The Idea-Driven Organization: Unlocking the Power in Bottom-Up Ideas

PREFACE AFTER YEARS OF BEING ASKED to do more with less, managers are increasingly aware that they cannot produce the results that are expected of them with the organizations they currently have and the methods they currently use.We have now been doing more with less for so long that we have reached a point where further demands can no longer be met by simply tweaking our existing organizations or management methods. Cutting wages, perks, and benefits and pushing people to work harder  can go only so far. A different approach is needed. Interestingly, the best solution involves the very people that have been bearing the brunt of the cost so far: ordinary employees.Every day, front-line employees see many problems and opportunities that their managers do not. They have plenty of ideas to improve produc- tivity and customer service, to offer new or better products or services, or to enhance their organizations in other ways. But their organizations usu- ally do better at suppressing these ideas than promoting them.In our experience, most managers have difficulty believing that there is enough value in employee ideas to justify the effort of going after them. But as we shall explain, some 80 percent of an organization’s potential for improvement lies in front-line ideas. This fact means that organizations that are not set up to listen to and act on front-line ideas are using at best only a fifth of their improvement engines. And much of their innovationpotential is locked up in the same way. When managers gain the ability to implement twenty, fifty, or even a hundred ideas per person per year,everything changes.Today, a growing number of idea-driven organizations have become very good at promoting front-line ideas and as a result are reaching extraor- dinary levels of performance. Whereas traditional  organizations are directed and driven from the top, idea-driven organizations are directed from the top but are driven by ideas from the bottom.A number of years ago, we wrote Ideas Are Free, in which we artic- ulated and documented  what becomes possible when an organization aggressively pursues front-line ideas. We described companies with the best idea systems in the world and the extraordinary advantages these systems provide. This vision attracted numerous  leaders and managers around the world. Some ran with it and were quite successful. But others struggled. We began to get a lot of calls for help.As we worked alongside managers and leaders trying to implement high-performance idea systems, we learned two important lessons. First, while getting the mechanics of an idea process right is certainly impor- tant, to get good results from it often requires significant changes in the way an organization is led, structured, and managed. Second, whereas it is one thing to understand how idea-driven organizations work, it is quite another to know how to create one. These realizations are what led us to write this book.We began to study the process by which organizations become idea driven. We dug deeply into the operating contexts of many idea-driven organizations, to learn how they accomplished what they did. We also looked at organizations that were just taking their first steps toward becoming idea driven and followed them in near-real time to get a richer understanding of precisely what works, and what does not, along the way. At the same time, our work with leaders and managers who asked for help allowed us to test, refine, and then retest the concepts and advice in this book.In some ways this book is about instigating nothing short of a revolu- tion in the way organizations are run. But at the same time, we have tried to lay out a logical, incremental, learn-as-you-go approach to creating an idea-driven organization. Still, this is not an easy journey, and managers choosing to take it will need courage and persistence, as the transforma- tion will take time and effort. But the lessons in this book will guide them in making the necessary changes with far less pain than their pioneering predecessors, and to quickly producing significant bottom-line results.The bottom line is this: Idea-driven organizations have many times the improvement and innovation capability of their traditional counter- parts. If you learn how to tap the ideas of your front-line workers, you can truly break free of the reductionist “more with less” mindset. You and your employees will thrive in environments where you once would have struggled to survive.  A final note: A lot can be learned by failure. Because we want to share examples of failure without embarrassing the people involved, our policy was to disguise the names of people and institutions whose stories might be construed in any way as negative.1The Power in Front-Line Ideas  WHAT IS  THE BIGGEST  SHORTFALL  in the way we practice manage- ment today? With all the money pouring into business schools and execu- tive 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 cus- tomer 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 extraor-dinarily 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.This book is about how to build such an organization—an idea-driven organization—one designed and led to systematically seek and implement large numbers of (mostly small) ideas from everyone, but particularly from the people on the front lines. We are aware, of course, that many organi- zations are famous for their innovativeness but are not idea driven in our sense, because the preponderance of their ideas comes from a handful of highly creative departments or perhaps a lone genius. But however successful these organizations already are, they would be even more success- ful, and more sustainably innovative, if they were to become idea driven.As an example of an idea-driven organization, let us look at Brasilata, which has been consistently named as one of the most innovative com- panies in Brazil by the FINEP (Financiadora de Estudos e Projetos), that country’s science and development agency. Surprisingly, Brasilata is in the steel can industry, a two-hundred-year-old  industry that was viewed as mature before the Soviet Union launched Sputnik in 1957. And yet 75 percent of Brasilata’s products either are protected by patents or have been developed within the last five years. How can a company in such a mature industry be as innovative as Brazil’s more well-known and high-flying technology, aerospace, energy, cosmetics, and fashion companies? Every year, Brasilata’s nearly 1,000 “inventors” (the job titles of its front-line employees) come up with some 150,000 ideas, 90 percent of which are implemented.Building an idea-driven organization such as Brasilata is not easy. There is a lot to know, much of which is counterintuitive. It took almost twenty years for Antonio Texeira, Brasilata’s CEO, to build the processes and culture capable of this kind of idea performance. He and his leadership team had no readily available models to follow, no classes they could attend, and no experts to call for advice. They had to figure things out as they went.Today, there is a small but growing number of idea-driven organiza- tions, and their collective experiences allow us to ferret out what works and what doesn’t when it comes to managing front-line ideas. This book lays out the general principles involved and describes how to methodically transform an ordinary organization into one that is idea driven. But before we get into how to do this, let us get a better sense of the power of front-line ideas by delving in some detail into another idea-driven organization—a company in Sweden whose idea system has won several national awards.  THE CLARION-STOCKHOLM HOTEL The Clarion-Stockholm is a four-star hotel located in the center of Stock- holm. It routinely averages more than fifty ideas per year from each of its employees—about one idea per person per week. One reason that Clarion employees are able to come up with so many ideas is that they have been trained to look for problems and opportunities to improve. For example, every time a guest complains, asks a question, or seems confused, staff members do all they can to fully understand the issue. If staffers have an idea to address the issue, they enter it into a special computer application. If not, they enter just the raw problem. Each department has a weekly idea meeting to review its ideas and problems, and decide on the actions it wants to take on each of them.We met with several bartenders and went through all of their depart- ment’s ideas from a randomly selected month. A sample of them is listed in Table 1.1.As you read through these ideas, notice five things. First, the ideas are responding to problems and opportunities that are easily seen by the bar staff, but not so readily by their managers. How would the managers know that customers are asking for organic cocktails (Tess’s idea) or vitamin shots (Fredrik’s idea), or that the bartenders could serve more beer if an extra beer tap were added (Marin’s idea)? Such insights come much more easily to employees who are serving the customers directly.Second, most of the ideas are small and straightforward. They don’t require much work to analyze and are inexpensive to implement. How difficult is it for the conference sales department  to give the bartenders a “heads-up” that it will be meeting in the bar with a customer who is considering booking a major event (Nadia’s idea)? And how hard is it to increase the font size of the print on coupons given to conference partici- pants so as to clarify what they mean (Marco’s idea) or to give the restaurant staff a tasting of the new bar cocktails so they can sell them more effectively to their diners (Tim’s idea)?