what can we manufacture,” recalls Megan Pryor, vice president of innovation at Pepsi-Cola.  “They came at it from what do consumers want from a vending machine.  They spent hours watching consumers interact with vending machines.  Consumers would never have verbalized ‘I want bigger buttons,’ ‘I want to see my product,’ “I don’t want to reach into that dark hole in the bottom and not know what’s down there.’ Their method is good at figuring out what consumers want but don’t know that they want.

“They do a remarkable job of taking observations and turning them into opportunities and eventually innovations,” Pryor concludes.  “They find opportunities to take very traditional packages that have existed for decades and give them new life through improved functionality.”

Observations get turned into ideas that can lead to innovations at brainstorming sessions. Brainstorming is practically a religion at IDEO; general manager Tom Kelley calls it “the idea engine of IDEO’s culture.”

Brainstormers are where IDEO’s magic is most evident—but they’re also a manifestation of what can be achieved with the right methodology.  IDEO agrees with Nobel Prize winner Linus Pauling’s oft-quoted belief that, “The best way to get a good idea is to get a lot of ideas.” It’s not uncommon to come up with more than 100 ideas during a 60-minute brainstormer. 

The basic assumption at IDEO is that brainstorming is a skill that gets better with practice. “Most people are involved in brainstorming at least once a week, maybe more,” says Tim Brown, IDEO’s president.  IDEO has also figured out how to teach people to be better brainstormers, how to put people in the right frame of mind for productive brainstorming and, most important, what to avoid that would kill a brainstorm. (See box on “The Seven Secrets of Successful Brainstorming”) 

If brainstorming gets you dreaming, then rapid prototyping—another crucial step—gets you doing.  “Prototyping is the shorthand of innovation,” Kelley comments, noting that a countless number of good ideas got their start from doodles, drawings and cobbled-together models.

The feeling at IDEO is that if a picture is worth a thousand words, then a good prototype is worth a thousand pictures.  Prototypes for products could be made out of foam or plastic or wood.  If the project has a service or human component, the prototype might be expressed through archetypal characters in an improvisational skit.

At IDEO, the mantra is “build to learn,” a process that includes acting before you’ve got the answers, taking chances, stumbling a little and, along the way, figuring out the solutions to the many small problems so that eventually you have the solution to the largest one.   Says Brown, “The discovery that Thomas Edison made is that you innovate by iterating quickly, by having lots of prototypes.  Prototyping allows you to learn from risks very quickly.”  Adds Steelcase’s Hackett, “You get a sense of the performance range of the product that teaches you more about the product idea than a thousand hours intellectualizing it.”  Or, as a popular slogan at IDEO goes, “Fail often to succeed sooner.”

Kelley likes to tell a story that illustrates the company-wide willingness to “fail forward.” One of the employees came back from his first-ever ski trip and boasted to his team at their Monday morning meeting that he had skied for three days and never fallen down.  “He expected them to pat him on the back.  Instead, people heckled him, saying ‘If you didn’t fall down, you never pushed the envelope.  You established a comfort zone and stayed in it.’”  The lesson:  “You can get very good at the old status quo, but the state of the art moves on and eventually you will lapse into obscurity.”

What fuels the creativity engine is the engrained belief that ideas are not meant to be hoarded. IDEO spends a lot of time figuring out how to share knowledge across the company, among the managing partners and out to the companies it works with. 

“Some organization rely on big info-databases to disseminate information,” says Brown.  “We’re a story-telling culture.  We disseminate our knowledge through stories.”  Storytelling isn’t limited to routine Monday morning meetings; Brown estimates that at the quarterly roundtables among IDEO’s 20-odd studio heads worldwide, half the time is dedicated to sharing stories about projects or best practices. “People hold stories in their heads,” he explains.  “Other forms of information, they can’t.”

For those other forms of information, there are Friday afternoon show-and-tell sessions to which everyone is invited, systematic sharing of a team’s work at different phases in its projects and the tech box.  A huge filing cabinet placed in the focal point of intra-office traffic, the Tech Box is a giant toy chest of nifty new technologies. “It’s a way of physically manifesting the latest ideas, the things we could use in day-to-day work,” explains Kelley.   It’s become so popular that many IDEO regular clients now have either physical or virtual Tech Boxes of their own.

Tech Boxes, story-telling, visualization, brainstorming—all these are tools that keep IDEO at the cutting edge of creativity.  What keeps those tools honed is the philosophy that nothing can’t be improved.  “The theory they espouse is that regardless of the type of category you compete in or the products you’ve had for long cycles, there are always ways to innovate those products so users have a better experience and enjoyment of that product,” says Steelcase’s Hackett, who saw IDEO take whiteboards and flip charts—a category that “didn’t seem to have a real future of change”—and come up with Huddleboards, an entirely new way for team members to exchange ideas. 

Hackett may have been talking about products, but the same comment could be applied to IDEO as it continually looks to renew itself.  From quantifying the process of creativity, IDEO is pushing its own comfort zone by teaching companies how to adapt that process to achieve their own innovation goals.  “The whole notion of being a strategic partner in innovation services is genuinely new,” says Tom Peters, head of the Tom Peters Group and author of In Search of Excellence.  “I don’t know of anyone else as focused on transferring their own product design knowledge and processes to another organization.  And I don’t know of any organization that couldn’t benefit from IDEO-ing itself.”


 BOX:  Seven Secrets for Successful Brainstorming

While brainstorming has been raised to an art at IDEO, it’s a skill that can be taught and honed, as explained in The Art of Innovation:

1. Sharpen the focus.  Good brainstormers will get off to a better start—and you can bring people back into the main topic more easily—if you have a well-articulated description of the problem at just the right level of specificity.  For example, “spill-proof coffee cup lids” is too narrow and already presumes you know the answer.  Another approach, “bicycle cup holders,” is too dry and product-focused.  A better, more open-ended topic would be “helping bike commuters to drink coffee without spilling it or burning their tongues.”  The best topic statements focus outward on a specific customer need or service enhancement, such as “How can we accelerate the time-to-first-result for customers searching via dial-up modem?” rather than inward on some organizational goal, such as “How can we build a better search engine than Company Y?” 

2. Playful rules.  Critiquing or debating ideas can quickly sap the energy of the session.  That’s why many IDEO conference rooms have brainstorming rules stenciled in six-inch-high letters on the walls, for example, “Go for quantity,” “Encourage wild ideas,” “Defer judgement” or “One conversation at a time.”  When the conversation veers into a normal meeting, the facilitator simply points to the rules.

3. Number your ideas.  Numbering the ideas that bubble up in a brainstorm helps in two ways.  First, it’s a tool to motivate the participants before and during the session, or to gauge the fluency of a completed brainstorm.  Second, it’s a great way to jump back and forth from idea to idea without losing track of where you are. 

4. Build and jump.  High-energy brainstormers tend to follow a series of steep “power” curves, in which momentum builds slowly, then intensely, then starts to plateau.  In the coffee-drinking-while-bicycling example, a good “building” suggestion to keep up the momentum might be:  “Shock absorbers are a great idea; now, what are some other ways to reduce spillage when the bicycle hits a bump?”  By contrast, when discussion tapers off, a good “jump” transition statement might be:  “Let’s switch gears and consider totally ‘hands-free’ solutions that allow the cyclist to keep both hands on the handlebars at all times.”

5. The space remembers.  Spatial memory is a powerful tool.  Have the facilitator write the flow of ideas down in a medium visible to the whole group.  IDEO has had great success with extremely low-tech tools like Sharpie markers, giant Post-its for the walls, and rolls of old-fashioned butcher-shop paper on the tables and walls.  You may find there’s a certain synergy in physically moving around the room writing down and sketching the ideas.  When you return to the spot on the wall where that idea was captured, spatial memory will help people recapture the mindset they had when the idea first emerged.

6. Stretch your mental muscles.  Doing mental warm-up exercises will make your brainstormers more productive, especially if the group doesn’t brainstorm frequently or when the group seems distracted by outside issues.  One type of warm-up is a fast-paced word game used to clear the mind and get the team into a more outgoing mode.  Another is to do content-related homework.  Yet another is to bring related show-and-tell items to help you visualize the wide variety of options and materials that could be applied to the session’s topic.

7. Get physical.  Good brainstorms are extremely visual.  They include sketching, mind-mapping, diagrams and stick figures.  But they also extend to bringing in competitive products and elegant solutions from other fields, having materials on hand to build crude models of a concept, and even “bodystorming,” in which people act out current behavior/usage patterns and see how they might be altered.


Box:  Six ways to kill a brainstormer

1. The boss gets to speak first.  If the boss gets first crack, then he’s going to set the agenda and the boundaries, and your brainstormer is immediately limited.

2. Everybody gets a turn.  Going clockwise around the room may be democratic but it’s not a brainstormer.

3. Experts only, please.  Don’t be an “expert” snob.  Bring in someone from manufacturing who knows how to build things.  Invite a customer service rep with lots of field experience.  Find someone who reads a lot of science fiction.  They may not have the “right” degrees, but they just might have the insight you need.

4. Do it off-site.  Do you want your team members to think that creativity and inspiration only happen at high altitudes or within walking distance of an ocean?  Off-sites are fine, but you want the buzz of creativity to blow through your offices as regularly as a breeze at the beach.

5. No silly stuff.  It’s hard to estimate enough what flights of fancy do for a team.  They remind everybody that brainstormers aren’t like work, that anything goes, and that you can have a lot of fun while you solve the problems.

Write down everything.  Taking notes shifts your focus to the wrong side of your brain.  It’s like trying to dance and type on your laptop at the same time.  Sketch all you want, doodle to your heart’s delight but leave the note-taking on the butcher’s paper rolls to the designated note-taker.