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Better sales, less waste

H&M transforms its operations to cut excess inventory.

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Case Studies
Creative Capabilities
Breakthrough Products
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

How to Think About Long-Term Strategy When You Can Barely See Past Tomorrow

This is the moment for businesses to redefine what it means to win

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Articles

The primary question in this moment should be: How might we each play our part in bringing this pandemic to an end? But it's a moment, too, for reflection on the future. Who do we want to be when we emerge from the worst of this? What do we want our organizations to stand for? These are questions of strategy—of what it means to win.

How does your organization define winning? What is that challenging shared goal that gets your people out of bed each day, excited to play their part? If your organization is like most I’ve worked with, you may struggle to answer that question. Despite all the time and resources poured into strategy work each year, few organizations have a widely understood definition of winning that goes beyond making money for shareholders.

Fifty years ago, in The Social Responsibility of Business is to Increase its Profits, economist Milton Friedman argued that the purpose of a business is to serve its owners. The leader’s role, he wrote, is “to conduct the business in accordance with their [owners’] desires, which generally will be to make as much money as possible while conforming to their basic rules of the society.” This notion, which is the foundation of the doctrine of shareholder value maximization, is now pervasive. But it’s showing considerable signs of wear and tear as we become more aware of the negative consequences of putting profits ahead of people.

Solely prioritizing short-run outcomes for shareholders does little to bring meaning to our work; it stymies innovation; it reduces our business fitness; and it makes much, much harder the real work of strategy. Meaning comes from creating real value in the world, which means we need to think broadly in terms of who we’re winning with (and for). Innovation requires a long-term perspective, so we need to think about winning beyond this quarter or even this year. Business fitness (the financial and strategic resilience of a company over time) depends on being attuned to things that shareholders may not see. To ensure our viability, we need to seek out signals as to what customers, employees, and societies care about. Strategy is about building a firm that can win both now and in the future, so we need to be more holistic in our approach to making choices.

If it is time to move past shareholder value, how might we define winning in a more useful way, that spurs rather than stops innovation? How might we set aspirations that don’t suggest a win-lose frame? How might we seek instead to create value for customers, for employees, and for investors?

Find the right language

In the process of developing a strategy for kyu, the collective of organizations that includes IDEO and SYPartners, some leaders rejected the notion of “winning” entirely, recoiling at a word that felt tied to a scarcity mindset. If we’re winning, they asked, who is losing?

Tim Brown and Susan Schuman, the kyu vice chairs who co-led the strategy discussions, thought hard about how to navigate that challenge. As Brown notes, they came to see that “we’re really creating a community at kyu—a collective that aims to unleash creativity and to help people flourish.” He goes on: “What we realized is that communities don’t win or lose, they thrive or falter.” The kyu strategy focuses on what it would mean to create a community that can truly thrive over time. Thriving may not be the term that resonates with your organization, but language matters. To redefine winning to be more inclusive, work with your team to find a mental model for winning that works for you, then build shared definitions of the models you choose.

Shift the timeline

Another way to push on current, unsustainable definitions of winning is to publicly shift the time horizon so that sustainability, both economical and ecological, can be integrated into our aspirations. Unless we look further out, we will continue to plunder the future to fund the present and to degrade the planet to drive profit. For inspiration on what is possible, look to Paul Polman, former CEO of Unilever.

In an interview for my book Creating Great Choices, Polman explained how he set out to change the time horizon at Unilever: “One of the things I had to do was to move the business to a longer-term plan,” he said. “We had become victims of chasing our own tail, cutting our internal spending in capital, R&D, or IT to reach the market expectations. We were developing our brand spends on a quarterly basis and not doing the right things...We were catering to the shorter-term shareholders.”

Polman decreed that the company would stop quarterly reporting and stop giving guidance. He embarked on a far-reaching environmental sustainability effort, and he reinvested in R&D, talent development, and brand building.

Polman believed that shareholders whose interests were aligned with Unilever (i.e. long-run profitability and environmental sustainability) would eventually buy into his plan. Taking a long-term perspective on winning not only let Unilever invest in innovation for customers and in development for its people, it let leadership focus on the fundamentals of the business rather than managing short-run expectations. As a result, it created lots of shareholder value too. In the decade Polman headed Unilever, its stock price increased 170 percent, creating more value for shareholders than most companies in the FTSE 100. This is a win-win-win solution, and it was powered by a willingness to show up differently in the world.

Define your purpose

A third way to redefine winning productively is to connect our aspirations to a larger purpose. Think of purpose as the human “why” that explains the reason a company exists. The best purpose statements are very human: they connect the work of the organization to real people, to real needs, and to real problems to be solved. By defining a meaningful purpose, companies can demonstrate to employees and customers what they stand for and why. The purpose can then set the context for the strategy; we can define what winning means in service of our overall purpose.

One company that demonstrates the power of connecting purpose to strategy is Orbia. Until 2019, Orbia was called Mexichem and it was mainly known as a chemical company. Last year, along with a new brand, Orbia unveiled a new purpose: To “advance life around the world,” tackling some of humanity’s biggest shared challenges, like food security, water scarcity, and livable cities.

Had it continued to define itself as a chemical company, Mexichem could have followed a path to near-inevitable commoditization. Instead, CEO Daniel Martinez-Valle and Orbia’s leadership team worked with IDEO to define a higher bar with a bold new purpose. Now the team is working to connect its strategic choices, its resource allocations and its employee incentives to that larger purpose. Doing that means reorganizing the structure of the company into five business groups, each aimed at addressing a unique global challenge, defining meaningful sustainability targets for each business, and investing in innovation in significant new ways. That’s really the power of purpose: it can align the organization, motivate employees, and promise customers something they can believe in. No wonder purpose-led companies tend to have higher employee engagement, happier customers, and better overall performance. They win on multiple dimensions.

Winning isn’t easy. It’s tempting to define winning narrowly, to make the task seem easier: winning means increasing the stock price this quarter. But as the last few months have demonstrated, a shareholder-led definition of winning is not only hollow, it can leave organizations with nothing to fall back on in a time of crisis. We need a far richer, more aspirational understanding of what it can really mean to win. To get there, ask how we could define a winning aspiration, using language that fits our organization, push out on the time horizon, connect strategic goals to a larger sense of purpose and give ourselves room to dream big.

In a moment of crisis, it can be difficult to think beyond the next hour, the next day, the next week. The global COVID-19 pandemic has been difficult for each of us, as we grapple with our duty of care to our employees, to our communities, to each other, to ourselves. The unprecedented disruption created by this crisis should be seen first and foremost in humanitarian terms, connecting to the very real personal toll of this disease—serious illness and lives lost, isolation and fear, worsening unemployment and economic precarity.

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long-term strategy when you can barely see past tomorrow, strategy, social impact, community engagement

4 Ways to Work Together When We Can’t Be Together

How we’re adapting for an age where digital collaboration is the norm

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Like most organizations, we’re reckoning with how COVID-19 will change how we do business. And as we do, we’re learning a lot from our community—our colleagues living and working under complex, difficult circumstances; our clients whose businesses depend on global transportation; and the people we design for and with on a daily basis.

"Constraints can breed a lot of innovation,” says Charles Hayes, a managing director of IDEO’s studios in Asia. “As designers, how do we design our way through this?"

Here are a few tips based on what we’re learning:

1. Create a virtual meeting survival kit

How many tabs do you have open right now? We equate multiple screens with fractured attention. But just because a meeting is being conducted virtually doesn’t mean it can’t be designed for presence. An IDEO team recently had to find an alternative way to run a 20-person workshop for a foundation in Seattle. They asked themselves: How might we still approximate the level of engagement of an in-person meeting? Better still: how might we make sure this virtual workshop delivers on our client’s needs—focus, alignment, and a set of actionable next steps—while keeping things interesting?

Before the meeting, the team mailed a virtual workshop survival kit, complete with “sleeping bags” for cell phones, mini-whiteboards for people to prototype ideas, and physical takeaways to help the presentation resonate off-screen.

A virtual workshop survival kit helped ground a 20-person remote workshop.

Over the course of the meeting, participants excitedly unwrapped items one by one. It was a way for the IDEO team to show up in the room when they couldn’t actually show up in the room.

2. Design rituals around tools

There are thousands of tools to facilitate remote collaboration—video conferencing! brainstorming tools! task-management software!—but perhaps more important than the specific tool are the processes teams put in place around them. After all, a tool is only as good as its ability to deliver on what the team needs.

Take video conferencing, for example. A reliable video chat box can be a Swiss Army knife to combat the woes of remote collaboration. But spending an entire day jumping from one serious video chat to another is a recipe for bleary eyes. IDEO teams around the world have been running experiments in how video conferencing can be a tool to build culture and connectedness in addition to getting work done.

For one, teams have been continuously changing their virtual video backgrounds—everything from a football game to a family vacation photo—to spark discussion and keep meetings fresh. Regular rituals like daily meditation or morning coffee chats have been ported over to video. And teams are using creative warmups—like a 10-second dance break or a quick show-and-tell of an artifact from the home office—to kick-off meetings.

3. Empower local communities

When travel is off the table, IDEOers have had to find alternative ways to learn from the communities for whom they’re designing. One approach that has become particularly relevant in the wake of COVID-19 is Equity Centered Community Design (ECCD). ECCD is a process of designing with—as opposed to designing for—a community.

For example, IDEO recently worked on a project to design a new lifelong learning program for the city of South Bend, Indiana. Rather than rely on traveling to South Bend to conduct research, the IDEO team hired local “community connectors” and a researcher in South Bend to conduct interviews, share prototypes, and co-design with the IDEO team remotely. Now that many cities are sheltering in place, even local communities will have to work remotely. That makes it all the more important to enlist those with hyperlocal context and lines of sight, ensuring there is sensitivity and flexibility around immediate needs. By designing themselves out of the room, the IDEO team received a level of honest feedback they may not have been privy to if they’d been physically present. This method isn’t new, but as movement becomes constrained, it’s even more important to engage local networks to be the eyes and ears on the ground.

4. When you can't do, learn

How long have you been putting off learning that skill? Cleaning up that code base? Building that website? When one door closes, listen for the creak of another opening. Travel constraints can be an opportunity to take a deep breath, hunker down, and try something new. Across IDEO, designers have been using these extenuating circumstances as an opportunity to gather digitally and learn. “We have experimented with a number of things,” says Brian Chien, a director in our Shanghai studio. “Some worked well, and some definitely didn’t.”

Whether it’s prototyping a remote brainstorm, trying out a new tool, or building something by hand, the disruption of your normal routine can be an opportunity to learn something. And if you already have the skills, teach! Designers in our Tokyo office are webcasting tutorials for young design students, sharing skills with those who aren’t able to attend an in-person workshop. What if, when it’s inadvisable to move from place to place, organizations took what they’re saving in travel expenses and invested it into L&D?

At IDEO, we will always believe in the alchemy of creative minds bouncing off one another in a shared space. But COVID-19 has pushed us to get even more comfortable with digital. And while we know necessity is the mother of invention, we still have much to learn—especially from other companies who have been at the forefront of remote collaboration for years.

Of this we’re certain, says Arlin Tao, a senior director in our Shanghai studio: virus aside, remote collaboration is the way of the future. “I think the only thing that most people agree on is when things go back to normal, it's not going to be the normal that we were used to before.”

It's not uncommon for IDEOers to make house calls. Friendly, in-person conversations are one of our most cherished tools—that kind of design research helps us learn what people collect and eat and carry in their backpacks. Social interactions fuel the insights we use to do our design work. What happens, then, when social interaction is not good for us?

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4 ways to work together when we can't be together, user research, research, team collaboration

Why One Artist Challenged Herself to Learn 366 Different Knots

Windy Chien spent a year learning how to turn rope into art

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While we tied, she shared the story of leaving her corporate career in design to pursue a year diving deep into the world of knots, teaching herself a new knot every single day. With explorations traversing the historical and functional—from gathering inspiration from sailor’s knots to the future-forward and abstract—her knots have become massive installations, offering an alternative translation for structures like the circuit board and New York City subway system. I left her session deeply inspired by the simple power of dedicating ourselves to daily acts of making and craft—let’s all try it.

In one sentence, who are you?

I make sculpture and installations that elevate the vernacular and inspire awe and understanding; in the context of knots, I work at the intersection of function, design, history, and aesthetics to illuminate what’s most fascinating about knots: the journey of the line.

What do you do? How did you learn it?

I developed fluency in the language of knots—and found my artist voice in the process—by learning one new knot every day of the calendar year in 2016 (which was 366 total knots because of the leap year).

How do you get over creative block?

You know, I never have creative block. I have a list as long as my arm of investigations I’m dying to explore and large installation concepts that are awaiting a home.

What was the last item on your to-do list?

I’m currently hiring, so today I'm posting a listing for a studio manager position, ordering custom-made cordage for a hotel project in the Maldives, and later on, I'm heading to Gensler San Francisco for the opening reception for a show I’m having there.

What’s your dream installation site?

An airport. I’m obsessed with the notion of the journey of the line, which is evident in my work. The rich metaphors that arise from journeying and traveling are particularly well suited to airports.

What’s your number one bucket list item?

I really want to see my work in an airport... and then a TED Talk.

What’s the weirdest or coolest knot you’ve learned? Why?

The five-strand star knot. During my Year of Knots, I tried for over an hour to learn it, only to end up frustrated and in tears. It's complex and the old-timely sailors knotting books were cryptic. But then I mastered it, and now it is my favorite knot to make.

What are you most curious about right now?

People often call me a "fiber artist," but I don’t restrict myself in that way. I’m interested in the journey of the line. So while it’s wonderful to render a line in rope, because rope allows for creating shapes in space without weight, almost anything can be a line. I’m curious about exploring other materials—glass, tubing, metal, and more. I’m still looking for the project that will want me to tie knots out of ethernet cable.

Who are you creative crushin’ on lately?

Always and forever: artist Janet Echelman, who makes sculpture on the scale of city blocks that respond to wind, weather, and light. I met and befriended her last year and we spent a day in Paris looking at art. Janet is lovely and her art absolutely takes my breath away. She has a permanent installation in Terminal 2 at the San Francisco Airport that is so beautiful, when I have a flight to catch, I will go to the airport early just to gaze at it. Endless respect to Janet Echelman.

Learn more about Windy's craft in her book, The Year of Knots.

I was feeling a bit sleepy at a design conference this past spring when, upon entering the auditorium for the next talk, I was handed a simple length of rope. My ears perked up with anticipation and curiosity. Enter Windy Chien: ingenious fiber artist who would coach the entire room of conference-goers in learning how to tie a donut knot (it’s adorable and makes for an amazing necklace).

No items found.
why one artist challenged herself to learn 366 different knots, learning

Your Competitors Aren’t Who You Think They Are

With tech firms getting into the financial services game, banks need to start thinking differently

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By looking to the neighborhood pub down the block, it was easy to see that if they wanted to keep customers around longer, they needed to have a similarly linger-worthy offering. It seemed to be working.

In an age when boundaries between sectors are blurring, traditional businesses need fresh approaches that keep them relevant, even as the tech titans add capabilities that could eclipse the old guard. When leaders are willing to look beyond their own industry for inspiration and ideas, they often gain a competitive advantage.

The financial services industry is a perfect candidate for this kind of approach. Money is changing in radical ways, and along with shifting regulatory environments at home and abroad, we increasingly find new players entering the financial space. It often seems like the future of financial services is being designed outside the domain of the industry giants, which begs the question: Are traditional financial firms equipped, at present, to satisfy customer needs? People want convenience and access, security, privacy, social features, comfort, experiences, and a range of incentives—many of which are more readily supplied by a digital platform than a stately bank. But some traditional players are taking a new tack.

When the first Capital One Café opened in late 2015, the bank was attempting to address these very concerns. Millennials, having come of age around the 2008 financial crisis, harbored a well-documented distrust of traditional banking and felt turned off by the branch experience, so Capital One attempted to reinvent the bank branch in the image of a coffee shop and coworking space—again, looking outside their industry for inspiration. “Customers are over the corporate thing,” a bank representative said. It’s hard to imagine someone would choose to enjoy their coffee inside a bank if other café options are available, yet by most measures Capital One’s experiment has been a success, offering a more welcoming and attractive experience than speaking to a teller through bulletproof glass. By innovating on the experience, Capital One has entered retail banking in a novel way.

The late Harvard academic Clayton Christensen developed the concept of “jobs to be done,” arguing that customers have a need to get a job done, rather than a need to acquire a specific product or service. It’s a slight but important turn of the dial from the traditional way of thinking. Here’s how legendary economist Theodore Levitt described the idea back in 1969: “Last year 1 million quarter-inch drills were sold, not because people wanted quarter-inch drills but because they wanted quarter-inch holes. People don’t buy products; they buy the expectation of benefits.” To advance the argument a step, perhaps what the customer needs isn’t a one-inch hole but the ability to hang a picture. Maybe an adhesive hook would do the job better than a drill.

Innovation is often driven by the urgent need to solve a problem. In 1922, a group of army officers observed that returning soldiers, who hadn’t driven cars while on active duty, had a hard time getting auto insurance. The officers formed the United Services Automobile Association to provide insurance to military members and their close family. Later USAA expanded to offer a wider range of services including banking, investment, and other types of insurance. Since their members were often scattered geographically—sometimes on the other side of the globe—USAA pioneered mobile banking, initially by phone and mail and later online. Even today, with almost 13 million members, USAA has only one full-service bank branch, located in San Antonio.

This company, which was founded to offer auto insurance to service members, is now regarded as a shining example in the banking world of loyalty and customer satisfaction. Several of my clients who work at major retail banks have admitted to me in private that they still do their personal banking at USAA because they so admire the firm’s customer service. From that original need in 1922, USAA created a new service model that has lasted nearly a century.

Many of today’s most inspiring models for innovation are scattered globally. The European Union’s Open Banking efforts have created fertile conditions for EU mobile-first banks such as N26, Starling Bank, and Monzo. These firms score off the charts in customer satisfaction rankings, above even USAA’s benchmark. In the EU, mobile-first banks have grown through a mix of purpose and convenience, the human-centered design of their interactions and offers, and a supportive regulatory environment.

Alipay in China—which has a staggering 900 million users—is a smartphone wallet app that has revolutionized mobile payments, including the development of “Smile and Pay,” facial recognition technology that allows consumers to pay for goods without even carrying their mobile device. Alibaba has aggressive plans for global expansion of Alipay, all but guaranteeing that domestic US firms will come into direct competition with the Chinese juggernaut.

In many African countries, citizens have so little faith in their nations’ financial stability and fiat currency that a new kind of money has emerged: prepaid mobile phone minutes. People pay for a broad range of goods and services—from procuring groceries to settling their electric bills—by transferring mobile phone minutes. Kenya’s most ubiquitous service, with more than 30 million users, is m-pesa, launched by the country’s top mobile phone companies, Vodafone and Safaricom. Who would have thought that mobile phone companies would emerge as the central disruptors in Africa’s financial services sector, disintermediating the banks?

The financial world has been slower to innovate than, say, the technology world, for a few key reasons. First, financial firms haven’t been forced to innovate at the same pace; second, regulation has disincentivized competition; third, most radical thinkers are no longer drawn to the financial services, as the center of action has moved to Silicon Valley.

Millennials comprise the largest population in our workforce, and three-quarters of them say they’d prefer a financial offering from a large technology company over one from a traditional financial services firm. And the tech world is responding. The Apple Card recently launched in an effort to redesign the credit card and disrupt the status quo. PayPal and Venmo, beyond their use as payment services, essentially function as savings accounts for many customers who store money in the app. And millennials aren’t the only focus of this evolution: A handful of new firms, such as EverSafe, have introduced new products that help the elderly population manage their bills and protect against financial exploitation.

Money is always changing—the way it moves, the shape of it, and how we store it. Financial services firms need not only to keep pace, they need to be leaders of innovation. New solutions could come from unexpected places, so it’s critical to take a global perspective, benchmark beyond industry peers, and consider the experience of the people providing and receiving services. Building the next 100-year financial services firm will depend on doing all of these.

Illustration by Emil Wikström

The bike shop in my neighborhood recently started serving beer. They keep a keg on ice in the back room, and customers can sip pints as they browse the bicycles, gear, and hardware. I was curious what was behind the move, so I asked the owners. They told me they’d been trying to figure out how to get customers to spend more time in the store, and hopefully to make a purchase, so they decided to take a page from another industry’s book.

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your competitors aren't who you think they are, financial services, fintech, hardware, physical computing, prototyping, product design

Lindsey Turner

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

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Leader
Leaders

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.
Uncovering unmet needs
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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.
An inclusive, hands-on approach
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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.
Developing China-led innovation and capabilities'
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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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Technology
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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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