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When all the current cost cutting is over and business models begin to make sense again, Tom Kelley believes that one thing will differentiate winning companies from also-rans: their ability to innovate.

Allow Kelley his bias. Author of The Art of Innovation: Lessons in Creativity from Ideo, America's Leading Design Firm (Doubleday, 2001) and general manager of Ideo Product Development, one of the world's premiere product-development firms, Kelley has innovation coursing through his veins. But even discounting Kelley's evangelism, there's merit in his argument.

According to The Economist's Innovation Survey, half of the U.S. economy's current growth comes from companies that didn't exist 10 years ago. Corporate titans have learned to fear the prodigy in his dorm room or the garage-based whiz kid who's forging a bullet with their company's name on it. "Innovate or die" is not an idle threat. It's the harsh reality of the modern, fast-forward economy.

Silicon Valley-based Ideo has sparked some of the most innovative products of the past decade -- the Apple mouse, the Polaroid I-Zone Pocket Camera, and the Palm V, among others. But Ideo staffers don't just sit around waiting for good ideas to pop into their heads. The company has institutionalized a process whereby ideas are coaxed to the surface through regular, structured brainstorming sessions. At Ideo, idea-generation exercises are "practically a religion," Kelley says.

On any given day, multiple brainstorming sessions may spawn hundreds of ideas and burn through just as many chocolate-chip cookies, the preferred fuel of world-class idea mongers. Indeed, collective idea generation is so important at Ideo that a staffer caught trying to noodle a problem alone at his desk may be called on the carpet for wasting his time and the client's money.

"The social ecology at many American companies says that when you're stuck, you're supposed to go back to your desk and think harder, because you were hired for your skills," Kelley says. "At Ideo, the culture is exactly the opposite. You have a social obligation to get help."

But a poorly planned brainstorming session could cause more harm than good, Kelley points out. (See Six Surefire Ways to Kill a Brainstorm.) That's why Ideo follows strict rules for sparking good ideas.

Some are simple truths: Morning meetings work best; 3 - 10 participants should take part; and cookies always spur creativity. Some, like those outlined below, are a bit more refined.

1. Sharpen the focus.

Start with a well-honed statement of the problem at hand. Edgy is better than fuzzy. The best topic statements focus outward on a specific customer need or service enhancement rather than inward on some organizational goal.

2. Write playful rules.

Ideo's primary brainstorming rules are simple: "Defer judgment" and "One conversation at a time." The firm believes in its rules so strongly that they're stenciled in 8-inch letters on conference-room walls. "If I'm the facilitator and somebody starts a critique or people start talking, I can enforce the rules without making it feel personal," Kelley says. Other rules include, "Go for quantity," "Be visual," and "Encourage wild ideas."