Kelley, David

Tom Peters dedicated his last book, The Professional Service Firm50, to David Kelley, founder and CEO of IDEO, one of the largest and most successful product development firms in history. But it wasn't size or even success of IDEO that inspired Tom Peters to do this, it was the culture of creativity and playfulness that permeates its halls. asks David Kelley ...

Why does Tom Peters say IDEO is the only other place he'd love to work?

DK: I'm not sure that as he got closer he'd actually believe it! On the surface he loves the kind of chaotic playful stuff, and IDEO exudes that, but I think that what he sees and likes is the fact that everybody is treated alike. We make concessions for everyone's personalities. Most companies have organization charts and people have to fit into their slots, but we don't do that.

We do it the opposite way—given that this person is good at this, and really likes to do this, then we ask what or who else do we need in the group to complement these individuals.

People here are operating in the area they want to be in. You can tell a large percentage are happy to be there, enjoying themselves. They don't have their heads down. For instance, we have a guy who is a real content person, but doesn't want to be a manager. So we've figured out a way to have him not do the people management but instead to team him with a manager and use his talents that way.

I think he [Tom Peters] feels that everyone's operating in a way that provides personal gratification. I think Tom likes design because it's creative and it's undervalued—and he likes underdogs.

Describe IDEO today—what kind of employees do you look for? How do you keep the culture that we saw on the Nightline show? [ABC's Nightline episode on IDEO, "The Deep Dive," first aired on February 9, 1999. A portion is available for viewing on IDEO's site at]

DK: We look for people who are not cynical, people who haven't spent the better part of their career in a corporation bitching & moaning about "Them." And we screen for hard working people with excitement in their eyes. Being a part of a team that is creating something out of nothing requires that.

My favorite part of the Nightline video is the moment when the team pulls the sheet off the shopping cart, after all this suspense has built up about what in the world it's going to look like!

DK: That's my favorite part of the job—it's that moment. And we're lucky that we get to do that with lots of different clients. The people at IDEO are doing something that other humans will resonate with, and there's a kind of excitement about that, about contributing.

You go to all these clients who told you they wanted a new "something." So we start our Phase 1, what we call the Understand phase, which is about finding out what people really want, and we go back to the client with a prototype. And the senior execs, they don't know who the hell we are or what we're gonna show them.

They're sitting there wondering, "Am I going to be wowed by these guys?" After all we have a big reputation, so they're sitting there saying to themselves, "Is it going to be something good?" They have no idea what's it going to be ... it could be a long flat something, or a tall thin something, or it could be little red ears! Then, it's really fun to take the cloth off ...

A lot of us have witnessed time and time again this most exciting moment, when you've made a creative leap to something really spectacular.

Can you keep this culture as you grow?

DK: One of my favorite recent quotes about the firm appeared in a British design magazine called Blueprint. It said that in the world of design, big hardly ever means best but that IDEO may be the exception to the rule. That's not the norm—usually the culture suffers as you grow.

We know how to do it. We empower people by keeping groups small—there are never more than about 35 in each studio. And that's our goal going forward, not how to continue to grow. Growth's not a valued thing here; we're not a public company worrying about returning an investment to its shareholders.

Our growth now is about how to get clients to value us more, how to increase our perceived value.

What are you doing to make that happen?

DK: We've raised a venture fund, which gives us the ability to invest in our clients. We may do the project with minimal fees, and instead find a way to share in their success. We partner with companies. Tom will like it, because we're having high-level conversations where we're both sitting on the same side of the table. It's not just selling services when we have stock or working for free to share in royalties. Now the client says, "We have $2 million; how should we spend it?" When before they might think that IDEO would try to find every way to charge them $2 million because we're there billing time.

It's as big a change as anything we've ever done at IDEO. It's changing us.

Something really touching happened at our last general meeting, the meeting of the people who are running each of the studios and offices. At these gatherings the most coveted time is the half-hour people have to update us on what's going on in their business. One of the guys gave up his update time to talk about how much his life has changed because of the changed relationship with his client because of this new business model.

We've been in the position many ad agencies are in—we've been seen as creative types but not peers. People didn't necessarily invite us to their strategy meetings. But the venture fund has really changed our business. IDEO today is a partner or an investor. We're one of the venture capitalists and our clients now treat us with a newfound respect!

Describe your role at IDEO—and do you still wear multiple hats as CEO, Stanford professor and Steelcase VP of Innovation?

DK: I still teach at Stanford, six classes a year, and IDEO has appointed a new guy, Tim Brown, as our president and soon-to-be CEO.

At Steelcase, I'm now acting as an advisor, and working with the CEO there, Jim Hackett, who is a really good friend of mine and has values that are unreal for a corporate person.

You've been part of so many what we would call, WOW! Projects. What are you working on right now that excites you?

DK: (Laughs) I'm afraid I can't answer that without giving away some of our clients' coolest secrets. What I can tell you about is recently released work—but I can't tell you what we're working on right now, though some of it will be announced soon and it's going to be quite exciting.

Everyone has a filter for what's important. Some people won't work on plastic. Some people love working on consumer projects. My bias is the big medical products. Like the insulin pen we did for Eli Lilly—I have friends who are diabetic and they say to me "I'm using your pen and I love it." That's really terrific.

We've created devices for growing skin for burn victims. We created a device for keeping track of drugs, that mixes drugs right at the patient's bedside. We've done work on a heart defibrillator that has already saved dozens of lives. It's very easy to enjoy and like this stuff because of the social value.

What other kind of clients do you like to work with?

DK: We like the ones who NEED to be more innovative—you know, "We've kind of missed the boat and we missed the waves." The underdogs have to really be more creative to compete. I especially like being in the president's office and sharing this kind of thinking with them. Here's what I mean by that:

What we do is the visualization of possible futures. They hire IDEO to paint several possible scenarios to show where they might go—and to help them get their people on the same page.

It's like concept cars, where the reaction from potential buyers can be so extreme that the car makers go forward and create the real thing. That's what we do in all industries and that's the power gained from research groups—we create compelling prototypes.

What don't your clients, or business people "get" about the use of design in business?

DK: TONS! Its value in general is not perceived by most business people. We [designers] are paid a fraction of what they pay their lawyers and management consultants. Though in fairness, it's much better now—Tom's books about innovation and other things have helped turn the tide. There's still a lot to do but progress has been so great, it's hard to complain.

Most companies' revenues today come from new products. So, companies are forced to look to innovators. What they don't get is the human-values part of the equation which is "what do people care about?" That's the holy grail! But companies often don't want to spend money on social scientists and go out and observe what their clients want.

What's the big deal about "customer experience"? Is the goal that every product and service BE an experience?

DK: Yes, I think so. The authors of The Experience Economy [B. Joseph Pine II and James Gilmore] have a reasonable point of view. People know that how good they feel about anything is based on the whole experience.

You can have really great meals or great seats at the show, but you gotta have the whole thing—service, environment, people. Anything can wipe it out. It's more about a simple mind shift from looking at one dimension to looking at the whole experience. Many of us talk about it but haven't made the shift yet to practicing it.

For us—when you move from product or service to experience you have to prototype differently. We use video to create an enactment of the new experience.

The best way to think about it is in terms of seeing the complete experience. In the case of the project we did for the Amtrak Acela, in our prototype we show you everything about train travel: how easy it is to buy tickets, how we've got fun things to do on the platform while you wait, what the lighting's like, what the food's like; it takes some cleverness to create this.

Or, a new medical device we created for patient monitoring. Well, we showed a little plastic device and the executives said, "Yeah, uh-huh"—they were underwhelmed. Then we showed them a movie of how the doctor/patient relationship would change. Instead of having to visit the office and have the doctor access the pacemaker in person, the doctor would be able to remotely see the patient's condition and decide whether or not to take action. And the execs saw it, really got it.

The Nightline piece on IDEO is rapidly becoming corporate lore. What is "the Deep Dive" and what are your reactions to the piece in general?

DK: We use the Deep Dive with big companies who have trouble getting off the dime—you know where everyone talks about stuff so much that they lose momentum, and they don't get to the critical point of achieving anything.

In the Deep Dive process we bring incredible resources along and get people to really, really focus and not take any calls, and really come up with ideas. And in one or two days we get an idea to the point where it can get going. It doesn't take six months. There's still all the work left to do, but we've figured out the gap ... the gap of what to do.

And, we've lived through this implementation phase many many times. Customers sometimes need a shot in the arm to get a concept far enough along to make the creative leap. For many of our clients the "advanced concepts" shelf is empty! The Deep Dive puts some stuff on it that has enough meat to go forward.

As for the Nightline piece, the reaction to it is really gratifying. I am especially gratified from the numbers of educators who use it in their classes to show what the design method is.

You know, the media doesn't think much about where design comes from. Where did this salt shaker come from? Did it fall out of the bottom of the company so you could just pick it up? Or did somebody worry about the size of the holes and the way it feels in your hand?

I have to ask you: which designs or designers do you find most interesting today?

DK: Apple stuff is interesting. Steve Jobs pushes so hard for excellence that it's super interesting. I'm drawn to these young irreverent chaotic designers, like Droog in the Netherlands.

We've kind of gone full circle. We went to modernism. We went to postmodernism. Everything is a reaction to something. Now we're in humanism. I like inside-out things—architects like Ettore Sottsass. It's old news that I'm a big fan. I admire the Italians. They care about how you have a good life, a good lunch, how you enjoy sitting on a rock at the beach. It starts to make caring about lunch really important! Caring about lunch is so un-American. But it's wonderful for design.

Did you do any summer reading?

DK: I'm reading some pop psychology, but otherwise not much. I have a three-year-old!

So how and where do you play with the three-year-old?

DK: It's Legoland at our house. And we both enjoy it—it works well for both the parents and the kid. When she wants to paint, build blocks, or draw, I'm there! Including after she's lost interest and wants to watch Mr. Roberts, I'm still building things with Legos.

What's in your future?

DK: I've been doing the same thing for 23 years. Some projects have been more fun than others. It's all a kind of a puzzle—the personality, the user, the process. It's never a dull moment, especially if you look at the variety of what people want.

If you look at my environments at both school and work, what we do is turning people on to thinking of themselves as creative. At both, it's the same phenomenon: How many people think they can't draw? Well, "draw" is just a word. Substitute "innovate" or "create." Some people want to do more of it. Our work is about how to turn people on to valuing innovation, creativity, drawing.

We want to be the patron of the creative leap. We want to make people's lives richer. Everybody can be a designer. Everyone can learn to draw. People want to be creative—maybe it's just to make a new flower box outside their house. Why is it that you have it or don't? Our work is about getting some mileage from design, about doing, trying it.

Last question! What do you expect from the CRAVE conference? What is all this interest in design in popular culture about?

DK: I expect to be inspired, as much from the attendees as from the presenters—to hang out and be turned on. Events like this raise the level of discussion. It is very much about sharing ideas. And it's going to be a feel-good thing for the designers, who will like having the spotlight on them.

What about CRAVE? When I imagine what people will crave in their futures, I imagine workplaces and work lives more integrated with family lives. I'm thinking that's what people want—movie theaters at the office with kids wandering the halls.