Sunday, February 25, 2024

Mutual Mentors: IDEO declines

Read Time: 3 minutes

The world is messing with one of the greats.

When bad things happen to creative organizations, I try to understand what happened and how to learn from it.

So, what lessons can creatives learn from IDEO’s dramatic drop in revenue and massive layoffs?

My take is that two primary things changed at IDEO.

First, leadership changes have had an impact on IDEO. Tom Kelly and Tim Brown are no longer in new business roles. Tom is a wonderful storyteller. See him in action. So is Tim. See him here.

Second, AI is where the corporate giants can see future profits. IDEO is using AI just like creatives everywhere. They have no cred as an AI leader. You can read their latest on AI here.

Here’s a short take on their current struggles:

IDEO reduced its staff by 32%

IDEO’s revenues are said to have dropped from $300 to $100 million.

IDEO taught its clients how to do what it does, in part by setting up in-house design groups for corporate clients that became competitors.

IDEO’s Design Thinking has been widely copied and heavily criticized for not producing the promised corporate revenue growth or the positive changes promised.

IDEO’s leadership’s connections to traditional corporate giants have been diminished with leadership changes and the shift to AI by their clients.

IDEO’s outbound communication efforts are in areas with far less profit potential, like global warming and DEI, producing only a rumored $2 million in revenue in 2023.

IDEO had significant overhead with 700ish people and offices all over the globe.

IDEO is a project-based business. When one project ends, IDEO has to find another to keep its people employed. With projects billing a half million and up, they include many people. With any gap between projects, those people become a huge financial drain.

IDEO’s work doesn’t provide a continuous revenue stream to its corporate clients as ad work does. WPP, Omnicom, and Publicis employ hundreds of thousands of creatives. But those creatives keep consumers buying stuff over and over through their work.

IDEO has a new CEO, Derek Robson. As with all declines of public companies, new CEOs are put in place to get profits flowing once again. IDEO is a subsidiary of publicly traded Kyu.

Here’s a video of Derek on the subject of promoting women in the ad world. A great cause. He’s a good speaker but not a comfortable, fluid, design speaker like Tom Kelly. Will he be able to fill the new business role like Tom and Tim Brown did? Hard to say.

Derek Robson has a vision: “We will make our value proposition singular and clear. We are future makers.” Sounds like bullshit to me. But I wish him well in guiding this great creative company back to success.

I am extremely sad about this whole thing.

What IDEO has accomplished is still amazing. The fact that they were so in demand that they have been able to get close to McKinsey money out of corporate giants was and is amazing. I’m totally in awe of what they have accomplished.

So we’ll talk about what we can learn from IDEO  on Saturday, March 2nd, from 10 to Noon in person at my house in Bellingham.

More info and registration here.

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