BUSM 4041
Case Study: IDEO Consulting
‘Culture drives creativity’
Angus Beattie
S3365681

Executive summary

Most of us are creative however it is often suppressed at an early age. The realisation that we are born creative; can take action to change our current ways of thinking; apply tools and concepts from design thinking to assist us in our quest; and accept that failure is acceptable, should enable most people and organisations to be more creative and therefore more innovative.
In today’s hyper-connected and competitive business environment, organisations need to innovate or perish as creativity is today’s competitive advantage. Firms like IDEO have become successful in assisting businesses innovate through harnessing the power of design thinking which centres on empathy, ideation, proto-typing and testing.
Creativity and innovation need to be driven at all levels of the organisation and businesses can easily look to adopt some of the practices of design thinking to gain this competitive advantage.
The award winning design firm IDEO exemplifies an organisation with a unique culture with a strong bias towards creativity and innovation and presents a role model for businesses wanting to learn how they can become more creative themselves.

Contents

Executive summary 2 Creativity is competitive advantage 4 IDEO & Design Thinking 5 Culture as a driver of creativity 7 Creativity for all? 9 References 11

Creativity is competitive advantage

In today’s fast paced competitive environment innovation is competitive advantage. “Ideas and innovation are the most precious currency in the new economy -- and increasingly in the old economy as well. Without a constant flow of ideas, a business is condemned to obsolescence (Hargadon and Sutton, 2000). To remain competitive, businesses need to unlock and harness their creativity. According to Frederick et al (2013) ‘the first rule for developing entrepreneurial vision is to recognise that problems are to solutions what demand is to supply.’

Creativity drives innovation and is not limited to ‘creative types’ who might be able to draw, paint or create music. We are all inherently creative, we just tend to have our creativity suppressed at an early age where we are critiqued for ‘creative’ work that we have done. Further, we tend to mislabel creativity and associate it only with the arts. In reality creativity is ‘the generation of ideas that result in improved efficiency or effectiveness of a system (Frederick et al 2013). Tom and David Kelley of design firm IDEO reckon we all have the ability to be creative, we often can’t remember how. “Most people are born creative. As children, we revel in imaginary play, ask outlandish questions, draw blobs and call them dinosaurs. But over time, because of socialization and formal education, a lot of us start to stifle those impulses. We learn to be warier of judgment, more cautious, more analytical. The world seems to divide into “creatives” and “noncreatives,” and too many people consciously or unconsciously resign themselves to the latter category. (Kelley and Kelley 2012)” And it is not just the guy in the jeans and the black skivvy. ‘The image of the lone genius inventing ideas from scratch is romantic and engaging, but it's a dangerous fiction. Innovation and creativity are far less mysterious than that image implies. (It is) a matter of taking developed ideas and applying them in new situations. If your company has the right connections and the right attitude, it works (Hargadon and Sutton, 2000).

However innovation requires more than creative thinking. To innovate successfully, companies need to research their markets meticulously, particularly when moving into different locations, or creating new product lines (Anon 2012). There is more to design than placing a funky computer in the office and declaring yourself well and truly plugged into the zeitgeist. (Anon 2007)
IDEO & Design Thinking

IDEO (pronounced “eye-dee-oh”) is an award-winning global design firm that takes a human-centred, design-based approach to helping organizations innovate and grow (IDEO 2014).

Since founding in 1978, they have developed thousands of products including the first mouse for the Apple Linda, the Palm V and the refit of Air New Zealand’s aircraft with the SkyBed. They are a multi-disciplinary firm and as such work with companies in fields ranging from medical instruments, furniture, toys, and computers which gives the company a broad view of the latest technologies. This allows IDEO's to learn from their diverse client base and inspire original designs. For example, a Chatty Cathy doll supplied the idea for a reliable, inexpensive motor used in a docking station for an Apple laptop computer (Anon 2007).

Design Thinking Process 1> empatHzize 2> Define 3> ideate 4> Prototype 5> test
Design Thinking Process 6> empatHzize 7> Define 8> ideate 9> Prototype 10> test
IDEO’s approach is founded on Design Thinking which is, according to Tim Brown, president and CEO, a “human-centered approach to innovation that draws from the designer's toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” (IDEO, 2014) According to the d.school at Stanford, where IDEO co-founder David Kelley is a Professor, ‘The Design Thinking process first defines the problem and then implements the solutions, always with the needs of the user demographic at the core of concept development. This process focuses on needfinding, understanding, creating, thinking, and doing. At the core of this process is a bias towards action and creation: by creating and testing something, you can continue to learn and improve upon your initial ideas (Stanford 2014).’
Thinking like a designer can ‘transform the way organizations develop products, services, processes, and strategy. This brings together what is desirable from a human perspective, with what is technologically feasible and economically viable. It also allows people who aren’t trained as designers to use creative tools to address a vast range of challenges (IDEO 2014 )’. In the view of IDEO, innovation occurs at the intersection point of the three.
The best…’innovators have systematized the generation and testing of new ideas -- and the system they've devised can be replicated practically anywhere, because it has everything to do with organization and attitude and very little to do with nurturing solitary genius. (Hargadon and Sutton, 2000) And IDEO is one of the best. Their practice focus heavily on observation and they combine teams with far reaching skills to resolve unique challenges. For example they once assembled a foot fetish, an artist, a body builder, a podiatrist and others to build concepts for a new range of fashion sandals. Teams also change disciplines to gain additional skills from other disciplines.
There is an expectation of spending time ‘in the field’ and a bias towards observation, rather than questioning. They team at IDEO feel that being in the subject’s natural habitat, without interruption, provides the ability to gain a firsthand understanding of relevant activities and artefacts. The team have been known to follow shoppers silently and enter into the changing rooms (with permission) to gain a deeper understanding.
IDEO also believes in rapid prototyping and play. This allows you to ‘build to think and test to learn (Stanford 2010)’. Prototyping also allows the designer; to communicate; to start a conversation; to fail quickly and cheaply; to test possibilities; and to manage the solution-building process. In working with Walgreens, a US based pharmacy retailer, the IDEO team used foam core to create ‘two ambitious full-scale prototypes, complete with redesigned interiors and designers role-playing new service roles (IDEO 2014). This allowed Walgreens to launch 2 pilot locations only six months after the research project was completed.

Culture as a driver of creativity

A company’s culture can have a powerful impact on its performance. Culture is the glue that binds an organization together and it’s the hardest thing for competitors to copy. As a result, it can be a lasting source of competitive advantage. (Mankins, 2013)

Culture is key at IDEO and a definer of the way that they operate which sets them apart. This has an impact on the type of people that they recruit, the style of recruitment, teaming, management of teams and projects and how performance is rewarded.

They are noted as having a culture of helpfulness with a very strong drive from their leadership. Leaders at IDEO prove their conviction by giving and seeking help themselves. Diversity and respect are also key. How else could you have musicians working with engineers, scientists and mathematicians all driving towards an outcome?

IDEO are a flat organisation who are small and nimble. Business Strategy Review describe them as ‘an organisation low on hierarchy, big on communication, with a minimal amount of ego (London Business School 2007). Their corporate headquarters in Palo Alto has 280 people and all other locations have fewer than 60. ‘In an age of corporate behemoths anxious to gorge on the latest prey, IDEO is hardly expansionist’ (London Business School 2007). They have retained their small-company values and their dedication to a proven business model and IDEO’s informal culture and the strong personal relationships hold its cross-disciplinary teams together.

IDEO Values 1. Be Optimistic 2. Collaborate 3. Embrace Ambiguity 4. Learn from failure 5. Make others successful 6. Take ownership 7. Talk less, do more
IDEO Values 8. Be Optimistic 9. Collaborate 10. Embrace Ambiguity 11. Learn from failure 12. Make others successful 13. Take ownership 14. Talk less, do more
IDEO’s values define their culture and are very strongly aligned with the principles of Design Thinking, specifically collaboration and making other successful which aligns with being empathetic; and learning from failure which strongly aligns with the test phase. Their culture is also strongly characterised by “curiosity, a habit of reaching out for ideas and help, and a mixture of confidence and humility-help create a highly collaborative culture (Hargadon and Sutton 2000).

IDEO's studios are laid out so that everyone sees and hears everyone else's design problems. This permits ‘unplanned interactions’ where designers who are not working on a specific issue can be involved as a result. According to Amabile, Fisher and Pillemer in ‘top-performing companies it is a norm that colleagues support one another’s efforts to do the best work possible.’

People are important and credibility is built through living their values. The most respected people at IDEO are part pack rat (because they have great private collections of stuff), part librarian (because they know who knows what), and part Good Samaritan (because they go out of their way to share what they know and to help others). (Hargadon and Sutton, 2000)

As one might expect IDEO’s recruitment process is different to most. It is reportedly long and drawn out with numerous interviews. To start applicants are encouraged to select three of IDEO’s ‘values and illustrate (in any medium) how (the application has) ‘exhibited those values in your work or personal life to be included in their initial application (IDEO, 2014 3). After that applicants then show their work and discuss it with a group of IDEO people. They get to meet everyone and look at the projects underway to see how they interact (London School of Business 2007). To get hired at IDEO, you have to be a "people person," not just a fantastic engineer or designer. Dave Blakely, director of IDEO's Smart Products studio comments "We have a very careful and rigorous interviewing process and we put cultural fit on equal footing with technical fit" (Shaghnessy,2002). As such the team at IDEO seek out individuals who are team focused. CEO Brown reinforces through stating that: “During job interviews, I listen for a couple things. When people repeatedly say ‘I,’ not ‘we,’ when recounting their accomplishments, I get suspicious.”

IDEO’s performance management system has annual formal reviews based around a matrix of five elements: content, culture (team working and team leadership), client, commerce, and mentoring and leadership. It is a case of what you do and the style in which you think. At IDEO, financial rewards are based in part on the reviews each person gets from colleagues (Mankins, 2013).

IDEO is very also inclusive. At the time of commencement new starters undertake “IDEO 101”, a course that embeds common language and an understanding of the company’s modus operandi. The team hold regular all company lunches and all team members receive a copy of the Little Book of IDEO which spells out the most important values (Amabile et al, 2004).

Creativity for all?

It would be difficult to think that one could replicate IDEO as they possess a unique combination of vision, culture, practices and people that makes them an outstanding organisation, however there are a number of things that organisations can do today to be more like them or at least to embrace their practices. And IDEO are encouraging of others taking learning from their practices and produce a wide array of free materials for schools, students and the general public to become more ‘design thinking’ oriented. They provide the tools, the individual or organisation take the action. The Kelley brothers comment ‘we’ve learned that our job isn’t to teach them creativity. It’s to help them rediscover their creative confidence—the natural ability to come up with new ideas and the courage to try them out (Kelly and Kelley, 2002).

One example where they are spreading their design philosophy is through ‘OpenIDEO’. An online community where people design better, together for social good. It’s all about collaborative innovation focused on creating real world impact around some of the large challenges facing our world today’ (OpenIDEO, 2014). IDEO post questions and encourages the community to assist in suggesting, solving and voting for the best ideas. It is an encouraging way to get more people involved in global issues and using design thinking methodologies. It also serves as a vehicle for IDEO to attract and find the best talent.

Acknowledging that it would be difficult to ‘be’ the next IDEO some recommendations that businesses can take on right now include;

1> Drive innovation from the top. Innovation should ‘be implemented as an integrated set of practices by leaders who can ‘walk the talk’ and work to shift the managerial mindset in a way that redefines failure away from its discreditable associations, and view it instead as a critical first step in a journey of discovery and learning (Cannon et al, 2005).

2> Create a positive culture and a great place to work. Tom Kelley once wrote that he wanted to start a company with all my best friends as employees" (IDEO, 2014) IDEO is built on a foundation of friendship and entrepreneurial verve and is a model for other businesses.

3> Embrace a bias towards action. Creative confidence is built through doing. Getting caught up in the week by week, quarter-by-quarter, year-on year cycle and thinking that you never have time to be ‘innovative’ is a certainty not to succeed. Through starting to believe that ‘creative confidence is about believing in your ability to create change’ and taking action you can be on your way.

4> Find small wins. It is often claimed that there is no budget and no time for innovation methods however you don’t need a large amount of money to be innovative. Find something small and recognise the process. Further developing a ‘creative confidence mindset becomes easier when you practice it regularly’ (Kelly and Kelly, 2013) and innovation does not need to be massive. Finding an improvement in a process that ‘costs’ 10 people 30 minutes every week translates into 10 days of productivity gain a year. Get a few of those under your belt and you’ll be on your way.

5> Encourage a culture that allows learning to fail to become a part of everyday business life. Cannon and Edmondson argue that ‘organizations should not only learn from failure - they should learn to fail intelligently as a deliberate strategy to promote innovation and improvement (Cannon and Edmonson, 2005). In Creative Confidence Kelley and Kelly state that ‘Culture and environment have a big impact on your creative confidence.’ Organisations should draw inspiration from business like IDEO and use the available resources to help then in their change.

References

Amabile T, Fisher C, Pillmer J, 2014 ‘IDEO’s Culture of Helping’ Harvard Business Review, Viewed at https://hbr.org/2014/01/ideos-culture-of-helping/ar/1

Anon 2007 ‘Designing the Culture’, Business Strategy Review, London School of Business

Anon, 2012,"Innovation", Strategic Direction, Vol. 28 Iss 2 pp. 9 – 11, Downloaded on: 23 December 2014, At: 15:39 (PT)

Cannon M and Edmonson A. 2005, “Failing to Learn and Learning to Fail (Intelligently):
How Great Organizations Put Failure to Work to Innovate and Improve. Long Range Planning 38 (2005) 299e319

Frederick, H., O’Connor, A. and Kuratko, D. (2013) Entrepreneurship: Theory, Process, Practice, 3rd Asia-Pacific edition, Cengage Learning, South Melbourne, Victoria.

Hargadon, A. and Sutton, R.I. 2000, “Building an innovation factory”, Harvard Business Review, May-June, pp. 157-166.

Haso Plattner School of Design 2010, An introduction to Design Thinking PROCESS GUIDE, Stanford University

IDEO, 2014 http://www.ideo.com, website viewed 3/1/2015

IDEO 2014, Careers Page, viewed at http://www.ideo.com/careers, website viewed 3/1/2015

IDEO 2014 http://www.ideo.com/work/community-pharmacy, website viewed 3/1/2015

Kelley D & Kelley T, 2012, “Reclaim your Creative Confidence”, HBR, Viewed online at https://hbr.org/2012/12/reclaim-your-creative-confidence

Kelley D & Kelly T, 2013, “Creative Confidence” Crown Business (October 15, 2013)

Mankins, C 2013, ‘The Defining Elements of a Winning Culture’ Harvard Business Review, December 19 2013

Shaughnessy, A 2002 ‘IDEO focused on the end-user’, Printed Circuit Design, Volume 19 issue 3 P 50 - 51

Stanford University, 2014 http://dschool.stanford.edu/redesigningtheater/the-design-thinking-process/, website viewed 3/1/2015