Case AnalysisIDEO: Innovating Change or Changing Innovation?

Pips Veazey

MBA 617 Organizational TheoryMarch 13, 2014

Case Analysis i

Pips Veazey

MBA 617March 13, 2014

Case AnalysisIDEO: Innovating Change or Changing Innovation?

BackgroundHISTORY

IDEO is an international design and innovation consulting firm founded in 1991 through

the merger of four established design firms: David Kelley Design (founded by Stanford

University Professor David Kelley), London-based Moggridge Associates and San Francisco’s

ID Two and Matrix Product Design. With offices in the

United States (Boston, Chicago, New York City, Palo Alto,

and San Francisco), London, Mumbai, Munich, Seoul,

Shanghai, Singapore and Tokyo, it has recently been

ranked #10 on Fast Company’s list of the Top 25 Most

Innovative Companies, has won 38 Red Dot awards, 28iF Hannover awards, and more IDEA

awards than any other design firm. It is also ranked #16 on Fortune’s list of 100 most-favored

employers by MBA students and has been awarded the Smithsonian Cooper-Hewitt National

Design Museum’s National Design Award for Product Design.

Case Analysis 1

IDEO teamwork in progress

IDEO provides product development and branding services for a large number of clients

including 3M, Acer, Coca-Cola, ConAgra, Ford, Intuit, Marriott, Microsoft, Sony, Target,

Toyota, Visa, Walgreens and many more. Examples of their projects include Apple’s first

mouse, the Palm V, and Steelcase’s leap Chair. They currently employ more than 600 people in a

wide range of disciplines that include behavioral sciences, communication design, digital design,

education, electrical engineering, industrial design, organizational design, and software

engineering. Their three major global competitors are frog design inc., Lunar Design Inc. and

Continuum LLC, all of whom market themselves with similar descriptive phrases including

“global design, product strategy, innovation consultancy, user experiences, and human-

centered”.

IDEO works with organizations in both the public and private sectors to create positive

impacts through design by focusing on three general categories of activities:

1. partner with leaders and change agents to identify new market opportunities, add

value and solve meaningful problems

2. design and launch innovative products, services, ventures, and brands by

combining business acumen with human-centered market insights

3. help organizations to build the capabilities required to sustain innovation

IDEO’s motto, “We think to build and build to think” highlights the fact that this organization

depends on creative people who can innovate design within the context of human needs.

Everything from the physical building itself to the internal company culture and the unique

Case Analysis 2

methods of recruiting and hiring have been developed by the current leaders and reflect the

ideals of the organization.

ORGANIZATIONAL STRUCTURE AND CULTURE

IDEO is an international organization so it possesses a level of complexity necessary for

working in the international arena. However, IDEO still maintains a relatively flat structure

overall with few hierarchical levels and employees organized into temporary multidisciplinary

teams based on current projects and the needs of customers. Key senior personnel include

Chairman and Co-founder, David Kelley, General Manager Tom Kelley and Tim Brown,

President and CEO (not pictured). “IDEO”S physical space is built around its values of

innovation, collaboration, communication and fun. Housed in a modern building of glass and

steel that incorporates the brick remains of an auto repair shop, it is not far from Stanford, where

it recruits most of its employees.” (Logan, 2012). Once a person applies for a job with IDEO, are

introduced to numerous people in the firm, and employees spend time with applicants to try to

determine if the “fit” with the company seems positive. Leaders are seen as helpers, and social

Case Analysis 3

IDEO Chairman and co-founder David Kelley (left), with brother and general manager Tom Kelley (right), lead IDEO, write, teach and design.

network analysis has documented that the interactions of the most helpful leaders are those who

are characterized as accessible and trusted over anything else (Amabile, 2014). “If we are going

to measure what makes a leader here, it would be to measure how nurturing people are” (Logan

2012).

INNOVATION and CREATIVITY

IDEO is a company that exists on the creation of ideas. In fact, its mission is “to create

positive impact through design by taking a human-centered approach to helping organizations in

the public and private sectors innovate, grow, and bring to market new ideas” (About IDEO,

Retrieved February 10, 2014, from http://www.ideo.com/about/). The raw materials needed for

this enterprise are thoughts and ideas generated by the employees, and that means that employees

are chosen deliberately and vetted by teams of current employees to determine whether or not the

“fit” is good. Recently, IDEO spun off a nonprofit organization (IDEO.org) from the original

business as a way to increase the impact of the organization in developing countries, provide

creative solutions to societal problems and pull in designers who would not otherwise have a

chance to participate in IDEO projects but have good ideas that should be shared.

Case

IDEO is a multinational organization that has undergone significant expansion in the past

two decades, growing from an organization of a couple dozen employees in California to the

current multinational organization that spans three continents and employs over 600 people.

IDEO’s strengths are centered on its core competencies of innovation, creativity and human-

Case Analysis 4

centered design, and the company is able to develop unique solutions because of the talented and

creative staff that they employ. Human resources are at the heart of their strengths and are

critical to the success of the company. They require and attract creative, educated, highly

innovative people who are willing and motivated to work in team settings. The collaborative

approach and flexible team structure allows the company to develop solutions that other

companies with more resources are unable to attain. Because of the nature of the organization

and the relatively recent expansion into international markets, IDEO must address two

significant challenges as it moves into the future.

First, IDEO’s most significant weakness centers around the fact that IDEO is spread

across many different sectors of the economy, as seen above through a partial list of clients, as

well as across several continents, as seen above through the list of office locations. While there is

strength in diversification, the lack of focus and extremely broad approach can also be a

weakness if resources are spread too thin or the company branches out too far beyond its core

competencies. While IDEO has done a remarkable job in scaling its culture of creativity and

innovation and reframing its business strategies to support a significantly larger multinational

company, there have been growing pains and leadership must be aware of the issues in order to

continue to nurture a healthy company.

Second, the IDEO workforce is educated and innovative, and these knowledge workers

are expensive. As a result, the company requires resources to actively recruit and retain their

highly qualified employees. A downturn in the economy may lead to fewer customers as those

trying to save money turn to internal sources for product development and organizational

Case Analysis 5

consulting currently being done by IDEO. While IDEO is a fairly unique enterprise, other firms

such as frog design and Lunar Design are formidable competitors in this high-paced market, and

IDEO will need to continue to differentiate itself and remain innovative and creative in order to

stay ahead of the competition. IDEO will need to keep pushing the boundaries of possibilities to

maintain its edge on the competition and continue to promote its hallmark culture that fosters

innovation and creativity and to accurately identify, recruit and retain experts that are motivated

and interested in working in team settings.

Evaluation and Recommendations

The future will continue to bring new challenges to IDEO, and while the two listed above

are significant, they are not insurmountable. With a commitment by leadership and a strategic

approach to addressing each, the organization has the potential to remain strong and maintain its

focus on innovating and creating solutions for clients. The following two initiatives and

associated recommendations will address the two most pressing challenges that IDEO faces

today and will serve as the blueprint for an action plan as upper level management actively seeks

a stable future.

Initiative One: Reinforce organizational culture

Several decades ago, David Kelley gathered ten of his friends from graduate school and

started a design company; thirty years later all but one are still working together. This initial

group of people formed the basis of what would eventually become IDEO and was developed as

a deliberate reaction to the machinery of large design conglomerations that churn out ideas

Case Analysis 6

within what Kelley refers to as a dehumanizing, sterile, corporate setting. Kelley had a different

idea of what his business would look like, and today IDEO looks and feels very different from

the typical design company – covered with plants, glass, crayons, paper, and doodle boards. “It

looks likes a scene of an inside park in some futuristic world, perhaps from The Jetsons” (Logan,

2011). IDEO has survived several growth spurts that resulted in the firm changing its name from

David Kelley Design to IDEO and creating a stage that all employees could inhabit – not only its

leader.

Because IDEO is a unique company, the typical change techniques that one would expect

to deliver in a case analysis such as switching structures, developing creative departments or

venture teams, encouraging corporate entrepreneurship and establishing collaborative teams will

not work. This company is already structured with these ideas in mind. The recommendations

must involve unique solutions to address the specific issue of maintaining the culture of this

unique organization as it experiences growth.

As the company grows both within its current structure and into new locations around the

world, leaders must make an effort to keep the culture of innovation, creativity and teamwork

alive at not only one expanding branch but at every location around the globe. This will

inevitably require more communication and regularly scheduled meetings to connect people and

ideas and provide guidelines for making decisions. Specific recommendations include

identifying, adopting and using the correct communication tools in order to keep all of the IDEO

branches connected to the main branch where the ultimate leadership resides. In addition,

regularly scheduled weekly meetings across the globe to discuss new projects and review the

Case Analysis 7

current status on current projects will help to keep people connected and supportive of the

helping culture so important to IDEO.

Finally, encouraging employees to write articles about and document through video the

process of design and creation will not only leave a record of what IDEO leadership values and

how it does business but it can reinforce the core ideas of the company across the current

distributed system of this multinational oganization. IDEO employees have started a regular

habit of writing and filming ideas and solutions, and with the advent of their public help site,

IDEO.org, others can join to offer solutions and suggest challenges. Supporting and requiring

this kind of organic communication will be healthy for the organization and may strengthen the

connections among people working across the globe. Every employee should be afforded time to

create and review these types of documents in order to help keep people connected and creative.

Initiative Two: Recruit and retain qualified innovators

IDEO is an organization whose major assets and raw materials are people, and specific

care needs to be taken to understand how to identify, recruit and retain people effectively during

these times of change. One of the assets that IDEO currently recognizes is the affiliation of

David Kelly with the design school at Stanford. Many of IDEO’s new recruits come from

Stanford, which sits just around the corner from IDEO. While this connection to new and

talented designers is handy for hiring purposes, David Kelly will not always be available to forge

this relationship, and thought must be given about how to keep a steady flow of talent into the

organization.

Case Analysis 8

There are several options for recruiting talented designers that should be considered.

First, making connections with prominent design schools around the world is imperative. IDEO

leaders should be lecturing, recruiting and communicating with the leaders of design schools on

a regular basis. The more students know about the organization, the more likely IDEO will be to

attract top-notch students. Second, developing an internship program to give potential recruits a

feel for the company will help to increase interest as well. Third, developing an exchange

program among the different IDEO branches will stimulate new ideas, increase engagement

among dispersed groups and motivate people to work across structural boundaries. For many

people, being able to take a corporate sabbatical and work in a foreign country is valuable. This

could be used as an incentive to recruit new employees.

IDEO currently has a fairly elaborate hiring process that includes vetting prospective

workers over an entire day or even several days while the new person introducing himself to

team members through various media including video, letters and face-to-face interviews.

Current employees spend time with the prospects and decide whether or not they think the “fit”

is good or not. If there are enough people who agree that they will support him, he is offered the

job. Once a worker is vetted and hired, the organization should make every effort to retain him.

Several methods for retention could be employed. First, as mentioned above, the corporate

sabbatical could also be used as a method to retain current employees. Second, allowing people

time to think and create outside of the projects that they are tackling is important. Companies

such as Google and Intuit provide time for their employees to brainstorm new ideas every week,

and some of the most successful projects have come to life through these open creative times.

Case Analysis 9

Third, allowing flexibility for families and different work hours supports an environment in

which people are able to find the right work schedule for themselves and their families. People

tend to identify a specific time of day when they are most creative, and allowing employees to

choose flexible schedules can help to maximize the creative processes that is so important to the

work at IDEO.

Case Analysis 10

Summary

IDEO has a solid base on which to grow and several decades of experience to support the

culture and vision that define the organization. While they have been successful in expanding

from an initial workforce of ten to the current structure of approximately 600, the organization

has had to focus on strategic changes along the way. With recent expansion into foreign markets

and new ideas, the next few years will bring about new challenges. With renewed efforts to

examine current practices and make the commitment necessary to address these changes in a

strategic manner, IDEO will continue to thrive and grow. Leadership should focus on two

specific initiatives: strengthening and reinforcing IDEO’s unique and creative culture and

renewing their commitment to recruiting and retaining exceptional employees. With this strategic

approach to addressing these specific issues, future growth and the resulting changes can be

managed in a controlled manner and lead to continued success for IDEO.

Case Analysis 11

References

Amabile, T., Fisher, C. M., & Pillemer, J. (2014). IDEO’S Culture of Helping. Harvard Business Review, January-February 2014. Retrieved from http://hbr.org/2014/01/ideos-culture-of-helping/ar/1

Anonymous (2014). Interview with IDEO associate.

Battarbee, K., Suri, F.S., & Howard, S.G. (2014). Empathy on the Edge: Scaling and Sustaining a Human-Centered Approach in the Evolving Practice of Design. Retrieved from http://www.ideo.com/news/archive/2014/01/.

Daft, R. (2010). Organization Theory and Design. 10th ed. Mason, OH: South-Western Cengage Learning.

Hyatt, J. (2010). David Kelley of IDEO: Reinventing Innovation. Retrieved from http://www.newsweek.com/david-kelley-ideo-reinventing-innovation-72611.

Kelley, T., & Kelley, D. (2013). Creative Confidence, Unleashing the Creative Potential Within Us All. New York, NY: Random House Publishing.

Kelley, T., & Kelley, D. (2012). Reclaim Your Creative Confidence. Harvard Business Review December 2012. Retrieved from http://hbr.org/2012/12/reclaim-your-creative-confidence.

Logan, D., King, J., & Fischer-Wright, H. (2008). Tribal Leadership. New York, NY: Harper Business.

Raney, C. (2012, April 9). Strategic Questions for an Accelerating World. [HBR Blog Network]. Retrieved from http://blogs.hbr.org/2012/04/strategic-questions-for-an-acc/.

Case Analysis 12

Appendix: Organizational Chart

Case Analysis 13

CEO David Kelley

Location 1

Project Team

Project Team...

Location 2

Project Team

Project Team...

Location 3 ...

Project Team

Project Team ...

Chairman Tom Kelley

General Manager

Tim Brown