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Procter & Gamble\u2019s standing toothpaste tubes. The Palm V personal digital assistant. Bank of America\u2019s \u201cKeep the Change\u201d program. For decades, the innovative wares invented inside IDEO were considered the leading edge of product design. At the core was the idea of\u00a0 \u201cdesign theory,\u201d an approach to developing new products or services that puts customer needs, instead of business or engineering needs, first. The design agency, founded in 1991, eventually grew beyond pure product design to, for example, revamp Ford\u2019s EV factories.\u00a0<\/p>\n
But, in recent years, the storied design agency has faced a crisis. Companies brought design in-house, copying IDEO\u2019s approach without needing to hire the agency. Executives pressured design teams to deliver results. Other companies saw design as a costly distraction amid an even costlier push to adopt AI. Last year, job postings in product design fell by 18%, and graphic design by 57%, according to Fast Company.\u00a0<\/p>\n
Before IDEO\u2019s current CEO, Mike Peng, took over the agency last year, it had reportedly cut a third of its workforce, closed its Munich and Tokyo offices, and seen its revenue decline to less than $100 million, from $300 million four years prior.<\/p>\n
Human-centered design defined the San Francisco-based agency\u2019s approach for almost four decades, shaping its pitch to boardrooms and its approach to products. But with AI threatening to change what it means to be innovative in the first place, Peng isn\u2019t sure that\u2019s enough anymore.<\/p>\n
\u201cCustomer centricity, the thing that IDEO has always stood for, just seems like it\u2019s table stakes now,\u201d Peng tells Fortune. \u201cJust saying that you\u2019re customer centered alone isn\u2019t enough. So many companies, over 50%, already believe they are customer-centered.\u201d<\/p>\n
Peng\u2019s response is to revamp IDEO\u2019s value proposition. Instead of designing individual products or services, he wants the agency to teach clients how to design products on their own.\u00a0<\/p>\n
\u201cThe type of projects IDEO is involved in now feels a lot bigger than just these one-off projects,\u201d he says. \u201cThey\u2019re very much in the \u2018teach the person how to fish, not just fish for them\u2019.\u201d\u00a0<\/p>\n
What\u2019s happening with design in Asia?<\/p>\n
Peng first joined IDEO in 2006 and spent a decade in Japan, helping launch the firm\u2019s Tokyo office. He left in 2020 to become chief creative officer at Moon Creative Lab, a venture studio backed by the Japanese company Mitsui, where he worked on new businesses in health, wellness, and digital transformation.\u00a0<\/p>\n
While he\u2019s currently based in San Francisco, he\u2019s still paying attention to design trends across Asia.<\/p>\n
In China, IDEO is tapping the trend of the country\u2019s companies \u201cgoing global,\u201d breaking out of the domestic market to serve a global customer base.\u00a0<\/p>\n
\u201cIt used to be that so much of the work we did was for multinational companies that were trying to make it in China,\u201d Peng recalls. \u201cBut the majority of projects now are helping Chinese companies in China, and helping Chinese companies break through and go global.\u201d<\/p>\n
Several Chinese brands are starting to get a foothold overseas. Chinese-made EVs are already garnering interest from drivers due to their advanced features and user experience; Chinese consumer appliance companies, like Roborock and Dreame, are also investing in home robotics. Even Chinese consumer brands, like Mixue, Luckin Coffee, and Pop Mart, are starting to break into markets like the U.S.\u00a0<\/p>\n
Peng sees a different story in Japan. \u201cOne of the toughest challenges Japan is having is how it breaks into North America,\u201d he says.\u00a0 \u201cThere\u2019s not really a solid understanding of what it\u2019s going to take to break through into some of these markets: the speed, the talent, how much you need to invest, the cultural differences.\u201d<\/p>\n
The typical approach, dispatching a small team to build an innovation lab in Silicon Valley and hoping the insights flow back to headquarters, has rarely worked. \u201cThey really need to think about new models to be able to break through in North America,\u201d Peng says.\u00a0<\/p>\n
How to be innovative<\/p>\n
Last month, IDEO released its first Innovation Quotient, based on a survey of more than 250 product and innovation executives across media, technology, healthcare, and consumer goods. The results suggest that workplace design culture and financial performance are linked: Companies in the top quintile of IDEO\u2019s IQ score generated 50% higher profits than the average firm.<\/p>\n
Yet while more than half of companies claimed they were customer-centric, only about 30% of surveyed leaders strongly agreed their teams had the autonomy to experiment or effectively balance short- and long-term goals, and just 21% said they consistently tested ideas with customers.\u00a0<\/p>\n
Peng thinks companies will spend years using AI for efficiency gains before they realize that the technology has far deeper implications. \u201cWe replaced steam power with electricity, yet the belt-and-shaft model of the factory lasted for 30 years because no one thought we could redesign what a factory was.\u201d<\/p>\n
But once companies have gotten the efficiency gains from AI, what comes next? \u201cMy hunch is that it\u2019s organizational transformation,\u201d Peng says. \u201cWhat is a new business organization structure going to be like? How is it going to work? With the surplus of human creativity and energy we gain through efficiency, what should we them on?\u201d<\/p>\n
AI remains the most urgent question for any firm in the design business. Design software companies have been hit hard by the AI scare trade, as investors worry that AI will soon be able to handle creative tasks in minutes. Shares in Autodesk, which mainly serves industries like construction and architecture, have fallen by almost 20%.<\/p>\n
The risk AI poses to design, in Peng\u2019s view, isn\u2019t that it will replace designers, but that it will make everyone\u2019s output look the same. \u201cEveryone is going to have access to the same technologies, and everything is going towards the average\u201d he says. \u201cIf companies are going to innovate, they\u2019re going to need to find that edge that\u2019s going to help them compete and help them outperform. I don\u2019t think models are going to be able to do that right now.\u201d<\/p>\n
\u201cThe act of finding that edge is, to me, a very human activity,\u201d he adds. \u201cIDEO has always been about designing for the human in the loop; it\u2019s just that the loop we\u2019re talking about is much more in the broader ecosystem.\u201d<\/p>\n
#IDEO #spent #years #selling #customercentricity #CEO #Mike #Peng #thinks #isnt #anymore<\/p>\n","protected":false},"excerpt":{"rendered":"
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