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The Idea-Driven Organization

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Too many organizations are overlooking, or even suppressing, their single most powerful source of growth and innovation. And it’s right under their noses. The frontline employees who interact directly with your customers, make your products, and provide your services have unparalleled insights into where problems exist and what improvements and new offerings would have the most impact. In this follow-up to their bestseller Ideas Are Free, Alan G. Robinson and Dean M. Schroeder show how to align every part of an organization around generating and implementing employee ideas and offer dozens of examples of what a tremendous competitive advantage this can offer. Their advice will enable leaders to build organizations capable of implementing 20, 50, or even 100 ideas per employee per year. Citing organizations from around the world, they explain what’s needed to put together a management team that can lead the type of organization that embraces grassroots ideas and describe the strategies, policies, and practices that enable them. They detail exactly how high-performing idea processes work and how to design one for your organization. There’s constant pressure today to do more with less. But cutting wages and benefits and pushing people to work harder with fewer resources can go only so far. Ironically, the best solution resides with the very people who have been bearing the brunt of these measures. With Robinson and Schroeder’s advice, you can unleash a constant stream of great ideas that will strengthen every facet of your organization.

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1 | The Power in Front-Line Ideas

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WHAT IS THE BIGGEST SHORTFALL in the way we practice management today? With all the money pouring into business schools and executive education, and all the books, articles and experts to consult, why do so many organizations still fall so painfully short of their potential? What have their leaders and managers been missing?

There is no single reason for the less-than-brilliant performance of these organizations, of course, but one limiting factor is clear. Very few managers know how to effectively tap the biggest source of performance improvement available to them—namely, the creativity and knowledge of the people who work for them.

Every day, these people see problems and opportunities that their managers do not. They are full of ideas to save money or time; increase revenue; make their jobs easier; improve productivity, quality, and the customer experience; or make their organizations better in some other way.

For more than a century, people have dabbled with various approaches to promoting employee ideas, but with little real success. In recent years, however, the picture has changed. As we shall see, companies with the best idea systems in the world now routinely implement twenty, fifty, or even a hundred ideas per person per year. As a result they perform at extraordinarily high levels and are able to consistently deliver innovative new products and services. Their customers enjoy working with them, and they are rewarding places to work.

 

2 | A Different Kind of Leadership

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MORE THAN A quarter century ago, Professor Fred Luthans of the University of Nebraska published an intriguing study that found a significant difference between how “successful” managers (those who got promoted rapidly) and “effective” managers (those whose units performed well) spent their time.1 The managers who were promoted rapidly spent much more time networking and politicking, while their more effective colleagues spent their time building their units and developing their people. In short, Luthans found that organizations were promoting the wrong types of managers. And because the managers who got promoted the fastest were also the ones who ended up in top leadership positions, Luthans’s study was an implicit indictment of how most organizations chose their leaders.

Although his study was conducted a while ago, we believe his findings are just as valid today. These findings alone might explain why leaders who pay attention to their front-line people are so rare, but the picture is actually much worse. Even when organizations do promote the right managers, as these managers rise up the hierarchy, a host of situational forces come to bear on them that can easily undermine their respect for the people on the front lines, and hence cause them to disregard the value in their ideas.

 

3 | Aligning the Organization to be Idea Driven: Strategy, Structure, and Goals

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SEVERAL YEARS AGO, we helped a national chain of specialty stores to start an idea system. The company had been growing rapidly, doubling in size over the previous five years. But the CEO was concerned that it had also become bureaucratic and inflexible, and was losing its entrepreneurial energy and innovativeness. He believed that setting up a high-performance idea system would be a good way to start reinvigorating his organization.

Our assessment confirmed his opinion. The organization was indeed rife with constricting rules and policies that made it painful to implement even the smallest improvements. For example, a senior vice president (one of the top eight people in the company) told us that he had asked the information technology (IT) department for a set of speakers for his computer so that he could participate in an online webinar. Despite numerous reminders and follow-up phone calls, the speakers never arrived. It turned out that speakers were not part of the specified computer package for senior vice presidents. The vice president ended up having to bring in the speakers from his home computer.

 

4 | Aligning the Organization to be Idea Driven: Management Systems

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AN ORGANIZATION’S MANAGEMENT systems consist of all the processes and procedures used to govern the way it works, from the budgeting process and how people are rewarded, to the procedures used to make products and deliver services. Typically, management systems evolve incrementally over time in response to shifting needs for coordination and control, with little thought for their impact on the flow of ideas. Consequently, the management systems in most organizations are seriously misaligned for bottom-up ideas.

While many aspects of goal misalignment discussed in the last chapter can be corrected in a single planning cycle, fixing the elements discussed in this chapter is more of an ongoing effort. Management systems generally consist of many moving parts, all interacting with one another. The resulting complexity makes it impossible to ever resolve all misalignments completely, and new ones are created all the time. Even the best idea-driven organizations still find subtle misalignments after years of constant vigilance and ongoing effort to root them out.

 

5 | How Effective Idea Processes Work

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IN 1992, MARTIN EDELSTON, CEO of Boardroom Inc., a Connecticut-based publisher, hired the iconic management guru Peter Drucker to come and spend a day at his company. Edelston had no particular goals in mind for the visit; he simply wanted Drucker to take a look at his company and tell him how to improve it. At the end of the day, Drucker gave him a piece of advice that would transform the company: ask every employee to come to his or her weekly departmental meeting with an idea to improve the company or his or her own work. Edelston took the advice and started right in.

Initially, wanting to maintain control, he personally reviewed and approved every idea. His method was to go through the week’s ideas on weekends while working out on his exercise bike. He joked with us that this took him so much time that he became extremely fit.

One Sunday, however, as he was working through a stack of suggestions, Edelston encountered one for a software improvement from a programmer in the IT department. Because he didn’t understand the idea, on Monday morning, he hunted down the programmer and asked him to explain it. Half an hour later, Edelston walked away still confused.

 

6 | Implementing A High-Performing Idea System

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SEVERAL YEARS AGO, a vice president at a Fortune 500 financial services company approached us to help her set up a high-performing idea system. She was in a hurry and asked if it was possible to get the pilot areas started in two months and begin rolling the system out a few months later. We explained that it was certainly doable but would require the creation of a strong design and implementation team, whose members would have to be able to do a lot of work in a short period of time. The effort would also inevitably require her to champion some organization-level changes to the leadership team. She agreed and recruited the team, and we set to work.

During the initial training sessions, the design team members began to appreciate the scale and scope of what they were being asked to do. Unfortunately, the vice president skipped out on those training sessions after the first hour, so she never really understood what designing and launching the new system would involve. She soon began pushing up the launch dates, insisting on unrealistic deadlines, and dismissing the team’s advice and requests. At what turned out to be our last meeting with the design team, its members were very disheartened and felt betrayed by that VP. Shortly thereafter, the team’s leader left the company, and the effort disintegrated.

 

7 | Ways to Get More and Better Ideas

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WHEN AN IDEA SYSTEM is launched, rarely is there a shortage of ideas. Front-line employees are already aware of many problems and opportunities that they have never had an easy way to correct before. Here, for example, are some of the early ideas at Big Y Foods:

(Bakery) Customers often ask if we sell the garlic butter we use to make garlic bread. I suggest we sell it in eight-ounce containers.

(Checkout) The “tender” key for totaling an order is very close to the “clear sale” key on the touch screen cash registers. We often hit the “clear sale” key by accident instead, and delete the last sale. Have the IT department place these two keys farther apart.

(Produce) Currently, stores call a special number to leave a message on an answering machine to report over/short deliveries in produce to be corrected in the next day’s delivery. Since no one ever physically answers this phone, why is the answering machine set to pick up after nine rings, making every store’s personnel wait thirty seconds unnecessarily every day?

 

8 | Front-Line Ideas and Innovation

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ALL OVER THE WORLD, leaders are struggling with the question of how to make their organizations more innovative. For the majority of them, their first step should be to set up a high-performing idea system. This approach will allow them to take advantage of the powerful multi-faceted synergies between front-line ideas and innovations. Without these synergies in play, their organizations are far less innovative than they could be.

In this chapter, we explain why the ability to get large numbers of bottom-up ideas significantly increases an organization’s ability to produce breakthrough innovations on a consistent basis. First, the synergies between front-line ideas and innovations lead to more and bigger breakthroughs. Second, putting a high-performance idea system in place requires the organization to be realigned, which eliminates many of the same barriers that also make the innovation process so difficult—barriers that would otherwise be ignored.

The complexity and novelty of large innovations mean that many smaller ideas are required to get them to work effectively, or sometimes even to work at all. To see this, let us look at a major green innovation that took place at Subaru Indiana Automotive (SIA) during its drive to zero landfill discussed in the last chapter.

 

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