IDEO Product Development Case Solution

1. Introduction

IDEO is an international design consulting firm which is based in California. IDEO creates designs for its international clients for innovative product, services, customer experiences and retail or service environments. Microsoft, Apple, PepsiCo, and Ford are among the most prominent clients of IDEO. The company has been known for its original work and break-through designs. The case relates to the problem faced by Dennis Boyle – a project manager at IDEO – to manage the schedule of Palm V design. Boyle needs to make decisions about the time scale and the work environment of the team to complete the design project within the specified time.

2. IDEO’s Processes

IDEO has in place a highly structured process for innovation. The innovation process followed at IDEO is an organized set of coherent activities. The innovation process is divided into a number of stages at IDEO. Each of these stages is characterized by a specific set of organizational, technical and economic operations. The first stage of the process is the emergence of the idea. During this stage, an awareness of the need of the client is gained. Also, feasibility of establishing scientific and technical innovation is assessed in the context of the problem at hand.

Subsequently, the team at IDEO generates alternative ideas on creation of the new concept. They also organize the selection of ideas in terms of their respective priority. The objective of assigning priority to each idea is that further research and development must be aimed only at specific practical ideas rather than a wide range of ideas (Zheng, et al., 2010). A very strong emphasis is placed during the research and development work on the selection and allocation of resources between different innovation areas. Thus, IDEO’s team carries out research and development in selected areas.

Once an idea has been shortlisted, the process comprises of the development of industrial design innovation and its implementation in production. Mass production and dissemination of innovations in the market is carried out (Jiang & Liu, 2015). The step of the process is aimed at improving consumer friendliness of the product, service or environment, as well as, to decrease the production cost of the new design.

The whole course of the innovation process at IDEO is monitored and adjusted based on market information. It is particularly important in the early stages of developing innovations to implement demand forecasting modules and to identify the likelihood of the commercial success of a product or service. Given below is a brief review of each step of the process at IDEO:

Stage 0 – This stage relates to the identification, study and systematization of the particular design project. For example, in this particular case IDEO’s team needs to identify the functions to be fulfilled by Palm V, which is under design. The results of this early research are recorded in the information management system of the company. This stage of the process is important because it reveals the possibility of technical and economic feasibility, as well as, the scope of the primary use of the research (Kjellberg, et al., 2015).

Stage 1 – Based on the results of initial research, the next step of the process includes the possibility of technical, socio-economic benefits and ways of practical use of the results of basic research in a particular industry. The industry for this particular project is Information Technology industry. This stage is characterized by the creation of production schedules, preliminary designs, technical specifications and requirements, as well as, procedures and standards of the technology. It is also important at this stage to carry out theoretical justification for ways and methods for developing applications, charting and possible solutions of scientific and applied problems of mathematical and physical models (Zhang, et al., 2014).

Stage 2 – During this stage of the process, initial development is made on the basis of the results of applied research and experimental verification of scientific and technical documentation for new or improved products. Attention is also paid to structures, processes, and management systems during this stage of the process. Details of the activities carried out during this step differ in terms of design development (Kraus, et al., 2012).

This phase includes a pilot production. The production of the first samples of the product is carried out in order to test their quality and compliance with terms of reference. This phase also checks the results of design and technological development in one form or another. Although the functional content development and its experimental verification are significantly different, the time during which this change occurs is the same (Varoutsa & Scapens, 2015). The case narrates that Research and Development at IDEO are carried out in specialized laboratories, design offices and pilot plants. In this phase of the process, a prototype of a model is created at IDEO. Creation of a prototype occupies a very high importance according to Dennis Boyle because it serves as a proof of the basic concept (Meer-Kooistra & Scapens, 2008).

Stage 3 – The subsequent stage is characterized by a commercial production of the new design at IDEO. This stage comprises of the implementation of the results of earlier developments in production. It is not uncommon to have a commissioning of new facilities, processes and management systems during this stage. The production and technical development during this stage includes creation of specifications, standards and the standard cost of resources (Salerno, et al., 2015). Design and manufacture of equipment are also carried out during this stage. Technical preparation of production is the most time-consuming step of this implementation, because it includes in addition to organizational and technical measures, training, and retraining, providing consulting and innovative service. This phase of the life cycle of innovation is characterized by a gradual decrease in the average cost (Müller, et al., 2014).

3. Organizational Structure & Culture at IDEO

The organizational structure at IDEO is a lateral organizational structure. David Kelley has been able to create an interactive culture at IDEO by building a friendly and adaptive environment that support innovation and creativity. IDEO has a horizontal organizational structure rather than a traditional hierarchical structure. This form of organizational structure enables the management of the organization to support employees in taking initiatives, to help them in making decisions and to take responsibility for the results (Nyborg, 2014).

Being a flat organization, IDEO has relatively fewer management layers. Kelley wanted to foster innovation and creativity within IDEO’s culture. Traditional hierarchical organizational structures follow a string of command and management control. This degree of command and control curbs innovation and creativity. Due to the reduction of the number of management layers, IDEO’s organizational structure gives freedom to the employees and makes the most of their talent. This form of organizational structure facilitates a greater level of communication between the employees and the management. The lateral organizational structure tends to be more democratic and provide a greater level of innovation to the organization. Communication and decision making take place in a lateral organization much faster, more reliable and more efficient as compared to large structures (Prasad, et al., 2012).

Zhang, et al., (2014) also mention that flat organizational structures are more flexible and adaptable than large structures. This level of flexibility means that decisions are taken on the basis of innovation and customer orientation. A traditional hierarchical organization curbs the innovation. This is because in traditional organizational a member of the staff needs to get approval from a supervisor or manager. In a flat organizational structure member of the staff has more power to take decisions on their judgment. Organizational structures with fewer reporting layers often contain less bureaucracy. Decisions are, therefore, taken much faster which gives the company greater agility and mobility (Salerno, et al., 2015).

The flat organizational structure of IDEO revolves around the formation of personal and fully engaged working groups. This arrangement leads to the formation of happier workers and lower employee turnover. When employees are responsible for decision making, they take more pride in the results and achievements of the company. This high level of engagement can lead to a decrease in employee turnover and increased profits for the organization (Meer-Kooistra & Scapens, 2008).

There is one problem with the lateral structure of IDEO. Employees at IDEO have more than one boss. Also, it is difficult to impose control on the employees in a flat organizational structure. This is because under a lateral organizational structure there is an overlap in the chain of command.
According to Zhang, et al., (2014) flat organizational structure works best for small organizations or for managing small business units. Large structures lose the benefits of the flat structure when there is too much variation between different job functions. The challenges of implementing the horizontal reporting structure have raised several issues at IDEO. There is a lack of identification of market segments based on customer expectations. The establishment of horizontal teams for management of different segments of targeted customers is difficult. The proper use of specialists in a vertical structure becomes problematic. The design of an appropriate remuneration system is also needed at IDEO.

Since IDEO has adopted a horizontal organization structure, it must commit to conduct marketing studies to identify customer segments based on expectations. It is also essential that senior and middle managers of IDEO must define the responsibilities of these teams. The roles and responsibilities of each member of the team should be clearly defined. Also, the management structure should define key individuals who will have the power to direct team formation. These will be made up of people in charge of strategic functions of IDEO and be assigned to specific functional areas (Meer-Kooistra & Scapens, 2008).

One of the main difficulties encountered in managing horizontal teams is the lack of depth relating to functional expertise of the members. To be effective, the horizontal teams at IDEO must have access to functional experts in their respective discipline. The most relevant functions in the context of the development of Palm V are marketing strategy, communication, production planning, finance, etc. The solution to the problem is that all the functional experts at IDEO are integrated into cohesive teams. The aim should be to combine the skills of a vertical and horizontal organization. Thus, the innovation at IDEO should be oriented towards the needs of different segments of customers. The decentralization of a horizontally integrated team will lead to a vertical functional organization (Prasad, et al., 2012).