Silicon Valley Design Firm IDEO Aims to Rethink Books, Cars

Employees at the Silicon Valley design firm IDEO LLC spotted weaknesses in the current crop of electronic-book readers. So they did what came naturally to them and designed their own.

The company created a proposal for e-readers called “The Future of the Book,” showing how the devices could tap wireless Internet access, location services and social networks to help readers interact and get more involved in novels. In September, the ideas were presented to publishers in New York, including McGraw-Hill Cos. and Random House.

“This is the way designers are -- interested across lots of things in their personal life,” Diego Rodriguez, a partner at IDEO, said in an interview from its Palo Alto, California, headquarters. “We tend to see trends, societal trends, maybe before mainstream society feels them.”

While IDEO’s vision for e-books may take time to show up in stores, the firm laid the groundwork for many of the products consumers will be considering this holiday season -- as well as the way they pay for them. Its designers helped create Apple Inc.’s first mouse and TiVo Inc.’s remote control, and they devised Bank of America Corp.’s Keep the Change program, which rounds up purchases to the nearest dollar and deposits the difference in customers’ savings accounts.

Switch to Strategy

Once focused on product design, the firm has spent the past decade branching out into everything from fighting childhood obesity to changing the way drivers interact with their cars. Its projects now involve brand management, business strategy and experience building, and revenue has increased 65 percent to $117 million by year-end from $71 million in 2000. The firm’s 545 employees are spread across offices in Boston, Chicago, London, New York, Munich, San Francisco and Shanghai.

“That’s the strength of IDEO -- they can work on anything,” said George McCain, president-elect of Industrial Designers Society of America, an association devoted to industrial design. IDEO, formed in 1991 when three separate design firms merged, has won more awards from the organization than any other company.

“Before them, everyone was doing just design of an object, and trying to make it look good,” he said. “They went below the surface, they dived down deep and looked into: what are the real needs of the user that’s going to use this product.”

Audrey’s Failure

Not every project works out. Take Audrey, an Internet appliance that IDEO designed for 3Com Corp. in 1999. The device was meant to be an information center for families that displayed calendars, weather, sports, stocks and traffic -- something handled today by mobile applications on smartphones.

Other ideas, such as “The Future of the Book,” are never meant to become real products. The company says it came up with that concept to start a conversation with publishers and content providers, though people have contacted IDEO about ordering the device shown in the demonstration video.

IDEO has worked with companies in a wide range of industries, including ConAgra Foods Inc., Eli Lilly & Co., Ford Motor Co., Microsoft Corp. and Target Corp.

Ford tapped IDEO to devise new ways for drivers to interact with their vehicles. Using a dashboard ripped out of a car, a PlayStation 2 console and a projector showing racing game “Gran Turismo 3,” IDEO studied how people listened to music, found directions and answered calls.

Ford Interface

Ford then used that information to create MyFord Touch, which replaces many of the standard buttons, knobs and gauges in the vehicle with LCD screens and five-way buttons. Drivers can personalize data screens, ambient lighting color, adjust temperature settings, radio channels, find music on MP3 players and access turn-by-turn directions. MyFord Touch is now debuting on 2011 model-year cars.

“They’re known for having this great innovative design process, for really getting customer-focused design,” said Jennifer Brace, a user-interface design engineer at Ford in Dearborn, Michigan.

Ford is increasingly relying on such technological developments to drive sales and profits. The company’s voice- activated Sync entertainment system, first released three years ago, was cited as critical to a buyer’s purchase of a Ford car 32 percent of the time.

What IDEO brought to the partnership was the ability to test unfinished concepts with a few people and make adjustments immediately, Brace said.

“That’s something we were lacking at Ford -- these quick prototypes. Everything had to be working for us before we showed people and got feedback,” Brace said. “We wanted to learn those lessons and bring them back to the company and use them going forward.”

Rounding Up

Bank of America turned to IDEO when it wanted to attract more baby-boomer moms as customers. After observing consumers in Atlanta, Baltimore and San Francisco, the firm concluded that many people typically round up their financial transactions. Customers also complained about not being able to put enough money aside.

The result was the Keep the Change program. Since debuting in 2005, more than 12 million customers have enrolled, helping them save more than $3 billion, said Don Vecchiarello, a spokesman for the Charlotte, North Carolina-based bank.

IDEO also has begun designing its own businesses. ShopWell Solutions Inc., which the company spun off earlier this year, stemmed from an effort to help people eat healthier food. ShopWell’s site lets users enter the things they want to avoid - - saturated fats, added sugar -- along with what they need, such as certain vitamins and whole grains. It then suggests products available at supermarkets that fit the criteria.

Needle-Free Vaccines

IDEO also has worked on a campaign to prevent unplanned pregnancies, the development of needle-free vaccinations and a project for the U.S. Centers for Disease Control and Prevention to encourage preteens to eat healthy foods.

One advantage of working in so many industries: Employees notice similar issues or questions from a variety of clients, said Duane Bray, a partner at IDEO. The firm is now tracking a pattern called “care and repair” -- the preference for items that are more durable and can be fixed when broken, instead of cheaper things that tend to get discarded. That’s helping clients decide how to design and market new products.

The company doesn’t rely on a few superstar designers to come up with the next big thing. Instead, IDEO hires people from diverse backgrounds, such as anthropologists, behavioral economists, food scientists and entrepreneurs, and makes them work in teams to solve clients’ problems.

“Because we work across many industries for many clients, we look for patterns that bubble up,” he said. “They bubble up in many ways.”

To contact the reporter on this story: Ryan Flinn in San Francisco at rflinn@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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