How does a company with 180 employees develop 90 new and radically different products a year? For IDEO, the answer lies in consciously establishing a corporate culture oriented toward creativity. Established as David Kelley Design in 1978, and renamed in 1991, this Palo Alto, California company does product development for hire--from computers (IDEO has done some 50 designs for Apple Computer Inc.), to medical equipment (including a laser-based blood analysis station), to automotive electronics (a recharging system for electric cars), to toys (a yo-yo is currently under development), to movie special effects (three-ton robot whales for Free Willy). IDEO sells itself to companies as offering a fresh look, top product designers, and speed, speed, speed--small projects can wrap up in a month or two, big ones rarely take longer than a year. In the past 15 years, IDEO has won some 27 Industrial Design Excellence Awards presented by Business Week, more than any other company. Tom Peters highlighted IDEO's creative culture in his book, Liberation Management. And Fortune magazine recently called the company one of Silicon Valley's secret weapons. IDEO's creative culture starts with hiring. The company does not recruit; in fact, it has never had any plans or desire to grow. We only hire people who [approach us] who we can't stand not to have in the company, founder Kelley said. Such people exhibit extremely high levels of intellectual curiosity. IDEO doesn't look for people who want to become experts on a certain subject; rather, it wants people who are always interested in doing something new, moving on to the next thing. Kelley calls people who prefer to design generation after generation of the same product, each time making it slightly better, concert pianists, and doesn't see a place for them in his lab. IDEO identifies its curious intellects by requiring that any potential hire be lunched by 10 current staffers. They rate the applicant in 10 or so categories, including love of product design, communication skills, technical knowledge, and drawing skills. A person needs all 9s or 10s to get hired, but once in, receives the company's full commitment. IDEO has never fired anybody, although a few employees have left because they got tired of the pressure to constantly innovate. Banning Bureaucracy IDEO keeps its staff creative by operating without a hierarchy. This company has taken the idea of the flat organization to an extreme. There are no organization charts, no titles. Titles, said Craig Sampson in IDEO's Chicago office, would focus attention away from what is important, which is the quality of the work. Most business cards contain only a field of specialty, like electrical engineering or interaction design. Only some 10 people around the company handle bureaucratic functions such as purchasing or tracking bills and payments; the other 170 dedicate themselves to innovation. With no opportunities for promotion or advancement to spur employees, motivation comes from peer pressure. It is about who can do the best job, who can come up with the most clever things, Kelley said, and employees think nothing of working 50 or 60 hour weeks to try to be the best. The no-promotion policy is an added plus for some employees, who elsewhere might be pushed up into management ranks and forced away from their first love, development. Other motivation comes in the form of internally produced trophies, presented at project completion ceremonies, and frequent parties and other gatherings. The company's Palo Alto offices hold a weekly bike ride, for example, and the company is currently holding a robot contest, where employees design mechanical devices to fight in a high-tech demolition derby. The key to avoiding hierarchy, in Kelley's view, is smallness. A typical IDEO site only houses about 25 employees. Too many more, Kelley said, and people wouldn't recognize everybody in the building, the company would have to institute security procedures, perhaps regulate vacations, and the bureaucracy would begin forming. …
Read full abstract