This video brought to mind three things:
1. One of the main sicknesses you see in this video is a failure to kill ideas. Most of the ideas are, on their own, sort of logical. But when you mash them all together, the complexity ruins the experience for the users and the designers end up doing many things, but none very well. See this post about Steve Jobs on the importance of killing good ideas for more on this crucial point.
2. Th process in the video, where a good idea isn't shown to users or customers, but each internal voice adds more and more, and forgets the big picture in the process, also reminds me of the stage gate process at its worst, where it each stage, the product or service is made worse as it travels along.
3. Finally, if you want a great companion innovation video, check out Gus Bitdinger's amazing song "Back to Orbit," which he wrote and performs. I wrote a bit more about it here. It was Gus's final project for an innovation class that Michael Dearing and I taught a few years back, and he does an amazing job of summarizing the key points of my favorite creativity book, Orbiting the Giant Hairball. It sort of addresses both the problems in the stop sign video and the solutions -- and in general is a delight and very instructive on the creative process.
This all raises a broader question: What are the most important things a boss can do to speed and improve the creative process. Certainly, talking to customers and users to identify their needs and test your ideas is standard and increasingly, so is the advice that you've got to kill a lot of good ideas, not just bad ones. I have also always been enamored by the power of a fast and civilized fight, and touch on a lot of other related topics in Weird Ideas That Work. Also, don't miss Diego's 17 Innovation Principles at Metacool;I especially like #17: It's not the years, it's the mileage.