IDEO Shifts Focus From Product Design to Teaching Innovation

IDEO, the San Francisco-based design agency founded in 1991, is changing its business model after decades of creating products for major companies. The agency previously developed items such as Procter & Gamble’s standing toothpaste tubes and Bank of America’s “Keep the Change” program. It later expanded into larger projects including work on Ford’s electric vehicle factories.

Last year, job postings in product design fell by 18% and graphic design postings fell by 57%. Before the current CEO took over, the agency had cut about one-third of its workforce, closed its Munich and Tokyo offices, and seen revenue drop to less than $100 million from $300 million four years earlier.

The current CEO said customer centricity is now considered basic rather than distinctive. The agency plans to focus on teaching clients how to design products themselves instead of handling one-off projects. The CEO noted that companies will likely spend years using AI for efficiency before addressing deeper organizational changes.

He added that the risk from AI is not replacement of designers but that outputs may become more similar across firms.

China, the agency is working with companies expanding outside the domestic market. Chinese electric vehicles, home robotics firms, and consumer brands are entering overseas markets. In Japan, the CEO said companies face challenges entering North America and may need new approaches beyond small innovation labs in Silicon Valley.