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<title>Ideo's Axioms for Starting Disruptive New Businesses</title>
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Ideo's Axioms for Starting Disruptive New Businesses
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<a href="http://www.fastcodesign.com/1662169/ideos-axioms-for-starting-disruptive-new-businesses">View original</a>
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<div class="sm">fastcodesign.com</div>
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<div>
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<div><a href="http://www.fastcodesign.com/1662169/ideos-axioms-for-starting-disruptive-new-businesses"><span>Back</span> to Fast Company</a></div>
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</div>
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<div>
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<div><a href="http://www.fastcodesign.com/">Fast Company</a></div>
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<div>
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<div><a href="http://www.fastcodesign.com/12072010-tue-0" title="Issue Flag"><strong>Dec 04,
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2010</strong></a></div>
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<img src="http://www.fastcodesign.com/multisite_files/codesign/imagecache/article-feature/business-beta-frontofhouseB.jpg" title="" alt="Ideo's Axioms for Starting Disruptive New Businesses" />
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<div>
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<div>
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<h1><span>Ideo’s Axioms for Starting Disruptive New
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Businesses</span></h1>
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<div>
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<div>Don’t wait for perfection: Launch and
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learn.</div>
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<p><em>This is the first piece in our PATTERNS
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series by IDEO. Read more about the series <a href="http://www.fastcodesign.com/1662168/introducing-ideos-new-column-patterns-affecting-business-and-design-today">
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here</a>.</em></p>
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<p>How do you build a business in an unproven market? How do you
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figure out what customers need when you’re delivering an
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experience they’ve never seen before? You begin where service
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and software companies have begun, by conducting fast, cheap
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experiments that help you understand your customers. You build on
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what you learn. In short, you prototype.</p>
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<p>With ever-increasing competition, innovative businesses are
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finding that in order to stay competitive their offerings need to
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constantly evolve. And that to improve their offerings is to
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encourage consumer participation. This helps them build a
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competitive advantage by constantly revisiting what they deliver
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and how they deliver it. They know that traditional market testing
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will only validate their past successes. To understand the next big
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thing, companies have to engage with customers and react to their
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needs.</p>
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<h2><strong>TAKE ACTION: Designing for Life’s Changes</strong></h2>
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<p><br /><br /><strong>1. Go early, go often</strong><br />
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Building experimentation into your business is harder than you
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think. Start small and stay focused. Try everything, but
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don’t try it all in one prototype.<br /><strong><br />
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2. Learning by doing</strong><br />
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Build value for the business as you prototype. If you fail, what
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will you have learned? What will you salvage?</p>
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<p><strong>3. Inspiration through constraint</strong><br />
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Don’t exhaust yourself searching for money and resources. The
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tighter your constraints, the more creative your prototypes will
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be.</p>
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<p><strong>4. Open to opportunity</strong><br />
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Look for unanticipated ways customers are using your offering.
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Their improvisations may be the future of your business.</p>
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<h2><strong>THE EVIDENCE: Stories from Around the
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Globe</strong></h2>
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<img src="http://images.fastcompany.com/upload/business-beta-platform.jpg" alt="" style="border: 0px;" />
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<strong>Platform for Change</strong><br />
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Companies like Apple and Facebook have learned to harness the
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energy of outside developers to create new applications. By
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allowing thousands of new applications to run on their platforms,
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they create a Darwinian environment where only the fittest survive.
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<p>Jeff, a developer, noticed that Facebook lacked reminders around
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birthdays, so he created Birthday Alert. Customers quickly made it
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one of the hottest apps on the platform. Instead of trying to guess
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what type of functionality users wanted, Facebook just tapped into
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smart developers like Jeff who built it for them.</p>
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<p>Through this process, Facebook learned it needed a mechanism to
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foster developers who could improve the overall ecosystem. Now the
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Facebook Fund supports enterprising developers who are eager to
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build their ideas.<br /><em><br />
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How can you engage your customers and partners to help you
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prototype new offerings?<br /></em></p>
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<p><strong>Front-of-house Flexibility</strong><br />
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The secret behind the unique feel of Whole Foods and Trader
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Joe’s is how employees are empowered to cocreate the customer
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experience. Each store establishes teams to figure out the best way
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to serve customers, from the products they offer to the way
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sections are organized. Each week, employees can see the results of
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their experiments in the aisles.</p>
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<p>Jesse recently joined the cheese department at Whole Foods and
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one of his favorite jobs is to select the cheeses that customers
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sample. He feels it helps set the mood of the entire store, and
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when he nails the selection, the store usually sells the entire
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stock. Giving teams the tools to constantly improve the business
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creates an engaging and successful environment.<br /><em><br />
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What control should you give up so your team is empowered?</em></p>
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<img src="http://images.fastcompany.com/upload/business-beta-grassroots.jpg" alt="image" />
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<br /><strong>Grassroots Growth</strong><br />
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Ayr is a former scientist with an MBA from Harvard. After several
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years with McKinsey, he decided to follow his dream to create a
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chain of fast and friendly vegetarian restaurants.
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<p>He could have hired a chef and tested his menu with focus
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groups, but instead he decided that it would be better to run a lot
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of experiments at low cost. So he launched his restaurant from a
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food truck parked outside the MIT campus, updating his customers
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about daily specials through text messages and blog posts.</p>
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<p>After six months, the results have been phenomenal. By starting
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small and prototyping, Ayr is learning while he shapes his
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business. He’s adding additional trucks, developing permanent
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spaces, and has begun to cater special events. Each experiment
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brings him closer to his ultimate goal.</p>
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<p><em>How can you intentionally limit your resources to create a
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more inspired offering?</em></p>
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<p><strong>Making Lemonade</strong><br />
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Like many fashion houses, Gucci and Ann Taylor were hit hard during
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the recent recession. The nation’s sudden shopping withdrawal
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left many designers with too few retail orders to manufacture their
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line. In similar circumstances, manufacturers will order the
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additional garments and offer excess inventory in outlet malls and
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discount retailers. This time things were different, demand was
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much lower so the fashion houses got creative. Taking advantage of
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empty retail space many designers negotiated short, temporary
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leases in high-traffic areas. In this short stay space they opened
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pop-up shops to connect with customers. The recession could have
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distanced these designers from their customers but quick, nimble
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moves created new opportunities to engage.<br /><em><br />
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How can you turn your biggest challenge into an opportunity to try
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something new?</em></p>
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<p><strong>Real-time Results</strong><br />
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Internet companies routinely use their constant connections with
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customers to prototype new offerings. Companies like Google and
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Amazon routinely select pools of users and change the functionality
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in their products (e.g., you may be looking at a different Gmail
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interface than your friends). Depending on specific behavioral
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metrics, Google may change a product without ever directly asking
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the customer. Smart and nimble businesses know that always-on and
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always-accessible allows them to learn and evolve.<br /><em><br />
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How can you experiment on the fly and learn without compromising
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experience?</em></p>
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<img src="http://images.fastcompany.com/upload/business-beta-frontofhouse.jpg" alt="image" />
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<br /><strong>Ongoing Experimentation</strong><br />
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McDonald’s has built prototyping into its organization. Since
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the company does not want every employee in every store deviating
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from service patterns, it has set up test restaurants to try new
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menu items, new pricing strategies, and new food preparation
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methods. This flexibility has paid off. McDonald’s has been able to
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roll out worldwide menu expansions in just a few months—quite a
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feat for a company that serves 47 million customers a day.
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<p><em>How can you build experimentation into the culture of your
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organization?</em></p>
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<p><strong>Name my Book</strong><br />
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Tim Ferriss loved the playful working title of his first book, Drug
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Dealing for Fun and Profit, but it was too racy for Walmart and
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other retailers. With the success of the book hinging on this
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decision, Tim decided to prototype. He drafted a shortlist of
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titles and bought Google AdWords. Each online click equaled one
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vote. Within a week, he had his title, and <em>The 4-Hour Work
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Week</em> was finally finished.</p>
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<p><em>How much information do you need to make decisions? Can
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prototyping help you get there faster?</em></p>
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<h2><strong>Be a Pattern Spotter</strong></h2>
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<p><br /><br />
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Now that you’ve been exposed to a few different examples,
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don’t be surprised if you start seeing Life’s Changes
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patterns all around. Keep your eyes open and let us know what you
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find, especially if it’s the next new pattern.</p>
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<p><em>PATTERNS are a collection of shared thoughts, insights, and
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observations gathered by IDEO through their work and the world
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around them. Read more pieces from the series <a href="http://www.fastcodesign.com/tag/ideo-patterns">here</a>.</em></p>
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<p><em><a href="http://www.fastcodesign.com/users/craney"><strong>Colin
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Raney</strong></a> leads the Business Design Community within IDEO.
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He specializes in designing new ventures for clients based on new
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technologies or unique insights. He believes that good business is
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good design—successful businesses require offerings, brands,
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services, and strategies that complement each other.</em></p>
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<div>
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<a href="http://www.fastcodesign.com/users/kclark" title="IDEO"><img src="http://www.fastcodesign.com/multisite_files/codesign/imagecache/124x124/IDEO_square_bio.jpg" alt="IDEO" title="IDEO" /></a>
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<div>
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<h2><a href="http://www.fastcodesign.com/users/kclark" title="IDEO">IDEO</a></h2>
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<p>IDEO is an award-winning global design firm that takes a
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human-centered approach to helping organizations in the public and
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private sectors innovate and grow. We identify … <a href="http://www.fastcodesign.com/users/kclark" title="Read more by IDEO">Read more</a></p>
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<p>• <a href="http://www.twitter.com/IDEO" title="IDEO's twitter profile">Twitter</a></p>
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<div><img src="http://www.fastcodesign.com/sites/fastcodesign.com/themes/co/images/blank.png" alt="image" /></div>
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