School of Bright Ideas

"For me, it's like a religious thing," says David Kelley. "I truly believe design thinking will make your life better." Kelley, 54, a professor in the engineering department at Stanford University and the chairman of Palo Alto, Calif., design firm Ideo, is sitting in his cramped third-floor office, surrounded by a blizzard of Post-it notes and foam-cut prototypes. Talking at the speed of a guy on his third espresso, occasionally jumping up to scribble ideas on a whiteboard, Kelley outlines his credo: that practically anyone in the business and academic worlds can and should think like a designer. "It isn't just the smartest kid in the art class, which is what that title meant back in the day," he says. "It's about understanding human needs."

Kelley has possibly done more than anyone to bridge the gap between modern design and modern business. After graduating from Stanford in 1978 (as a self-described "lousy" mechanical engineer), he created--among other things--the very first Apple computer mouse and the light-up LAVATORY OCCUPIED sign used on Boeing 747s. In 1991 his company merged with ID Two, designer of the first laptop, to form Ideo. During the heady high-tech 1990s, the firm became the hottest product-design shop in Silicon Valley, working with the biggest names in business, churning out hundreds of supremely user-friendly designs like the Palm V and the Polaroid I-Zone "fun" camera and winning more awards per year than any other design firm.

But that was only Stage 1. When the dotcoms started going bust, Ideo adapted its business model. Instead of cool products, Kelley began to focus on processes--like streamlining admission into hospitals or new ways to stock supermarket shelves. Ideo transformed itself into a highly unconventional business consultancy--taking clients on bizarre field trips or making them dress up as customers--that spread the gospel of design thinking to corporate America. The CEO of Procter & Gamble, for instance, was once sent shopping in San Francisco's low-rent Mission District, while top executives from Kraft were taken to the traffic-control center of a large city to see whether watching 1.2 million cars being stopped and started every day could influence their supply-chain management. (It did: after collaborating with Ideo, Kraft cut in half the time it took to get new products to retail.)

Then there were the AT&T Wireless execs who were sent on a scavenger hunt and told to use their Mmode location software to find an ATM, a drugstore and a particular kind of Japanese cookie. Almost immediately, Mmode proved too hard to use. One participant broke down and dialed 411, and another called his wife and asked her to Google a location. "They realized their competition wasn't Verizon," says Ideo's Duane Bray, who designed the exercise. "Their competition was real life."