School of Bright Ideas

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Ideo's reach and influence extend well beyond its 350 employees and relatively modest $70 million in annual revenue. By bringing fresh thinking to clients from P&G to Microsoft, Kelley's firm has become a go-to resource for bellwether businesses. (Seven of Ideo's top 10 clients--Microsoft, P&G, Pepsi, Eli Lilly, Hewlett-Packard, office-furniture maker Steelcase and a consumer-electronics multinational whose name Ideo has been asked not to disclose--have been working with the firm for more than 10 years.) Now Kelley is moving to a third stage, bringing the lessons of design thinking full circle by linking business, design and education. Last month he got a $35 million check from an anonymous business donor for his pet project, the Institute of Design at Stanford, a new department better known as d.school. Its mission: to take graduate students from a grab bag of disciplines--business, engineering, social sciences--and put them together with real companies like General Motors and Electronic Arts facing real business challenges. With Ideo staff members acting as adjunct faculty--intentionally blurring the lines between the firm and the classroom--the goal is not only to help the companies but also to train the next generation of business leaders as designers.

Many experts are hailing the idea as revolutionary. "Most industrial designers used to originate from schools of art or architecture," says Don Norman, author of Emotional Design and a professor at Northwestern University. "Ideo was different. It was from the start a merger of people who believed design was more than skin deep. You should always remember the culture in which the thing you're designing is embedded--that you're solving the problem behind the design problem."

If that all seems like a hazy, emotional way to do business, it is. And that's just the point. "If you stay at the market-research level, you stay detached," says Jane Fulton Suri, Ideo's head of human factors (the company is constantly tweaking the names of its departments) and soon to be a d.school teacher. "We reintroduce you to the real chaos of human behavior." At any of Ideo's offices in Palo Alto, San Francisco, Chicago, Boston, London and Munich, a photo of someone using a product is considered worth a thousand dry sales statistics. Anecdotal evidence, brainstorming (at a breakneck rate of 100 ideas an hour), role playing--those are the tools Ideo uses to encourage true openmindedness and, with it, more fluid problem solving.