Evan Baehr

As you walk down the alley between two rusty warehouses, you get a glimpse of waves crashing under the Bay Bridge. When you enter the facility, bright sunlight pours through curved skylight windows, bringing to life the dark tones of the original wood flooring, the shine of beautiful metallic chairs, and the bright white of meticulously organized shelves. The employees move around quickly, though not hurried, often carrying a recently brewed cup of exotic tea.  The people themselves are works of art–their distinctive hair, stylish yet hipster clothing, and rare footwear.  Small moments over a catered lunch or taking in views of the bay provide opportunities to talk about their passions, their vision, and how they can make the world a more beautiful place.

This is Ideo – a revolutionary design firm whose patriarch, David Kelley, invented “design thinking” (see this for a great introduction) and founded Stanford’s d.school. These institutions and this school of thought is exerting tremendous influence on corporations and their attempts to innovate. However, when Ideo hipsters meet corporate pinstripes, some things get lost in translation.  This clash of cultures–you might even say of civilizations–is instructive for how big corporations ought to partner with innovators/creatives.

Corporations are desperate for innovation.  John Hagel argues that American companies have seen dramatically reduced return on assets in the last four decades, due in large part to changes in technology and failure to innovate.  So big companies have received the message: it is time to innovate.  I was recently with a VP of a large corporation after his first encounter with Ideo.  Although he did not know exactly what Ideo does or what it might mean for his business, he told me: ”I want to get some Ideo.” ”If only we could have a team like that at our company,” he reflected.

Following an encounter with these chic, innovative, and inspiring designers, it is easy to understand this urge to build a team of Ideo-like innovators inside your corporation–yet this desire should be quashed.  The cultural gulf between creative hipsters and analytical pinstripes is so deep that the best hope we have is to facilitate short, structured exchanges of ideas and information.  Deeper cultural integration–the kind required to actually build a team within a corporation–is likely impossible for five reasons:

1. Designers are communitarians disinterested in profits: the entire apparatus of human resources and talent management built in the last 50 years in an era of knowledge workers does not work for creatives.  (See HBS Grad Scott Belsky’s Making Ideas Happen for color on this.)   They are rarely motivated by money and instead desire respect from their peers and to know they made something more beautiful than they found it. There are numerous examples of cases where creatives turn down profitable work because they fear the impact to their reputation of producing something that is not avant-garde.   Successfully managing and motivating prima donnas is nearly impossible inside today’s corporation.

2. Design firms (or internal business units) have no business model: Even the most famous design firms today exhibit tumultuous corporate histories: filled with mergers, breakups, big personalities, and poor economic performance. This troubled corporate history suggests that creative business units inside larger corporations are likely to be loss leaders.  So even if the fees from design consultants seem high, the alternative of bringing the creative’s in-house will prove even more expensive–and certainly more painful.

3. Designers are hard to manage: They are often disinterested in profits, are unwilling to work for clients they do not like, push back on practical feedback from strategy and business people, and expect to be treated as “artists” (said with french accent).

4. Designers are hard to attract: Given the importance of reputation and pedigree of firm, you might assume that any designer who would be willing to work for a non-innovative big company is a designer you should not hire.

5. Designers are hard to retain: Even if the corporation is able to attract high-quality designers it will be very difficult to retain them. Pushing new, innovative ideas (whether radical product designs or edgy marketing materials) through big corporations is a difficult process. You can probably assume that only a small percentage of new ideas generated from within the company actually see the light of day. This process is likely to prove very frustrating for creatives employed in-house. If Ideo delivers a set of product recommendations to clients and the client chooses to not accept them, the Ideo designer can walk away thinking, “They have no idea what they are doing. Thank goodness I do not work there.”  If the designers worked in-house, their frequent frustration would kill their motivation and likely result in high turnover.

Designers are absolutely critical for the future of innovation–and therefore for the future of the modern corporation. And it is more than just their chic clothing and beautiful whiteboards–their process of idea generation is remarkable and will likely be responsible for tremendous economic growth. However, managers of modern corporations must be smart in how they partner with designers. Given the tremendous cultural gulf, these partnerships should be created between two separate firms–firms that have two very different business models–instead of trying to merge the corporate entities by bringing creatives in-house.

Note: this semester at Harvard Business School I am privileged to study with Karim Lakhani, who is leading a seminar on Managing Innovation. Karim is a superb teacher and evangelist of innovation. I’m borrowing one of his favorite quotes to give you a glimpse into what excites him:

Creativity is dangerous.  We cannot open ourselves to new  insights without endangering the security of our prior assumptions.  We cannot propose new ideas without risking disapproval or rejection.  Creative achievement is the boldest  initiative of mind, an adventure that takes its hero simultaneously to the rim of knowledge and the limits of propriety. Its pleasure is not the comfort of the safe harbor,  but the thrill of reaching sail. – Robert Grudin, “The Grace of Great Things”