Case Study: Ideo Product Development

Abstract This report is based on a case presented by Harvard Business School, titled “IDEO Product Development. ” The goal of this report is to examine whether an engineering design company, IDEO, should have requested more time to complete a design for a Personal Data Assistant (PDA) that was to be called the Handspring Visor. The key events take place between March 1996 and September 1999. IDEO is an unconventional Silicone Valley based company, and the hiring company was the then newly formed PDA manufacturer Handspring.

IDEO was in the process of completing a related and competing PDA design, the “Palm V,” for 3Com’s Palm division, when they were approached by Handspring. Additionally, the founders of Handspring worked for 3Com and closely with IDEO in creating Palm’s “Palm V” design before they left 3Com to found Handspring. This report concludes that IDEO should not have asked for more time to complete the Handspring Visor design. This conclusion was reached due to the risk that the PDA market would only become more crowded with direct competitors as more time passed.

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Table of Contents 1. Introduction5 2. IDEO Company Description5 2. 1. IDEO’s Work Culture5 2. 2. IDEO Design Process6 2. 2. 1. Phase 0 – Understand/Observe7 2. 2. 2. Phase I: Visualize/Realize7 2. 2. 3. Phase II: Evaluating/Refining7 2. 2. 4. Phase III: Implement/Detailed Engineering7 2. 2. 5. Phase IV: Implement/Manufacturing Liaison)7 2. 3. More on Prototyping8 3. Palm V Project8 3. 1. Predecessors to the Palm V8 3. 2. IDEO’s Design of the Palm V9 3. 3. Palm V Design Phases9 3. 3. 1. Phase 0: Understand/Observe9 3. 3. 2. Phase I: Visualize/Realize9 3. . 3. Phase II: Evaluating/Refining10 3. 3. 4. Phase III: Implement/Detailed Engineering10 3.

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3. 5. Phase IV: Implement/Manufacturing Liaison10 4. Handspring Project11 4. 1. Product Development12 4. 2. Market Research/Analysis12 5. SWOT Analysis of Handspring Project13 5. 1. Strengths13 5. 2. Weaknesses13 5. 3. Opportunities14 5. 4. Threats14 6. Conclusion14 References16 ? Table of Figures Figure 1: Early to pre-production Palm V prototypes11 Figure 2: Timeline of Palm V and Visor design development13 Figure 3: Views of Handspring Visor15 ? 1. Introduction

IDEO is a product development firm based in Silicon Valley. While helping other companies create products and build their brands, IDEO has effectively branded itself. IDEO’s brand of design is iconoclastic and built on the freewheeling creativity of individuals. IDEO provides an environment where the designers are allowed and expected to follow the muse or muses of their choice. The design process that IDEO employs and the work environment that IDEO fosters probably looks like anarchy to individuals from other companies, but they have also built a reputation for being dependable, as emonstrated by the many successful products that they have designed. An IDEO team that worked on 3Com’s Palm V PDA design applied all of IDEO’s unorthodox approaches in completing that project. IDEO was subsequently asked to work on Handspring’s Palm-compatible Visor PDA project, with some overlap in time between the Palm V and Handspring efforts. However, Handspring’s proposed schedule would not allow for IDEO to perform a full version of their design process. This report examines the circumstances surrounding the Palm V project and prospective Handspring Visor project.

With respect to the Visor project, this report seeks to answer the question: Should IDEO ask for a longer schedule so that they can apply all of their design know-how in order to create the best product possible, or should IDEO accept the Handspring project as a “design to cost and schedule,” job with minimal need for creative design? 2. IDEO Company Description 2. 1. IDEO’s Work Culture IDEO’s corporate philosophy is a significant departure from the typical business’s standards for behavior, attitude, expectations and status.

IDEO takes the norms of the nine-to-five business attitude and turns them upside down by enacting a “no policy” policy, with the ultimate goal being creativity and innovation. This “no rules” attitude strips the mandatory dress code, allowing them to come to work in whatever outfit will spur the most creativity. Employees are encouraged to get up and walk around in order to avoid creative slumps. Furthermore, employees are allowed to design their own offices. General Manager David Kelley even goes as far as to say that he may become suspicious of employees if they remain at their desk all day.

IDEO has established such an open floor for all ideas, that to be a productive and innovative member of a team requires constant communication of ideas and information with other team members. Expanding on their “no policy” policy, employees of IDEO share the idea that traditional business status labels only hurt productivity and innovation. Team members share responsibilities and are evaluated only on the quality of their input toward a project. Teams may be lead by a designer who has only a few years of experience.

A team leader is selected because he or she is good at organizing a team and working with people, not because he or she is the most experienced or has the highest status. IDEO’s flat organizational structure facilitates their main goals as a company, which are creativity and innovation. Given IDEO’s unique operational attitude, employees are challenged in unique ways. Because there are very few “bosses” that walk around and lay orders upon designers, the motivation and direction comes from within the design teams instead of being filtered down from above. Team members are influenced and pressured by their peers to complete assignments.

Within this culture, team members share information and ideas constantly, so it is easy to see when an employee’s performance is subpar. This does not necessarily mean that underperforming employees will lose their jobs. In fact, very few employees are ever fired, because there is nowhere for them to hide. If an employee is an underperformer, the employee knows it and the rest of the team knows it, so there is a tremendous amount of pressure to remain in stride with the rest of the team. If a team member is unable to perform to everyone else’s expectations, that employee will often leave far before they need to be let go.

The hiring of an underperforming individual is a rare occurrence because IDEO takes great pain in selecting the perfect applicants for the job. The hiring process at IDEO is very long and in depth. An applicant may expect up to ten interviews before a position is offered to them. To ensure fresh perspectives, IDEO hires many young but experienced individuals who come from other internship programs. Another method that the company uses to maintain its innovative spirit is the nature and composition of the design teams. First, designers rarely hold on to one specific job assignment for very long.

Designers are continually challenged by different projects, and different assignments within said projects. Second, the composition of the teams also helps lead to creative flow, in that every team includes individuals that are not engineers. IDEO’s design teams feature businessmen, psychologists, biologists, marketing and individuals from other various disciplines. Through the synergy provided by teams such as these, and the environment IDEO maintains in which the teams work, IDEO is able to produce quality innovations that set their designs above those of their competitors.

This is what IDEO prides its self on, and it is what makes the company special. 2. 2. IDEO Design Process Although IDEO maintains a wide open corporate structure with few restrictions, the design procedure itself operates on a few very key principles. Posters that IDEO management keep hung on the wall describe how their design teams are so successful in turning out original and creative designs. The posters convey these ideas: stay focused on the topic, encourage wild ideas, defer judgment to avoid limiting ideas, build on the idea of others, and hold one conversation at a time.

The design process is divided into the following five phases, starting with phase zero: ? 2. 2. 1. Phase 0 – Understand/Observe During Phase 0 design teams research every aspect of the clients company and their competing market. They determine what innovations may be most beneficial for their client. 2. 2. 2. Phase I: Visualize/Realize In Phase I design teams choose the direction of a potential product and potential solutions to the problems that are identified. Design teams will systematically pump out hundreds of initial ideas that eventually boil down to one great product.

Teams encourage wild and crazy ideas because those are the ideas that end up being refined and shaped into new and exciting products. If a team becomes creatively blocked, the team leader institutes what IDEO calls a Deep Dive. During a Deep Dive, the team devotes an entire day to generating a large number of ideas. From these ideas, team members can vote on which ones hold potential while the weaker ideas are weeded out. 2. 2. 3. Phase II: Evaluating/Refining Phase II involves refining of the ideas through rigorous prototyping and testing.

Once an appropriate number of the most promising ideas have been established in the previous phase, team members break up into groups and prototype those ideas. The prototyping involves the production of three dimensional models, so that particular design aspects may be tested and flaws may be uncovered. Each prototype is examined and judged by the rest of the team. As different prototypes are compared to each other, both good and bad parts of each design are able to stand out. The team takes the good aspects of each design and bundles them into a final functional prototype and a final “looks like” prototype. . 2. 4. Phase III: Implement/Detailed Engineering Phase III is where the complete design is finalized and proved to work. The product is handed over many times to the technical teams that make sure the various components and subsystems function properly. Then the team takes this final prototype and supporting documentation, and moves forward to the next phase. 2. 2. 5. Phase IV: Implement/Manufacturing Liaison) In Phase IV the product is released for production. Often an IDEO representative will stay with the product through this phase in order to handle various production issues that may arise. 2. 3. More on Prototyping The concept of prototyping is not a new one by any means, but IDEO has redefined how prototyping can be effectively used within their industry. IDEO uses prototypes in every phase of their design process after the initial research in Phase 0. Team leaders are instructed to bring at least one prototype to every client meeting because it deepens the clients understanding of the product’s progress as well as bolstering the client’s faith in IDEO’s dedication to their product development. The IDEO prototype philosophy follows three R’s: Rough, Rapid, and Right.

Rough prototyping is used often; daily or even hourly. These prototypes can be made from cardboard, Styrofoam, or wood; whatever allows the designer to express a particular idea in a speedy manner. Rapid prototyping acts in tandem with the rough prototyping because rough prototypes are used to express small details of a product and they can be made and remade very quickly. The third R, right, describes their end goal for the product. By prototyping nearly every aspect of a project many times and exploring every angle, products are designed right because every option has been explored and only the best ideas remain.

During this process obviously not every idea can be a successful one. IDEO not only understands this but embraces this idea. Kelley states that “failure is part of the culture”. By failing early and often, teams are able to learn what does not work and then progress from there. 3. Palm V Project 3. 1. Predecessors to the Palm V Before addressing the Palm V effort, it is useful to describe its context with respect to some preceding PDAs, as conveyed by Thomke and Nimgade.

In the early 1990s, an early attempt at creating a mass-market PDA that would be recognizable by contemporary standards was Apple’s Newton pad. The Newton was not very successful due to its inaccurate handwriting interface, and its relatively large size. Then in 1996 the Palm Pilot PDA was introduced by California-based engineer Jeff Hawkins. The Palm Pilot was commercially successful due to “…the development of critical technologies, including the…Graffiti program for handwriting recognition and…the capability to synchronize data between… the PDA and a home computer (8). Hawkins’s design for the Palm Pilot focused on simplicity. As described by Thomke and Nimgade, while conceptualizing the form factor and usage profile of the Palm Pilot, Hawkins carried around a wooden pocket-sized prototype. He intended the Palm Pilot to compete with paper rather than large computers (Thomke and Nimgade 8). As noted by P. E. Teague, Hawkins’ resulting design made the Palm Pilot “the fastest-selling computer product ever” (cited in Thomke and Nimgade 8-9). ? 3. 2. IDEO’s Design of the Palm V

As described by Thomke and Nimgade, despite the introduction by competitors of more complex and feature laden PDAs, Hawkins took a different approach for the follow-on to the Palm Pilot. Hawkins wanted to keep the next Palm PDA model, which was to be the Palm V, simple and to make it more attractive to female users. For this effort, Palm chose IDEO, and within IDEO Dennis Boyle was chosen as the senior product leader (Thomke and Nimgade 9). 3. 3. Palm V Design Phases Thomke and Nimgade recounted IDEO’s design phases for the Palm V project as follows (10-12). 3. 3. 1. Phase 0: Understand/Observe

The Palm V project started late in 1996. This phase lasted approximately 10 to 12 weeks. Boyle realized that despite the popularity of the Palm III, little data existed on user preferences (Thomke and Nimgade may have meant to reference the Palm Pilot, since the Palm III was not released until 1998, as reported in Palm’s “Support resources for older Palm products” Web page). So Boyle created a source for such observations by purchasing dozens of palm pilots and passing them out to everyone he knew. He was then able to get valuable feedback through emails and casual hallway conversations.

The team became aware of problems such as breaking due to being dropped, case rigidity, battery and memory doors placement, and the stylus holder location. 3. 3. 2. Phase I: Visualize/Realize Starting in March 1997, many staff members with different nationalities, including Taiwan, the Netherlands and Israel, became involved in the project. Additionally two female designers were added to the team, with the hope that they would provide insights that would make the resulting product more attractive to women. At that time 95% of the existing Palm users were men.

The female team members got feedback from 15 other women. Their inputs led to a more curvy design with tapering edges, which was a big difference from the blocky and rectangular designs of previous handheld devices. It was in this Phase, that the project got the code name “RAZOR” because they want to create a “razor thin” product. The IDEO team held weekly meeting with the Palm division to get feedback. They always brought a prototype to demonstrate different possible button configurations, lengths, thicknesses, etc. This ensured that even very small design details would be considered. ? 3. 3. 3.

Phase II: Evaluating/Refining Phase II began in May 1997. This phase involved computer-aided design (CAD) engineering, in support of the creation of accurate industrial models that resemble the proposed end product. Observed usage patterns were taken into account regarding such things as allowing for short and incomplete charge cycles without harming the battery. During this phase, the team was close to defining the final model, and they were choosing suppliers for the materials that would allow it to be manufactured. By the time this phase had ended, between 20 and 25 prototypes had been created. . 3. 4. Phase III: Implement/Detailed Engineering Starting in the fall of 1997, every component for Palm V was engineered to be functional in terms of electronics and software. From three to five production prototypes were created to test everything, including that the product would comply with government regulations. Toward the end of Phase III, prototype models could cost more than $30,000. It was during this phase that responsibilities gradually shifted away from IDEO and toward the growing Palm team, as Palm geared up for production and product promotion. 3. 3. 5.

Phase IV: Implement/Manufacturing Liaison Phase IV ended with “Razor” being released for production. The Palm division retained some IDEO personnel for another six months, leading up to the expected market release in February 1999. During this period the Palm team worked on perfecting the manufacturing process in order to allow for production of up to 5,000 units per day. Palm’s manufacturing team still had many problems to solve, including cracked displays, electrostatic charge, procurement of supplies, etc. The loss of a day of production would cost the Palm division a few hundred thousand dollars.

Figure 1: Early to pre-production Palm V prototypes (Thomke and Nimgade 19) 4. Handspring Project The Handspring project was born in 1996 when Hawkins and Donna Dubinsky resigned from 3com, the producers of the Palm V. Hawkins decided to part from 3com because he wanted to start a company with greater autonomy. Although 3com was performing well as a company, they were still unable to reward personnel with stock options. Because of this, Hawkins along with Dubinsky parted amicably with 3com and went to start a new company, Handspring. The goal of this new company was simple, to produce a clone of 3com’s Palm V.

This clone would address many of Palm’s main design flaws. The new product would be smaller, less expensive, and hopefully add functionally that the Palm lacked. This endeavor started out with two very key advantages. Handspring was able to sign a licensing agreement with 3com for the use of the Palm operating system. This was a major advantage for Handspring because their PDA would be able to run to all of the applications that were available for the Palm. This was a major component that would help cut the overall cost of the product, and save a significant amount of development time.

Another benefit for Hawkins was that the remaining designers from 3com, which had previously worked on the Palm, joined him at Handspring. These two factors placed Handspring in a very opportune position. Armed with the Palm operating system and the wealth of knowledge from the previous Palm design team, it seemed almost impossible for Handspring to fail. ? 4. 1. Product Development At the onset of the product development, Hawkins again approached IDEO to design the new Palm clone. The product development strategy was to get a Handspring PDA into as many hands as quickly as possible.

This statement seems simple enough but it was a bold statement for the product in question. The Palm, priced at $450, was held mainly by wealthy businessmen or other prominent people. Handspring aimed to change this trend. The new product was to be priced at $150, and it was going to be designed for and marketed to a wide variety of people, including women who had been particularly absent from the Palm demographic. Handspring aimed to allow users to add functionality to their PDAs while keeping the product simple to use.

It was difficult, if not impossible, to upgrade or personalize the Palm to perform tasks that were not native to its original design. Handspring’s proposed “ROM” cards that would effectively add functionality without adding any complication. The idea was derived from the Nintendo game console concept that allowed for a game to be changed through a slot and then played immediately after. This concept was to be transferred to Handspring’s new product in hopes of allowing users to add to the functionality of their PDAs without requiring the installation of new software or hardware internally.

The ROM cards would allow for the device to operate as a cell phone, GPS, pager, voice recorder, wireless modem, MP3 player, digital camera, or even a graphing calculator. This ROM card concept became known as “Springboard. ” The PDA would have a slot on the back, and matchbook sized modules would be inserted into the device to run any number of programs or peripherals. Following this development, the product also received its name, this time from Hawkins’ daughter. She suggested it be called “Visor”, short for Advisor. . 2. Market Research/Analysis Initially the Visor designers saw little need to conduct market research for their new product. Their view was that all of the market research has already been done with respect to the Palm V. Any extra time devoted to investigating the potential effectiveness of the Visor within its market would be redundant because the research prior to the launch of the Palm product still applies to the Visor. Any deficiencies of the Palm have already been accounted for (e. g. , price, simplicity).

As Dubinsky explains, “We felt we understood the marketplace pretty well. After all, we invented the product and the category… You can’t test the concept of a slot; it’s too major”. This means that the only major change to the Visor, the Springboard slot, cannot be tested because the only way to test the effectiveness of the slots is to build a product and measure the response. Therefore, the Visor management team insisted that Boyle and his IDEO team develop their Visor product without performing all the phases of the IDEO design process.

This comes to be a pressing issue with Boyle and his IDEO team because this is the process that makes their company different from the rest of the product development firms. The question that Boyle must ask himself is if he is willing to sacrifice IDEO’s steps toward innovation, or if he should persuade Hawkins to push his aggressive deadline back so that the IDEO design teams can perform the necessary research to make this product a booming success. Figure 2: Timeline of Palm V and Visor design development 5.

SWOT Analysis of Handspring Project The case study presents the question of whether or not IDEO’s management should ask for more time, so that they can apply their full development process. The case study does not really suggest that refusing the Handspring Visor project is an option. However, it does seem implicit that one of the possible outcomes is that IDEO either does not accept or is not awarded the Handspring Visor project. 5. 1. Strengths •The staff is intimately familiar with the preceding Palm V product. The Handspring Visor will be very similar in form-factor and usage profile to the Palm V, except for the addition of a ROM card slot. oThe Visor project should require less human factor engineering. •Much of the Visor’s componentry should be commercial, off-the-shelf (COTS). •The organization already has a track record of successfully working with Handspring’s management during the Palm V effort. •Taking on a strictly budgeted and scheduled project will provide useful experience within the IDEO organization for the kinds of work that might be available during leaner economic times. IDEO’s Dennis Boyle is “…not worried about meeting this challenging deadline,” so IDEO’s ability to succeed within Handspring’s constraints is not in question (Thomke and Nimgade 13). 5. 2. Weaknesses •Handspring’s requested product development schedule will not allow for all the steps of IDEO’s “legendary” product development process. •The specificity of Handspring’s design requirements and the associated cost constraints may be de-motivational within IDEO’s design culture. •There is always the possibility of failure on the part of IDEO, even if the risk is minimal. ? 5. 3. Opportunities The Handspring founders left 3Com on good terms (Thomke and Nigade 12). •Handspring apparently has at least tacit approval from 3Com to produce a product that will potentially compete with 3Com’s Palm line of PDAs. •If IDEO accepts Handspring’s short product schedule, then potentially greater market penetration can be achieved. oRecall that the Palm V is about to be launched, and the Visor is supposed to be a direct and less expensive competitor with even greater capabilities. 5. 4. Threats •Taking this sort of “design to cost and schedule” work could “water down” IDEO’s maverick brand. Appearance of conflict of interest by working with Handspring on a competing product while still supporting the Palm V effort. •Due to the close working relationship with Handspring’s management during the Palm V design effort; if IDEO does not take the job then Handspring may take a substantial amount of IDEO’s expertise about PDA design to competitor. •If IDEO pushes for more product development time: oHandspring could lose confidence and take the Visor project elsewhere. oThe time window in which it will be possible for Handspring to significantly penetrate the PDA market could pass. . Conclusion IDEO should take the Handspring Visor job and it should support Handspring’s shortened time schedule for creation of the final design. First, the Harvard Business School case does not question whether IDEO should decline to work with Handspring on the Visor project. It only poses the question of whether or not IDEO should lobby Handspring to allow more time for the full and fairly extravagant IDEO development process. According to IDEO’s Dennis Boyle, there does not seem to be significant risk of failure by IDEO regarding this project.

Therefore, the potential downside of possibly perturbing IDEO’s culture in a fairly localized way is outweighed by the loss of profit that IDEO could earn by taking the job. More importantly, IDEO’s expertise gained from designing the Palm V could potentially be implicitly conveyed by Handspring’s management to an IDEO competitor. Or as a corollary, if IDEO takes the work, then IDEO will remain involved in the growing PDA market. Second, there is the primary question of whether IDEO should push Handspring to allow time in the schedule for all of IDEO’s design phases.

Given the speed with which the PDA market could potentially progress, it seems more important to get the Handspring Visor out quickly. The longer it takes to get the Visor to market, the more likely that there would be other competing PDAs on the market at the same time. Furthermore, delaying would allow preexisting PDAs to soak up market share that would then not be available for Handspring to claim. E. g. , it is harder to sell a Visor to someone if they already own a Palm V. Furthermore, if the initial Visor PDA is a success, then it is likely that IDEO will be poised to work with Handspring on it next PDA design iteration.

Ultimately, IDEO did take the Handspring Visor design project, as reported by IDEO’s web site. The project produced a PDA that had the features that Handspring’s management envisioned, including a $150 dollar entry-level cost, a “Springboard” ROM card expansion slot, and an on-time product launch date of September 14, 1999, as reported by Shawn Barnett in Pen Computing Magazine. Figure 3: Views of Handspring Visor, including Springboard example, lower right (images from Pen Computing Magazine)

Wikipedia’s “Handspring (company)” article reports that the Visor product line has been out of production since 2002, and has otherwise been superseded by newer more advanced products (especially smart phones). However, Wikipedia reports that the Visor PDAs still have a significant and loyal user base, although the authors of this report were unable to confirm this via primary sources. It is likely that interest has fallen off over the last few years with the introduction of ever more powerful smart phones and ultraportable laptops.

In 2003 Visor was acquired by Palm, which is fitting since the formation of Handspring seemed almost like a spinoff from Palm in the first place. In April 2010 Hewlett-Packard announced that they would purchase Palm. References Barnett, Shawn. “Handspring Visor. ” Pen Computing Magazine. May 10, 2000. Jun 12 2010 . “The Deep Dive. ” Narr. Jack Smith. Niteline, ABC. Jul. 13, 1999. May 31, 2010 . “Handspring (company). ” Wikipedia. May 29, 2010. Jun. 12, 2010 . “HP to Acquire Palm for $1. 2 Billion. ” News release. Hewlett-Packard Company. Apr. 28, 2010. Jun. 13, 2010 . Morse, Lucy C. and Daniel L. Babcock, Managing Engineering and Technology. 5th ed. Upper Saddle River, NJ: Prentice Hall, 2010. “Palm Announces Acquisition of Handspring to Bolster Industry Leadership; Board Approves PalmSource Spin-off. ” News release. Palm Inc. Jun. 4, 2003. Jun. 13, 2010 . “Support resources for older Palm products. ” Product support. Palm Inc. Article ID: 47831. Jun. 13 2010 . Thomke, Stefan, and Ashok Nimgade, M. D. “IDEO Product Development. ” Case. Harvard Business School. 9-600-143 (rev. Apr. 26, 2007): 1-21. “Visor for Handspring. ” Case study. IDEO. Jun. 13 2010 .