Free Willy? Free the engineers
Publication Date: Wednesday Oct 26, 1994

Free Willy? Free the engineers

Ideo's success relies on marching, never in lock step, to an offbeat drummer

by Diane Sussman

The shelves in David Kelley's office are crammed with the outpourings of his own and his company's imagination: the no-waste toothpaste tube, the Apple Computer mouse, a model of the mechanical whale used as a body double for Keiku in "Free Willy," the no-bad-notes Jaminator for people who like more sound than air guitar. Yet he pouts. "I didn't invent the Xerograph machine," he laments. "I wish I'd invented the Xerograph machine."

He also spends a few moments regretting that he didn't have a hand in the creation of the Frisbee, the 10-speed bicycle, the ice cream scoop with antifreeze inside or the Slinky.

"Put it in the hands of anyone in the world and it instantly comes to life," he said, referring to the Slinky.

At the same time, he takes comfort in the knowledge that he had nothing to do with foisting wood-grain Formica, hotel room alarm clocks, chimney flues or "interfaces on VCRs" (otherwise known as the remote control) on an innocent public.

"It's bad, it's just bad," he said of VCR interfaces. "You try to change the channel and the volume goes up. And the end result is that the user feels bad."

Kelley is the--well, what?--at Ideo Product Development, an industrial design firm in Palo Alto. He is also an associate professor in the product design division of the mechanical engineering department at Stanford.

It's hard to fix a title on Kelley because "there are no titles at Ideo," said Maureen Rathjens, who, if she worked elsewhere, would be the "marketing, new business development, public relations, that kind of thing" person of the company.

Without formally acknowledging a hierarchy, Kelley can safely be called the founder of the 17-year-old company. Rathjens has also approved of calling Kelley the chief executive officer or chief operating officer. "If we had titles," she repeated, "then CEO or COO would be fine." Kelley runs the business with his brother, Tom, who is, "I guess, the equivalent of head of marketing, or director of marketing," said Rathjens.

In a way, it's easier to define Kelley through what others call him. Fortune magazine called him "one of the most powerful people in Silicon Valley." And, until recently when the 43-year-old announced his Oct. 22 wedding plans, he had been considered one of Silicon Valley's choicest bachelors. "Some of the women I used to go out with wouldn't have called me that. They would have said other things," he commented.

As CEO, COO, president, owner or whatever title he prefers, Kelley heads the country's largest industrial design and development firm. From its origins as a one-man show above Roxy clothing store on University Avenue in the 1970s, the privately held company has grown to an international business with 170 employees and annual revenues of $25 million.

The absence of titles and the downplaying of a hierarchy are just two of the indicators that Ideo is not your typical company. The University Avenue office looks more like a playpen than work space. Boxes, bikes, rubber ears, toy boats and molded hands line the hallways. Employees punch no time clocks, conform to no dress code and, it seems, drive no cars. "We are big on biking here," confirms Kelley.

Obviously, the company does not stress tidiness. "Tidiness?" said Kelley, zigzagging around a bicycle helmet in the hallway. "The star of the company has the messiest office."

Kelley's management philosophy can be reduced to something akin to benign neglect. "The people here don't mind being led. They mind being managed," he said. "Here, the idea is just to get the job done. The best thing I can do is get out of their way."

Kelley and his friend Dean Hovey founded the company, then called Hovey-Kelley, on pocket money in 1978. In 1980, Kelley went solo as David Kelley Designs, then merged with Matrix and ID2 in 1991 to become Ideo.

The company now occupies so much downtown real estate--seven buildings--that people jokingly call Kelley the next Jim Baer. "Except we rent," said Kelley.

Generally speaking, Ideo falls into the category of industrial design firms, known to those in the trade as ID firms. While the typical ID firm concentrates on developing what is known as an "appearance models"--in other words, a model with no working innards--Ideo develops a working prototype and manufacturing specifications.

To do this, the company relies on the collective wits of product designers, mechanical engineers, electrical engineers, artists and cognitive psychologists who study human-machine interactions.

At this point, Ideo doesn't even define itself as an ID firm. "We call ourselves a product design company," said Mike Nutall, industrial design director at Ideo.

"Even though we've been around for a long time, we're seen as kind of a novelty act," said Kelley.

Companies come to Ideo they want to design a new product, refine old ones or test an idea to see if it's feasible. A project can start, as it did in the case of the Microsoft mouse, with a request as vague as a desire "to build the world's best mouse."

"A simple request," joked Nuttall, who worked on the project, "but that's what they wanted."

In addition to Ideo, Kelley founded Onset, a venture capital firm, and co-founded Edge Innovations. This small spinoff company, also located in Palo Alto, specializes in projects for the film industry. Edge created the submersibles in "The Abyss," the special effects in "Terminator 2," the snakes in "Maverick" and the "animatronic" orca whales in "Free Willy." Nearly 50 percent of Willy's "acting" was performed by Edge's animatronic rubber orcas.

The animatronic Willy is another example of having to give shape to an inchoate idea. "Basically, Warner Bros. came to us and said, 'We want a whale that can do all these things,'" said Walt Conti, president and owner of Edge Innovations.

"All these things," Conti learned from the script, included swimming and letting a boy ride on its back. "You're talking to them and you're saying, 'We can do this,'" said Conti. "But in the back of your mind, you're thinking, can we really?"

The company's client list reads like a Blue Chip roster of the medical, technical, computer and consumer world: Apple Computer, Hewlett-Packard, Motorola, Logitech, Procter & Gamble, Baxter Health Care, Zenith.

To the roster of status clients add a series of status awards: a design distinction award for the Logitech Cyberman 3D Controller, the New Generation fishing reels from Berkely Outdoor Products and the "Free Willy" whales; a best of category award for the Audiovision 14-inch display and the Color Stylewriter Pro from Apple Computer; and the highest design quality award for the Mercury oneZone M300 Mobile Phone.

Almost as much fuss has been made about Kelley's physical appearance as about his business. With his round glasses, black mustache and dark hair, Kelley is a ringer for Groucho Marx. "I do get tired of the comparison," he said, pointing to a huge cache of plastic nose-and-mustache sets that people have sent him over the years.

No one else seems to have gotten tired of it. In restaurants, waiters give Kelley the "cigar sign." When Fortune magazine did a story on the company, they dressed everyone--except Kelley, of course--in Groucho glasses and noses. And nothing seems to stop the plastic nose and glasses sets from pouring in.

In the early years of his career, Kelley despaired of ever finding engineering work that went beyond "making widgets for projects I didn't care about."

"Basically, I was out in the world being a bad engineer," he said.

While his employers wanted widgets, he wanted flying machines and Frisbees and Slinkys. "Engineering is about innovation, not measuring a gadget. It's Edison. It's the American spirit. To be good at inventing. Like Edison. And I didn't seem to be able to find that."

From childhood, he wanted to be an artist. But Dayton, Ohio, was not a place to nurture a young artist. "Saw art? I never saw anything," he said. "Not even a Chinese restaurant."

His family, all "good people," were mostly tire builders, although his father was an engineer. With no outlet for his art, he tinkered. One time he "improved" the family washing machine and made it unusable. Another time he dismantled the family piano and couldn't put it back together. "My mother still sends me the parts," he said. "I think she is still hoping I will put it together."

After graduating from Carnegie-Mellon University in Pittsburgh, he tried working as an electrical engineer at Boeing in Seattle. "It was always some gadget that was 18 levels removed from the space shuttle."

After two years, he left Boeing and took a job as a manufacturing engineer at National Cash Register Corp. in Dayton. But after a year of that he was on the road again, this time to Chemetrics Corp. in Burlingame, where he worked as a product designer.

Things didn't really begin to click for Kelley until he enrolled in Stanford University's master's program in engineering product design. There, he found the innovative spirit that had eluded him in the business world.

When he started his business, he modeled it after what he thought were the two most successful traits of the Stanford program--"can-do spirit with limitless imagination."

Success, he believed, would ride or sink on the people he chose. He hand-picked his employees. He hired no one unless they had been "lunched" and approved by 10 people. He looked for imagination and curiosity. "You have to have people who feel freedom and initiative are the most important things in the world," he said. "You want everyone to think they are the most important person in the company."

To this core group of engineers, he added product designers, consultants and cognitive psychologists. "These people are experts at observing human behavior and developing questions," he said. "Engineers have different questions. We wanted people who could go wide with their thinking."

He indulged his employees utterly, allowing them to work their own hours, their own way, in their own messes. When the 40-something crowd found itself infiltrated by "spunks" (20-somethings who work to loud music), he gave the spunks rooms of their own. "I couldn't work that way," he said. "But they can."

He must be doing something right, because business is brisk and no one has ever been fired. Most of his employees have stuck around for years, even decades. In his mind, no one in the company has ever failed. "You don't fail because you end up changing the rules. Maybe you can't make an eyedropper for old people that costs 20 cents. So you change the rules. Instead, maybe you can make it for 40 cents."

Is Ideo, then, a modern-day utopia, where everything goes off without a hitch? "Oh, we've failed big-time," he said. "We've seen things fail in the manufacturing and fail financially. But you don't fire people because something fails financially, or in the manufacturing."

Middle age may be the biggest obstacle facing the company. As employees are learning, you can't live a Silicon Valley life on a dreamer's salary. "My biggest problem is that now we're older. We have mortgages and family and we need more money.

"These are all my friends," he said. "I don't want them to leave because someone else offered them more money."

Outsiders, on the other hand, may wonder if the world really needs another mousetrap--or toothpaste tube, or fly fishing rod--even if it is better? "I think about that too," said Kelley. "You see studies on products like dishwashing liquid which show that 80 percent of the people use whatever brand their mother used."

For Kelley, it all comes back to Frisbees and Slinkys--to the notion that good things come to life in the human hand. "I like to make a tool people can use," he said. "Picture your grandmother with an electric charger for her electric car, and enjoying it. When you make a tool like that, and you see someone using it, it makes you feel vital."1 n

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