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.”

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.

When SSM DePaul Health Center in St. Louis, Mo., hired Ideo to help make over a nursing unit, Ideo staff members deployed a technique they call bodystorming. Taking on the roles of real patients, they acted out the entire physical experience of a stay in the unit, with one hand on a crutch and the other on a video camera. They also gave disposable cameras to DePaul’s nurses and told them to take pictures of anything that impeded them during their duties. The result? Dozens of small fixes–such as a room for families, a phone for every nurse, and pictures of trees in every patient room–that make for a less stressful and more healing environment. “When you get on the other side of the design process, you think, Gosh, this is just common sense,” says Bob Porter, DePaul’s executive vice president. “But because of inertia and conditioning, we quickly lose the perspective we need to see those improvements. You have to do things to provoke creativity, and Ideo is great at doing that.”

So impressed is Porter that he’s retaining Ideo’s services again for the design of a new hospital. In fact, Ideo is developing something of an expertise in medical reform, also working with clients like the Mayo Clinic in Rochester, Minn., to create mini-Ideos–permanent design-research facilities that work like prototype factories within the organizations. The Mayo facility has already created one Ideo-like product: a check-in kiosk based on those e-ticket machines at airports so that Mayo patients don’t have to wait in line just to sign in.

Most business leaders would have a heart attack if their companies started training clients not to need them, as the Mayo mini-Ideo is meant to do. But Kelley doesn’t blink an eye. “We have no trouble giving away this week’s ideas because we think we’re going to come up with better ones next week,” he says. “We’re quite happy to see them ride off into the sunset.”

Why is Kelley’s outlook on business so different? To hear him tell it, being around academia–Kelley got tenure to teach product design part time at Stanford’s engineering school in 1990–gives him the necessary distance and perspective. “If you always stay at a company, this barbaric businessness overtakes you,” he says. “You’re always in execution mode. Here [at Stanford] you get to think more strategically about your profession.” Or, as he tells his students, “enlightened trial and error succeeds over the planning of flawed intellects.”

That he still has another $15 million to raise to build the d.school isn’t stopping Kelley from dreaming about the kind of human-centered, multidisciplinary church it can be–or the kind of bully pulpit it will serve as in his profession. “Designers are in a position to be the glue that holds collaborative teaching together,” he says. The high priest of the new religion of design thinking has spoken.