Tom Kelley is the general manager of IDEO, the 450-person company product design pioneer known for its groundbreaking work for Apple, Baxter Healthcare, Caterpillar, Kraft, and a host of other manufacturing icons. He is the author of the best sellers The Art of Innovation and The Ten Faces of Innovation. In this exclusive interview, he explains how manufacturers can spur innovation within their companies.
Q: Do you find more client companies coming to IDEO these days looking for big-bang ideas as opposed to more iterative innovations?
A: Most of our client organizations are pretty darn good at incremental stuff. The harder ones are the bigger leaps that challenge the status quo and thought patterns. For one project, on the office wall was a quote from Henry Ford, 'If I had asked the customer what they wanted, they'd have said a faster horse.' Companies are good at the faster horse. They're good at making things smaller and lighter. So they ask, 'How do we change?'
I call what's happening now the Red Queen effect, and here's an example of it. I grew up in Akron, and back then, 100% of passenger tires for U.S. cars were made within 10 miles of our house. It was a nice little oligopoly. All the companies had to do was come out with a new innovation -- a stronger material, a new rain tire -- every couple of years.
In Alice in Wonderland, the Red Queen tells Alice, 'If you really want to get somewhere you've got to run twice as fast.' That's where companies are now. They've been innovating, just not enough. Michelin innovated at a faster pace and stole the tire market away from Akron. By the time I graduated from high school, the number of passenger tires manufactured in Akron was zero. It's about innovating at a faster pace.
Q: What challenges do companies face when they're trying to develop new streams of revenue and new business models?
A: For many larger companies, the process of thinking through innovative business models is not one they're used to. So what we do for them is put together a small team that can try out different approaches. Most of the time those are quite successful.
Afterwards we ask the collective team, 'How might we tweak the organization as a whole -- the structure, the process, the rules -- so we can do things like this all the time?' We invite senior management to that discussion. Often when team members talk about the perceived corporate barriers to innovation, senior management will say, "No, that's not a rule; you can break that rule as much as you want."
Small teams have a success story, and the world likes successes. So a team that has succeeded with an innovation becomes a magnet for other teams in the company looking to run faster and jump higher. And it starts to get viral.
Q: Mobile communications has been credited with changing the way companies can interact with prospective customers. Do you see mobile devices having a major change on innovative business models?
A: Your ability to test something goes way up. If you develop a network of interested parties -- good customers or industry observers you trust -- you can put an idea out there or try a trial balloon much more easily than if you have to find a test market. And if better communications allow you to reduce the cost of an experiment, then you can do more experiments and learn faster.