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IDEO:ServiceDesign(A)10/2008-5276ThiscasewaswrittenbyRiteshBhavnani,ResearchAssociateandINSEADMBA(July2004),andManuelSosa,AssistantProfessorofTechnologyandOperationsManagementatINSEAD,asabasisforclassdiscussionratherthantoillustrateeithereffectiveorineffectivehandlingofanadministrativesituation.Theinformationinthiscasehasbeenobtainedfrombothpublicsourcesandcompanyinterviews.Copyright©2006INSEADN.B.:TOORDERCOPIESOFINSEADCASES,SEEDETAILSONBACKCOVER.COPIESMAYNOTBEMADEWITHOUTPERMISSION.Thiscasewonthe2008EuropeanCaseClearingHouseAwardinthecategory“ProductionandOperationsManagement”Copyright©2006INSEAD110/2008-5276“Ishouldhavehadthecafélatte,”thoughtPeterCoughlanashesippedhisstrongdecafdoubleno-fatsoyalattemacchiatoatPeet’sCoffeehouse,justaroundthecornerfromhisoffice.Designersandengineersfromhiscompany,IDEO,oneoftheworld’slargestandarguablymostsuccessfuldesignfirms,oftengatheredhereandtalked.HelookeduptoseeDennisBoyle,anotherIDEOemployee,glaringathisowncoffeenearby.BoylehadbeentheprojectleaderonthePalmVandHandspringVisorhandheldcomputerprojects,andCoughlanbrieflywonderedifBoylehadeverhadtowrestlewiththesamekindofproblemthathewasfacingnow.Thecoffeehe’dcreatedwasjustterrible.Coughlanhadjustcomeoutofafour-hourmeetingwithDavidBecker,presidentandCEOofPortlandGeneralHealthCenter.BeckerhadchancedtoseethefamousNightlinedocumentaryaboutIDEO’sdesignprocessandhadbeensuitablyimpressed.TedKoppel,thehostofNightline,hadchallengedIDEOtocompletelyredesignthetraditionalshoppingcartinfivedays,andNightlinehadfilmedtheentireprocess.Intheend,IDEOdeliveredasleekandstreamlinedshoppingcart,withmodulardetachableshoppingbaskets,ababychair,ado-it-yourselfbarcodescannerandahostofotherinnovations.Moreimportantly,thereporthadgivenpublicexposuretothefamedIDEOdesignprocess,aprocessthathadelevatedthefirmtonear-legendarystatusinthedesignworld,enablingittowinmoredesignawardsthananyothercompanyyearafteryear.1BeckerhadcometoIDEOlookingfornewideasonhowtoimprovehealthcareserviceinhishospital.Americanhealthcarehadneverbeenknownforitsdesign.WhenTomKelley,thegeneralmanagerofIDEOandbrotherofDavidKelley,oneofthecompanyfounders,wasinterviewedontheradioprogrammeFreshAir,hehaddescribedahandfulofthingswhosedesign“hadbeenbadsolongthatyoudon’tevenreallythinkaboutthem”.Hementionedirons(“Thestate-of-the-artmethodfordecidingwhetheryoursteamironishotornotistoputyourtenderfingersontothemetal”),andairlinetickets(“There’sallsortsofcodesand17-digitsonthere”).2Whenhecametohospitalwaitingrooms,noanecdotalevidencewasrequired;everyonecouldpicturethepainfullybrightfluorescentlighting,out-of-datemagazines,andstiffuncomfortablechairs.Hospitalshadtodealwithseverefinancialpressures,escalatingcostsandstaffshortages,yet,perversely,wereexpectedtocontinuetodeliverstate-of-the-artmedicalcareandkeepuptodatewithrapidlyevolvingmedicaltechnology.“Design”hadneverreallybeenthoughtofasanimportantfactorindeliveringbetterpatienttreatment.ThechallengethatBeckerputtoIDEOwasn’teasy:howdoyouredesignahealthcareserviceandimprovepatientcareinthefaceoflimitedbudgetsandconstrainedresources?1In2004,thecompanywon10IndustrialDesignExcellenceAwards(IDEA),doublethenumberofthenexttwofirms,SmartDesignandfuseproject,eachofwhichwonfive.2ChristopherHawthorne,“TheIDEOCure”,MetropolisMagazine,October2002,pp.3-7.Copyright©2006INSEAD210/2008-5276TheHistoryofIDEO“Gooddesignisgoodbusiness.”ThomasWatson,CEO,IBMIDEOwasacompanybornoftwohistories.Thefirstpartofthehistorybeganin1969,whenaBritishindustrialdesigner,BillMoggridge,setupMoggridgeAssociatesinLondon.In1979heexpandedhisbusinessbyopeningupanofficeinSanFranciscocalledIDTwo,whichfocusedonindustrialdesign.ThesecondpartofthehistorytookplaceintheearlyboomdaysofSiliconValley,whenDavidKelley,adoctoratestudentatStanfordUniversity,realisedthatmosttechnologycompanieslackedaccesstogeneralproductdevelopmentskills.Accordingly,in1978hegaveupwritinghisPhDthesisandwentontoformhisowncompany,DavidKelleyDesign,toaddresstheengineeringdesignrequirementsoffirmsintheValley.Thetwoindividualsmetin1979andstartedcooperatingonjointprojects.Theyrealisedearlyonthatthefieldofdesignwasevolvingtosuchapointthataninter-disciplinary,multi-functionalapproachwasrequiredtoprovideeffectiveservicetocompanies.IDEOwasformedin1991whenDavidKellyDesign,MoggridgeAssociates,IDTwoandMatrixProductDesign(anotherdesigncompany)merged.Themergerbroughtunderoneroofprofessionalswithexperienceinthehithertodiversefieldsofmechanicalandelectricalengineering,industrialdesign,ergonomics,informationtechnology,cognitivepsychologyandprototyping–practiceareasthatrapidlycametobeconsideredintegraltoproductdesign.AnotherimportantadvantagethatIDEOhadwasthefactthatitwasatranscontinentalfirmfromitsveryinception.BothfoundersarestillcloselyassociatedwithIDEO,althoughKelley,formerlyCEO,becamechairmaninMarch2000,relinquishingthereinsoftheorganisationtoTimBrown,whousedtobeinchargeofIDEOLondon.ByJanuary2005IDEOspannedtwocontinentswithsixlocations(PaloAlto,SanFrancisco,Chicago,Boston,LondonandMunich)andhadastaffof350peopleandannualrevenuesofab