Introduction
You face relentless competition from agile startups that threaten your traditional business model. When your organization relies on rigid hierarchies and static products, growth stalls. You need to move innovation from the fringes to the center of your corporate strategy.
Innovation requires shifting corporate focus from static products to human experiences through multidisciplinary teamwork, direct observation, and rapid prototyping.
Tom Kelley, general manager at the design firm IDEO, reveals how you can build a culture of continuous renewal. You will discover methods for uncovering hidden customer needs, running high-energy brainstorming sessions, and building cohesive teams. The journey takes you through the mechanics of rapid prototyping, workspace design, and overcoming the psychological barriers that block new ideas.
- How do you observe real user behavior instead of trusting focus groups?
- What makes a hot team succeed where standing committees fail?
- How can you use physical prototypes to persuade management?
- What workspace changes turn your office into an innovation greenhouse?
1. Innovation at the Top and Start-up Mode
Innovation has shifted from the fringes of commerce to the very center of corporate strategy. As global competition increased, companies recognized continuous renewal as a requirement. Senior executives now frame corporate needs around innovation, and those who fail to out-innovate face threats from agile startups.
Corporate survival depends on continuous renewal, playful start-up cultures, and leveraging smart networks instead of rigid hierarchies.
Business writer Gary Hamel warned that an entrepreneur in a garage is forging a bullet with a company's name on it, forcing firms to shoot first by out-innovating. Achieving innovation excellence does not require being the best in every category, but rather achieving strength across an innovation decathlon of capabilities.
IDEO applies a core five-step methodology that combines understanding, observation, visualization, rapid prototyping, and commercial implementation. You can follow these core phases:
- Understand the market, client, technology, and perceived constraints.
- Observe real people in real-life situations to find latent, unaddressed needs.
- Visualize new-to-the-world concepts and customer experiences through brainstorming, physical models, and scenarios.
- Evaluate and refine prototypes in a series of quick iterations based on feedback.
- Implement the new concept for commercialization.
ABC's Nightline challenged IDEO to completely redesign the standard shopping cart in just 5 days. On the broadcast, 10 million people watched the team combine instant anthropology and rapid prototyping to build a functional prototype featuring nested handbaskets and sideways-moving wheels.
David Kelley launched his design firm treating it like a project, leaning into an unstructured environment. Initial staff size was 20 designers before growing to over 300. Childlike play, pranks, and a lack of rigid corporate structures foster a creative culture where employees take risks and solve difficult problems.
Early IDEO engineers built a foam-core fly the size of a pig, glued office items down using windshield cement, and constructed a makeshift rooftop workshop accessible only through a window. When facing difficult or unfamiliar problems, the most effective approach is to leverage a network of smart contacts. You should follow this rule:
- Talk to all the smart people you know when stuck with a tough decision or unfamiliar problem.
David Kelley connected with industrial designer Jerry Mannock, leading to a meeting with Steve Jobs and an assignment to help create the Apple Lisa computer and its mouse.
2. Observation and Brainstorming Mastery
Companies should rely on direct observation of human behavior rather than traditional market research or focus groups, because users often cannot articulate their true needs or give polite, unhelpful answers.
Uncovering true customer needs requires observing real behavior instead of relying on focus groups, while high-energy brainstorming drives creative output.
People naturally put on a positive face, calling a frustrating experience fine because they lack the vocabulary or technical palate to explain what is missing or wrong. Advanced Cardiovascular Systems told IDEO that their angioplasty inflation device had to be suitable for one-handed use. Operating room observations revealed technicians always used two hands, prompting IDEO to add stabilizing ribs and tilt the pressure gauge upward.
Uncovering everyday frustrations and recording them on bug lists helps identify prime opportunities for breakthrough products.
- Pay close attention when you are in a new-to-the-experience mode.
- Take notes about your impressions, reactions, and questions.
- Record the problems and the things that bug you.
Perry Klebahn, recovering from an ankle fracture, found traditional snowshoes extremely heavy and awkward. As a 26-year-old Stanford product design student keeping bug lists, he founded the Atlas Snowshoe Company, reducing snowshoe weight by 70 percent. The Vail snowshoe area reached 100,000 visitors by its second season, and Atlas Snowshoe Company achieved 10 million dollars in sales before its sale.
Developing empathy for extreme users or those with physical differences who do not fit the average profile unlocks new market opportunities and improves product design. Observing bank workers placing phone books under their desks because their feet dangled inspired the creation of an adjustable footrest. Watching kids grip toothbrushes with their whole fist led Oral-B to create the fat, squishy Squish Grip brush.
Innovators learn more by observing rule breakers who force products to do things manuals say they cannot, rather than watching users who follow directions perfectly. When IDEO observed a travel agent named Sally make a conference call, she placed multiple phones in a circle on her desk to physically map out and manage each caller. This dramatized the limitations of standard phone systems and inspired more intuitive visual interfaces.
Viewing products as animated verbs in motion rather than static nouns helps uncover usability flaws and opportunities for enhancement. Observing mountain bikers struggling to draw bottle nozzles out with their teeth led IDEO to design the Racer's Edge water bottle with a self-sealing tricuspid heart valve that opens with a simple squeeze. The Crest Neat Squeeze tube achieved 50 million dollars in sales in its first year and 1 billion units in cumulative sales over nine years.
Designing products from the point of view of struggling operators can transform an intimidating ritual and make the user feel like a knowledgeable hero. Observing dads struggling with complex, separately sold fishing rods, reels, and tackle at suburban lakes inspired IDEO to design Berkley's all-in-one fishing kit complete with integrated gear, laminated instructions, and Power Bait worms.
Brainstorming must be treated as a rigorous artistic skill rather than a routine check-box meeting, requiring frequent practice and strict structural rules. While 70 percent of businesspeople surveyed say they use brainstorming, 76 percent of those who brainstorm admit they do so less than once a month. A true brainstorming session is an active, high-energy 60-to-90-minute idea engine rather than a presentation, status update, or democratic turn-taking meeting, with a fluid rate of 100 to 150 ideas per hour.
Following seven specific secrets—ranging from sharp problem focus to physical prototyping—maximizes the creative output and energy of a brainstorming session. IDEO found that groups who visited a toy store as a warm-up homework assignment significantly outperformed groups that did background reading or came in cold.
- Sharpen the focus by starting with a well-honed, customer-oriented problem statement.
- Playful rules: turn aside critiques without killing energy and post rules visibly.
- Number your ideas to track fluency and jump back and forth.
- Build and jump: use building suggestions to sustain momentum and jump transitions when energy fades.
- The space remembers: cover walls with butcher paper and rapidly scribe ideas using low-tech tools.
- Stretch your mental muscles using word games or content-related show-and-tell homework.
- Get physical: bring in competitive products, build crude models, and bodystorm usage patterns.
Common management habits like letting the boss speak first or enforcing strict turn-taking will instantly kill the creative energy of a brainstorm. A silicon valley boss once called a brainstorm for 16 people packed into a poorly run meeting, but immediately added a room-silencing caveat that every idea had to be patentable and easily manufactured, effectively halting wild contributions.
3. Hot Teams and Team Dynamics
High-performing innovation relies on cohesive hot groups driven by passion, diverse personality archetypes, and studio structures rather than standing committees.
Corporate survival requires moving away from stagnant operations review committees maintained by sheer inertia. Hot groups start with clear goals, serious deadlines, and the readiness to disband after accomplishing tasks. IDEO contrasted traditional bureaucracy with a rapid, focused Nightline shopping cart team that achieved results in a single week.
The popular notion of the lone genius inventor is a myth that hampers corporate innovation. Legendary individual creators invariably rely on teams or collaborations. Thomas Edison generated four hundred patents in six scant years with a fourteen-man team, prompting his assistant Francis Jehl to state that Edison is a collective noun. Michelangelo used a gang of artisans for the Sistine Chapel, and Keith Haring collaborated with hundreds of schoolchildren.
Companies gain a competitive edge by adopting a Hollywood-like studio system where teams form flexibly around projects. IDEO approached the one hundred people mark at Palo Alto offices in the mid-1990s and threw studio membership open via secret ballots. Employees chose among studio groups ranging from ten to twenty people, successfully matching everyone to their first choice. Project teams typically held three to twelve people.
Eliminating the abstract authority of they and fostering an abundance mentality encourages grassroots problem-solving. An IDEO team member withdrew $18,000 from a personal account to pay unpaid subcontractors and billed the company for mileage to get the project done, submitting an $18,001.54 expense report.
A team led by Dennis Boyle decided to create the Eyemodule add-on digital camera for the Handspring Visor using the Springboard connector. Starting in late summer 1999 with a goal to snap digital images by December 2, they produced a working prototype sixty days after assembling. They delivered a dozen alpha units by mid-January, three dozen units in February, and shipped the product in mid-April, reaching the market just six and a half months from founding.
Cramming team members into tight, interactive spaces intensifies focus and accelerates creative breakthroughs. Three consultants working for Singapore Airlines shared a small office and lived in the same hotel for over six months, ultimately discovering a costly fleet downtime flaw that saved tens of millions of dollars.
Academy Award-winning screenwriter Ron Bass uses a team of six writers and researchers to brainstorm, outline, and review scripts. This factory approach generated sixteen feature films earning $2 billion while juggling four or five projects at once.
Conductor Benjamin Zander tells his Boston Philharmonic students on the first day that they all get an A. You can use this technique to build confidence:
- Tell students or team members on the first day that they all receive the highest grade or status.
- Require them to write a letter dated on the final day explaining why they deserved that grade.
Customized end-of-project awards and playful rituals reinforce team solidarity and make light of blunders. IDEO team members created a mirror plaque for an engineer who drew a reversed diagram, a bulletproof metal chunk for an overspecified enclosure, and a cow derriere dartboard for a team leader improving vet tools.
High-performing innovation teams require a diverse mix of distinct personality archetypes rather than uniform members. Hot groups thrive when they include:
- The Visionary
- The Troubleshooter
- The Iconoclast
- The Pulse Taker
- The Craftsman
- The Technologist
- The Entrepreneur
- The Cross-Dresser
4. Prototyping as a Problem-Solving Tool
Building physical models and rapid prototypes allows teams to learn quickly, test assumptions, and persuade management effectively.
Prototyping acts as a culture and a language that can be applied to products, services, and promotions. It allows you to test assumptions under realistic conditions even when ideal environments or long timeframes are unavailable.
IDEO tested new snowboarder goggles for fog-free performance in freezing conditions during a hot California summer by borrowing an industrial ice cream freezer at Peninsula Creamery and having a team member pedal an exercise bike with a fan.
Instead of building an entire complex system at once, you should isolate specific functional questions and build quick, targeted models to test principles and mechanics.
- Never go to a meeting without a prototype.
- Make your mistakes and discoveries as soon as possible.
When working on a chair for Vecta, an IDEO team focused strictly on building a small height-adjustment lever and interface rather than constructing the whole chair or tilt mechanism.
Jeff Bezos started Amazon.com by directing a moving van west from New York without a final city destination while writing his business plan in a car and calling investors amid a 2,300 percent annual Web growth prediction in spring 1994.
The tactile process of making things opens up new possibilities of discovery that purely mental brainstorming or flat reports cannot achieve.
While gluing a prototype foam-rubber football with tee-wings, Brendan Boyle noticed the wings curved like a propeller, leading to the creation of the Aerobie football.
Tangible prototypes are vastly more effective than dry reports or flat drawings at persuading management and crystallizing feedback. Good prototypes up the data rate by giving audiences concrete choices and physical hardware that reveal size, shape, and how parts fit together.
IDEO found that a $1.80 fish-eye mirror placed above Wells Fargo ATMs solved customer security concerns better than expensive high-tech addons like video cameras.
Prototyping serves as both a source of creation and insurance against writer's block or creative stagnation when innovation stalls.
- Prototype till you're silly when all else fails.
An IDEO engineer in Silicon Valley routinely prototypes bad ideas specifically to shoot them down and uncover underlying flaws or unexpected insights.
Embracing playful metaphors and cheap, unconventional components can lead to breakthrough product designs. Apple's Duo Dock used a cheap toy motor costing about $1.25 instead of expensive precision motors to create a smooth, VCR-like ejection mechanism for less than seven dollars total cost for parts in the mechanism.
The Golden Gate National Recreational Area bypassed congressional delays across two dozen sites by rebranding as Golden Gate National Parks, hiring illustrator Michael Schwab, and launching retail items that raised $26 million in charitable contributions in two years while 15,000 new volunteers recruited joined the cause.
5. Workspace, Cross-Pollination, and Adoption Barriers
Optimizing physical workspaces as greenhouses and embracing cross-pollination help organizations overcome psychological and cultural barriers to new products.
Physical workspace is one of a company's premier assets and should be carefully designed to foster innovation just as athletes need proper facilities. Office space is typically the second biggest expense after salary and benefits, yet companies often neglect how space impacts performance. At IDEO, spaces evolve organically without overriding master plans, favoring fewer rules, movable partitions, and environments that balance community and privacy.
Top talent tells IDEO they join not only for industry leadership but because of the physical and cultural environment.
- Build neighborhoods and think in terms of projects.
- Make building blocks to create playful, flexible foundations for workers.
- Remember the spirit of prototyping so space evolves with teams.
- Encourage hot teams to find or create a team icon.
- Ensure your spaces tell stories about your workers and company.
A central lending library of innovative physical elements, materials, and gadgets acts as a corporate spark plug and physical wellspring for creative solutions. Dennis Boyle created the Tech Box by collecting mechanical parts, exotic plastics, and unusual materials in a flat-file cabinet. Placed centrally next to copiers and printers, it serves as a physical version of a museum where designers can touch, feel, and see materials to solve thorny design issues.
IDEO contributors added items like Aerogel, Mylar, Kevlar, and Sorbothane, which later helped solve engineering challenges such as cooling mobile processors and dampening noise in TiVo set-top boxes. There are two-hundred-plus items cataloged in an Intranet database for the Tech Box.
Adapting ideas from outside your industry and removing consumer adoption barriers turns creative concepts into commercial realities.
Adapting ideas, materials, and mechanisms from entirely disparate industries and disciplines dramatically increases creative breakthroughs. Working across diverse fields builds an innovation vocabulary when products or concepts from one field are applied to another. IDEO adapted a ball-and-socket mechanism from computer monitors used for tilting and swiveling displays to create a sun-tracking beach chair.
- Subscribe and surf: browse magazines and surf the internet in your free time.
- Play director: break the world down into scenes and watch people perform small tasks.
- Hold an open house: periodically hold casual open houses displaying crude prototypes and food to get people talking.
- Inspire advocates: recruit and value mental diversity with individuals representing specific viewpoints.
- Hire outsiders: bring in people slightly off center to introduce new ideas.
- Change hats: experience user challenges firsthand by simulating constraints like blindfolds.
- Cross-train: adopt drills or processes picked up from noncompetitive businesses.
Innovators must never underestimate the psychological and practical barriers that prevent consumers from adopting genuinely new products. Jeff Hawkins created the Palm Pilot by realizing that previous PDAs failed because they demanded complex 100 percent handwriting recognition, whereas Graffiti allowed users to share the cognitive load. This breakthrough bypassed 1 billion dollars of capital lost in half a dozen major PDA efforts in the preceding few years.
10 Key Ideas
- Corporate survival depends on continuous renewal, playful start-up cultures, and leveraging smart networks instead of rigid hierarchies.
- Uncovering true customer needs requires observing real behavior instead of relying on focus groups, while high-energy brainstorming drives creative output.
- High-performing innovation relies on cohesive hot groups driven by passion, diverse personality archetypes, and studio structures rather than standing committees.
- Building physical models and rapid prototypes allows teams to learn quickly, test assumptions, and persuade management effectively.
- Optimizing physical workspaces as greenhouses and embracing cross-pollination help organizations overcome psychological and cultural barriers to new products.
- Innovation requires shifting corporate focus from static products to human experiences through multidisciplinary teamwork, direct observation, and rapid prototyping.
- Innovators learn more by observing rule breakers who force products to do things manuals say they cannot, rather than watching users who follow directions perfectly.
- Cramming team members into tight, interactive spaces intensifies focus and accelerates creative breakthroughs.
- Prototyping serves as both a source of creation and insurance against writer's block or creative stagnation when innovation stalls.
- Adapting ideas from outside your industry and removing consumer adoption barriers turns creative concepts into commercial realities.