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Better sales, less waste

H&M transforms its operations to cut excess inventory.

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Climate
Consumer Products & Retail

Globally, the European Commission reports, a truckload of textiles heads to landfills or is incinerated every single second.

The fashion industry accounts for some 10 percent of greenhouse gas emissions worldwide.

Less than 1 percent of the materials used to make clothing is recycled, according to a report by the Ellen MacArthur Foundation.

The best way to keep clothes out of a landfill? Don’t make them.

Picture this: Not long ago, it wasn’t unusual for a customer to walk into an H&M store and not be able to find a basic white t-shirt in their size. Why? Like most long-established retail operations, H&M was operating with a push model—placing seasonal bets on what the demand for a given item of clothing might be, locking orders far in advance, and hoping that they were able to sell out. Make a mistake in that kind of model, though, and you can end up with customers unable to find the basics they rely on, or excess inventory you can’t sell. That’s a problem for the business, but for the environment as well—and one that doesn’t fit H&M’s aggressive sustainability goals.

Though H&M had tried to tackle the problem before, the launch of the H&M Group Design Studio, co-created with IDEO, gave the retailer the confidence to go after it again. The team started out by mapping out the complex network of people that make up its supply chain across the globe, meeting with everyone from designers to garment suppliers, logistics managers, and even folks selling the final product in H&M stores. 

They then created an algorithm for more precise ordering, as well as a tool that provides a shared view of information. Instead of placing orders, the new automated flow—dubbed “Cruise Control"—allows staff to work with a demand forecast that gives them more time to focus on customer-centric operations, like providing guidance and inspiration. It also makes it easier for H&M to follow the demands of the market, and place much more accurate bets on what consumers will want, when. Already, H&M has significantly increased sales while cutting excess inventory—a result that improves its bottom line, as well as its environmental impact.

Estimates project that by 2030, global apparel consumption will hit 102 million tons.

22%

reduction in stock during a pilot program

34%

increase in sales during a pilot program
Over the past few years, H&M has gotten serious about its sustainability goals, setting an aggressive agenda to be climate positive by 2030. That means cutting its use of plastics, water, pollutants, and the amount of excess inventory that could end up in landfills. But the traditional retail supply chain model that so many clothing manufacturers rely on was making it hard to accurately predict how much of a particular clothing item the brand might sell in a given market several seasons in the future. The problem led to overstock of some items, and customers unable to find others. Together, IDEO and H&M Group Design Studio took a human-centric, end-to-end approach to understanding the supply chain, then used those insights to create an algorithm that could better predict demand and shorten the interval between sales and production. It’s a change that not only benefits the business, but significantly cuts waste, too. For an operation of H&M’s size—eight different brands across 74 markets—it’s a change that can significantly affect its environmental impact.
The H&M Group Design Studio leverages design thinking to rethink its supply chains, cutting excess inventory while boosting sales.
H&M Group Design Studio cuts excess inventory while boosting sales.
H&M Group
H&M Group
Better sales, less waste, H&M Group, climate innovation, sustainability, consumer products, retail, consumer experience, retail innovation, brand strategy, brand design, brand identity, brand experience, business transformation, organizational transformation, culture change, human centered design, design thinking, customer centricity, user research, customer research, consumer insights, climate strategy, sustainable design, circular economy, retail experience, store of the future, future strategy, strategic futures, designing for the future, how to build a brand, how to make business more sustainable, innovation, strategy, research, transformation, what do customers want, how do we innovate

Fueling innovation in Boston

How the Boston Society for Architecture is leveraging member expertise to increase its impact.

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Strategic Futures
Industrial & Manufacturing

To foster creative projects that spoke to the needs of local communities and environments, the BSA began to engage its members in collaborative, user-led design. The organization launched its first-ever innovation challenge, putting out a call for all members to pitch their ideas for projects in the built environment.

The BSA expected those pitches to have dollar signs attached. To the organizer’s surprise, only one asked for funding. The rest requested less tangible, but equally meaningful support: advice, connections, specific expertise. Those are resources that the BSA has aplenty, but hadn’t learned how to leverage well.

From that first go at an innovation challenge, the BSA learned how to better support its members. It also learned that to lead with purpose and make strategic choices, one must develop the confidence to say no. Instead of spreading itself thin across many projects, the organization decided to take small steps, focusing on one initiative at a time, so that it can deliver focused impact and stay true to its evolving mission.

With 36% of global energy going to buildings and 8% of global emissions caused by cement alone, the architectural community is inextricably intertwined with both the causes and solutions related to climate change.

According to a survey conducted by the AIA, the architecture profession in the US is less diverse than the population as a whole. This lack of diversity can contribute to a disconnect between architects and the communities they serve.

31

submissions received from innovators in the Boston region working on equity and sustainability challenges

5

innovation teams invited to pitch ideas
For more than 150 years, the Boston Society for Architecture (BSA) has offered its members a way to find connection and support from like-minded creatives. But as systemic inequities and climate change have come into the fore, the organization wanted to reflect the field’s evolution. So, BSA set out to redefine its role, both as a supporter of its 4,500 member architects and a convener for the broader and more diverse Boston community of residents, academics, students, policymakers, and developers. IDEO led the BSA through an internal rebrand, including a new model of measuring success. The collaboration helped BSA pivot from a networking organization to one that focuses on impact through community-led challenges and proactive calls for ideas.
The Boston Society for Architecture evolves from a networking organization to one that supports its members and community, and makes an impact.
BSA works to align its values and support member innovation.
Boston Society for Architecture
Boston Society for Architecture
Fueling innovation in Boston, Boston Society for Architecture, manufacturing innovation, industrial design, brand strategy, brand design, brand identity, brand experience, climate strategy, sustainable design, circular economy, innovation strategy, business innovation, design innovation, how to innovate, how to build a brand, how to make business more sustainable, innovation, strategy, sustainability, climate change, rebranding, how do we innovate

Student-centered solutions

How an organizational culture change is helping newbies at NYU navigate campus life.

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Learning & Work

The resources that NYU students needed were organized by administrative department, and buried on disparate websites and calendars. But students don’t think in terms of departments—they just need to know where their classes are.

All of this became patently clear as IDEO shadowed students. Team members visited classrooms, walked with them through their days, and hosted pop-ups in highly trafficked areas to get ideas from passersby. That helped the team develop a common understanding of the overall student journey and grounded employees in the key moments that can either make or break a student’s experience. Visualizing their journey helped departments gain a shared understanding of the fractured communications challenge and develop possible solutions.

To synthesize those insights, we formed cross-functional action learning groups, challenging existing practices at the university and coming up with new ways of working. Participants came from a diverse set of departments, including enrollment management, student affairs, marketing and communications, IT, global inclusion, student services, the provost’s office, digital communications, and more. The cohorts sketched early hypotheses and got feedback from faculty, administrators, and students from all of NYU's undergraduate schools to refine initial concepts.

Collaborating with students gave staff a first-hand look at what students were struggling with and a way to engage students directly in addressing those challenges. Just as importantly, there was an overall culture shift at NYU: Administrators started with questions instead of agendas, came together around a table, and reached beyond their job descriptions to meet the needs of students.

First-year students reported receiving hundreds of paper forms, and email from more than 70 unique senders.

NYU needed to offer students the right resources at the right time—and collaborate to serve them as a unified administration.

New services

in-production include centralized calendars, dynamic campus mapping, and customized notifications

Design-thinking cohorts

now support the student experience
NYU prides itself on being a university where individual students decide their own paths, supported by administrators and faculty and programs aimed to help them succeed. Yet, for first-year students, the experience of trying to access resources felt more like navigating a “tsunami of services.” Every department had good intentions, but operated independently, creating a fragmented undergraduate experience that left overwhelmed students to sort through droves of well-intentioned emails a week. To address the issue, NYU and IDEO hosted a week of on-campus pop-ups and workshops with 400 students who shared their ideas. The biggest takeaway: The university wasn't under-resourced, it was under-organized. That insight sparked a shift in how NYU operates. Making student voices the central motivator helped the school’s many operational departments come together around a common cause: streamlining tools to help students navigate their first months on campus. The work made students feel "heard, not tallied," and paved the way for innovation that meets their needs—which turned out to be surprisingly simple.
NYU collaborates across departments to create an aligned communication strategy that results in a better student experience.
How an organizational culture change is adding clarity for students.
New York University
New York University
Student-centered solutions, New York University, education innovation, learning experience, future of work, business transformation, organizational transformation, culture change, user research, customer research, consumer insights, student experience, future of education, innovation strategy, business innovation, design innovation, how to innovate, understanding user needs, innovation, strategy, research, transformation, organizational culture, education, learning, what do customers want

She knows best

A major athleisure brand passes the mic so women can define community for themselves.

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Consumer Products & Retail
Health

Diversity alone isn’t enough—in marketing or any other facet of business. Today’s brands must authentically engage with and create the conditions for co-design with existing communities.

That sort of deep, meaningful engagement with customers doesn’t happen over Instagram. It requires a playbook, a prototype, and a healthy amount of trust. So, IDEO worked with Athleta and Gap to tap into the wisdom of a council of women who represent intersectional identities and lived experiences. The council surfaced powerful insights for the brand, like the fact that active women don’t need a brand to empower them—they already feel powerful.

After only a few weeks, Athleta experienced the difference between research and a truly reciprocal relationship. The way their brand engages with communities is adding depth, understanding, and authenticity to Athleta’s content, products, and experiences. And women can feel the difference.

76% of US adults say that the media promotes an unattainable body image for women.

Fewer than 1 in 10 businesses review for inclusion as part of product design and marketing campaigns.

>2X

user growth in 2022

13,000+

Athleta WellPro well-being providers active on the platform

Too big. Too loud. Too much. Women have heard it all. So instead of telling its customers what to be, Athleta chose to flip the script and listen. Women would define what community means to them. Over the summer of 2020, IDEO convened a diverse council of women to help make the brand community more inclusive, representative, and reciprocal. Then those women wrote the playbook for how Athleta could stay connected. The work revealed that the way to amplify and deliver on one’s purpose is to uplift existing communities and find new ways to work together.
IDEO partnered with Athleta and Gap to bring together a diverse group of women to create a plan for a more inclusive and representative brand community. Discover the results of their efforts.
Athleta turns to a diverse council of women to improve community.
Athleta
North America
Athleta
She knows best, Athleta, consumer products, retail, consumer experience, retail innovation, healthcare, health innovation, patient experience, brand strategy, brand design, brand identity, brand experience, product design, industrial design, new product development, inclusive design, accessible design, equitable design, how to build a brand, innovation, strategy, co-design, research, prototyping, product development

6 ways to design value into your membership model

Earning loyalty depends on delivering one of two types of value.

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Article
Articles

Some speculate that this rising tide might lift all boats, nudging every business to become a subscription business. But as the last six months have shown, the impact of COVID-19 has been unevenly distributed; winners and losers are determined by how favorable their offering is to the everything-from-home context. While all companies are working to make their products and services remote-friendly, this can obscure the fundamental question of how to design a compelling and intentional membership proposition, one that can endure and flex to exogenous shocks. In this article, we’ll explore six levers for designing membership and fostering loyalty right now and in the future.

A membership offering must accomplish either of these two things

There is no one formula for designing a compelling membership offering. But membership should be more than a basic loyalty program. It must offer either exceptional rational value or deep emotional value.

Rational value implies tangible benefits: customers know exactly what they’re getting from the offering, and it’s easy and straightforward to justify and explain their continued loyalty. Emotional value is intangible but at least equally powerful. While it may not be quantifiable, it creates genuine connection that generates sustained engagement and loyalty.

There are various levers—value drivers to design a membership offering around—that ladder up to and provide rational or emotional value. Cost, convenience, and incentives and rewards provide rational value; identity, community, and experience provide emotional value.

Designing for rational value: Cost, convenience, and incentives and rewards

LEVER 1: COST

One fundamental value proposition of a membership model is its ability to offer customers savings. By committing to a monthly or annual fee, subscription-based organizations can often afford to provide members with preferential pricing. This is the most basic element and value driver of a membership rooted in rational value.

One of the originators of the warehouse model, Costco offers members bulk quantities of goods at attractive prices. Costco prioritizes savings beyond other benefits, like high-touch customer service or an elevated store experience. And yet, Costco consistently receives top marks for customer satisfaction. They achieve this through an unwavering understanding and dedication to their key value proposition.

Costco has been able to sustain a successful business rooted in cost savings because of significant economies of scale, which help create barriers of entry for potential competitors. In many other industries, attempts to define and differentiate a value proposition on price and discounts will almost inevitably lead to brutal competition and eventual commoditization. Accordingly, companies considering cost as a membership lever must carefully think through the strategic and viability implications within their particular market.

Prompts for teams:

  • Do your brand and mission align primarily with the idea of providing savings?
  • Can you provide savings to customers while maintaining a sustainable business?
  • What benefits will you not provide in order to deliver on cost savings?

LEVER 2: CONVENIENCE

As they say, time is money. As a source of rational value, convenience is as compelling as cost savings. In today’s convenience economy, technology is being leveraged to save time and effort in every market and pocket of daily life.

Amazon’s largest lever for rational value is the convenience it provides members. For an annual fee of $119, Amazon Prime members can get almost anything they could possibly need shipped to them in two days or (increasingly) less. This one benefit has allowed Amazon to forge a relationship with members that transcends loyalty to resemble something closer to dependence. This convenience proposition has become so powerful that it arguably provides members emotional value, too. Ask almost any new parent and they’ll probably rank Amazon somewhere between a utility and a member of the family. Providing rational value to such a degree that it also drives emotional value is a rare achievement, but demonstrates how impactful convenience can be.

Prompts for teams:

  • How critical is convenience to the value proposition that you provide customers?
  • What are the biggest challenges and bottlenecks your customers face in fulfilling their needs on a daily basis that your industry, market, or product area can help address?
  • Can your company provide something to customers that they truly can’t live without?

LEVER 3: INCENTIVES & REWARDS

Incentives and rewards are often employed as part of membership programs to drive engagement and encourage specific behaviors such as sign-ups, spending, and referrals. They tend to be utilized in industries with limited differentiation, such as airlines and credit cards.

The credit card industry in particular has developed an incentives model that uses referrals, sign-up bonuses and points multipliers to drive customer acquisition and encourage early spending. This model has quickly become both the industry norm and customer expectation. In 2016, Chase made headlines by offering 100,000 points for its Sapphire Reserve card, the most extreme sign-up incentive the space had seen. Chase also won customer favor by simplifying the points to dollar value to 100:1, a calculation which many other credit cards obscure to make comparison more difficult.

There’s no denying the ability of financial incentives to drive behavior. But keep in mind, space for innovation is slim and an over-reliance on this lever runs the risk of creating a transactional relationship with the customer. Depending solely on financial incentives can also attract customers who are focused on “gaming” the system. Moreover, it creates an inevitable race to the bottom where eventually no player can viably compete. Balancing incentives and rewards with other rational or emotional value drivers can help mitigate these effects.

Prompts for teams:

  • What is truly differentiating about the incentives and rewards that you can offer?
  • How can you design your incentives and rewards to be less transactional and instead reinforce your core value proposition?
  • How might you leverage incentives and rewards with other sources of value in your loyalty program?

Designing for emotional value: Identity, community, and experience

LEVER 4: IDENTITY

Some companies and brands are able to command loyalty through the strength of their identity, which is reflected in their brand, mission, or values. A membership rooted in identity is enabled when a company can rally customers around shared values and reinforce them through its offering, allowing members to see and express themselves through their participation.

One example is Ellevest, an investing platform for women that aims to educate, empower, and advance its customers in pursuit of their financial goals and to close the gender wealth gap. Ellevest differentiates itself from the many other investing options in the market through this dedicated focus, which is reflected in both its purpose and product—its algorithm recommends an investment plan that is designed to help address the gender investing gap.

In June 2020, Ellevest added a membership program to its core product that includes new features and services that strongly tie to their core mission. In addition to banking and debit products, the membership provides career workshops, coaches, and financial planners. While all of these benefits are designed to further members’ financial success, Ellevest is selling more than these services: they’re asking members to buy into their mission. An Ellevest member could receive similar products from any number of institutions. Being a part of the membership signals the salience of identity—both that it is key to the experience of managing money and an alignment of values.

Prompts for teams:

  • What does your organization stand for and what are its most powerful, emotionally rich territories for design and differentiation?
  • How can you tap into your organization’s mission or purpose as a way to create more emotionally resonant services and experiences?
  • What would it look like to evolve the membership offering to reflect these values or enable members to express themselves?

LEVER 5: COMMUNITY

When community is a key value proposition of a membership, members not only feel connection with the brand, but also a sense of belonging and kinship with other members. From religious communities to career networks to social media, being part of a group creates powerful emotional currency.

WW, formerly known as Weight Watchers, is a company that has differentiated its membership offering through community. The organization’s promise is rooted in its origin story: a Queens mom who began inviting people into her home to discuss weight loss strategies. The concept quickly grew into a global organization that outlives various fad diets and health trends because of its core value: guiding people in their weight loss journeys through social and emotional support. Whereas before, every diet and nutritional program was designed to be undertaken alone, WW was designed to be interactive and communal through weekly group meetings. This structure provides people with support, inspiration, and accountability. The group convenes to share challenges and victories and provide each other with encouragement. The impact and effectiveness of this value proposition is reflected in WW's strong retention: many members continue attending meetings for years even after achieving their goal.

Prompts for teams:

  • How authentic is the promise of community for your organization? Do members truly interact and benefit from other members?
  • What is the role of exclusivity in your membership? Exclusivity is a powerful driver for people, but what does it say about your brand and what it stands for?
  • How can you empower your community with roles, tools, rituals, and shared experiences?

LEVER 6: EXPERIENCE

Finally, there’s the element of experience, which can be a vague, squishy term that many companies claim to offer. People are drawn to memberships that provide unique, enriching, and inspiring experiences. An experience can be physical or digital, a product or service, communal or individual. While it can be delivered with pomp and circumstance, meaningful experiences can also be remarkably simple.

An example of an exceptional experience born out of a simple idea is SoulCycle. Interestingly, SoulCycle doesn’t technically offer membership; they sell individual drop-in classes or class packs. But with its cult-like following of diehard riders, SoulCycle certainly feels like a membership. The fitness start-up achieved this status through their distinct vision for what a spin class should be. The founders recognized that when exercising, people are looking not only for a physical release, but a mental one, as well. While most cycling classes focused on providing a great workout, SoulCycle designed an entirely different kind of ride: a collective, uplifting, and emotional experience that is as much a part of its value proposition as the sweat.

During COVID-19, SoulCycle has suffered, given its reliance on in-studio group sessions. By contrast, Peloton is soaring because it was designed to be experienced at home. As SoulCycle pivots to offer their own at-home bike, the way it evolves the experience to elevate its collective and emotional DNA will be crucial for success.

Prompts for teams:

  • What are the needs that your experience is designed to serve?
  • How can experience be a differentiating factor of your membership offering?
  • What qualities define your experience, and how might you elevate or amplify the value they provide your customers?

The power of offering rational and emotional value

Cost, convenience, and incentives and rewards can be powerful sources of value in membership because they offer rational, straightforward value. However, because they provide limited dimensions for differentiation, they can lead to competition and be challenging to sustain. Designing around emotional tenets—identity, community, and experience—presents different starting points and opportunities for membership offerings.

But memberships that draw on more than one of these levers—particularly those that generate both rational and emotional value—will be especially effective. While Costco’s core value proposition is rooted in cost savings, its business provides emotional value, too, through its famous food court and food and beverage sampling experiences and additional services. This combination of rational and emotional value has proven incredibly compelling in both customer experience and membership proposition: Costco has some of the highest customer satisfaction scores and retention rates in the business.

Keep your purpose, mission, and value proposition top of mind

The six levers we discussed can individually, or more powerfully in combination, form the foundation of a differentiated, value-driving membership offering. But in any of these territories, companies must have (or earn) their customers’ permission to play.

At its core, membership demands an ongoing relationship and commitment from its customers. Designing membership for this level of loyalty boils down to both an organization’s value proposition and who they fundamentally are: What is the essence of what’s being provided through membership, and what does the company stand for? And critically, do these two things match—does the membership feel authentic to a company’s purpose?

By aligning purpose with a compelling rational or emotional value proposition, companies can cultivate reciprocally authentic and lasting customer loyalty.

Illustrations by Simon Heather

In the last decade, we’ve witnessed the explosion of subscription-based “membership,” from movies, music, and audiobooks to elite global communities, razor blades, and dog food. While this phenomenon has been fueled in part by the growth of digital channels, targeted marketing, and the rise of the sharing economy, what’s ultimately driving companies across industries to adopt a version of this business model is the irresistible promise of recurring revenue and sustained customer loyalty.

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6 ways to design value into your membership model, business model innovation, new business ideas, building a new business, music, community engagement

The Rules of Brainstorming Change When Artificial Intelligence Gets Involved. Here’s How.

Recent advances in machine learning have created a new catalyst for design

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My “partner” that day was a technology called GPT-3 from OpenAI. You may have heard of it already; if not, you can think of GPT-3 as a really good autocomplete. Like, shockingly good. Once I shared some of the output of my brainstorm with others on Slack, there were plenty of 🤯reactions—and honestly, our minds are still blown. But clients and design teams will need to tread carefully and watch their ethical compass as they imagine inspiring, human-centered applications for this new tool. As with any new technology, there are new risks to account for. Here's how I started my experimentation.

How to run a virtual brainstorm

In order to work with a so-called “transformer model” such as GPT-3, you feed it a pre-written prompt, then the model uses everything it's seen before (in this case, a substantial portion of the internet) to guess what should come next.

I wrote some context: This is an IDEO brainstorm, which follows our 7 Rules of Brainstorming, including “encourage wild ideas.” I gave GPT-3 a real client challenge from a past project: The team is developing a new app for a bank to encourage millennials to better utilize savings accounts. Then I wrote a brainstorm prompt: How might we help young people turn saving money into a lifelong habit?—and fed it five example ideas.

As soon as I pressed submit, the model began churning out new ideas. Not all of them were gold, but many were perfectly good brainstorm concepts. After all, the rules also tell us to “defer judgment” and “go for quantity.” Without cherry-picking too much, here's a sample of some of the ideas it generated:

  • Allow the user to share their saving goals with friends and have a community of people who will cheer them on or challenge them if necessary
  • Reward the user with real money if they don't spend money at all in a month
  • Allow the user to set up “fun budgets” (aka “triggers”) to save more money, e.g. whenever they go to Target, they'd get a pop-up asking if they'd like to put $5 towards savings
  • Similar to the Future View idea, show how much more could be saved if the user decides to forgo a coffee every day or splurge on new sneakers instead of taking an extra vacation

In the last example, you can even see the model “build on the ideas of others”—another rule of brainstorming—by riffing on an idea called Future View that I had given in the prompt.

This stuff is on par or better than some of what I've seen from humans. Some [of it] is worse, too. But that anything is better is wild.
An IDEO Director on GPT-3's brainstorming output. Watch out, humans.

Another colleague suggested we tweak the prompt we gave GPT-3 to encourage it to use analogous inspiration, which primed the model to produce some truly wild ideas:

  • Have “clowns” jump out of ATM's, making it less fun to withdraw money
  • Create a virtual reality experience where users are in an arena full of savings monsters, and need to slay them by depositing money into savings
  • Create a “Savings Monster” similar to those featured on Chinese lottery shows where viewers have to guess the amount saved in order to win money

“I'd love to know what a Savings Monster is,” I mused on Slack, and a colleague responded, “Why don't you ask it?” Of course! After the brainstorm, I started a Q&A session with the model (my prompt is in bold):

Q: Quick question: What exactly is a savings monster? You mentioned it twice.

A: I'm glad you asked! This was just an idea that emerged from the brainstorm. A savings monster is a physical manifestation of your savings goal. For example, let's say I want to save $500 by the end of next year. If I deposit $10 every day, that will get me pretty close to my goal at the end of the year, but what happens if one day I don't have $10? Now my savings monster is underfed, and he starts to throw a tantrum (eg. negative cash flow notification).

A: Yes, this is an idea inspired by Chinese lottery shows (and World War Z). We thought it might be fun for users to have a physical manifestation of their goals that they could feed (ie. save more money) when they meet their goals, and starve (ie. spend more money) when they fall short. In order for this idea to work however, the savings monster would have to be very cute, and a bit terrifying.

As it turns out, the model doesn't skip a beat when you change up the input’s format. So I decided to try my luck: In my next prompt, I asked GPT-3 to choose its favorite idea from the brainstorm and create a script for a promo video. Thankfully my virtual brainstorm partner selected the Savings Monster concept. The resulting script was so good that I found an animator to bring it to life.

So what is this good for?

As exciting as this technology is, GPT-3 is not Artificial General Intelligence, and it was interesting to find the edges of its abilities. For example, this model can easily summarize a news article, or turn it into a fairy tale. But it's surprisingly difficult to get it to remove references to a specific person, or change the subject of a certain paragraph.

To put this in human-centered design terms, these large transformers are an extremely valuable way to augment the team during divergent moments in a project, when we're creating choices. The tech struggles, however, in convergent moments, when we're making choices. Thankfully, humans are still required to synthesize massive amounts of information about human needs into concrete human-centered design decisions.

Gotchas

There are two other issues we have to confront when considering transformer models for our prototypes and design recommendations: toxicity and bias. These models are trained on big chunks of the internet, and optimized to produce output that looks like the input. The result is that the model can reproduce the language of a scientific paper just as easily as it can mimic an internet troll. You get the good with the bad.

My experiments sparked a conversation with Jess Freaner, an IDEO Data Scientist with a special interest in ethics and AI. “Though the rules governing how it all works might not be explicitly written on the wall,” Jess told me, “being a product of our world as it exists now and in our past (the internet is an excellent, incomplete archive) we need to consider what GPT-3 reinforces and when it can reveal what needs to be subverted about society.”

Problems with toxicity and bias are not unique to GPT-3. OpenAI is working on both—they have built-in tools to manually and automatically flag output as toxic. They’re also working on the issue of bias, but it’s a thornier problem. These models literally encode a snapshot in time, and are inherently biased to reproduce the status quo. Companies and designers will need to question and problematize the output of these models with the same rigor that we are learning to bring to our human interactions.

Future possibilities

Despite the challenges, it's clear that in the past 12 months, natural language models have crossed an invisible threshold of usefulness, in the same way that speech recognition was frustratingly terrible for decades—until one day it wasn't. Early proof of concept prototypes demonstrate how this type of model can transform a description of an interface into functional UI code. Talk about “declarative programming.” Imagine a future in which the job of a UI designer is to write a description of the interface rather than laying out each button and label by hand. The same description might result in totally different visual expressions or interactions depending on the individual user's needs, interests, or current context.

As transformer models improve, I'm inspired by a future where people are literally in conversation with their software. Users might be able to easily adapt the same app to become a widget in their AR glasses, a quirky voice assistant, or an animated character. Because who knows: for some people, the perfect solution just might be a Savings Monster.

Illustrations by Katie Kirk

Back in early August, I opened my laptop and kicked off a remote brainstorm. Immediately, my partner started generating a huge number of ideas—a perfect blend of wild, hilarious ideas and pragmatic solutions. That's not unusual at IDEO, but what made it remarkable is that my partner wasn't just remote—it wasn’t human at all.

Technology
AI & Emerging Tech
the rules of brainstorming change when artificial intelligence gets involved here's how, technology, digital innovation, ai, emerging technology, artificial intelligence, ai strategy, learning, ideation, brainstorming, creativity

2020 Didn’t Go as Planned, but 2021 Is Coming Anyway

Here’s a tool to bring imagination to your annual planning process

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Articles

In 2020, everything has been turned upside-down, and all budgets are starting from scratch. Planning for the coming year will be more ambiguous and uncertain than ever. It’s time to ditch the carry-over mindset, which can’t solve the complex and often competing challenges faced by business leaders today. What we need now is to broaden our perspectives and use imagination to project into the future.

Back in the spring, when it became clear that coronavirus would reshape the entire world in short order, we began tracking principles to help us focus on understanding context as it evolves, having a clear vision for successful recovery, rebuilding for resilience, and designing through collaboration.

As we spoke to clients and business leaders within and outside of IDEO, we saw the opportunity to develop a tool that would help leaders plan with imagination for the tumultuous road ahead. We were inspired by the Early Recovery principles used by the United Nations to respond to crises or natural disasters. Early Recovery helps people and societies "build resilience and establish a sustainable process of recovery from crisis."

We’ve adapted this concept into a framework for organizations to use in planning the coming 12 months. The Build Back Bolder canvas offers a simple template for reflection, and a series of short exercises designed to help set strategic priorities and initiatives, and to uncover opportunities for growth and impact in the midst of fluctuating conditions. Build Back Bolder is a straightforward, two-page tool that business leaders can run alongside their own planning processes. It can help leaders and teams make sense of the present, get out of analysis-paralysis, and move towards action. Simply put, the Build Back Bolder canvas helps you think, and that helps you plan.

Circumstances don’t get much more ambiguous and uncertain than the ones we’re living through now. In moments of crisis, when markets are redefined, imagination rarely leads the day. But this instability calls for a more varied and experimental suite of tools. Change is inevitable, but using imagination is not. By choosing an imaginative approach, we can plan for a more resilient, bold, and sustainable 2021.

Download the Building Back a Bolder 2021 tool here.

Illustration by Charlota Blunarova

In typical years, there’s a continuity to the annual planning process. Changes are incremental. Many budgets that were approved the previous year are simply carried over. Not so this year.

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2020 didn't go as planned but 2021 is coming anyway

Capitalism Needs a Redesign, but Where Do We Start?

Leaders share what they're doing to address systemic challenges

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To fix big, systemic problems like inequality and climate change, many called for rethinking how companies generate value and who they generate it for—from shareholders, employees, and customers to partners and the planet itself. This wasn’t just a moral argument that business ought to “do the right thing.” The movement was anchored in an existential understanding that radical forces are changing not just the rules of the game for business, but the game itself.

The multilayered crises we face today offer a powerful moment of reckoning for purpose-led businesses and leaders: will we make good on this rallying cry for a reimagined capitalism or not? The pandemic put stakeholder capitalism to the test: a report funded by the Ford Foundation found that companies that had signed on to the “Statement on the Purpose of a Corporation” fared no better than other top companies in prioritizing worker rights. Though there is clearly the opportunity and will to rethink the purpose of business to address systemic problems, the way forward is often less apparent. Understanding where to begin can help us realize the more equitable promise of stakeholder capitalism.

I’ve long been curious about how forward-looking companies have jumped over this hurdle, so I’ve spent this year learning from dozens of movers and shakers already in the thick of tackling systemic changes, from professors and CEOs to founders and non-profit presidents working across sectors and industries. They’ve shared with me the first steps that helped them break the initial inertia of business-as-usual—and, importantly, the mindsets they’ve adopted to sustain new kinds of activity. I hope their wisdom will be as inspiring for you as it has been for me.

First steps

Set bold targets and innovate your way to reaching them
Even if they don’t know where to start, the changemakers I’ve talked with have put a stake in the ground and set bold targets. But they don’t rely on a big PR splash and then move on: alongside these bold goals is a commitment to a process of brave experimentation and innovation.

The Swedish furniture retailer IKEA, for example, has committed to becoming a fully circular company—one that is restorative and regenerative by design—by 2030. To make good on this future, they’ve invested in a range of experiments, prototyping smaller-format shops in city centers that rely on fewer resources, electric vehicles for home delivery, new products like home solar systems, and buyback and rental programs to reduce waste, among others. Taken together, these many activities are moving IKEA closer to their ambitious goal. But they’ve also enabled fast learning and iteration, so that when the company chooses to scale any of these solutions they have the greatest impact for their investment.

From this example and others, a common method is emerging for how companies can use their scale to unlock change at a systems level: commit boldly to an outcome, design a number of experiments, learn and iterate quickly, and scale what works. Spoiler alert: It’s not going to be one thing.

Create a coalition of partners around a tipping-point problem
From homelessness to climate injustice, our challenges demand unprecedented collaboration across sectors. The UN Sustainable Development Goals provide a powerful framework to rally around, but there are other emerging partnership models that leverage the capital investment, innovation muscle, and ability to scale that corporate partners often uniquely bring to the table.

Take the NextGen Consortium, for example. Managed by Closed Loop Partners and powered by OpenIDEO, some of the most powerful food and beverage companies (including Starbucks, McDonald’s, Wendy’s, the Coca-Cola Company, Yum! Brands, Nestlé, and WWF) are collaborating to create a new cup that will curb the 250 billion fiber cups piling up in landfills each year. The approach of this coalition has been to enable many breakthrough solutions, working directly with founders and stakeholders in the system, to take root in the market.

There are many other examples of convenings—whether official or unofficial—and the power of rallying partners around a shared challenge. Founded by Sam Polk, Everytable is on a mission to bring healthy, affordable food to communities that do not have readily available options. Polk grew Everytable to eight locations and delivered 160,000 meals just a few weeks after launching. Through a philanthropic initiative led by the California government, Everytable partnered with a hotel offering shelter and protection to the homeless during COVID to provide food, eventually facilitating additional partnerships with elder care homes. Everytable is now on track to deliver a million and a half meals, and they’ve added jobs along the way. As Jacqueline Novogratz, CEO of Acumen, shared with me, this is an example of business, government, philanthropy, and individual volunteers, leaders, and donors uniting and busting siloes to address hunger.

Define key performance indicators (KPIs) for stakeholder groups
Despite its recent buzziness, the stakeholder perspective—a fundamental commitment to all stakeholders, including customers, employees, suppliers, communities, and shareholders—is not a new idea. Many companies already consider multiple stakeholder interests in their decision-making. But the problem with stakeholder capitalism as it exists today is that it doesn’t offer a clear compass for how to make decisions in complex scenarios where win-win outcomes for all parties are rarely possible. This brings us to the elephant in the room: not all stakeholders are created equal. Leaders are often forced to pick favorites, and at the end of the day, we know who will always win.

To address this, companies like Airbnb are beginning to hold themselves accountable to new stakeholder-centric metrics. Airbnb sees their stakeholder community as made up of guests, hosts, communities, shareholders, and employees. Their design challenge—Rob Chestnut, Airbnb’s Chief Ethics Officer, told me—was to create a company that measures itself against the value it creates for each. Airbnb began by listening to these groups, establishing principles and metrics reflecting the needs of each. For example, they have committed to treating hosts like partners, and measure their delivery of this through survey data evaluating hosts’ satisfaction and earnings over time, among other things. Airbnb reports their progress and continues to update their corporate governance and compensation to reflect delivery against these KPIs.

This approach isn’t perfect. But doing the work of measuring the value you create with and for stakeholders and institutionalizing accountabilities for delivering that value is certainly a step in the right direction.

New mindsets

Allies over heroes
When it comes to business’ role in the big problems society faces, they are often cast as either heroes or villains. Some see capitalism as society’s savior, especially when governments have seemingly abdicated their responsibility to serve citizens’ best interests. Others see capitalism as society’s villain, the cause of many of its major problems like climate change and inequality.

The leaders I’ve interviewed reframe the discourse entirely. They know that systems change requires bringing together key actors—local communities, nonprofits, governments, businesses, donors, and others—to address unjust systems and solve social problems at scale. So, they see their organizations as meaningful allies in the work of change-making, adopting a partnership-as-leadership approach to their engagement in these issues.

“Greyston’s founder Bernie literally started pulling people off the streets to work for a small cake-baking business he had started to address the problems he saw in Southwest Yonkers...Just as the bakery started growing, [Greyston’s founder] Bernie met two guys named Ben and Jerry. Our relationship with Ben & Jerry’s started out as a serendipitous one, but it’s held steadfast as a strong partnership over the years and has enabled us to employ more folks who would normally be deemed excludable, non-employable.”
—Joseph Kenner, President and CEO, Greyston Bakery

“Cooperation among investors is a key to this progress. More than a third of the world’s invested capital—about $19 trillion—is controlled by the world’s hundred largest asset owners…In principle these investors have enormous power to move the entire economy in more sustainable directions. All they have to do is find a way to cooperate...The rumor is that they look at each other and say, “You go first.”
—Rebecca Henderson, Professor, Harvard Business School and author of Reimagining Capitalism in a World on Fire

Gardeners over architects
As the pandemic unevenly distributes pain and suffering across our society, it’s ever more clear: true systemic change requires a shift in power. That means that a top-down approach to change just won’t work to produce the equitable outcomes we need. We need new voices with new ideas to reimagine our economic system. Personally, I’m inspired by the small business owners who have reimagined the role businesses might play in neighborhoods through creative pivoting—like restaurants now offering CSA boxes and large family meals while their dining rooms are closed. Or Black communities that were forced to develop regenerative economic strategies decades ago, long before these concepts penetrated white-dominated corporate worlds.

These are the imagineers of a more resilient, inclusive, and sustainable society for everyone, and the leaders I’ve learned from believe this, too. Their job, as they see it, is to find the seeds of ideas and nurture them. They play the role of gardener, but instead of a green thumb they have a green ear, tuned to listen and learn.

“We were open to new ideas from anywhere and created new mechanisms to source them. Part of our mantra was the conviction that all the good thinking doesn't come only from people sitting on Fifth Avenue in New York City. We ran competitions, we did global innovation challenges, and we learned a lot from what was going on on the ground.”
—Judith Rodin, Former President, The Rockefeller Foundation

“Purpose is obviously about how a company acts, but it’s also about how they listen.”
—Maryam Banikarim, Chief Marketing Officer, Nextdoor

“And so it's going to be up to the rest of us in the conversation to hold those people’s feet to the fire—to make sure that as we are reimagining capitalism we are reimagining it to actually work for all. And part of that is by creating systems that are actually inclusive and equitable and regenerative because only those things will dismantle a version of capitalism that is just for the elite.”
—Andrew Kassoy, Co-founder and Global CEO, B Lab

An audacious question over an assumption about the answer
Rather than start with an assumption about the right solution, these leaders begin with an audacious question. What, for example, would it look like to be a fully carbon neutral company by 2030, asks IKEA? Melinda Gates’ Pivotal Ventures asks what would a future look like if women’s power and influence was equal to that of men?

By starting with a question instead of an answer, these individuals are searching for far more imaginative solutions. This is how radical breakthroughs happen.

“Business has a huge role to play in designing our future. They can do this by first, stepping back and asking, what are the problems that need to be solved? And how can we make that the purpose of our business? Start with that problem. Then, look at the different stakeholders you engage with and rethink how we might come together around that problem...This is moral imagination—the humility to see the world as it is and the audacity to imagine what it could be.”
—Jacqueline Novogratz, Acumen’s CEO

“For the big briefs we face, we need questions that open up new possibility. We don't need the obvious questions — we’ve got plenty of those. We need questions that reframe how we think about some of these systems, ones that change our perspective.”
—Tim Brown, Chair and former CEO, IDEO

The work of changing systems is hard. Taking any of these first steps might require you to flex new muscles, fit yourself into a mold that isn’t quite perfect, or develop new collaborations that might not go seamlessly. Likewise, adopting any of these mindsets might clash with your business-as-usual culture and process. It’s not for the faint of heart. And yet, we can’t move forward—on equity, on the environment, on social cohesion—unless we roll up our sleeves, start redesigning our organizations, and make room for the voices most affected by these systems. So let’s take some first steps, and prototype them together to help push this work forward.

Before the coronavirus pandemic, the promise of a reimagined purpose for business—one that serves a diverse set of stakeholders and society more broadly—had bubbled into mainstream industry discourse. From boardrooms to business schools, a growing chorus argued that our economic system is not only unable to respond to the world’s most urgent challenges, but has excluded many people from the prosperity capitalism promises.

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capitalism needs a redesign but where do we start, leadership, education, learning

Lindsey Turner

I’m passionate about building brands, products, and experiences that help organizations show up with meaning and momentum.

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I help organizations cut through complexity by shaping how they show up, through brand strategy, identity, and storytelling.

Working at the intersection of brand and business, I bring an editorial eye and a bias toward making—turning ideas into tangible experiences that people can understand, trust, and believe in.

My work spans government, healthcare, financial services, media, and consumer goods, from launching Gen Z-focused ventures to building innovation labs and reimagining legacy brands. I relish moments of ambiguity and enjoy translating across teams, perspectives, and priorities to move ideas forward.

I started my career in editorial and digital design, shaping cross-platform experiences and identity systems in publishing and agency environments. That foundation still shapes how I work today: I’m detail-oriented, collaborative, and overreliant on the Oxford comma. I hold a BFA in Visual Communication from the School of the Art Institute of Chicago.

My tween twins teach me more about technology and gen-alpha than the last decade of trend reports.
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Rachel Young

My work helps organizations see who their products aren't working for—and build the will and the tools to do something about it

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For 25 years, I've asked the same question: Who does this design exclude—and what are we going to do about it?

My work spans human-centered strategy, inclusive design, and qualitative research, with clients ranging from Microsoft, Google, and Verizon to the National Science Foundation, and San Francisco Unified School District.

Before IDEO, I taught elementary school in East Palo Alto and spent a decade doing design work with social service organizations—where I learned firsthand what it costs people when systems are built without them in mind.

I am currently writing User Error, a nonfiction book about digital access and the design decisions behind it. I live in Oakland, California.

The greatest project to which I’ve ever contributed is raising my two daughters with my husband.
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Brian Pelsoh

I lead with craft, ensuring our work is creatively excellent: rooted in deep human insight and imagination, while also grounded in the realities of business and technology.

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My expertise spans brand, communication, and product design across tech, education, the arts, and social impact.

I believe great work demands both high-level vision and obsessive attention to detail, and only happens through collaboration.

I bring an inclusive, hands-on approach and a deep understanding of business, which enables me to consistently deliver excellence while always asking why.

Before joining IDEO, I worked at the brand firms Pentagram and VSA Partners. I began my career as a designer, leading teams at the School of the Art Institute of Chicago and the Milwaukee Art Museum. I hold an MFA in graphic design from Maryland Institute College of Art and a BFA in communication design from the Milwaukee Institute of Art & Design, and have taught at some of the best design schools in the US.

I love a good crit.
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Tony Wong

I am responsible for IDEO’s long-term success in China and working with clients to use design as a tool to enable growth.

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I am responsible for IDEO’s long-term success in China and working with clients to use design as a tool to enable growth. Specifically, I have helped Chinese companies design holistic brand solutions through the development of their products, communication, services, and innovation teams, and I have helped multinationals expand their presence and influence in China.

I advise global leaders on developing China-led innovation and capabilities.

In over 15 years in IDEO Shanghai, I have worked on projects that use design to elevate the quality of the experience of healthcare products and services, streamline processes that increase productivity, create spaces and programs that promote and enable inclusive communities, and build next generation mobility solutions that are planet-positive.

Before joining IDEO, I worked at Philips Electronics and the Electrolux Group in Italy, the Netherlands, and Singapore on a number of breakthrough commercial products. I am a member of the Young President Organization in Shanghai.

I have a thing for antique maps.
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How to use AI as an editor, not a writer

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Ed White shares how he uses AI as an editor—not a writer—to sharpen storytelling, rehearse ideas, and preserve the productive friction that makes creative work better.

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Ed White has a rule he's tested on his own writing: hold yourself as the writer, and let AI be your editor. Ed is a Senior Design Director at IDEO's London studio, where he co-leads the firm's AI portfolio across Europe. Before IDEO, he spent 12 years as a writer and editor at the Financial Times, Wired, and Contagious. So when he talks about when to use AI for storytelling and when not to, it comes from two decades of crafting his storytelling skills.

In this episode, Mina Seetharaman talks with Ed about two specific tools he uses to keep AI in an editor's seat: a "roasting agent" prompted to critique his drafts without any sugarcoating, and a simulated audience he rehearses pitches on before the real thing. They also get into what Ed is hearing from design leaders at Anthropic, Lovable, Shopify, and Google Creative Lab about how creative work is changing, and why he thinks the friction of writing something yourself is worth protecting rather than automating away.

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Building a personal AI for the messiness of life: Sida Li

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Becca Carroll talks with Cue co-founder Sida Li about designing a personal AI for the messiness of everyday life—not just work. They explore how Sida stays anchored to human needs while navigating fast-changing technology, product tradeoffs, business-model experimentation, and the realities of building an AI company today.

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Most AI products today are built for work—a space with clear problems and established systems. One founder noticed a gap: personal life is messier, harder to systematize, and mostly left behind by the AI boom. So she built Cue, a personal AI that lives inside iMessage and group chats, to go where the other tools haven't.

In this episode, Becca Carroll, IDEO's Chief Strategy Officer, talks with Sida Li, co-founder and CEO of Shared Context Lab, about staying anchored to a human need while the technology around her keeps changing shape, why she treats her business model with the same rigor she'd bring to a product, and what it feels like to build a company at this particular, disorienting moment in AI.

The conversation also gets into how Sida makes design decisions: the language Cue uses to describe itself, the tradeoffs behind building inside iMessage instead of a new app, and a real story about a business idea that didn’t pan out.

This is the second in a two-part series profiling founders from IDEO's Startups-in-Residence program. The first conversation is with Johannes Seemann, founder of Sooner, on designing GenAI for the emotional side of money.

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Designing GenAI for the emotional side of money: Johannes Seemann

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Designing financial tools around the feelings that shape money decisions.

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Most personal financial tools are built to run the numbers and optimize towards a budget. While that works for some, most people experience money as a lived relationship that does not neatly fit into a spreadsheet. Johannes Seemann and Becca Carroll discuss why money is emotional before it is mathematical, and what a human-centered approach to building a generative AI financial product looks like in practice.

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The curious leader's edge in uncertainty: Scott Shigeoka

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How genuine curiosity helps leaders navigate uncertainty with greater confidence.

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Mina Seetharaman talks with Scott Shigeoka, author of Seek and Head of Curiosity Cultivation at the Eames Institute, about what distinguishes genuinely curious leadership from performative curiosity, how power dynamics shape curiosity, and why practicing curiosity can restore energy rather than drain it.

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