Kelley says that Ideo works with companies that have identified a particular customer need. "From that initial spark," he says, "we create the innovation."

Here are the steps Ideo team members typically take toward innovation:

1. Conduct "human factors" research to determine all the variables involved with the problem.
2. Create a "problem statement."
3. Brainstorm with six to 12 participants to come up with potential solutions.
4. Build prototypes, taking a "small-failure" approach to enable participants to easily let go of bad ideas. Prototypes are built as cheaply and quickly as possible.
5. Listen carefully to user feedback.

Kelley uses an example to underline the last step in the process, user feedback. One of the more popular products Ideo has developed is the Crest Neat Squeeze Toothpaste tube. It employed a then-unusual pop-off cap.

"We could demonstrate empirically that is was faster and easier to use [than a twist-off cap]," Kelley says. "But we found that people were twisting it. They were twisting it and saying, 'Mine's broken. Mine doesn't work.' So we had to abandon this perfect solution... as opposed to just gritting our teeth and saying, 'Stupid customer.'"