MGMT 6101-Spring '16 Innovation and Management of Change Dr. Louis Jourdan IDEO Case 1. How would you characterize IDEO's process, organization, culture, and management? The Process IDEO's process is shaped by intensive brainstorming, focused on marketing research, driven by prototyping, follows five phases, keeps clients involved and enlightened by trial and error. According to Kelley (2001), \"Brainstorming is practically a religion at IDEO, one we practice nearly every day\" and he believes that \"one can deliver more value, create more energy, and foster more innovation through better brainstorming\". IDEO follows several principles of brainstorming: stay focused on the topic; encourage wild ideas; defer judgment to avoid interrupting the flow of ideas; build on the ideas of others, hold only one conversation at a time to ensure that introverts also get their say; go for quantity, and be visual, since sketching ideas would help people understand them. No more than eight invitees attend these sessions, which run under the above rules. This brainstorming methodology builds on the following principles: 1) Understanding- market clients, technology, and perceived constraints. 2) Observing- people in real life situations. 3) Visualizing- new world concepts and the customers who will use them. 4) Evaluating/ refining- the prototypes in a series of quick iterations, and series of improvements. 5) Implementing- a new concept for commercialization (Kelly, T. 2001). This process works hand in hand with their process of rapid prototyping, which is essential to their approach to design. Besides common brainstorming, IDEO has another intensive process called the Deep Dive process, used when progress appeared to come to a standstill. In this process, the team focuses intensively for an entire day to generate a large number of creative concepts, weed out weak ideas, and start prototyping based on the top handful of solutions. Brainstorming methodology from IDEO directly correlates to existing research that demonstrates that \"discovery skills\" are foundational to innovation. Innovative entrepreneurs and companies have creative intelligence that enables their ability to be creative and discover new things. These discovery skills include the ability to associate, questions, observe, experiment, and network. Innovators and including innovative companies actively engage in these skills, they become identified by these skills (Christensen, C., Dyer, J., Gregerson, H. 2009). Another process principal used at IDEO is focusing on marketing research. IDEO's team gain an understanding of the product context through a gallery of envisioned characters using the product in their daily lives. Through close coordination with the client, the team would have rough three-dimensional models of a product and a general idea of utilizing the manufacturing strategy. Scott Cook also asserted, \"Often the surprises that lead to new business ideas come from watching other people work and live their normal lives\". (The Innovator's DNA, Harvard Business Review, 2009) Prototyping is the central of IDEO's design process. It is the most important way for the company to communicate with clients, marketers, experts, and end users. Prototypes ensure everyone is imagining the same design during discussions about a product. All IDEO offices staff shops with highly skilled machinists to rapidly produce both simple and sophisticated prototypes. Prototyping at IDEO follows the three \"R's\": \"Rough, Rapid, and Right\". The final R, \"Right,\" referrs to building several models focused on getting specific aspects of a product right. IDEO's product development process follows five basic phases: (NEED CITATION) Phase 0 _ Understand/Observe: In this phase, the team seeks to understand the client's, the technology, and the perceived constraints on the problem. In Phase I Visualize/Realize, the team ends up choosing a product direction based on ideas, technologies, and market perceptions. Close coordination with the client allows the team to create rough three-dimensional models of a product. According to Tom Kelley (2001) the general manager of IDEO, it is the most brainstorming-intensive phase of the process. Phase II: Evaluating/Refining, the purpose of this stage is to enhance design prototypes through testing functional prototypes. Emphasis shifts over the course of this stage from human factors and ergonomics to engineering. Phase II culminats with a functional model as well as a \"looks like\" design model. In Phase III: Implement/Detailed Engineering: the team completes product design and verifies that the product works. It validates the manufacturability and performance of the final product. This phase is often the longest and most technology technically challenging in the process (Kelley, T. 2001). Phase IV: Implement/Manufacturing Liaison: The final phase, the team ensures smooth product release to manufacturing as the product moves from the shop floor to the client's factory lines. IDEO believes in keeping clients involved. At the beginning of a new project, IDEO submits cost and time estimates to potential clients. Designers come up with innovative ideas and concepts. Project Managers ensure that those concepts are within agreed upon budgets and timelines, as a project unfolds. However, designers often aim for perfection which could potentially lead to cost and time overruns. Therefore, IDEO requires very frequent client meetings to discuss those issues. IDEO is cautious of having overly formalized processes. The company actively embraces failure. This belief in the power of failure, which is essential to rapid prototyping, the foundation to their design philosophy, is a key driver of the company's overall process to innovation. \"Fail often to succeed sooner\" and \"stumbling as long you fall forward\" (Kelly, T. 2001) which means that even if you fail that something can be learned from your failure is also core to the IDEO process. IDEO believes that learning from failure is itself a success and progress, as sometimes it is just as important to know what does not work, as it is to know what does. Another way to help mitigate such formality and a key part of the IDEO process is the belief in the product of the team. IDEO considers failure as enlightened trial and error. The company learns how to develop from failure. IDEO also seeks to improve its own design processes by reviewing all completed projects. The company believes diverse and experienced personnel are valuable to virtually any client. Innovation needs a process that properly matches people with the right challenges and leads them through an organized process of releasing creativity and evaluating results so that the right concepts move into the implementation process. (The Big Ten Innovation Killers and How to Keep Your Innovation System Alive and Well by Joyce Wycoff, 2004). The Organization Fundamental to the organization of IDEO is balance of play and chaos. This effort to have a more fluid kind of organization is to help maintain an environment to promote creativity that meets the needs of all its employees. This fluidity is important because \"one's preferred creativity style is like one's eye color. It cannot be changed. It's innate, according to Charles Prather, in his book Blueprints for Innovation (Weiss, R. 2001). IDEO's employees are comfortable with confusion, ambiguity, and have fun for the sake of having fun. This type of environment causes many from the outside looking in to label IDEO as a zoo or playground. A key to the success of IDEO, the history of the organization was simply about trying to find a solution to a problem. This mindset has assisted David Kelley, IDEO's founder, in becoming \"one of the most powerful people in Silicon Valley\" (Nimgade, A., Thomke, S. 2007). Originally the company started as David Kelley Design, but it eventually merged with two other organizations, which built it's capacity to provide all the services that clients would need in order to conceptualize, design, develop, and manufacture new products. The premise of the company was to be the idea firm, which is why when looking for a name they landed on \"Ideo-\" which is the Greek work for idea. The merger led to converge many different fields to IDEO to design, develop, and manufacture new products: mechanical and electrical engineering, industrial design, ergonomics, information technology, prototype machining, and even cognitive psychology. IDEO thus pioneered the design version of \"concurrent engineering\"a fusion of art and engineering to produce aesthetically pleasing products that were also technically competent. (CITATION) The company also has established clients. These clients are Apple Computer, AT&T, Samsung, Philips, Amtrak, Steelcase, Baxter International and NEC Corporation. Additionally, the company also has sites in major cities like London, San Francisco, New York, Tel Aviv and Palo Alto. These sites operate independently with constant communication with the central head office and other sites. The company constantly designs their office design to enable good movement in the office. The organization can be best characterized using the words pioneer, innovator, and successful. While as innovators, they produced Apple's first mouse and created the 25-foot whale used in the movie \"Free Willy.\" As a result IDEO would go on to win more industry awards than any other design firm in the industry. This ability to pioneer and innovate led to unprecedented success. This allowed IDEO to experience revenue upwards of $40 million while other companies were experiencing downsizing. An individual could work on one large project as a principal or on as many as three to four projects as a contributor. IDEO is a flat organization to an extreme. All work is broken into project teams. These teams form for the life of a project and then disband. As a result, there are no permanent job assignments or job titles. There are also no organization charts or titles to distract from the quality of the work. Having no hierarchy helps IDEO to avoid the problem of promoting designers and engineers into administrative positions and out of their first love: creating products. However, it causes confusion among new recruits. IDEO has 300 employees each unit small. To avoid a large unit, additional smaller design studios were created. In 1990, David Kelley asserted, \" this company will never be larger than 40 people\". An amoeboid growth strategy, found the company in possession of nine different buildings on Palo Alto in the late '90s. Employees were encouraged to design their own workspace to reflect their own personalities. Some strung up their bicycles on pulleys. Rolling doors could quickly seal offices for privacy. Staffers kept personal possessions in portable bookshelves and cabinets so that moves between projects could be accomplished rapidly. One studio suspended the wing of a DC-3 airplane with a blinking red wing light from the ceiling. Tom Peters stated, \"IDEO is a zoo ...Walk into the offices of IDEO design... you'll be caught up in the energy, buzz, creative disarray and sheer lunacy of it all\". (CITATION) By the late 1990s, the turnover had crept up to 10%. To counter the trend of increasing attrition, IDEO sought to redo its compensation strategy, planning to do more equity deals and seek royalties. Their core value is to 'help organizations grow.' Every employee is aware and does their level best to make the customer happy. IDEO also offers training opportunities to offer their employees' growth in all aspects to enable them to perform their duties comfortably, innovatively and more competitively to position their brand as the most preferred by multinational firms like Google Inc. The Culture The IDEO's culture is a very inclusive culture. The employees of IDEO are encouraged to participate fully in the process of development of product designs. The culture of IDEO encourages employees to innovate ideas. It supports all the employees' ideas. IDEO's staff mingle freely and help one another to solve work problems. IDEO's culture also incorporates high employee morale thus creating well-motivated teams with high self-esteem. This environment positions IDEO as one of the better companies to work for in the world market. Additionally, the IDEO culture is the playing field of innovation. Unless the culture supports creativity and risk-taking, innovation will be stifled (Wycoff, J. 2004). IDEO's culture can be characterized in three key different ways. First, the culture at IDEO reflects the importance of democracy. It is an open, egalitarian culture that focuses less on hierarchy and more on idea generation. As such the company provides opportunities for all employees to showcase their creativity and newest ideas to their peers. The culture also caters to the individual needs of each of its employees. Emphasis on people is an IDEO cultural characteristic. Simply, IDEO exists to enable other organizations to grow their businesses. It allows its staff to design their own workspace based on individual personalities. The environment is playful and messy, they embrace the playroom atmosphere, and communicate and persuade through prototypes, pictures and diagrams. According to Tom Kelley, \"we prototype more than our clients suspect, and probably more than our competitors.\" (CITATION) They never go to a client without a prototype. On Mondays, all company branches hold \"show-and- tells\" where designers and engineers could highlight their latest insights and products. The culture itself reflects the importance of management's support of creativity and creating a democracy of ideas. The second key way to the culture of IDEO is in its lack of formality. The company believes in and works very hard at having a relatively flat organization, as well as not having very formal titles. This attitude is also reflected in its dress code or lack thereof. In addition, employees are evaluated through a peer review process, in which employees get to choose which of their peers will be a part of the peer review. The belief and emphasis in little formality is demonstrated when selecting project leaders, talent acquisition, employees, and employee job assignments, among other things. Designers are encouraged to talk to one another or even call a brainstorming session through email. In the late 1990s, IDEO was strategically located in Boston, Chicago, San Francisco, London, Palo Alto, Grand Rapids, New York, Milan, Tel Aviv, and Tokyo. These sites were stimulating locations. Although all centers operate independently, seeking business locally, they exchanged a high volume of e-mail and often shared talent as needed. According to Kelley, \"I'm the person who builds the stage rather than performs on it.\" In IDEO, failure is part of the culture. They believed that \"If at first an idea does not sound absurd, then there is no hope for it.\" (Einstein, IDEO Product Development) People are generally not upset if their idea did not become the definitive solution since the act of clipping off ideas brings the entire team closer to the solution. \"Good companies embrace a culture of mini-failures\" (Kelley, T. 2001). This pretty much sums up the third key way of understanding the IDEO culture. IDEO openly promotes and expects risks and subsequent failures that are associated with risk taking. In addition, employees are encouraged to initiate new ideas, and maximize the full scope of their individual creativity, and to do so by not always spending long hours at their desk, to wander the building and surrounding grounds, and to get stimuli through other non-traditional means in order to increase their productivity. Attention to detail is another cultural characteristic of IDEO's. According to Scott Barry Kaufman, scientific director of the Imagination Institute at Penn's Positive Psychology Center, \"Mind-wandering seems to be essential to the creative process, and I don't think a lot of businesses are aware of that fact\" (Can Creativity, 2014). Altogether, this resulted in a culture at IDEO that became hard to depart and eagerly sought after by prospective want-to-be employees. In comparison to competitors in Silicon Valley with an average staff size of less than 25 employees, IDEO regularly maintained a workforce of approximately 300 employees. This is all the more impressive as it usually maintained an attrition rate of 10% or less, which is significantly below the industry average. The Management From the existing research that is available on the topic, we know that there are many ways \"in which a manager's ordinary, routine interactions with subordinates can support, or undermine, creativity (Amabile, T. 2009). At IDEO, the role of management is to help create and foster the culture that the company worked so hard to cultivate. The management at IDEO infrequently fires employees. Instead they focus on removing barriers to creativity and innovation. They find ways to encourage employees to push through mental blocks, and spend the majority of their time managing hard working employees opposed to focusing on underperforming ones. They seek to reward the better performing employees with shares in the overall revenues and continually spend time rethinking ways to retain those good employees through improving their compensation and other benefits packages. Management encourages employees to leave their desk and walk around, especially during mental blocks. IDEO pays high rent for its prime Silicon Valley location to encourage stimulating interactions between employees. Instead of merely relying on employee surveys, the company also studies workplace interactions through suspended video cameras in order to optimize office design. On Mondays, all company branches hold \"show-and- tells\" where designers and engineers could display their latest insights and products. In addition, increasing importance to designers is IDEO's \"Tech Box,\" the company's giant \"shoebox\" for curiosities and interesting gadgets meant to inspire innovators. Designers rummage through the contents and play with the switches, buttons, and odd materials in search of new uses. The management of IDEO is an efficient management. The head of the company is the Chief Executive Officer, David Kelly. He collaborates with Bill Moggridge and Mike Nutall. Tom Kelley is the general manager. Management of IDEO does not allow hierarchy in the organization. This is to avoid the problem of promoting designers. Employees are treated equally. Management encourages good relationships with all the employees. IDEO management also greatly recognizes the need for teamwork and coordination in order to deliver to the customers and clients what the clients/customers really need. \"We believe innovation happens through networks of inspired people.\" (CITATION) Management is also goal oriented. They place a tremendous amount of focus on customer needs. In addition, management is also multi-dimensional which deals with managing the work, managing the people (employees and clients) and management of operations. 2. What should IDEO do and why? a. Should IDEO accept the Visor project as is (on a dramatically reduced schedule)? Creativity is more likely when people feel they are on a mission. If they believe they're doing important work, then creative thinking geared towards solving that problem will flourish. However, creativity is less likely when people feel they're on a treadmill (Amabile, T. 2002). With that in mind, the time pressure of a dramatically reduced schedule could serve as a motivator for the team and could be in their best interest to accept the project as is. Nevertheless, if the time pressure only exists without real purpose and creates the atmosphere of a \"fishing expedition\" then that would be counterproductive and I would recommend that the team not accept the project as is. Advantage Boyle was not worried about meeting this challenging deadline because IDEO could meet difficult deadlines, even if at the \"eleventh hour and fifty-ninth minute.\" (CITATION) Besides, the team under Boyle had already encountered and worked smoothly with most of the Handspring team through dozens of prior meetings and other encounters during the Palm V project. IDEO and Handspring shared a common belief in quick prototyping and a consumer-centered mentality. Some two dozen third-party developers expressed interest in developing add-on devices for the proposed Visor. Even without a concrete plan, funding flowed easily from venture capitalists eager to duplicate Palm's success with a device that could set a new trend in handheld computing. Moreover, IDEO is an innovative company, armed with the tools of rapid prototyping, brainstorming, a well-honed product development process, very diversified and experienced staff, thus the company viewed itself as being able to provide value to virtually any client and would rarely encounter entirely new problems. Disadvantage The Handspring project would also require Boyle's team to keep the rest of IDEO, in the dark about the project. This would make for uncomfortable moments, especially during informal hallway conversations with colleagues, some of whom were still working on the Palm V project. If Boyle accepts this project, he will sacrifice the IDEO emphasis on innovation and design in order to meet the client's goal. Because of the time and price pressures, Hawkins' proposal would imply running with only \"tried-and-true\" technology; IDEO would not be able to indulge in the early phases of its legendary development process that differentiated it from other product development firms. Visor would have to sacrifice style and settle on an inexpensive plastic housing, and on AAA batteries instead of the rechargeable lithium-ion battery found in the Palm V. b. Try to persuade Handspring's management to change its aggressive launch schedule? Changing Handspring's aggressive launch schedule may be a good idea. The IDEO team may have some great suggestions behind that idea; however, if they are unable to convey the brilliance of their idea, and more importantly how that idea will be beneficial, particularly in a monetary way, to Handspring, they might as well not attempt (Farrell, M. 2007). Furthermore, if the team has a clear, concise, and cohesive message supporting their idea, and can deliver it in a way that avoids sending mix messages then they should try to present their case to try to persuade Handspring to alter its plan. Advantage IDEO can maintain its legendary status that differentiates it from other product development firms. All employees will feel comfortable. The Visor can be a perfect product from IDEO's perspective. Disadvantage New challenges confront IDEO. Other companies may take the chance to release a similar or better product. Spending would surely increase. The credibility of Handspring would decrease. IDEO should persuade Handspring's management to change its aggressive launch schedule. The deadline was not a problem for the IDEO Company. In addition, IDEO was not ready to sacrifice its emphasis on innovation and design. The project design was inadequate and could not do well in the market without IDEO's proper design. c. Or should they simply decline the project? No. I do not think that they should decline the project. Advantage IDEO does not have to sacrifice the company emphasis on innovation and design. They also would be able to focus on another product. Failure is a part of the culture. If IDEO accepts the Visor project and it is a failure, the company will know how to avoid the same failure next time. Disadvantage IDEO's credibility would decrease, as a result they might lose the next contract from Handspring. There will be missed opportunities for IDEO to increase its ability to create new trendy products. After carefully weighing the pros and cons of the three choices, Boyle should accept the Visor project on a dramatically reduce schedule. Kelly, T. (2001). The Art of Innovation: Lesson in creativity from IDEO, America's Leading Design Firm. New York: Doubleday. Christensen, C., Dyer, J., Gregerson, H. (2009). 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Harvard Business Review Press. May. 3-4. Amabile, T. (2002). Creativity Under the Gun. The Innovative Enterprise. Harvard Business Review Press. August. 52-61. Farrell, M. (2007). Ten Ways to Torpedo Your Sales Pitch. Boost Your Business. http://www.forbes.com/entrepreneurs/2007/08/01/microsoft-ebay-symantec-entsales-cx_mf_0801byb07_torpedo.html. January. 1-2 - The Innovator's DNA, Harvard Business Review, 2009 - IDEO Product Development, Harvard Business School, 2007 - The Big Ten Innovation Killers and How to Keep Your Innovation System Alive and Well by Joyce Wycoff, 2004. - Tom Kelly, The art of innovation