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Innovation wasn't always a hot topic in the Silicon Valley. More than a decade ago, when our firm was just a small group of product designers working over a dress shop in Palo Alto, we became very interested in why companies looked outside for product development. We hired a professional services firm to help answer that question, and after interviewing many clients (and nonclients) we distilled the answers down into four key reasons: One was just raw capacity. Companies had a bigger appetite than their in-house resources could satisfy.

The second was speed. If they couldn't find anybody in-house to sign up to some incredibly tight deadline, they would look outside. The third reason was the need for some specific expertise outside their core competencies. And the fourth was innovation.  Well, a funny thing has happened in the ensuing years. Innovation has risen from the bottom to the top of the list. During that time, IDEO has broadened its client base to include some of the best-known and best-managed companies in the world.

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