IDEO - Organizational Behavior Evaluation
ORG 711
02/11/06

Organizations need to be cognizant of what type of organizational design is best for the survival and growth of the organization through the years. Factors affecting the organization are in continual flux throughout time, and the design or structure best suited for any organization is stringently tested over time. Much thought and research is required at the onset of developing organizations. Periodic assessment or review of the organizational design is also beneficial. It could be the difference between survival or failure for the organization. One organization whose design strategy has withstood the test of time is IDEO, “a private design consulting firm headquartered in Palo Alto, CA” (Shaughnessy, 2002, p. 50). Its organizational design, as well as the performance of this design, is examined and recommendations provided for future organizations that enter into the same field.
Evaluation of Overall Organizational Design IDEO, originally known as David Kelley Design, began in 1978, and merged with ID Two in 1991 (Nussbaum, 2004) when it became known as IDEO. It has been an innovative company from its inception and has been extremely successful as well (Nussbaum, 2004). IDEO has been the recipient of numerous awards through the years, including the National Design Award (Shaughnessy, 2002), (Perry, 1995). The client list of IDEO has numerous well-known names: 3Com, Agilent Technologies, Cisco, Pepsi, Samsung, Gillette, Amtrak, Polaroid, Ford, and Kraft (Shaughnessy, 2002). Though its headquarters is located in Palo Alto, CA, they also have branches in San Francisco, Boulder, Chicago, Boston, Grand Rapids, London, Munich, Tel Aviv, and Tokyo (Shaughnessy, 2002). Though located around the world, they are not a large organization, attempting to keep staff at each location to 25 employees (Perry, 1995). This is not typical for organizations today. While many organizations with conventional structures and designs attempt to survive and retain what they have amassed throughout their existence, IDEO not only survives but also excels (Sutton, 2004). These conventional organizations, with hierarchies, centralized control, and playing hardball, which entails cost-cutting measures, labor reduction policies, tight control of resources, are struggling (Sutton, 2004). They seem to believe that bigger is better and taking over the competition is the route to survival (Sutton, 2004). They attempt to retain control of the knowledge they have amassed rather than sharing it with other organizations as a means of survival (Sutton, 2004). IDEO, a design, consulting firm, is the antithesis of all of this. IDEO is different, and the moment a potential employee enters its halls, they know it is different (Shaughnessy, 2002). IDEO “has been described as the coolest place to work” (Shaughnessy, 2002, p. 50). This description makes one want to understand what makes IDEO such a special place to work, what makes it fun. What becomes obvious after spending sometime within the walls of IDEO is the energy of the organization and that the employees actually enjoy their work (Shaughnessy, 2002). The structure of IDEO is completely flat; it has no hierarchy (Perry, 1995). This means there are no job titles, no career ladder to the top, and the person in charge, or project leader, is usually different for each project IDEO attempts (Perry, 1995). One will not find the usual organizational chart or the CEO’s office that is usually present in corporations today (Perry, 1995).This structure removes internal competition and the attempts of individuals to further their own careers rather than meeting the needs of the clients that IDEO serves (Perry, 1995). Employees of IDEO manage to work together, pooling their creativity for the good of the client (Roberts, 2000). IDEO purposefully maintains its small size believing that to grow to large would be to lose its unique atmosphere of creativity (Perry, 1995). The company does not even have the usual Human Resources department to take care of the hiring and firing (Perry, 1995). The employees themselves do the activities normally assigned to a Human Resources department (Perry, 1995). IDEO does not go out and look for people to work for them, rather they let people come to them (Perry, 2995). The interview process for prospective employees involves the input of 10 people within the organization (Perry, 1995). No one is even invited to interview unless they are “a people person,” and if they are “not a team player and will not be open to other people’s points of view”, IDEO does not want them (Shaughnessy, 2002, p. 50). During the interview process, the prospective employee is scored in 10 different areas by the 10 interviewers, and they are looking for qualities such as the “love of product design, communication skills, technical knowledge, and drawing skills” (Perry, 1995, p. 14). They are looking for someone they “can’t stand not to have in the company” (Perry, 1995, p. 14). If someone makes it through this interview process to become one of the team, a mentor from the existing employees will take them under his or her wing (Perry, 1995). The mentor shows them how it works at IDEO and how to obtain what is needed (Perry, 1995). Everyone is an integral part of the team. With everyone occupying a seemingly important position within the organization, how does motivation take place within this atmosphere? What is the major organizational theory at work at IDEO? Is anyone in charge? There is a CEO but otherwise there are no titles (Perry, 1995). There is no chain of command as found in hierarchies; everyone has the opportunity to be a project leader. The project leader usually emerges for each project as someone stands out for his or her excitement for the individual project on the table (Perry, 1995). The leadership and organizational theory most prevalent within IDEO would seem to be that of transformational (Bass & Steidlmeier, n.d.) and entrepreneurial (Morris & Schindebutte, 2005) leadership. The culture is that of innovation (Kelley, 2001). This leadership, organizational theory, and culture are what have allowed IDEO to form, survive, and thrive since its inception. As already mentioned, the awards and name recognition of IDEO speaks for the short and long-term effectiveness of the design strategy. They have survived for 28 years and are thriving yet today. It would seem the strategy was well thought out and planned. IDEO did not want to behave as other companies behave. To incorporate any of the more constricting organizational theories into its design could have potentially smothered IDEO’s main asset and very culture, innovation (Kelley, 2001). Fayol’s administrative theory (Crainer, 2003) or Taylor’s scientific method theory (Crainer, 2003), (Chapman, 2005) would introduce too many constraints, too much hierarchy, and too much formalism. IDEO would cease to exist as it is if forced to operate under or amidst these constraints. IDEO would not be able to offer its clients the service and expertise that these clients need.
Source of IDEO’s Success The particular methodology that IDEO uses to provide clients with the innovation they are seeking is a five-step process (Kelley, 2001). Each step is equally important and must not be neglected in order to achieve the desired end product (Kelley, 2001). The five steps include observation, brainstorming, rapid prototyping, refining, and implementation (Nussbaum, 2004). Several types of people exist within the employees of IDEO, each essential to the mix of success, and they include the anthropologist, experimenter, cross-pollinator, hurdler, collaborator, director, experience architect, set designer, caregiver, and storyteller (Kelley, 2005). Each step and each type of person will be explained in more detail. The first step in IDEO’s methodology, observation, involves getting out into the domain where a product or service will be used and observing customers purchasing or using a product or service, the obstacles they encounter in purchasing or using the product, how they interact with the product, and how that interaction could be simplified and made more user-friendly (Nussbaum, 2004). The staff of IDEO will use photography, camera journals, interviews, unfocus groups, and employees of the client they are serving in this step (Nussbaum, 2004). The client observes first hand that its customers face. The second step involves brainstorming with a refined set of rules (Kelley, 2001). Everyone must abide by the rules and a defined period of time for brainstorming is given, usually an hour (Nussbaum, 2004). The rules include numbering ideas, no critiquing of ideas during the brainstorming, anyone may speak, only one person may speak at a time, put ideas on large post it pads and attach to the walls, and stay focused on the subject (Kelley, 2001). The third step is prototyping. It does not require expensive, time-consuming materials but uses paper, Styrofoam, building blocks, or even role-playing (Kelley, 2001), (Nussbaum, 2004). When prototypes are made quickly and inexpensively, one can move from one prototype to the next without being tied by a major investment to the prototype (Kelley, 2001). This allows trial and error, learning from the failure of a prototype, until the optimal model is found (Kelley, 2001). The fourth step in the process is refining or evaluating the prototype and involves the client (Nussbaum, 2004). Rather than the unfocus groups mentioned in the brainstorming step, focus is needed, honing in on a workable prototype until the final working prototype is clearly defined (Nussbaum, 2004). Having the client engaged at this point will ensure a rapid transition to the fifth stage of the process, implementation, but complete agreement on the prototype must be achieved before progressing to the fifth stage (Nussbaum, 2004). Implementation involves getting the prototype into production or into service (Kelley, 2001). The designers, engineers, and social science people of IDEO are instrumental in enabling the client to do this (Kelley, 2005). There is a vast people resource within IDEO that will assist the client throughout the process, and past clients of IDEO can attest to this (Nussbaum, 2004). Who are the people resources within the ranks of IDEO? There are 10 types of people at IDEO and they fall within three persona groups: the learning personas, the organizing personas, and the building personas (Kelley, 2005). The learning personas consist of anthropologists, experimenters, and cross-pollinators (Kelley, 2004). The anthropologist enables IDEO to understand how people interact with each other and their surroundings, the experimenter is good at prototyping and learning by trial and error, and the cross-pollinator brings different cultures together to find ways to fill unique needs (Kelley, 2005). The second group is that of the organizing personas. It consists of hurdlers, who are skilled at overcoming obstacles, collaborators, who facilitate the merging of people from varying disciplines, and directors, who get the cast and crew working together (Kelley, 2005). This leaves one final group consisting of four personas. The last group is the building personas. It consists of experience architects, who manipulate experiences so that more than mere functionality is explored, and set designers, who arrange the work space into an area that feeds the creativity of the cast (Kelley, 2005). The final two personas are caregivers, who anticipate customer needs and ways to meet those needs, and storytellers, who weave the entire experience together into a fabric that speaks of human values and cultural traits (Kelley, 2005). This diversity in personas contained within IDEO makes it uniquely able to explore, model, and fulfill client needs. It enables IDEO to provide a unique experience for clients to offer their customers that Myerson defines as “a dynamic, complex and subjective phenomenon” (2001, p. 89). It enables clients to know what the customer needs and values.
Impact of Internal and External Environmental Change IDEO seems uniquely suited to meet environmental changes of any variety that may come. Its entire premise that makes it the organization it is revolves around change (Myerson, 2001). Myerson (2001) believes that IDEO’s passion, interest in future concepts and the design of those concepts, as well as its insatiable curiosity is more than enough to equip it to meet the challenges of the future. IDEO’s business is innovation or change so they of all organizations should be able to meet quickly changes on the horizon. They have already adjusted their focus somewhat. Nussbaum points out that in 2004, IDEO CEO, Brown, “reorganized IDEO into a professional consultancy around practices, or fields of expertise” (2004, para. 31) rather than just the design of products or processes. IDEO needs to remain small and keep the organizational form they have rather than “expanding for expansion’s sake” (Shaughnessy, 2002, p.51). Mergers and acquisitions are not in its future (Shaughnessy, 2002), but the sharing of its ideas and the testing of these ideas will remain part of its identity (Sutton, 2002). IDEO must continue to hire in the same manner, with the same goals as it has in the past in order to keep the creativity, individualism, and absence of competition fresh. These steps should ensure IDEO’s future. The bottom line of this evaluation is that environmental change should not require change within IDEO because they have been set from inception to deal with change.

Conclusions and Recommendations for Future Businesses of this Type Any newly formed organization that would endeavor to enter this field of innovation would do well to model itself after the pattern of IDEO. Organizational structure should be kept flat with no titles or chain of command involved. Hiring should be very specific and particular so that all who are employed in this organization share the same visions, goals, creative and adventurous spirit, curiosity, and desire to keep their jobs fun, challenging, and fulfilling. This newly formed organization should be willing to work closely with clients and share what they learn with their clients. When the organization is successful in helping a client, this client will be more willing to return for its services in the future and recommend its services to others. This then will enable this new company to be “the coolest place to work” (Shaughnessy, 2002, p. 50) also, which is speaking highly of any company.

References:
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