bookwork
instructions included
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DUE: ASSIGNMENT #5 GRADUATE BOOK CRITIQUE
Amberton University
MGT 5650.E1 – Contemporary Management Issues
GRADUATE Book Critique Project Assignment Instructions (35%)
(YOU RECEIVED A MOODLE MESSAGE WITH YOUR INDIVIDUAL BOOK ASSIGNMENT)
Instructions:
This assignment is broken into two components: 1. Presentation/Critique which will be shared with the class and
2. Paper. The Presentation/Critique will be worth 20% of the grade and the Paper will be worth 80%. The Paper will be well structured and conform to the outline provided below. The specifics for the two components of the assignment are provided below.
The Critique:
This part of the assignment will comprise 20% of the assignment grade. The student will provide a critique of the book for the class to read. (Most of this information will be pulled directly from your paper.) A discussion portal will be provided for each student to post a critique. Please use this format:
Critical Review Template
· Title:____________________________________________________
· Author & Author’s Credential:________________________________
· Thesis/Subject:____________________________________________
· Body (Thesis Development) – Did the author achieve the stated purpose:
_________________________________________________________
Possible question in the body (Do not include all of the questions in your paper, instead be deliberate and expound on your findings):
· Is there an adequate, consistent development of the author’s thesis? Why or why not?
· What is the author’s purpose? Does the author accomplish the purpose? If so, how? If not, why not?
· Does the author approach the subject with any biases? Do they influence the conclusions?
· Does the author adequately consider and refute opposing viewpoints?
· Does the author have to resort to suppression of contrary evidence in order to make the thesis credible (slanting)? If so, what additional evidences would weaken the case?
· Is the thesis sound but marred by a flawed procedure?
· Is the author’s case proved, or would another thesis have been more appropriately chose?
· Review: __________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
· Would the reviewer recommend this book above to others? Why or why not?
_________________________________________________________
Finally, a summary that includes: How does this book differ from other texts of the same subject matter? What is unique and valuable about this approach as opposed to the others? Would the reviewer recommend this text above others? Why or why not?
· NOTES:__________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
The Paper:
The paper will be 5-8 written pages in length. The paper will include a title page (per APA format), which will not count as a one of the five required pages. The paper should use the format below for headings and written in paragraph form. The paper should be free of grammatical and spelling errors and exhibit quality written scholarship commensurate with graduate standards. The paper will be worth 80% of the assignment grade.
1. Introduction, Review of Book, Conclusion, References (per APA format)
2. Author’s Credential (1-3 sentences)
3. Thesis (The Main Proposition Stated in the book; 1-3 sentences)
4. Body (Thesis Development) – Did the author achieve the stated purpose? Inspect each section of the text to see how the thesis is (or is not) developed. If the author makes supported and logical progress advancing the thesis – cite in review.
· Is there an adequate, consistent development of the author’s thesis? Why or why not?
· What is the author’s purpose? Does the author accomplish the purpose? If so, how? If not, why not?
· Does the author approach the subject with any biases? Do they influence the conclusions?
· Does the author adequately consider and refute opposing viewpoints?
· Does the author have to resort to suppression of contrary evidence in order to make the thesis credible (slanting)? If so, what additional evidences would weaken the case?
· Is the thesis sound but marred by a flawed procedure?
· Is the author’s case proved, or would another thesis have been more appropriately chosen?
5. Finally, a summary (1-2 paragraphs) that includes: How does this book differ from other texts of the same subject matter? What is unique and valuable about this approach as opposed to the others? Would the reviewer recommend this text above others? Why or why not?
The assignment will be 5-8 pages in length.
REQUIREMENTS
All assignments must be typed and reflective of graduate work.
This is an individual assignment and as such, you must not give help or receive help from another student or individual.
This assignment must be submitted via the Moodle Portal.
There will be a discussion board for the critique to be shared with the class.
Please include:
* Assignment number and title.
* Student’s name.
* Course: MGT5650.E1
HOW TO ACCESS YOUR EBOOK:
* Your book will be randomly selected for you. Use the instructions below. *
Log onto the Amberton Website.
Click on “Current Students,”
Click on the library link to the left of your screen,
Scroll down and click on the link titled: “Search,”
Click on ProQuest Ebook Central
You will be prompted to log onto the Amberton portal,
A link will be provided for you to insert your assigned book here.
More Praise for The Idea-Driven Organization
“The Idea-Driven Organization is an exciting book that makes a compelling case
for a simple but very powerful concept—business leaders who learn how to lever-
age the know-how and ideas of their frontline people will have a major winning
edge because most of their competitors either don’t get it or don’t know how to
do it. The detailed and provocative case examples are a major strength of the
book—they show how business leaders can put ideas into action by tapping the
expertise in their own organization.”
—Lee Bolman, coauthor of Reframing Organizations
“We’re at the end of the age of being able to do more with less based on tired
old management models and thinking. To thrive in the new era, organizations
will need to be idea driven. Fortunately, Robinson and Schroeder have written a
must-read guide for leaders looking to make this transformation.”
—Chip R. Bell, coauthor of Managing Knock Your Socks Off Service and Managers
as Mentors
“The Idea-Driven Organization is a challenge to the dominant paradigm of ‘Man-
ager Knows Best,’ replacing it with a more balanced program of top-directed but
bottom-driven initiative to keep creativity and productivity fl owing. It is no less
than a call for a complete housecleaning—from physical and spatial relation-
ships, to organization and information fl ows, and to changing the mindsets of
employees and management alike! Required reading in an increasingly globalized
and competitive world.”
—Dean Cycon, founder and CEO, Dean’s Beans Organic Coffee Company, and
winner of a 2013 Oslo Business for Peace Award and the United Nations
Women’s Empowerment Principles Leadership Award for Community Engagement
“Robinson and Schroeder have learned from experience the power of people at the
front line of the organization actively identifying and solving problems. Building
on their previous book, Ideas Are Free, they tell us how to create an environment
to encourage the free fl ow of ideas to become a high performing organization.”
—Jeffrey K. Liker, PhD, Professor, University of Michigan, and author of The Toyota
Way
“To succeed in business today, it is absolutely essential that you tap into the ideas,
creativity, and innovation of every member of your team. Working with compa-
nies around the world, I have seen that one of the greatest roadblocks to their
success is a failure to truly get the most possible value from their talent. I am
extremely impressed with this book and have recommended it to many of my cli-
ents. The authors lay out a superb blueprint, with lots of tools and examples, for
creating an idea-driven organization. This is one of those rare must-read books.”
—John Spence, author of Awesomely Simple
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The
Idea-Driven
ORGANIZATION
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The
Idea-Driven
ORGANIZATION
Alan G. Robinson
Dean M. Schroeder
UNLOCKING THE POWER
IN BOTTOM-UP IDEAS
The Idea-Driven Organization
Copyright © 2014 by Alan G. Robinson and Dean M. Schroeder
All rights reserved. No part of this publication may be reproduced, distributed, or trans-
mitted in any form or by any means, including photocopying, recording, or other elec-
tronic or mechanical methods, without the prior written permission of the publisher,
except in the case of brief quotations embodied in critical reviews and certain other
noncommercial uses permitted by copyright law. For permission requests, write to the
publisher, addressed “Attention: Permissions Coordinator,” at the address below.
Berrett-Koehler Publishers, Inc.
235 Montgomery Street, Suite 650
San Francisco, California 94104-2916
Tel: (415) 288-0260, Fax: (415) 362-2512
www.bkconnection.com
Ordering information for print editions
Quantity sales. Special discounts are available on quantity purchases by corporations,
associations, and others. For details, contact the “Special Sales Department” at the
Berrett-Koehler address above.
Individual sales. Berrett-Koehler publications are available through most bookstores.
They can also be ordered directly from Berrett-Koehler: Tel: (800) 929-2929; Fax:
(802) 864-7626; www.bkconnection.com
Orders for college textbook/course adoption use. Please contact Berrett-Koehler:
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Orders by U.S. trade bookstores and wholesalers. Please contact Ingram Publisher
Services, Tel: (800) 509-4887; Fax: (800) 838-1149; E-mail: customer
.service@ingram publisher services .com; or visit www .ingram publisher services .com/
Ordering for details about electronic ordering.
Berrett-Koehler and the BK logo are registered trademarks of Berrett-Koehler
Publishers, Inc.
First Edition
Hardcover print edition ISBN 978-1-62656-123-6
PDF e-book ISBN 978-1-62656-124-3
IDPF e-book ISBN 978-1-62656-125-0
2014-1
Production Management: Michael Bass Associates
Cover Design: Ian Shimkoviak/The Book Designers
www.bkconnection.com
www.bkconnection.com
www.ingrampublisherservices.com/
To Margaret, Phoebe,
and Margot
To Kate, Lexie,
Liz, and Tori
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Contents
Contents
C ONTENTS
Preface xi
1 | THE POWER IN FRONT-LINE IDEAS 1
The Clarion-Stockholm Hotel 3
The Impact of Front-Line Ideas: The 80/20 Principle 7
Creating an Idea-Driven Organization 11
Why Are Idea-Driven Organizations So Rare? 14
Realigning the Organization for Ideas 17
Effective Idea Processes 18
Getting More and Better Ideas 19
Idea Systems and Innovativeness 20
2 | A DIFFERENT KIND OF LEADERSHIP 23
Why Leaders Are Often Blind to Front-line Ideas 24
Fighting Back 29
Key Points 45
3 | ALIGNING THE ORGANIZATION
TO BE IDEA DRIVEN: 47
Strategy, Structure, and Goals
Strategy and Goal Alignment 51
Structuring for Ideas 64
Key Points 67
viii | CONTENTS
4 | ALIGNING THE ORGANIZATION
TO BE IDEA DRIVEN: 69
Management Systems
Budgeting and Resourcing the Idea Process 70
Aligning Policies and Rules 76
Aligning Processes and Procedures 84
Aligning Evaluation and Reward Systems 86
Conclusion 87
Key Points 88
5 | HOW EFFECTIVE IDEA PROCESSES
WORK 89
The Kaizen Teian Process 91
Team-Based Processes 93
Facilitation 99
Escalation 103
The Electronic Suggestion Box Trap 105
Key Points 108
6 | IMPLEMENTING A HIGH-PERFORMING
IDEA SYSTEM 109
Step 1 Ensure the leadership’s long-term commitment to
the new idea system 111
Step 2 Form and train the team that will design and
implement the system 113
Step 3 Assess the organization from an idea management
perspective 115
Step 4 Design the idea system 119
Step 5 Start correcting misalignments 120
Step 6 Conduct a pilot test 121
Step 7 Assess the pilot results, make adjustments, and
prepare for the launch 127
Step 8 Roll out the system organization-wide 129
Step 9 Continue to improve the system 131
Key Points 132
CONTENTS | ix
7 | WAYS TO GET MORE AND BETTER
IDEAS 135
Problem Finding 136
Creating a Problem-Sensitive Organization 149
Key Points 154
8 | FRONT-LINE IDEAS AND INNOVATION 157
Innovations Often Need Front-Line Ideas to Work 158
Front-Line Ideas Create Capabilities That Enable Innovations 159
Front-Line Ideas Can Transform Routine Innovations into
Major Breakthroughs 160
Front-Line Ideas Can Open Up New Opportunities for
Innovation 163
Setting Up an Idea System Removes Many of the Barriers
to Innovation 165
Bringing It All Together 169
Conclusion 173
Key Points 175
Notes 177
Acknowledgments 179
Index 181
About the Authors 189
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xi
Preface
Preface
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 innovation
potential is locked up in the same way. When managers gain the ability
xii | PREFACE
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
PREFACE | xiii
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.
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1
The Idea-Driven Organization
The Power in Front-Line Ideas
1
The Power in
Fron t – L ine Ide as
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
2 | THE IdEA-dRIvEn ORGAnIzATIOn
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 suc-
cessful 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
THE POWER In FROnT-LInE IdEAS | 3
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 restau-
rant staff a tasting of the new bar cocktails so they can sell them more
effectively to their diners (Tim’s idea)?
4 | THE IdEA-dRIvEn ORGAnIzATIOn
TABLE 1.1 Ideas from the Clarion-Stockholm bar
Marco Get maintenance to drill three holes in the floor behind the bar and install
pipes so bartenders can drop bottles directly into the recycling bins in the
basement.
Reza When things are slow in the bar, mix drinks at the tables so the guests get a
show.
Nadia Many customers ask if we serve afternoon tea. Currently, there is no hotel
in the entire south of Stockholm that does. I suggest we start doing this.
Tess Have an organic cocktail. Customers often ask for them, and we don’t offer one.
Nadia Clarion conference and event sales staff often meet prospective customers
in the bar. Give the bar staff information in advance about the prospects so
they can be on alert and do something special.
Tim Whenever the bar introduces a new cocktail, have a tasting for the
restaurant staff, just as the restaurant always does when a new menu or
menu item is introduced, so servers know what they are selling.
Fredrik When the bar opens at 9:30 in the morning, many guests ask for vitamin
shots (special blends of fruit juices). Put these on the menu.
Nadia Have maintenance build some shelves in an unused area in the staff
access corridor behind the bar for glasses. Currently, there is so little space
for glasses in the bar that they are stored upstairs in the kitchen, and it
takes 30 minutes, several times a night, for one of the two bartenders to go
and get glasses, which means lost sales.
Marco In the upstairs bar, we have to spend an hour bringing up all the alcohol
from downstairs when we open and putting it away when we close. We
wouldn’t have to do this if locks were installed on the cabinets in the bar.
Marin On our receipts, when guests pay with Eurocard, it says “Euro.” This
confuses many guests, who think they have been charged in euros instead
of kronor. Get the accounting department to contact our Eurocard provider
to see if we can change the header on the receipts.
Nadia The bartending staff often act as concierges, telling people about the hotel,
local shops, restaurants, and attractions, and giving directions. We have a
concierge video that we show on our website. Offer this on the Tvs in all
hotel rooms.
Tess Currently we close at 10 p.m. on Sundays, and many guests complain
about this. Because we have a red dot on our liquor license from a single
violation many years ago, we must have four security guards in the bar to
be open after 10 on Sundays, and this is too expensive. Apply to have red
dot removed, and then we can stay open with only one security guard.
THE POWER In FROnT-LInE IdEAS | 5
Third, the ideas are neither scattershot nor self-serving. They sys-
tematically drive performance improvement in key strategic areas for the
hotel. They improve customer service, increase productivity, and make the
bar a better place to work—in many cases doing all three at the same time.
Before Marco’s idea to drill three holes for tubes through the floor to allow
the bar staff to drop recyclable cans and bottles directly into bins in the
basement, once an hour a bartender had to lug a plastic tub of empties
down long hallways and a flight of stairs to the basement, and then sepa-
rate them into three different bins. This chore took a bartender away from
serving customers for roughly ten minutes. One bartender commented
that whenever one of them left the bar during a busy period to empty the
recyclables tub, “You could watch sales go down.” As their ideas free up
time from unpleasant and non-value-adding work, the bartenders can do
more for the customers, such as giving them a show at their tables when
TABLE 1.1 (continued) Ideas from the Clarion-Stockholm bar
Nadia The late night security guards are sometimes curt and rude to the
customers (the security service is subcontracted). These guards should
be required to take the same “Attitude at Clarion” training that all Clarion
staff take.
Marco Increase the font size and make clearer that the coupons that
conferences give out are for discounts at the bar, not for free drinks.
Nadia Have the kitchen mark the prewrapped ham sandwiches that the bar
sells. Bar staff currently have to cut them in half to tell the difference
between them and the ham-and-cheese sandwiches.
Marin Put an extra beer tap in the bar, so we can sell more beer. Currently,
there is only one, and it is a bottleneck.
Nadia Have maintenance put some sandpaper safety strips on the handicapped
ramp in the bar. Children currently use it as a slide, and the bar staff has
to deal with minor scrapes and cuts on a daily basis.
Nadia Give the bar staff information about how many guests are staying in the
hotel, so they can stock and staff the bar appropriately.
6 | THE IdEA-dRIvEn ORGAnIzATIOn
they order special mixed drinks (Reza’s idea). And imagine how much
more the upstairs bartenders look forward to their work when they do not
have to begin their day by lugging the entire bar stock upstairs, and finish
it by returning the bar stock to the special locked storeroom downstairs
(Marco’s idea). Making the hotel a better place for staff to work also affects
the way they interact with their customers.
Fourth, these ideas pick up on important but intangible aspects of the
bar’s operations and environment. How many customers will no longer
be driven away by rude security guards or rowdy children sliding down
the handicapped ramp (Nadia’s ideas)? In the hospitality industry, these
intangibles often determine whether customers return or not.
Fifth, taken as a whole, the ideas illustrate the profound understand-
ing the staff has of the bar’s capabilities and customers, an understanding
that only people working on the front lines can possess.
While the list of ideas from the bar is certainly impressive, what is more
impressive is that every department in the Clarion-Stockholm implements
a similar list of ideas every month and has been doing so for a number of
years. Each of these ideas enhances the hotel in some small way, and over
time their cumulative impact is huge. This level of idea performance does
not happen by accident. It takes a leadership team that (1) appreciates the
power of front-line ideas to move their organization in a desired direction,
(2) is willing to make them a priority, (3) aligns the hotel’s systems and
policies to support them, (4) holds managers accountable for encouraging
and implementing them, and (5) provides the necessary resources to run
an idea-driven organization. The payoff, in this case, is a hotel capable of
delivering better service at a more competitive price, a fact that is certainly
noticed and appreciated by its guests. On one of our visits to Stockholm,
when Sweden was feeling the impact of the global recession, we couldn’t
get rooms at the Clarion. The hotel was fully booked for most of the next
nine months.
Employee ideas have certainly helped the Clarion in a number of
important ways. But what many leaders want to know is this: how big
an impact can a good idea system really have? Just across Stockholm, we
found a company that had actually measured this impact.
THE POWER In FROnT-LInE IdEAS | 7
THE IMPACT OF FROnT-LInE IdEAS:
THE 80 /20 PRInCIPLE
Several years ago, Coca-Cola Stockholm was struggling with a messy
problem on its half-liter Coke bottling line. After being filled and capped,
the bottles would zoom around a ninety-degree corner before passing
an electronic eye that would scan each bottle in order to assure that it
had been properly filled. If not, an air piston would activate and push the
improperly filled bottle off the line. As long as the bottles were properly
spaced, the process worked quite well. Unfortunately, the bottles would
sometimes bunch together as they rounded the corner. Then, when the
air piston pushed a bottle into the rejection chute, the next bottle (which
was in contact with the first) would be shifted slightly, sometimes causing
it to hit the edge of the chute, tip over, and block the line. Ten bottles per
second would then slam into the fallen bottle and Coke would fly every-
where, creating a huge mess and ruining many bottles before the operator
could stop the line. This disruption to production occurred two or three
times per day.
Two Six Sigma black belt project teams had failed to solve the problem,
which they determined to be caused by friction between the bottles and
the corner guide.1 The teams had fiddled with many variables—the line
speed, different kinds of lubricating strips along the curve guide, and the
spacing of the bottles—but with little success. In the end, both teams could
only come up with faster ways to clean up the mess after each incident.
Ironically, after the black belt teams failed, the problem was solved
by a simple idea from one of the bottling-line workers. His solution was
to reduce the contact surface area between the guide and the bottles. By
slipping a steel washer in between the guide and its mounting bracket,
the guide was cocked slightly inward so that only its upper edge touched
the bottle (see Figure 1.1). This lowered the friction enough to keep the
bottles from bunching. The idea saved a lot of hassle cleaning up the spills,
reduced downtime on the bottling line, and eliminated the need to dispose
of about $15,000 worth of damaged products per year. And this was only
one of 1,720 front-line ideas implemented that year.
8 | THE IdEA-dRIvEn ORGAnIzATIOn
Interestingly, a few years before, Coca-Cola headquarters had required
all corporate-owned bottlers to implement Six Sigma as a way to drive
improvement. Each unit was expected to (1) train a cadre of black and
green belts, (2) focus on Six Sigma improvement projects that would gener-
ate large documentable monetary savings, and (3) strive for high bottling
capacity utilization. The implementation of Six Sigma on top of an effective
idea system provided a rare opportunity to compare the relative impact
of management-driven and front-line-driven approaches to improvement.
Before joining Coca-Cola, the managing director had worked at Scania,
the Swedish truck maker, which placed strong emphasis on front-line
ideas. When she arrived at Coca-Cola Stockholm, one of her first actions
had been to put a high-performing idea system in place. By the time the Six
Sigma initiative was fully operational, the bottling unit was implementing
fifteen ideas per person per year.
The managing director used the exhibit shown in Figure 1.2 to illus-
trate the relative contribution of each source of cost-saving improvements.
F IGURE 1.1 Half-liter bottle idea
Broad
Contact
Area
Single
Contact
Point
Before After
Washer
THE POWER In FROnT-LInE IdEAS | 9
In 2007, for example, two black belt and five green belt Six Sigma proj-
ects were completed, for savings that totaled 2.5 million Swedish kronor
(SEK) (1 USD was then about 6 SEK). But the 1,720 front-line ideas gener-
ated some 8 million SEK in savings, or 76 percent of overall improvement.
Armed with this insight, the company increased its emphasis on employee
ideas; and in 2008, this percentage increased to 83 percent. In 2010, the
company stopped tracking the cost savings from front-line ideas because
the financial benefits from them were clear.
All these ideas helped Coca-Cola Stockholm surpass its peers in almost
all the primary performance categories for bottling plants. Globally, it
ranked first in productivity, quality, safety, environmental performance,
and customer fulfillment rate. The only key metric in which Stockholm
was not the top performer was capacity utilization. Standing in the mid–60
percent utilization range, its rank on this metric was merely average. The
managing director told us that this was because the large number of front-
line improvement ideas was constantly increasing her bottling capacity.
The Coca-Cola improvement data reflect what we have come to call the
80/20 Principle of Improvement: roughly 80 percent of an organization’s
F IGURE 1.2 Coca-Cola Stockholm improvement results
(SEK 1.5 mill)
2 Black-Belt Projects
5 Green-Belt Projects
1,720 Front-Line Ideas
(SEK 1.0 million)
(SEK 8.0 million)
10 | THE IdEA-dRIvEn ORGAnIzATIOn
performance improvement potential lies in front-line ideas, and only 20
percent in management-driven initiatives.
Managers can find it very difficult to accept the fact that front-line
ideas offer four times the improvement potential of their own. But we have
witnessed many examples. A case in point: Several years ago, a U.S. Navy
technical support base was being pushed hard to increase its levels of sup-
port, while at the same time pressure on the defense budget was forcing it
to make severe cuts. The base commander saw a high-performing idea sys-
tem as a way to deal with these conflicting demands and asked us for help.
During one of our early training sessions, several upper and middle
managers expressed skepticism about devoting valuable leadership atten-
tion to getting front-line ideas. In the ensuing discussion, we brought up
the 80/20 principle and pointed out that if the laboratory did not go after
front-line ideas, it would be trying to make headway with at most 20 per-
cent of its innovation and cost-saving capability. One of the skeptics, the
base’s top improvement expert and a Lean Six Sigma Master Black Belt,
suddenly got up and left the room.
He returned a short time later and reported that he had thought the
80/20 assertion was overstated, so he had left to check it against the base’s
own data. While the base’s Lean Six Sigma program was intended pri-
marily as a tool for management-driven improvement, it did allow “grass-
roots” projects to be initiated by front-line staff. The Master Black Belt
had pulled the data on the previous year’s projects and separated out the
savings from the grassroots projects. The leadership team had budgeted
$6.8 million in savings from Lean Six Sigma—$5.4 million (79.4 percent)
from management-initiated projects and $1.4 million (20.6 percent) from
front-line initiated projects. But the actual savings turned out to be only
$1.2 million (17.6 percent) from management-initiated projects, and $5.6
million (82.4 percent) from grassroots projects—the opposite of what had
been anticipated.
Ironically, when we first encountered the 80/20 phenomenon many
years ago at a Dana auto parts manufacturing plant in Cape Girardeau,
Missouri, we didn’t believe it, either. At the time, the three-hundred-
person operation was implementing some thirty-six ideas per person per
year. While we were talking with the plant manager, he casually mentioned
THE POWER In FROnT-LInE IdEAS | 11
that 80 percent of his operation’s improvement came from front-line ideas.
We had already studied and worked with idea systems for over a decade by
then and, even with everything we had seen, didn’t take his statement liter-
ally. To us, it was simply a self-effacing comment and a generous recogni-
tion of his front-line people. But it did get us thinking about the relative
impact of front-line ideas. We started collecting data whenever we came
across it, and over the years have found it to be surprisingly consistent.
Across organizations in services, manufacturing, health care, and govern-
ment, 80 percent of an organization’s improvement potential lies in front-
line ideas.
In our experience, when leaders become convinced of the validity of
the 80/20 principle, they realize what they have been missing and want a
high-performing idea system in their organizations. However, they need
to be careful. There is a lot more involved in getting these ideas than simply
setting up an idea process and layering it onto an existing organization.
CREATInG An IdEA-dRIvEn
ORGAnIzATIOn
Over the last several decades, U.S. furniture makers have been hit hard by
global competition. Low-cost foreign competitors have forced many fur-
niture makers out of business or obliged them to source their production
overseas. Today, more than 75 percent of all wood and metal furniture
sold in the United States is imported. In North Carolina alone, more than
two hundred furniture manufacturers have gone out of business, and fifty
thousand furniture workers have lost their jobs. Yet one company in that
state, Hickory Chair, did very well throughout these hard times.
After the sudden death of the company’s forty-nine-year-old president
in 1996, Jay Reardon, the vice president of marketing, was asked to take
over as president. His first step was to conduct a thorough analysis of the
company’s situation, from which he documented a trend that had been
troubling him for some time. Over the previous decade, annual unit sales
(a “unit” is one piece of furniture) had dropped from 137,000 to 87,000.
The main reason Hickory Chair was still in business was that it had been
able to increase its prices every year to compensate for these declining unit
12 | THE IdEA-dRIvEn ORGAnIzATIOn
sales. This had pushed the average unit price for its furniture from around
$300 to over $900. But Hickory’s ability to continue raising prices was
coming to an end. Several lower-cost competitors had recently moved into
Hickory’s niche of eighteenth- and nineteenth-century reproductions and
were already undercutting its prices by 20 to 25 percent.
Reardon realized that in order to survive, Hickory had to figure out
how to deliver much more value to its customers. It had to significantly
lower costs, improve quality, and increase its responsiveness. Reardon
openly admitted that he had limited knowledge about how furniture was
made, but he did know how to approach the overall challenge. He had
previously worked at Milliken Corporation, a textile company that, during
his time there, was implementing more than eighty ideas per employee per
year.2 After four generations of the Milliken family’s running the company
in a heavily top-down manner, CEO Roger Milliken had transformed it
into one driven by employee ideas, radically improving its performance
in the process.
When Reardon proposed a similar transformative initiative to involve
Hickory’s front-line workers in improving the company, he encountered
stiff resistance from his leadership team. Furniture-making companies
in the United States had a long-standing tradition of authoritarian man-
agement, and Hickory Chair was no exception. Adding further to the
challenge, several of his vice presidents who had been passed over for the
company’s top job when Reardon was chosen were actively undermining
his initiatives.
After struggling with his management team for almost a year, Reardon
decided to take his plans directly to the front lines. He assembled the entire
workforce of some four hundred employees at a local community college
and showed them how the company’s unit sales were dropping while its
prices were going up. He explained that these trends were unsustainable
and told them that he needed their help. Then he introduced his concept
of an idea program.
Reardon began taking regular walks through the plant and talking
with his workers. Whenever an employee approached him with a problem,
Reardon made certain it was fixed. When someone pointed out to him
THE POWER In FROnT-LInE IdEAS | 13
that the supervisors were using the bathrooms in the front offices because
the factory bathrooms were in such bad shape, he checked them out and
immediately ordered maintenance to fix them up and keep them clean.
When informed about blatant misconduct by some supervisors—who
among other things were clocking in girlfriends who were not at work and
giving overtime preferentially to friends—Reardon investigated the allega-
tions and ended up firing several of them.
He also went to work on his management team. He gave several of his
more recalcitrant vice presidents an option: they could be fired immedi-
ately, or they could stay on for up to six months while looking for new jobs,
on condition that they not do anything to harm the company or hinder
Reardon’s initiatives. Over the next couple of years, about 70 percent of his
managers either were asked to leave or chose to leave because their man-
agement styles no longer meshed with an environment of highly empow-
ered front-line workers. In the process, an entire layer of management was
eliminated.
About two years after Reardon had launched his idea initiative, the
rate of improvement began to slow. After reading in several books about
the work of the Toyota Supplier Support Center (TSSC)—the organiza-
tion Toyota set up to develop its North American suppliers—Reardon con-
tacted it to see if it would be willing to help Hickory. Even though Hickory
was not a Toyota supplier, the legendary Toyota sensei Hajime Ohba agreed
to come to North Carolina for a day and see what he could do.
When Ohba arrived, Reardon and several managers led him on a tour
of the plant. At one point, while they were talking, an alarm went off.
The managers ignored it and continued to talk. Ohba interrupted them:
“What’s that?”
“The line-stop alarm.”
Ohba walked over to the line and asked one of the employees, “Why
did the line stop?”
“The drive chain was clogged with lint.”
“Why did the chain get clogged with lint?” Ohba inquired.
“We didn’t clean the lint trap out because our supervisor told us we
didn’t have time. We needed to get production out.”
14 | THE IdEA-dRIvEn ORGAnIzATIOn
Ohba smiled, “Well, you have plenty of time now.”
He then turned to the managers and said, “The reason the line went
down was that the supervisor prevented the operators from doing what
they knew was right.”
Reardon recalled this incident as a defining moment for his managers
and him. “We were like a covey of quail, standing there yapping. The alarm
went off and we continued to talk. Mr. Ohba, however, went directly to the
source of the problem and began pushing for a solution. The employees
already knew what needed to happen. We realized that our supervisors
were often just getting in the way.”
Over the next decade, Hickory Chair’s quality, responsiveness, and
innovativeness improved dramatically. Hickory didn’t just survive—it
thrived. Work-in-process inventory was cut more than 90 percent, and
lead times went from sixteen weeks to a week and a half, allowing the
company to almost entirely eliminate finished goods inventory. Several
new designer furniture lines were introduced, and customization options
were added to 90 percent of the company’s furniture with no increase in
delivery lead time. Half of the manufacturing that Hickory had been out-
sourcing to Asia was brought back in house. Except for the 2008 reces-
sion, annual sales grew at double-digit rates, and profit margins increased
while prices were held steady. Hickory’s return on assets (ROA) increased
to almost 50 percent.
Notice that Reardon did not just set up a process for getting front-line
ideas and wait for the ideas to pour in. He had a lot of things to fix, both
with his people and in his organization. He needed to correct a number of
serious problems that would get in the way of improvement, to recast his
management team, to learn and apply the best practices in idea manage-
ment, to gain the trust and respect of his front-line workers, and to train
and then empower them.
WHY ARE IdEA-dRIvEn
ORGAnIzATIOnS SO RARE?
An obvious question arises. Given that organizations like Hickory Chair
have achieved extraordinary results by tapping the ideas of their front-line
THE POWER In FROnT-LInE IdEAS | 15
people, why aren’t leaders around the world falling all over themselves to
do the same thing?
The answer has two parts. First, as we saw with Hickory Chair, build-
ing an idea-driven organization takes a lot of hard work. Second, trusting
front-line employees to do what is best for the organization runs counter
to traditional management practice.
An interesting case in point was the time we were asked to help a New
England utility that was under tremendous pressure to cut costs. We began
by spending several days looking at various parts of the company to learn
how it worked. At one point, we found ourselves talking to a group of
workers and supervisors in a regional depot where the company stored
wire, poles, and equipment for repair and maintenance work. They laughed
as they told us about the constant stream of ludicrous cost-cutting mea-
sures that had been coming down from above. One they found particularly
comical was a recent policy aimed at reducing the inventory of transform-
ers held in each depot. The policy mandated that each depot keep on hand
no more than two transformers of each size. But even a light rainfall, the
workers told us, could wipe out the stocks of the most commonly used
smaller transformers, forcing the workers to install bigger more expensive
ones in their place. In fact, just the previous week, they had been forced to
deploy extra crews and equipment to jury-rig a brand new $500,000 trans-
former to replace a $2,000 one. And after the smaller transformers were
ordered and received, the crews had to be sent back out, this time to take
out the larger transformers and install the smaller ones.
The utility company managers undoubtedly thought their new policy
was sound. And with the pressures they were under, it is easy to see how
excess inventory would be a tempting target to free up much-needed oper-
ating cash and to cut costs. It is also easy to imagine how these manag-
ers reviewed the inventory of supplies at the depots and focused in on
transformers, because transformers are expensive. So far, so good. Their
mistake was to put their new inventory policy in place without consulting
the people who understood how it would impact operations.
The new transformer policy was made at a distance, based on data
that told only part of the story. But at the same time as these managers
were patting themselves on the back for their cost-cutting brilliance, all
16 | THE IdEA-dRIvEn ORGAnIzATIOn
they had really accomplished was to drive up the company’s operating
expenses and create a great deal of stress and non-value-adding work for
its line crews.
The utility managers’ actions contrast sharply with Jay Reardon’s
approach to the same type of problem at Hickory Chair. He, too, looked
at the data and realized that he needed to cut costs. But then he went
directly to his front-line people who had the specific knowledge needed
to actually do so. While the New England utility managers identified the
problem, came up with a solution, and ordered its implementation, Rear-
don identified the problem, shared it with his front-line people, and asked
them for their ideas on how best to solve it. Instead of a command-and-
control approach that was top directed and top driven, his approach was top
directed but bottom driven. Reardon got the desired results. Those utility
company executives did not.
The Nobel Prize–winning economist Friedrich Hayek provided insight
into why the top-directed but bottom-driven approach is so much more
effective.3 He separated knowledge into two types: aggregate knowledge
about the organization, and knowledge of the particular circumstances of
time and place. Aggregate knowledge is what top managers tend to have.
It comes from dealing with high-level data and performance numbers.
These numbers are derived by quantifying, simplifying, and then com-
bining the results of all the activities that are taking place across the entire
organization and outside it. Such data provide a good picture of overall
performance and trends, and are needed for making strategic-level deci-
sions and setting the organization’s direction. This was how Reardon used
the data. But, as he knew, top managers generally do not have much of the
other type of knowledge, because they do not see most of the details from
which their aggregate information is produced. As a result, they are poorly
equipped to make the many smaller decisions that actually drive the out-
comes they are after. When they do make these decisions, their resulting
commands give them only the illusion of control.
Managers can easily fall into the trap of believing that they know best
and that their jobs are to issue orders and make certain those orders are
followed. In Chapter 2, we discuss the powerful forces that cause so many
people to gravitate to this command-and-control thinking as they rise up
THE POWER In FROnT-LInE IdEAS | 17
in their organizations. We then address what is needed to counteract these
forces and how to develop a management team that is capable of building
and leading an idea-driven organization.
REALIGnInG THE ORGAnIzATIOn
FOR IdEAS
We often give participants in our seminars the following assignment:
identify a bottom-up improvement or innovation in your organization,
interview the people who championed it, and briefly document their sto-
ries. When the participants present their findings to the group, invari-
ably a litany of horror stories emerges as they tell of the heroic lengths
their subjects had to go to in order to overcome managerial indifference or
opposition, burdensome policies and rules, uncooperative people in other
departments, key players not wanting to change, and a host of other ridic-
ulous and petty behavioral and institutional barriers. At some point in the
process of listening to these stories, someone always asks, “Why are these
organizations and their managers making it so difficult for their people to
implement good ideas?” Bingo!
Hero stories are a recurring theme in innovation and improvement.
After years of operating in a top-down manner that emphasizes control
and conformance, organizations are rife with obstacles to bottom-up ideas
that their champions are forced to overcome. Perhaps the most challenging
part of building an idea-driven organization is realigning it for ideas—in
other words, rooting out and eliminating misalignments that are imped-
ing the flow of ideas—so the organization can move beyond the “champi-
ons battling barriers” model of innovation and improvement.
In many cases, these misalignments are problems that have subtly
plagued performance for years, but they have been tolerated because their
impact has been difficult to pin down. But once an idea system is in place
and the volume of ideas ramps up, the impact of these misalignments
becomes much clearer, and managers can no longer ignore them.
The process of realigning an organization for ideas is never ending.
Initially, many misalignments will be easy to spot as even the simplest
ideas experience petty implementation delays. Examples of this from
18 | THE IdEA-dRIvEn ORGAnIzATIOn
organizations we have worked with include a specialty manufacturer
where it was not possible for workers and supervisors to get a few dol-
lars to test or implement small ideas, a national luxury goods retail chain
where even minor improvements needed to be approved by committees
or signed off on by countless managers, a European insurance company
with a three-month backlog for even the smallest IT change request, and a
federal agency whose IT backlog was three years!
Less obvious barriers will often emerge only as the organization
becomes more sophisticated at managing ideas. For example, some of the
least visible and hardest-to-correct misalignments arise from poorly con-
ceptualized or outdated policies. Policies are an important part of running
any organization, but as we shall discuss, they often have unintended con-
sequences. They are made by people throughout the organization who are
trying to deal with various situations from their own perspectives—people
who don’t typically consider their policies’ impact on the flow of ideas.
Chapters 3 and 4 discuss common misalignments and how to cor-
rect them. Chapter 3 explains the mechanisms that idea-driven organiza-
tions use to focus their front-line ideas on key strategic goals. Chapter 4
is about how to realign an organization’s management systems to enable
the smooth flow of ideas. An important section of this chapter is about the
development of policies, where we provide a brief primer on how to make
more effective policies and how to deal with bad ones. In particular, we
describe in some detail the “Kill Stupid Rules” process developed by a U.S.
regional bank to modify or eliminate dysfunctional policies.
EFFECTIvE IdEA PROCESSES
A few years ago, a senior vice president at a national specialty retailer
decided to conduct a campaign for employee ideas in his unit. He commis-
sioned an expensive inspirational video, staged a big high-energy launch
event, and pressured his managers to go after employee ideas. Over the
next two months, his people submitted more than eight hundred ideas.
The campaign appeared to have been a rousing success. But five months
later, after the CEO had independently invited us in to implement a
companywide idea system, only six of the eight hundred ideas had been
THE POWER In FROnT-LInE IdEAS | 19
implemented. Despite this, and the fact that several of his colleagues told
us that they regarded his initiative as a spectacular failure, the senior vice
president remained upbeat. He didn’t understand the damage he had done.
He had staked his credibility on a poorly thought-out effort that had ended
up using less than 1 percent of the ideas that his people had given him.
More than 90 percent of the suggesters never even received a response.
It is hard to imagine how he could have more effectively undermined his
people’s trust in his willingness to listen to their ideas.
That senior vice president had not realized that there was a lot more
involved in managing ideas than simply collecting them. Employees were
not told what kinds of ideas were important, he did not allocate any time
or resources to evaluate and implement the ideas that came in, and his
managers were thrown into the campaign without any proper direction
or training, which left them unsure of their roles and without some of the
skills they would need.
The mistakes this executive made are not unusual. Over the years,
we have watched many leaders set up idea processes believing that they
will be easy to get up and running. They are unaware of the existence of
high-performance idea processes, let alone what is needed to develop and
launch one. From the outset, their initiatives are condemned to delivering
mediocre results or to failing outright.
Chapter 5 explains how high-performing idea processes work.
Although all such systems share the same principles, in practice they can
look quite different. Every organization is unique: each has its own culture,
cast of characters, operating systems and norms, capabilities, and history.
A good idea system is not a stand-alone program. It has to be designed
to work in concert with a lot of other parts of the organization. Chapter
6 is a step-by-step walk through the process of designing and launching
a high-performance idea system. We discuss the pitfalls and issues that
often arise, and provide tactics for dealing with them.
GETTInG MORE And BETTER IdEAS
One of the authors recently had an interesting experience at a local diner.
As the waitress took his drink order, she put down a paper placemat, a
20 | THE IdEA-dRIvEn ORGAnIzATIOn
knife, and a fork that had a large piece of fried egg encrusted between its
prongs. She glanced at the fork, then at the author, and walked away.
Had the author been eating breakfast at the Ritz-Carlton, the dirty
fork would not have made it anywhere near the table. The hotel trains its
employees to be sensitive to even the slightest service problem. What was
not a problem for the waitress in the diner would have been a major issue
at the Ritz-Carlton.
Ideas begin with problems. If people don’t see problems, they won’t be
thinking about how to solve them. Thus problem sensitivity is a key driver
of ideas.
When an organization starts up a high-performing idea system, there
is often an early surge of ideas directed at problems that have been bother-
ing people for a long time. But after all the obvious problems have been
addressed, employees start to run out of ideas. The remedy is training—
training designed to create sensitivity to new types of problems.
In Chapter 7, we describe a variety of proven methods that idea-driven
organizations have used to help their people see new and different kinds
of problems, so that they can come up with greater numbers of more use-
ful ideas. Idea activators, for example, introduce people to new ways to
improve their work. Idea mining is used to extract fresh perspectives from
ideas that have already been proposed. These and other methods we dis-
cuss, which can be delivered in surprisingly brief training modules, allow
both employees and managers to approach idea generation with a sense of
abundance of improvement opportunities rather than a sense of scarcity.
IdEA SYSTEMS And InnOvATIvEnESS
A few years ago, one of our former students was promoted to vice presi-
dent at a Wall Street investment bank, and was tasked with making the
bank more innovative. He called us and asked, “What should I do? Where
should I start?”
Many leaders struggle with those questions and end up doing a variety
of generally ineffective things in the name of innovation. For the majority,
their first step should be to set up a high-performance idea system. It may
seem strange that a leader looking for more breakthrough innovations
THE POWER In FROnT-LInE IdEAS | 21
should make it a top priority to go after ideas from the front lines. But for
a number of reasons, the ability to produce successful breakthrough prod-
ucts and services on a consistent basis depends on the ability to tap large
numbers of smaller front-line ideas.
Several years ago, we had the opportunity to track the development
of one of Brasilata’s award-winning steel cans (Brasilata is the Brazilian
company discussed in the beginning of this chapter that was averaging
some 150 ideas per employee). The idea for it originated with an account-
ing clerk when a product designer happened to show her the prototype of
a new can. She commented to him that with some minor modifications it
would make a handy container for several common cooking ingredients she
used. Her observation was opportune, for at the time Brasilata was produc-
ing cans primarily for nonfood products, and its management was looking
for products that could be used to expand its offerings in the food market.
As we were tracking how the new can had been developed, at one point
we found ourselves talking with a group of production workers who were
fabricating it. One of the can’s features required some particularly clever
processing, which we were trying to understand.
“By the way,” we asked, “who thought of this feature?”
The question triggered a short and intense discussion in Portuguese.
Then one of the workers turned to us and said, “We can’t remember who
came up with that idea, us or R&D.”
We went back to the R&D department to find out. No one there could
remember, either!
As this story illustrates, ideas flow freely across Brasilata. Innova-
tion pervades every aspect of what it does. It has been able to develop
sophisticated technologies that are much more flexible than commercially
available alternatives—and at a fraction of their cost. All this has allowed
Brasilata to generate a continuous stream of breakthrough products that
its competitors cannot duplicate.
In Chapter 8, we explain the multifaceted interplay between innova-
tion and front-line ideas, an interplay that most managers are not aware
of. As a result, their organizations are far less innovative than they could
be. It is ironic that the most powerful enabler of innovativeness for most
organizations is the last thing their leaders would think of.
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23
The Idea-Driven Organization
A Different Kind of Leadership
2
A d i f f e ren t K ind
o f L e ade r sh ip
MORE THAn A quarter century ago, Professor Fred Luthans of the
University of Nebraska published an intriguing study that found a sig-
nificant 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 effec-
tive 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 actu-
ally 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.
24 | THE IdEA-dRIvEn ORGAnIzATIOn
In this chapter, we discuss the dysfunctional behaviors that people
often exhibit as they gain power and the reasons that such behaviors arise.
We then turn to how idea-driven organizations counteract this problem
and keep their managers engaged with their front-line people and valuing
their ideas.
WHY LEAdERS ARE OFTEn BLInd
TO FROnT-LInE IdEAS
Consider the constant reminders of their superiority that managers are
bombarded with in the course of their daily work. They wear the suits,
they have the private offices, they are the ones chosen for promotion, they
are more highly educated and paid significantly more than their subordi-
nates, and everyone defers to them. They are the ones in charge. With all
of these signals continually reminding them that they are superior to their
employees, it is easy for managers to come to believe that they actually are.
And such a belief can lead them into some highly dysfunctional behaviors.
One way that managers’ feelings of superiority manifest themselves is
in excessive pay disparities and inappropriate perks. More than a century
ago, J. P. Morgan observed an interesting pattern in his client companies.
Those having excessive pay differences between levels in their hierarchies
did not perform as well. Consequently, he would not invest in a company if
pay differences from level to level were more than 30 percent. Morgan had
put his finger on something important. If differences between levels in a
company become too great, its intangible fabric of trust, communication,
and respect unravels, which introduces enormous hidden costs.2 From the
point of view of ideas, the ability of managers to listen to those who work
for them is greatly reduced, as is the willingness of their subordinates to
offer ideas.
We encountered a good example of the detrimental impact of extreme
differences between levels on the flow of ideas while helping a European
port and logistics company with its idea system. We arrived at the port
in a blinding wet snowstorm to find the parking lot full. But directly in
front of the headquarters building there was a row of mostly open spaces.
Furthermore, these spaces were covered by a blue awning, which extended
A dIFFEREnT KInd OF LEAdERSHIP | 25
conveniently all the way to the front entrance. We couldn’t believe our
luck—the visitors’ parking was right up front and protected from the
weather! We pulled into one of the open spots and began getting out of the
car. A well-dressed receptionist bustled out from the lobby and confronted
us: “I’m afraid you can’t park there. It’s for top managers only.” We got back
in the car, circulated some more, and eventually squeezed into a spot at the
back of the lot. We got soaked as we ran into the building.
The right to park under the blue awning turned out to be a jealously
guarded top management perk. The company’s headquarters were on the
Adriatic coast, near the Italian Alps. In winter, it snowed and rained a
lot, and in summer the hot Mediterranean sun baked any car left out in
the open. That awning spoke volumes. On a daily basis, it reinforced top
managers’ perceptions that they were somehow more worthy than their
employees—they should not have to get wet in the winter or climb into
swelteringly hot cars in the summer—and it reminded employees of their
second-class status.
We had been invited because the company was losing business to more
nimble competitors, and top management had set up an idea system hop-
ing to capture employee ideas to cut costs. Unfortunately, very few ideas
were coming in and almost none were being implemented. The managing
director and his team thought the problem lay somewhere in the mechan-
ics of the idea system, but the real problem turned out to be the gap the
management team had created between itself and the workers. The blue
awning had been our first indication of this. No matter how much the
leaders of this company tweaked their idea process, unless they changed
their behavior, they were not going to get much help from their employees
in making the company more competitive.
When the perks that arise from management feelings of superior-
ity are out of public view, some of them can be ridiculous. In Riverside,
California, one such perk revealed much about the attitude of the county
executives toward their workers. County policy specified that all bath-
room tissue purchased for county government bathrooms must be two-
ply. Yet the county supervisor had quietly upgraded the toilet paper used
in the bathrooms of the county’s top executives to a more expensive and
softer four-ply. A whistleblower “outed” this perk to the press just after
26 | THE IdEA-dRIvEn ORGAnIzATIOn
the county announced that employees had to take a 10 percent pay cut in
response to a budget crisis. After a storm of negative coverage of what the
media dubbed “Bathroom Tissue Gate,” the embarrassed officials sheep-
ishly reverted back to two-ply.3
From reserved parking places to separate bathrooms, the last things
managers need are extravagant status symbols that tell them that they are
better than the people who work for them. Once they believe that, they can
easily believe that they know better, too.
How Power Can Undermine Idea Leadership
Excessive perks and salary differentials are relatively easy to eliminate if
an organization’s leaders have the will to do so. Unfortunately, power has
more destructive effects on people than causing them to overpay them-
selves or pamper themselves with soft bathroom tissue, and many of these
effects are much less apparent.
A considerable amount of research has been done on how power
affects people. A classic, and very revealing, study was done in the early
1970s by Stanford psychology professor Philip Zimbardo. He conducted
what became an infamous experiment, now known as the Stanford Prison
Experiment.4 Together with his research team, Zimbardo built a mock
prison in the basement of the psychology building. He recruited a pool of
intelligent, healthy, and normal male students and randomly divided them
into two groups: guards and prisoners. Great care was taken to re-create
the power relationship between the guards and prisoners that is found in
real prisons. On the day the experiment began, the prisoners-to-be were
arrested as they went about their daily business by Palo Alto police officers.
The prisoners were put in barred cells and placed “under the complete
subjugation” of the guards. The experiment was continuously observed
and both audio- and videotaped. Although it was scheduled to last two
weeks, it quickly spun out of control and was aborted after only six days.
The guards had become so abusive that the prisoners were in danger of
mental and physical breakdown. Some of the video footage is shocking,
and several of the “prisoners” suffered significant psychological problems
for years afterward. Zimbardo would comment almost forty years later
A dIFFEREnT KInd OF LEAdERSHIP | 27
on the eerie similarities between the abuses during his prison experiment
and the abuses in 2003 and 2004 at the Abu Ghraib prison in Iraq while
U.S. forces were running the facility.5 Ultimately, the experiment resulted
in significant new understanding of how a situation’s context can override
people’s natural dispositions and radically alter their behavior. It also led
to major changes around the world in the rules governing human subject
experimentation.
The provocative nature of Zimbardo’s findings spurred considerable
academic research on the effects of power on a person’s behavior. One par-
ticularly enlightening follow-up study, for example, was done by Adam
Galinsky, Deborah Gruenfeld, and Joe Magee (Gruenfeld was a colleague
of Zimbardo’s at Stanford).6 As they noted:
The experience of holding power in a particular situation gener-
ates a constellation of characteristics and propensities that manifest
themselves in affect, cognition, and behavior.
It is easy to see how some of these “characteristics and propensities”
have a direct negative effect on a person’s receptiveness to ideas from sub-
ordinates. For example:
� Power reduces the complexity of a person’s thinking and his ability to
consider alternatives.
� Power leads to objectification—that is, to seeing others as a means to
an end as opposed to seeing them as real people.
� People with power listen less carefully and have difficulty taking into
account what others already know.
� People with power do not regulate their behavior as much. They
become egocentric and preoccupied with their own self-interest,
which eclipses their awareness of the interests of others.
� People with power are less accurate in their estimates of the interests
and positions of others, and less open to the perspectives of others.
In our own work, we often see power bringing out these tendencies
and watch them undermine the trust and respect needed for an organiza-
tion to operate effectively. Recently, we were hired by the new CEO of a
large pharmaceutical company to design and lead an upper management
28 | THE IdEA-dRIvEn ORGAnIzATIOn
development program aimed at improving the company’s ability to inno-
vate and improve. We began by spending a day interviewing managers
and workers to build an understanding of the issues the program would
need to address. A picture of a dysfunctional and demoralized organiza-
tion quickly emerged, one ruled by fear. At the end of the day, we spent an
hour and a half with the CEO in order to better understand his goals for
the upcoming program. The CEO was very clear—he was not impressed
with his managers and wanted them shaken up.
“I have set the goal of 30 percent sales growth for each of the next three
years,” he said, “and I need them to be able to keep up.”
“How did you come up with that goal?”
“Actually, I just pulled it out of a hat,” the CEO replied, with a smirk.
Further probing revealed that he had given little thought to this stretch
goal or whether it was even achievable. Was there enough market demand?
What changes in the company’s physical plant would be needed to produce
the increased volume? Would the resources be available to expand capac-
ity and to fund the increased sales volume? What increases in staff would
be needed, and where? He had not considered any of these basic questions.
That night, the CEO invited us and the managers who would be partici-
pating in the program out to dinner. At one point, the conversation turned
to a recent environmental incident at one of the company’s plants. A large
amount of hot liquid petroleum jelly had been accidentally released into
the municipal wastewater treatment system, which had become clogged
as the liquid cooled and gelled. As a result, two of the senior managers
at the table had been summoned to a hearing the following morning and
were worried that the company would lose its permit to use the municipal
system. The CEO was completely unconcerned—in fact, he joked about the
spill and made several derogatory remarks about the local environmental
regulations. And then he boasted, “The first thing I did when I moved
here [to an East Coast state with strict environmental rules] was to slip my
garbage guy a couple of hundred bucks. Now I don’t have to worry about
recycling or hazardous waste—he’ll take anything I put out.” His leader-
ship team was visibly stunned.
Over the course of the management training program, it became clear
that the leadership team members did not trust or respect the CEO. They
A dIFFEREnT KInd OF LEAdERSHIP | 29
felt that he was out for himself and unwilling to address the company’s real
problems. But because several successful new products had been brought
on line just as he joined the company, sales were strong and forecasts
were rosy. As long as the CEO made sure the board heard only what he
wanted them to, his job would be secure. He was a classic example of a
“successful” manager in the Luthans sense, and he personified all the
negative behaviors and cognitive limitations that power can bring out
in a person.
FIGHTInG BACK
In 2013, after a series of embarrassing public scandals involving top com-
manders, U.S. Army General Martin Dempsey, chairman of the Joint
Chiefs of Staff, instituted a new “360-degree” evaluation system for senior
officers—that is, an evaluation system in which input about their charac-
ters and competence would be sought from their direct subordinates and
peers. According to the New York Times:7
General Dempsey said that evaluations of top officers needed to go
beyond the traditional assessment of professional performance by
superior officers alone . . . to assess both competence and charac-
ter in a richer way. . . . The central role in national life played by
the military since the attacks of Sept. 11, 2001—a time in which
some general officers attained the stature, and entourages, of rock
stars—put them in the spotlight. “Frankly, we’ve developed some
bad habits,” General Dempsey said. . . . “It’s those bad habits we are
seeking to overcome.”
The new evaluation regime was part of a broader overhaul of the way
senior military leaders were to be selected and developed. Dempsey was
attempting to stop his senior leaders from succumbing to the bad habits
that come with power.
Fighting the forces that drive these bad habits takes place on two
fronts. The first involves hiring and promoting the right managers, and
the second involves keeping existing managers grounded so they continue
to value their subordinates and treat them with respect.
30 | THE IdEA-dRIvEn ORGAnIzATIOn
Hiring and Promoting the Right People
Jay Reardon, president of Hickory Chair, the company whose dramatic
turnaround was described in the last chapter, was very clear about what he
looked for when hiring or promoting managers:
First, I look for people who are humble. Humility is not a weak-
ness—it is a strength. I am careful to do the background work to
make certain a candidate will be truly humble. How does he talk
about his coworkers? How do they talk about him? Is he in the back-
ground supporting others and celebrating their accomplishments,
or is he standing out front demanding all the attention?
During interviews, Reardon listens carefully to how candidates discuss
their work and other people. “If they talk primarily about business and
the numbers, and all the great things they have accomplished, I eliminate
them from serious consideration. But if they focus more on their people’s
contributions and accomplishments, then I look at them more seriously. I
look for more ‘we’s and ‘us’s, and fewer ‘I’s and ‘me’s, in the way they talk.”
We asked Jesus Echevarria, chief communications officer at Inditex,
what characteristics his company looked for in its managers. “First of all,
humility,” he said. “A manager has to have the humility to listen to and
respect other people’s ideas if he expects to rise up in Inditex.” (After-
ward, we realized that Echevarria never did offer a second characteristic.)
Inditex, best known for its Zara brand of “fast-fashion” stores, is head-
quartered in A Coruna, Spain, and is the world’s largest clothing company
with more than six thousand stores in seventy countries. Zara’s business
model is built around closely listening to customers and rapidly acting on
the resulting information. It relies on its sales associates to observe what
fashion-conscious customers are wearing and to listen to what they are
requesting. Twice a week, headquarters calls each store to get its associates’
observations and ideas. (We will discuss Zara’s idea processes more fully
in Chapter 3.) Echevarria emphasized that humble managers are necessary
for a business model that is based on careful listening.
Amancio Ortega, founder and majority stockholder of Inditex, real-
ized the importance of humility in managers at a very early age. He grew
A dIFFEREnT KInd OF LEAdERSHIP | 31
up poor and was forced to drop out of school at age twelve to work as a
delivery boy for a women’s clothing store. He was bothered by the fact that
the store wasn’t offering the types of clothing that its customers were ask-
ing for. He brought many improvement ideas to the store manager, but the
manager never listened to him. Out of frustration, and while still in his
teens, Ortega set up his own small clothing manufacturing company. By
building a company that could listen extremely carefully to its customers
and then respond very rapidly, Ortega would go on to become one of the
richest men in the world.
To maintain its culture of humility, almost all of Inditex’s hiring is
done for entry-level positions, and most managers are promoted from
within the company. The exceptions occur when specific professional
skills are needed that are not available internally, and in these cases the
company is very careful to fit the new recruits into its culture.
In the late 1990s, for example, when Inditex was preparing for both
rapid global expansion and an initial public offering, it was forced to hire
a number of high-powered managers from the outside. One of them was
Jesus Vega de la Falla, the new director of HR. He had an MBA from IESE
(ranked among the top business schools in the world) and had extensive
management experience at both Hewlett-Packard and Banco Santander
(a large global bank headquartered in Madrid). When he arrived on his
first day at Inditex, he was met by the company’s CEO, who informed him
that they, together with the person Vega was replacing, would be leaving
immediately on an extended road trip. Over the next ten days, the three
men visited dozens of the company’s stores all over Spain. Finally, they
pulled up in front of a Zara store in Madrid. The CEO turned to Vega and
said, “This is where you will be working.”
Caught by surprise, Vega responded, “But I have never managed a
retail store before!”
“That’s OK,” the CEO replied. “You won’t be managing the store. You
will be a sales associate.”
The CEO introduced Vega to the store manager. After a brief welcome, the
manager turned to Vega and said, “Let me introduce you to your new boss.”
The new boss turned out to be a twenty-year old girl with bright dyed-
red hair and a large number of body piercings.
32 | THE IdEA-dRIvEn ORGAnIzATIOn
Vega turned to the CEO and asked, “How long will I be working here?”
The CEO shrugged, “I have no idea.”
“Does Ortega know about this?” Vega asked.
“It was his idea.”
Recounting this story to us years later, Vega said “My stint as a sales
associate was the most effective development experience I have ever had. It
made me humble. It was also the beginning of a life experience with Zara
that completely changed the way I thought about how to run a business.”
While humility is a prerequisite for managing in an idea-driven
manner, other characteristics are necessary as well. These include being
improvement oriented and execution minded, and having the ability to
work well collaboratively. When Pete Wilson, CEO of Pyromation, an
Indiana thermocouple manufacturer with 120 employees (averaging 45
implemented ideas per person per year or so), began transforming his
company, he brought in a consultant with a PhD in organizational behav-
ior to help his top managers make the transition to the idea-driven leader-
ship style he was looking for. Early on, two of his top managers didn’t like
the changes being made and left. Wilson hired an executive search firm
to help create an in-depth profile of the type of people he wanted on his
leadership team. This profile was used to develop a detailed questionnaire
to guide the process of evaluating prospects and, once hired, to structure
their ongoing development.
The characteristics of idea-driven leaders are similar to those of the
“Level 5” leaders that Jim Collins found in his best-selling Good to Great
study.8 Level 5 leaders, the ones who successfully led their companies’
transition to greatness, were humble people who put their organizations
first and were determined to improve them. While Collins found such
people to be rare in top leadership positions, Jay Reardon of Hickory Chair
insisted that they are plentiful, but the place to look for them is three or
four tiers down in the organization’s hierarchy—exactly where the Luthans
study predicts managers more concerned with being effective than being
promoted will be predominantly found.
The problem is that the people in the best positions to identify such
leaders are usually their subordinates. Subordinates know the true char-
acters of their bosses and whether they are truly improvement oriented
A dIFFEREnT KInd OF LEAdERSHIP | 33
and responsive to ideas. This is why a 360-degree review process, like the
one initiated by General Dempsey, holds the promise of providing much
better evaluations of managers than can be done by their superiors alone.
However, while the 360-degree review is an attractive concept, a note of
caution is needed. The process is difficult to get right and rarely delivers
fully on its promise. Unless the right conditions are set by the leaders,
and subordinates have a great deal of trust in the confidentiality of the
process, they will not provide honest feedback. It is dangerous and fool-
ish for subordinates to point out their bosses’ weaknesses in an unsecure
process, particularly as their comments will be documented and remain
in the organization’s files for a long time.
Changing Management Mindsets and Behaviors
When Wilf Blackburn took over as CEO of Ayudhya Allianz, the Thai sub-
sidiary of Munich-based insurance giant Allianz, the company was run in
a heavily top-down manner and was a minor player in the Thai market.
His first actions were to set up an idea system, educate his managers and
employees in what would be expected of them, and begin identifying and
eliminating the barriers that impeded the flow of ideas.
Blackburn abolished the company’s dress code, knocked down walls—
literally—and eliminated high-walled cubicles to open up the offices and
improve interdepartmental communication. He relocated managers
nearer to their subordinates, scheduled quarterly idea fairs around the
company to showcase ideas, and instituted a spectacular off-site annual
idea celebration and recognition event for everyone in the company. He
also had his managers select the themes for the quarterly idea campaigns
so the resulting ideas would help them with their unit’s goals, and he
incorporated each manager’s idea management performance into his for-
mal performance reviews.
Within three years Ayudhya Allianz won a Stevie award for being one of
the most innovative companies in Asia, and Blackburn himself was named
Best Executive in Asia (subcontinent, Australia and New Zealand) in the
International Business Awards. The company was also named the most
innovative of the 120 “operating enterprises” in the global Allianz family.
34 | THE IdEA-dRIvEn ORGAnIzATIOn
And by the end of Blackburn’s fourth year, Ayudhya Allianz had moved
from twenty-fourth in revenue among Thai insurance companies to second,
and it was first in terms of new policies underwritten (i.e., growth rate).
Blackburn was already an experienced change agent when he assumed
control of Ayudhya Allianz. The effectiveness of his actions is perhaps
best explained by viewing them from the perspective of change theory.
In their landmark study of hundreds of different approaches to chang-
ing a person’s behavior, Kenneth Benne and Robert Chin separated them
into three categories: the rational-empirical (using data and logic), the
normative–re-educative (educating people to look at things differently),
and the power-coercive (forcing conformance).9 Collectively, Blackburn’s
actions covered all three categories. His rational-empirical tactics were to
show managers the benefits of ideas through idea fairs and engaging them
in choosing idea campaign themes. His normative–re-educative tactics,
all designed to get his managers to change their perspectives and ways
of thinking, were manifested in the new training programs he created
and in his tearing down walls, locating managers close to their charges,
and promoting ideas through lavish celebrations. And, of course, holding
his managers accountable for their idea management performance was a
power-coercive approach.
Whatever the mix of tactics you choose to work on your managers’
mindsets and behaviors, your efforts will have a much better chance of
success if you use a synergistic balance of Benne and Chin’s three dimen-
sions of creating change. In the rest of this chapter, we describe some effec-
tive tactics in each area.
The Rational Approach: Building the Case for Ideas. One of the most
common questions we are asked by people who are interested in starting
an idea system in their organizations is how to convince (possibly reluc-
tant) senior managers that it is worth doing. If senior managers have never
been exposed to a high-performing idea system, they may find it difficult
to imagine what one can do for their organization. Consequently, an effec-
tive first step is to expose senior managers to a sizeable quantity of good
ideas from their own employees.
A dIFFEREnT KInd OF LEAdERSHIP | 35
At Big Y World Class Market, one of the largest independently owned
supermarket chains in New England, CEO Donald D’Amour came up
with a very effective tactic to do just this for his leadership team. During
the pilot stage of his idea system, he held monthly leadership meetings
for the sole purpose of reviewing all the ideas submitted in the three pilot
stores and assessing how they had been handled. Over the six-month pilot,
the senior leaders looked at hundreds of implemented ideas. Even though
most of them were small, it was clear that their cumulative impact was
huge (a small sample of these ideas is given in Chapter 7). This process
convinced the leadership team that an idea system would be an enormous
help in meeting their company’s goals. It forced them to engage with the
new idea process and confront the changes they would need to make in
management systems or policies that interfered with the flow of ideas. It
also gave them a fresh appreciation of what was taking place on the front
lines in their stores.
For example, one of the first ideas was from a woman in the deli
department. It had to do with the numbered tickets that customers pulled
from a dispenser to get their place in line for service. The problem was that
when she finished serving one customer, before turning to the next, she
had to walk twenty feet down to the end of the counter to hit the button to
advance the overhead sign to the next customer’s number. She pointed out
that this meant that her first action as the next customer stepped forward
was to turn her back and walk away, starting that person’s service experi-
ence off on a negative note. Her idea was to put three buttons spaced along
the deli counter so employees could conveniently press one while begin-
ning to serve the next customer. D’Amour used this idea frequently in
his meetings with directors across the company to show them how a very
simple idea—one that was most readily seen by someone directly serv-
ing the customers—made the employees’ jobs easier and more productive
while improving customer service.
D’Amour was a champion of the idea system from the outset. He took
on himself the task of winning over the other members of his leadership
team. Although rare, such championing from the top certainly makes all
the change involved a lot easier. More often the initial championing comes
36 | THE IdEA-dRIvEn ORGAnIzATIOn
from midlevel managers with much less power. But they can still find ways
to put large numbers of employee ideas in front of their senior leaders.
We recently watched a middle manager at a large European insurance
company use this tactic with his superiors. The company had been using
an electronic suggestion box that was averaging 0.2 ideas per person per
year with an 8 percent implementation rate. Although the CEO dutifully
attended the annual awards banquets and said all the right things, he was
hardly a champion of employee ideas. Worse, at least half the company’s
leadership team was openly hostile to investing any effort whatsoever in
eliciting employee ideas.
It was obvious that the idea system needed to be scrapped and a new
one created. After some persuasion, the CEO gave this middle manager
permission to develop and pilot a new process. Within two months, some
of the six pilot areas were averaging more than one implemented idea per
person per month—750 times more than before. The middle manager
selected a sample of 30 ideas, listed them on a single “idea sheet” (much
like Table 1.1), and met with the CEO and COO.
As he walked them through the ideas, their excitement mounted.
Most of the ideas were small but were obvious improvements and easy
to implement. Taken collectively, they clearly had a significant impact on
performance. The two men could now envision the significant benefits of
a company-wide idea system. At the CEO’s request, over the next few days,
the middle manager met with all members of the leadership team indi-
vidually, showing them the idea sheet and letting them see its implications.
Soon afterward, the CEO began championing employee ideas regularly in
his talks around the company.
Reeducating Managers. Although some leaders can be convinced of
the value of front-line ideas when exposed to a large number of them,
such exposure alone is rarely enough for a person to overcome years of
entrenched bad habits and to change his or her management style. A
deeper intervention is needed, the nature and extent of which will vary
depending on where the manager sits in the organization’s hierarchy and
exactly how much that person’s behavior and attitude need to change.
A dIFFEREnT KInd OF LEAdERSHIP | 37
For lower-tier managers, who are closer to the front lines, installing
new idea processes combined with a day or two of thoughtfully designed
training, followed by a short-term regime of coaching, is usually sufficient.
But sometimes a little more help is needed. For example, during the pilot-
testing of its new idea system, a U.K. financial services company was expe-
riencing a huge variance in performance between the different pilot areas.
While several supervisors were doing quite well, the majority were strug-
gling. After looking into the reasons behind this variance, it appeared that
the two dominant factors were (1) the supervisor’s attitude toward front-
line ideas and (2) the supervisor’s skills in idea management, particularly
in idea meeting facilitation, coaching team members, and problem solving.
To address these areas, an in-house certification program for idea manage-
ment was designed for supervisors. To become certified, candidates had to
attend two day-long training seminars, work through two books on idea
management, and pass two online examinations on these books. A mini-
mum of three of their idea meetings (this process is explained in Chapter
5) had to be observed by trained idea coaches, who provided structured
feedback and had to “sign off” on each candidate’s ability to lead effective
idea meetings. Certification was awarded only after the supervisor’s team
had implemented at least one hundred ideas.
Note how effectively this certification program addressed both factors
that had been identified. First, the skills gap was addressed by training—
training that was put to use immediately, then backed up with observation
and coaching. The online examinations made sure that the managers had
read the books and understood the material. And then there was the test
of supervisors’ idea management skills through their teams’ actual per-
formance—that is, the requirement for one hundred implemented ideas.
This requirement also helped to address the second issue: the supervisor’s
attitude. By the time a supervisor’s team implements one hundred ideas,
the supervisor should have come to appreciate the value of front-line ideas,
become comfortable working with them, developed the right habits to
encourage and stimulate them, and created a successful team that uses the
idea process effectively in its daily work. In short, the supervisor should
have become a true believer.
38 | THE IdEA-dRIvEn ORGAnIzATIOn
Ironically, most of the skills a supervisor needs to effectively manage
ideas are skills that any supervisor should have anyway: listening, coach-
ing, communicating, facilitating meetings, and leading improvement
activities. Unfortunately, in organizations where supervisors’ jobs are to
give orders and assure compliance with them, they can slide by without
many of these skills. But in idea-driven organizations, any shortcoming
in these skills will quickly become obvious, as it will be reflected in their
team’s idea performance.
It is much more challenging to transform the thinking of recalcitrant
higher-level managers and executives who don’t see the value in front-line
ideas. They are generally successful people who have built careers around
the very habits and thinking that now hold them and their organizations
back, on top of which they are suffering from the debilitating effects of
having power. Consequently, they are often less open to new leadership
concepts, and a deeper intervention is necessary. One of the more effective
methods, in our experience, is a guided reading course for the company’s
top leadership.10
A few years ago, a prestigious national laboratory was struggling and
risked possible closure. As part of a plan to cut costs and increase perfor-
mance, its director brought us in to help set up an idea system. During
our assessment, a number of issues were identified that were also pri-
mary contributors to the laboratory’s overall poor performance. Many of
these issues ultimately stemmed from the lab’s promotion practices. For
decades, its scientists had been selected for promotion into management
positions based on their scientific prowess rather than their management
skills. A further complication was that the leadership team members had
a very low opinion of management as a profession, and they saw manage-
ment training as silly and shallow. But they were open to a guided reading
course, based on serious management books, which would give them the
opportunity to explore new thinking and discuss how it might help to
address some of the lab’s substantive issues.
The first book, Good to Great, was selected partially because we felt
the leadership team members (all scientists and engineers) would respect
author Jim Collins’s data-driven approach to discovering the elements
needed to transform a good organization into a great one.
A dIFFEREnT KInd OF LEAdERSHIP | 39
One of these elements, for example, is the importance of “confronting
the brutal facts.” An early homework question was “What are the most
important brutal facts this leadership team is not confronting?” When the
replies came back, they collectively identified that the lab’s hiring and pro-
motion processes focused on the wrong skills, and no one at any level was
being held accountable for his or her performance.
Another of the book’s main points was the importance of defining a
simple and clear focus for the organization—the so-called hedgehog con-
cept—and then to ruthlessly stop doing anything that was not within this
focus. After considerable debate, the leadership team realized that the lab-
oratory was not even close to having such a focus. Over the decades, it had
grown haphazardly as disparate opportunities arose, and resources were
now being dissipated across a host of unrelated programs and institutes.
In total, the leadership team studied seven books over a six-month
period. By the end, the change in mindset of its members was profound,
and they became a much more effective team. Among other things, they
completely overhauled the HR process, developed a hedgehog concept that
helped them prioritize projects, and set up an idea system.
When properly designed and used in the right context, reading
courses can be highly effective. They can be customized to address the
exact changes that are sought, and the pedagogy respects the complex-
ity of leadership, the sophistication and judgment of the participants, and
the need for them to discuss and debate how the concepts apply to their
organizations. The readings and robust dialogue also create the common
understanding and vocabulary that is a prerequisite for better teamwork.
However, reading courses are not risk-free for the participants. With
the quality of each executive’s thinking on display to colleagues and supe-
riors, inflexibility and poor thinking are quickly exposed. The discussions
also bring out areas of fundamental disagreement between managers. A
skilled moderator can be important to minimize excessive conflict and
draw out the key lessons.
Keeping managers in touch with the front lines. Even when manag-
ers believe that their people have good ideas and can be counted on to
make good decisions about them, with all the power-related situational
40 | THE IdEA-dRIvEn ORGAnIzATIOn
forces working to distance them from the front lines, their conviction will
need ongoing reinforcement. This is one of the reasons that leaders of idea-
driven organizations develop mechanisms to keep their busy managers
engaged with front-line people and their ideas:
� John Boardman, the CEO who led Dubal (an aluminum producer in
Dubai with three thousand employees) to become one of the most
idea-driven companies in the Middle East, developed a recognition
process designed to regularly expose his managers to large numbers
of excellent front-line ideas. Annually, first-, second- and third-place
awards were given for the best ideas in more than a dozen categories.
Each department was expected to nominate one idea in each applica-
ble category. The clever part of Boardman’s scheme was the composi-
tion of the judging teams. Every upper manager, including Boardman
himself, served on at least one team. To evaluate the ideas, the teams had
to visit each department to hear presentations from the people whose
ideas had been nominated and to see the results of these ideas firsthand.
� Toyota has long been an idea-driven organization. One of its core man-
agement concepts is the importance of managers at all levels regularly
“going to gemba” to stay in touch with what is going on there. Gemba is
Japanese for the actual place where the real work is done (i.e., the front
lines). At Toyota, managers and employees are taught that everything
that really matters happens at gemba.
� ThedaCare, an idea-driven health care system in Wisconsin, is widely
recognized for the superior clinical results it delivers at costs signifi-
cantly lower than the industry average. Every manager, even the CEO,
must spend several hours each week at gemba as part of his “leader
standard work,” learning about issues, listening to ideas, and coach-
ing. A concept from lean, leader standard work generally refers to a
checklist of regular tasks that leaders must do to support improvement
activities.
The value of keeping managers engaged with the front lines is greater
than simply making them supportive of front-line ideas. It also helps them
make much more informed decisions on major issues. Consider the fol-
lowing example from ThedaCare.
A dIFFEREnT KInd OF LEAdERSHIP | 41
ThedaCare holds its Thursday morning leadership team meetings at a
different one of its hospitals or clinics each week. Immediately following
each meeting, the senior leaders each take a gemba walk in a different part
of the facility. After one meeting held at the ThedaCare Clark Hospital,
CEO John Toussaint decided to take his walk through the intensive care
unit (ICU). He approached a nurse and asked if he could shadow her for
about half an hour as she went about her work. She was happy to oblige.
The nurse’s first stop was the room of an automobile accident victim.
The patient was still unconscious, and three worried family members were
huddling in a corner of the small room trying to stay out of the way as
the nurse went about her work. Toussaint watched as the nurse had to
go around the bed, twist and lean awkwardly over a shelf to adjust the
patient’s oxygen, and then a little while later do it again to check the suc-
tion tubes that were keeping the patient’s airways clear. Both control and
connection panels were attached to the wall in unwieldy positions. And
while working with this awkward setup, she had to be careful to work
around the IV pole, lines, and pumps.
Toussaint quickly realized that the ICU rooms were very poorly
designed for modern medical care. They had been built many years before
and were far too small to provide efficient care using modern technologies
and methods. In addition, the movements the nurses needed to go through
because of the space constraints and poor layout meant they could easily
be injured. Furthermore, there was not enough room for family and visi-
tors, who were important for the patients’ morale and comfort.
Ironically, at that morning’s leadership team meeting a $90 million
renovation and construction project for the ThedaCare Hospitals had been
discussed. Toussaint was about to take the proposal to the board of direc-
tors for approval. The project involved a major redesign of the facilities as
part of a new “collaborative care” initiative. The pilot of this program had
demonstrated significant improvements in the quality of health care deliv-
ered, and at a much lower cost. But the ICU, which was not directly related
to the collaborative care delivery model, had been cut from the project.
Immediately after leaving the ICU, Toussaint called ThedaCare’s president
and asked her why the ICU was not included in the proposal. The answer
was for budget reasons—it would add $4 million to the proposal. But after
42 | THE IdEA-dRIvEn ORGAnIzATIOn
a short discussion, they both agreed to add the $4 million for a new ICU
back into the proposal. There was little difference, after all, between bor-
rowing $90 million and $94 million.
In the end, the new rooms were more than double the size of the old
ones, and they were designed to support the clinical process redesign as
well as integrate the latest technologies in ways that made the work of the
staff much easier and more efficient. Special lifts attached to the ceilings
reduced injuries when transferring patients in and out of bed. Cabinets
were installed so that regularly needed supplies could be stored in the rooms
and resupplied by dedicated support functions on daily rounds, and medi-
cations could be delivered directly to the rooms where they would be used
rather than to the nursing station. The rooms also had extra-wide doors
and enough space to wheel in special equipment so a number of com-
mon tests and procedures—such as ultrasounds, electrocardiograms, and
endoscopy—could be conducted right in the rooms rather than requiring
patients in critical condition to be moved to other parts of the hospital.
The new rooms resulted in a significant improvement in productiv-
ity and increases in both patient and family satisfaction. In addition, the
hospital was no longer requiring its front-line people to work in ways that
could easily cause them injury. All this started with Toussaint shadowing
a nurse on his weekly visit to the front lines.
As Key Fujimura, director of Continuous Improvement and Quality
at Crane & Co., the high-end paper maker, once said to us, “When you go
down to the front lines to see for yourself, you can use all five senses to
decide if ideas are any good.”
Unfortunately, many top-level managers make their decisions primar-
ily on the financial numbers. As UCLA professor Theodore Porter wrote
in his 1995 book Trust in Numbers, numbers are the language of distance.
The problem with a myopic focus on numbers is that it shuts out the rich-
ness of the knowledge that comes from the front lines. “What is the finan-
cial return on that idea?” is often not the smartest question to ask. While
cost-benefit analysis (CBA) is certainly useful, it deals with only part of the
story—and often not the most important part.
A National Academy of Sciences study found that while CBA can accu-
rately predict the effect of simple decisions, it is a poor technique for more
A dIFFEREnT KInd OF LEAdERSHIP | 43
complex ones, particularly for those with intangible and unpredictable ele-
ments.11 Even its inventor, the French engineer-economist Jean Dupuit,
warned of the limitations of CBA in his classic 1844 paper.12 He cautioned
that it would be easy for decision makers to take the numbers as gospel and
not think past them. Because of these limitations, Dupuit stressed, CBA
should be used to inform decisions, not to make them.
Applying Power: Accountability for Idea Performance. If an organiza-
tion wants its managers to encourage and implement large numbers of front-
line ideas, it needs to hold them accountable for doing so, just as it would for
any other aspect of their performance. This can be done in a variety of ways,
ranging from light social pressure to complete integration of idea perfor-
mance into the organization’s performance appraisal processes.
One of the lighter forms of accountability is transparency. When man-
agers’ idea performance is public and can be compared with their peers,
and they know their bosses are watching, they will start paying more
attention to ideas. A number of years ago, during a visit to a division of
Air France, one of the authors noticed that one of a handful of graphs dis-
played in its lobby showed the number of implemented ideas in each of the
division’s eight units for the previous quarter. There was considerable dis-
parity in the height of the bars, and each bar had the unit manager’s name
underneath it. The author asked the managing director what was done
with this information. “Nothing,” he replied. “You have to understand that
it is impossible to become a senior manager without being very sensitive to
what your boss is thinking. Just the fact that I have posted this data means
that the situation will be totally different next year.”
Transparency can also be used to hold managers accountable to their
subordinates when it comes to following through on ideas. We found a
good example of this at Scania, the Swedish truck maker, where ideas
escalated from front-line idea boards are posted on higher-level boards for
managers to work on. All the boards, up to and including the leadership
team’s, are public so that everyone can easily see the progress of escalated
ideas. This idea-by-idea transparency gives managers a powerful induce-
ment to follow through on the ideas that come to them. Their employees
are watching! (We will discuss the Scania system more in Chapter 5.)
44 | THE IdEA-dRIvEn ORGAnIzATIOn
Transparency alone, of course, does not create full accountability.
For this, managers who do not do well at getting ideas from their people
should face consequences, and managers who do well should be recog-
nized and rewarded.
A number of years ago, the new CEO of Siemens VDO created strong
accountability for ideas in a relatively simple way. Early on, he met with
his idea system manager and told him that he wanted at least fifteen imple-
mented ideas per person throughout his global organization of forty-four
thousand people. The idea system manager came up with a simple Pareto-
type chart that displayed the idea performance of each of the ninety-five
business units (an illustrative version with fewer and fictional locations is
shown in Figure 2.1). This chart became one of the CEO’s favorite tools
when reviewing his business directors’ performance. When showing it to
us, the idea system manager pointed to the laggards in the bottom right
of the graph and commented, “When the CEO gets this chart, you do not
want to be one of the executives out here.” Similar approaches are used in
many idea-driven organizations. As we explain in Chapter 4, it is usually
quite straightforward to integrate idea performance into an organization’s
F IGURE 2.1 Idea performance by unit
Plant
Se
ou
l
Se
at
tle
St
ut
tg
ar
t
M
un
ic
h
In
ch
eo
n
Le
ip
zi
g
H
am
ilt
on
P
eo
ria
P
ra
gu
e
R
ei
m
s
W
ar
sa
w
B
on
n
R
ot
te
rd
am
P
oz
na
n
St
oc
kh
ol
m
To
le
do
M
an
ch
es
te
r
Id
ea
s/
Em
pl
oy
ee
50
45
40
35
30
25
20
15
10
5
“. . . you do not want
to be one of the
executives
out here . . .”
A dIFFEREnT KInd OF LEAdERSHIP | 45
regular performance review process and to incorporate it into the criteria
used for promotions, raises, and bonuses.
The most draconian type of accountability we have ever seen was in
the late 1980s at Sumitomo Electric in Japan. At the time, the company
was averaging some fifteen ideas per person. The CEO’s policy was that
any manager—from supervisor to vice president—who did not average at
least five ideas per person in his area was ineligible for a raise or promotion
for three years.
An idea-driven organization cannot be created or maintained without
being led by the right kind of people. But the leaders themselves can only
be as good as the structures and systems they set up to govern the way
their organizations work. What we turn to next is how to modify these
structures and systems so they enable the organization to be idea driven.
| K E Y P O I N T S
✓✓ As managers rise up the hierarchy and gain power, a host of situational
forces come to bear on them that reduce their openness to ideas from
subordinates. For example, research shows the following:
� Power reduces the complexity of a person’s thinking and his or her
ability to consider alternatives.
� People with power listen less carefully and have difficulty taking
into account what others already know.
� People with power are less accurate in their estimates of the
interests and positions of others, and they are less open to others’
perspectives.
✓✓ Fighting the negative effects of power takes place on two fronts: (1)
how managers are selected, developed, and promoted and (2) keeping
managers grounded in what is happening on the front lines.
46 | THE IdEA-dRIvEn ORGAnIzATIOn
✓✓ Idea-driven organizations look for managers with humility when hiring
and promoting, and they constantly cultivate it in their managers.
✓✓ Most of the skills a supervisor needs to effectively manage ideas are
skills that any supervisor should have anyway: listening, coaching,
communicating, facilitating meetings, and leading improvement
activities. But in idea-driven organizations, any shortcomings in
these skills quickly become obvious.
✓✓ Idea-driven organizations develop mechanisms to keep their busy
managers engaged with front-line people and their ideas.
✓✓ “What is the financial return of that idea?” is often not the smartest
question to ask. While numbers are certainly important, they tell only
part of the story—and often not the most important part. Cost-benefit
analysis (CBA) should be used to inform decisions, not to make them.
✓✓ Idea-driven organizations have mechanisms to hold managers account-
able for encouraging and implementing large numbers of front-line
ideas, just as they do for any other aspect of their performance.
47
The Idea-Driven Organization
Aligning the Organization: Strategy, Structure, and Goals
3
A l i gn ing the
O rgan i z a t i on t o
Be Ide a d r i ven:
Strategy, Structure,
and Goals
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 com-
puter so that he could participate in an online webinar. Despite numer-
ous reminders and follow-up phone calls, the speakers never arrived. It
turned out that speakers were not part of the specified computer package
48 | THE IdEA-dRIvEn ORGAnIzATIOn
for senior vice presidents. The vice president ended up having to bring in
the speakers from his home computer.
This was not an isolated example. The company had created an infra-
structure of tight controls that made it difficult to get anything done and
would be a significant barrier to front-line ideas. For example:
� The purchasing process was extremely cumbersome. Even small pur-
chases required a series of signatures (often including a senior vice pres-
ident’s), several price comparisons, and supporting documentation.
� Minor changes in the company’s software, even when they would
have significantly enhanced productivity, required the completion of
extensive forms that justified the proposed changes and meetings with
IT managers to negotiate the specifics of each change. Then funding
for the programming time had to be obtained through a formal budget
request process.
� Staffing levels in some departments were set daily at slightly below
what the work standards projected would be needed for that day’s vol-
ume of sales. The intent was to maximize productivity by having every
minute of every front-line worker’s day committed to regular work.
Given this practice, it was very difficult for supervisors to free up time
for their employees to work on developing and implementing ideas.
� The slightest change in a work procedure required extensive manage-
ment review and had to be signed off by a director or vice president.
When we pointed out these and other issues to the CEO and his man-
agement team, we were surprised by their reaction. While they had long
recognized the problems created by such tight controls, they were reluctant
to loosen them. About eight years earlier, when the company was much
smaller, its single-minded pursuit of rapid growth had led to chaos and
inefficiency. To counter the resulting financial hemorrhaging, the leader-
ship team had been forced to install draconian top-down controls that
many of them believed had saved the company. Careful negotiations with
top management were required to get temporary waivers from some of the
more burdensome rules so that the pilot idea system could demonstrate
the potential of a companywide system.
ALIGnInG THE ORGAnIzATIOn: STRATEGY, STRUCTURE, And GOALS | 49
The three-month pilot, conducted in four key departments, was a
resounding success. Three of the four departments averaged more than
two implemented ideas per person per month, and the performance of all
four improved significantly. Had the CEO not been willing to make the
changes that were needed to remove critical barriers blocking the devel-
opment and implementation of ideas in his organization, his idea system
would not have been very successful.
A critical inflexion point occurs when a leader realizes that becom-
ing idea driven involves a lot more than simply layering a mechanism to
collect front-line ideas onto an existing organization. A host of additional
changes need to be made as well. We have watched many leaders wrestle
with the decision of whether to move forward. It is a big decision. They are
essentially deciding whether they have the courage, energy, and even the
ability to create an entirely different kind of organization, and whether
their organization is ready for such substantial change. If management
truly wants front-line ideas, it has to realign the organization to be idea
driven. It has to create a culture where front-line ideas are valued and build
management systems that are aligned to actively support their generation
and implementation.
Figure 3.1 gives the framework that we use to conceptualize this
alignment. Although we included this framework in Ideas Are Free, we
are covering it in more detail here because we have learned that realign-
ment plays a much bigger role in building an idea-driven organization
than we initially thought. An organization faces a certain external envi-
ronment. The strategy it follows must successfully draw needed resources
from that environment. The organization’s structure should be designed
to support the strategy, as should the policies it follows and the way it bud-
gets its resources. The systems and procedures it deploys, in turn, should
be consistent with its strategy, structure, budgets, and policies. Smoothly
meshing with all this is the way people are rewarded, the skills they are
given through training, and the way they are supervised. The ultimate goal
is to assure that throughout the organization, individual behavior is in line
with the organization’s strategic direction. The role played by the organi-
zation’s culture and its leadership is to keep all these elements aligned. If
50 | THE IdEA-dRIvEn ORGAnIzATIOn
the strategy involves being idea driven, then all of these elements have to
be aligned for ideas as well.
Ideas are voluntary. If people don’t feel that their ideas will be wel-
comed and acted on rapidly and with a minimum of fuss, they can always
keep the ideas to themselves, if they even think of them in the first place.
This is why the flow of ideas is very sensitive to alignment. Although align-
ment is conceptually simple, in practice, it is very challenging to get right,
and few organizations do it well.
For an organization to be well aligned for ideas, many different ele-
ments have to work together. Even one critical element out of alignment
can make implementing an individual idea challenging or even block it.
Neglect of just a few elements can undermine an entire idea system. In far
too many organizations, ideas are forced to run a gauntlet of misaligned
elements that is often unsurvivable.
In the remainder of this chapter and in Chapter 4, we discuss how
to realign an organization to promote the flow of bottom-up ideas. This
chapter focuses on the alignment of organizational structure and goals;
Chapter 4 discusses the organization’s management systems—the policies,
procedures, and practices used to run it on a daily basis.
F IGURE 3.1 A framework for alignment
The Environment
Strategy
Structure
Budgets/Policies/Rules
Systems/Procedures
Skills/Supervision/Rewards
Behaviors
—
—
—
—
—
C
u
lt
u
r
e
—
—
—
—
—
—
—
—
—
L
e
a
d
e
r
s
h
ip
—
—
—
—
ALIGnInG THE ORGAnIzATIOn: STRATEGY, STRUCTURE, And GOALS | 51
STRATEGY And GOAL ALIGnMEnT
Organizational structures come in a wide variety of forms—from tradi-
tional functional hierarchies to more contemporary process-based struc-
tures—but all of them have both vertical and horizontal elements. The
vertical elements align top-level goals with the actions being taken at every
level of the organization, while the horizontal elements assure that the dif-
ferent branches of the organization work well together. In this section we
discuss how to align both elements in order to ensure that the ideas com-
ing from the front lines are focused on helping the organization to achieve
its strategic goals and improve its overall performance.
vertical Alignment
While every manager knows that vertical alignment is critical, many lead-
ers assume that their pro forma processes of cascading goals down their
organizations are much more effective than they actually are. Sometimes,
their goals don’t even make it one level down, to the people they work with
most closely.
Take, for example, what happened at an electronics retail chain in
Spain and Portugal. The CEO, who had started an idea initiative a year
earlier, asked us in because he felt the effort had stalled. The ideas that were
being received were light and scattershot. We began by spending several
days studying the idea system, visiting stores, interviewing employees and
managers, and looking through the ideas that had come in.
The CEO’s concern proved to be well founded: the ideas were indeed
all over the map, on every topic under the sun, and many were of little
value. Both managers and employees were frustrated with the idea system
as they struggled with such basic questions as “What constitutes an idea?”
or “Do changes as small as moving a wastebasket or rearranging a store
display count as ideas?”
When presenting our findings to the company’s leadership team, we
explained that one of the main reasons the system was getting such poor
ideas was that the corporate goals had not been effectively rolled down and
internalized by front-line staff. As a result, many of the ideas that came in
52 | THE IdEA-dRIvEn ORGAnIzATIOn
lacked focus and were only marginally helpful. Upon grasping the signifi-
cance of this point, the CEO immediately turned to his leadership team
and said, “I want each of you to make sure that your people have good
metrics and understand what our goals are.”
“Are you sure everyone in your leadership team understands what
your company’s goals are?” we asked.
“Of course they do!” the CEO shot back.
This view was inconsistent with what we had found, so we asked
everyone on the leadership team, including the CEO, to write down on an
index card what he or she considered to be the top three strategic goals for
the company.
One of us then stepped out of the room, compiled the managers’ stated
goals, and created a chart comparing these with the CEO’s. The results
were eye-opening. None of the three goals that were most frequently cited
by the company’s top managers matched any of the CEO’s three top goals!
He had assumed that he had made his priorities clear to the entire organi-
zation, but even his direct reports were hazy about them.
Ever since Robert Kaplan and David Norton popularized the notion of
key performance indicators (KPIs)—specific measures of performance tied
to goals—in their 1996 book The Balanced Scorecard: Translating Strategy
into Action, many leaders have put increased emphasis on formally cas-
cading goals and metrics down through their organizations. In practice,
however, KPIs are generally used for deploying strategies and holding
managers accountable for their performance rather than for encouraging
front-line ideas that drive performance in a specific direction. Care is not
always taken to translate top-level goals, as they are cascaded down, into
metrics that front-line people can meaningfully affect through their ideas.
Strategic goals such as “Increase market share to 8 percent” or “Lower
operating costs to 40 percent of net revenue” have little meaning at the
front-line level. Goals and measures must be properly disaggregated as
they are passed down and then articulated in ways that front-line people
can affect with their ideas.
We were able to demonstrate the power of properly translated goals to
the CEO of that electronics retailer with an example from his own company.
It turned out that the manager of the central warehouse had understood
ALIGnInG THE ORGAnIzATIOn: STRATEGY, STRUCTURE, And GOALS | 53
the CEO’s goals—which were high productivity, excellent customer service,
and efficient use of capital—and had translated them into metrics that his
warehouse workers could understand and affect with their ideas:
� Shipments per week per employee (productivity),
� Percentage of orders shipped same day and correctly (customer
service), and
� Inventory turnover (use of capital).
The manager posted the performance on these metrics on a weekly basis
as a way to focus his team’s ideas. Besides, he pointed out, keeping score
added a bit of challenge and fun.
Because of these clear goals, his employees had implemented hun-
dreds of small ideas that had dramatically improved the warehouse’s
performance. For example, at one point, the employees had been issued
handheld scanners that wirelessly communicated with the central com-
puter from anywhere in the warehouse. The original purpose of the scan-
ners had been to ease the process of checking inventory in and out, by
eliminating the need to use a scanner that was tethered to the terminal on
the loading dock. But when the employees discovered the scanners were
programmable, they came up with many ideas to increase the scanners’
capability. Now, they can be used, from anywhere in the warehouse, to
change inventory locations in the system and to instantaneously display
the contents of a box, a shelf, or even an entire bay by simply scanning its
bar code. The employees also programmed the scanners to display optimal
order-picking routes for each order.
As a result of all these ideas, in just one year the warehouse was able
to double the number of orders it shipped without adding any employees,
reduce the number of orders filled incorrectly or shipped late by over 90
percent, and increase inventory turnover by 30 percent. In addition, the
time required to take monthly inventory was cut by over 80 percent.
This example hit home with the CEO, who now understood why the
warehouse was both getting a lot of ideas and performing well. Smiling,
he told us of an idea that had recently come to his attention illustrating
the high level of trust that had developed between management and the
warehouse team. The idea had also given the warehouse manager a chance
54 | THE IdEA-dRIvEn ORGAnIzATIOn
to recognize his team’s exceptional performance. An employee suggested
mounting a large flat-screen TV in the warehouse tuned to the sports
channel, so people could monitor games of their favorite teams and keep
up with the latest football (soccer) scores. The problem was, the suggester
admitted, that whenever there were important matches, workers (even
nonsmoking ones) were taking long smoking breaks to sit outside and
listen to car radios during critical periods in the games. Or, they would
leave early to rush home to watch the games. He suggested that a large
flat-screen television in a central location would actually save time and
improve productivity by eliminating the need for employees to surrepti-
tiously leave the building to check on scores. The CEO joked to us, “With
this group, I only hope the TV screen was big enough!”
Leaders are accustomed to thinking about their organizational goals
in broad terms. When passing these goals down, it is easy for them to
miss the importance of translating them into terms that are meaningful
to the people whose actions are necessary to achieve them. Recently, for
example, the chancellor of a major U.S. public university was anticipating
large budget cuts due to shortfalls in state tax revenues. He set up a special
website and issued a call to tens of thousands of faculty, staff, and students.
“We need to find ways to save money. Please send in any ideas you have to
cut costs.” In the end, he got less than a hundred ideas and implemented
only a handful.
The poor chancellor never had a chance with this campaign. For one
thing, at the university, “cost cutting” was historically code for laying peo-
ple off or eliminating programs. His faculty and staff would never engage
with an initiative framed in these terms. But had the chancellor engaged
his unit heads in passing down and expressing his goals in terms that were
actionable and meaningful for their people, his campaign might have had
a very different outcome. Consider, for example, the athletics department.
How could its staff intelligently reduce expenses? A person working in the
equipment lockers in the gym might be baffled if asked for ways to save
money but could think of a lot of ideas if asked how to save energy and
water (he does the laundry, controls the lighting, and patrols the locker
rooms and showers), how to save on supplies, or how to reduce the amount
of lost or damaged equipment. Had the chancellor ensured this type of
ALIGnInG THE ORGAnIzATIOn: STRATEGY, STRUCTURE, And GOALS | 55
translation occurred across all campus units, his request would have been
more meaningful to the university’s staff and students, and he would have
received a lot more useful money-saving ideas.
The effective translation of organization-level goals into lower-level
goals requires the ability to identify key leverage points, as well as the cre-
ativity to frame them in an actionable way. One of the more memorable
examples of this that we have seen occurred at Fresh AB, the Swedish venti-
lation products manufacturer. At the time, Fresh was confronting the need
to make a major strategic shift in its markets. The company sold products
in three different markets: home construction, commercial construction,
and consumer retail (do-it-yourself). Economic forecasts projected a sig-
nificant drop in new home construction. To compensate for the expected
sales drop in this market, the leadership team wanted to increase sales in
the consumer retail market. The retail sales channels included hardware
and home improvement stores, particularly the increasing number of “big
box” retailers.
Rather than simply assigning the sales and marketing staff the “stretch
goal” of doubling retail sales, Fresh’s leadership team took a different
approach. Since retail display space is the primary driver of retail sales, it
translated its high-level goal into one that everyone could contribute ideas
toward achieving: Double the number of product displays in retail stores.
If the goal had remained to double sales, it would have most likely been
interpreted as “sales and marketing need to work harder.” Few people out-
side the sales and marketing departments would have offered meaningful
ideas. But everyone could help with the display goal.
Ideas came in for more attractive packaging, enhanced display designs,
displays of different sizes and configurations to better fit the needs of more
retailers, eye-catching new products and color schemes, and a variety of
other display-related improvements. As a result, Fresh was able to reach its
retail sales expansion goal before the decline in new home construction,
an impressive accomplishment that would probably have been impossible
for sales and marketing to pull off alone.
Another dimension that leaders have to consider when setting goals
is whether the goals are in the interests of the people who are expected to
work toward them. If not, no matter how well they are articulated, few
56 | THE IdEA-dRIvEn ORGAnIzATIOn
ideas will be offered. Take, for example, what happened at a Silicon Valley
company that was part of a major global engineering corporation with
almost a hundred business units. Shortly before our visit, this company
had won the award for the best idea system in the entire corporation.
Senior managers, several of whom had just returned from the award cer-
emony in Europe, were justifiably proud of their idea system, which had
saved millions of dollars in the previous year. We reviewed the ideas this
unit had received during its winning year and interviewed the groups and
individuals that had been the most prolific idea generators. Some of the
ideas were very creative and had saved considerable sums of money. We
were particularly impressed by the company’s success with employee ideas
given its recent history.
Before being purchased as a strategic acquisition by its current corpo-
rate parent, it had been a rapidly growing high-technology startup that had
developed some very innovative and high-margin products. Its primary
focus had been on breakthrough technology and sophisticated product
engineering. Production costs had never been a priority for the company,
as they had been a relatively small part of its overall cost structure. Its
manufacturing operations were quite inefficient, and the new corporate
parent had begun systematically shifting production offshore and had
already laid off more than two-thirds of its manufacturing workforce. The
message was clear. The facility had to lower its production costs further or
eventually it would be reduced to only a research center. So management
turned to its employees for cost-saving and productivity-enhancing ideas.
At first glance, the award-winning system appeared to be a resounding
success. However, management never realized what it was missing.
As we went through the ideas, a pattern began to emerge. All of
the ideas involved ways to save material, shipping costs, or other non-
personnel-related expenses. None of them involved working more effi-
ciently. Yet the production floor was rife with obvious labor-saving
improvement opportunities. This was puzzling until we realized that with
the company steadily cutting its production workforce, ideas that saved
labor would quickly result in the elimination of more jobs. Discrete con-
versations with several employees and front-line supervisors revealed that
they were indeed focusing on cost-savings ideas that did not impact labor.
ALIGnInG THE ORGAnIzATIOn: STRATEGY, STRUCTURE, And GOALS | 57
Having already seen enough of their friends lose their jobs, they were not
about to offer ideas that would justify any more layoffs.
The threat of layoffs does create a special dynamic when it comes to
front-line ideas. Why would anyone offer ideas if it could cost them or
their colleagues their jobs? Generally, idea-driven organizations do what-
ever they can to avoid layoffs and, in many cases, even offer some form of
job security with respect to performance improvement coming from ideas.
They do this because they understand the importance of front-line ideas
and don’t want to cut them off. They are able to do it because the ideas they
get put them in better positions than their traditionally run counterparts
to respond effectively to market shocks or downturns, as they are generally
more flexible and perform at much higher levels.
Horizontal Alignment
When a small East Coast specialty insurance company started an idea sys-
tem, one of the early ideas came from a customer service representative
who suggested an improvement to the company’s customer management
software. Every time she finished talking with one customer, she had to
exit the application and restart it in order to access the next customer’s
data. Why not create the ability to switch between customers without exit-
ing the software? When her colleagues discussed her idea, they unani-
mously agreed that it should be quickly implemented. They estimated that
the problem wasted seven minutes of each of the thirty representative’s
time every day, or 3.5 hours total, the equivalent of almost half a person.
Moreover, the service delays irritated customers who had to wait while
their information was being pulled up. But when the idea arrived at the IT
department, because it would take three to four hours of a programmer’s
time to implement, it was rejected. This was a classic example of horizontal
misalignment.
The IT department had been tasked with three things: running the
help desk, maintaining current systems, and working on large strategic
software initiatives. Implementing front-line ideas was not part of its
charge. Furthermore, it was under pressure to keep its costs down, and the
time to implement this idea would come out of its budget.
58 | THE IdEA-dRIvEn ORGAnIzATIOn
The manager of IT was acting rationally according to his assigned
goals. From the perspective of the company as a whole, however, it was
silly not to implement the idea. The small sacrifice that the IT department
was being asked to make—three to four hours of work, only once—was
far outweighed by the improvement it would have created in the customer
service department—three to four hours saved every day.
Horizontal goal misalignment is extremely prevalent. When set-
ting goals, many leaders focus on rolling down their goals and put little
thought into whether these might conflict at lower levels. And when the
symptoms of horizontal misalignment emerge, they are usually attributed
to other causes, such as personality conflicts between managers, territori-
ality, excessive personal ambition, or some other human failing. So it goes
undiagnosed.
Horizontal misalignment is often rooted in the way organizations
are structured. The most popular configuration is by function—that is,
marketing, accounting, operations, and so on. Each of these functions, in
turn, is broken down into more and more finely segmented tasks, until the
department or team level is reached. But since the organization’s processes
cut across these segmented tasks, many ideas that improve these processes
will have cross-departmental implications. Unless great care is taken with
how department-level goals are designed, many departments will end up
with goals that can most easily be met at the expense of other departments
or the process as a whole.
Horizontal misalignment is also costly. The following example dem-
onstrates how the very same idea that failed after several years of trying
it in a horizontally misaligned organization was quickly and successfully
implemented in an idea-driven one. It offers a rare chance to quantify
some of the costs of such misalignment.
A number of years ago, a global aerospace company bought a large
automated storage and retrieval system for its spare parts inventory. The
$2.5 million system included computer-controlled robotic technology that
could store and retrieve tens of thousands of parts in more than 5,400 bins.
The problems started once the system was physically installed and ready
to be programmed. The IT and inventory control departments fought over
who would do the programming and the system became the object of a
ALIGnInG THE ORGAnIzATIOn: STRATEGY, STRUCTURE, And GOALS | 59
turf war. Caught in the middle, the front-line workers operating it had to
manually record the locations of parts in a spiral-bound notebook as they
were moved in and out of the huge storage system. This notebook was
stolen once and had to be re-created by painstakingly retrieving each of
the 5,400 bins and logging its contents—some two weeks of wasted labor
for six people. Moreover, the manual process of logging parts as they were
loaded into and extracted from the system led to human errors. Some-
times a part was called for and was not in its documented location—it
was lost somewhere in the system. Whenever this happened, the operators
would have to go through the bins one by one until they found the missing
part. Eventually, the problems with the system led the aerospace company
to abandon it entirely and put it up for auction on the Internet.
What was particularly interesting was who ended up buying the sys-
tem and how. Task Force Tips (TFT) is a medium-sized manufacturer of
firefighting equipment headquartered in Indiana. In 2009, the growing
company was moving to a larger facility. The plan was to maintain full pro-
duction while gradually shifting it to the new facility over a three-month
period. One of the last items scheduled to be moved was the old automated
inventory storage and retrieval system. Moving this equipment would be
time-consuming—it was heavy; had four bays that were each sixteen feet
high, four feet wide, and forty feet long; and contained five hundred stor-
age bins plus robotic lifting equipment. Until this storage system could be
moved, TFT planned to purchase simple racks to temporarily store parts
at the new location and handle the inventory there manually.
The engineer assigned to locate a company that could fabricate the
temporary racks was shocked at their high cost. But he had an idea. Maybe,
he thought, the company could buy another (and bigger) automated stor-
age and retrieval system for not too much more money than the temporary
racks would cost. This approach would simplify the move and also help
with the company’s increasing need for storage. The current storage sys-
tem was already nearing its capacity. It was also wearing out. The idea was
quickly escalated to CEO Stewart McMillan, who told the engineer that
he had a better chance of being struck by lightning than being able to find
such a system for a price that would make it worthwhile, but the engineer
looked into the idea anyway.
60 | THE IdEA-dRIvEn ORGAnIzATIOn
Searching on the Internet, the engineer found the aerospace firm’s
storage system for sale and noticed that it would be auctioned on the Inter-
net in just a few days. It was ideal for TFT’s needs. It was practically new
and had twice the storage capacity of the company’s old system. When
McMillan was informed, he invited the engineer and some others to his
house for a “bid-watching party.” Early on, the group decided to submit
the minimum bid of $1,000, fully expecting to be quickly outbid. But no
further bids came in. With only minutes left, the group still expected to
see a number of bidders jump in at the last minute. They were surprised
when no bids did come in, and an e-mail arrived informing them that they
had won. While the system was practically free, it had to be disassembled,
shipped halfway across the country (in twenty-seven truckloads), and reas-
sembled. In the end, TFT got the system up and running for only $600,000.
Think about what this story illustrates. The misalignment between IT
and inventory control at the aerospace company rendered a $3.5 million
investment ($2.5 million for equipment and $1 million for installation)
worthless. On top of this loss was all the extra labor wasted on operating it
manually, searching for all the lost parts, and infighting, as well as the inef-
ficiencies that poor inventory control created throughout the company. It
was interesting for us to watch a poorly aligned aerospace company being
taken advantage of by a nimbler idea-driven company. Essentially, TFT
was able to purchase and install a slightly used automated storage system
for less than twenty cents on the dollar!
At first glance, the inability of the aerospace company to get the inven-
tory system working properly, despite all of its resources, appeared to be
the result of a political battle between the IT and inventory control depart-
ments. While we did not have the opportunity to directly investigate the
underlying causes of the interdepartmental warring at this company, as
we noted earlier, when departments or managers don’t work well together,
the behavior is usually rooted in some form of horizontal misalignment—
such as conflicting goals or performance measures, inflexible budget rules,
or poorly conceived bonus or promotion systems.
Seemingly logical approaches taken to hold people accountable, or to
incentivize and reward them, often create, or significantly aggravate, hori-
zontal misalignment. Take pay-for-performance, for example. Although
ALIGnInG THE ORGAnIzATIOn: STRATEGY, STRUCTURE, And GOALS | 61
it may seem sensible at the individual level, it often backfires dramati-
cally at the organizational level by creating disincentives for people to
work together. One of the larger retail chains in the United States cre-
ated a bonus system that all but guaranteed that if a good idea came up
in one store, it would never be shared with other stores. The chain was
organized into regions, and store managers’ bonuses were based on their
store’s performance ranking relative to the other stores in their region. The
top-ranked manager got the largest bonus, the second-ranked one got the
second-largest bonus, and so on down the line. One store manager told us
that if he were to share a profitable idea with another store manager, he
would essentially be cutting his own bonus. The competitive bonus system
completely shut down the vital sharing and cooperation that should have
been occurring between stores.
Creating Horizontal Linkages
Most work in organizations requires some form of interaction between
different departments or units. But the complexity of all but the small-
est and simplest organizations makes it impossible to establish individual
unit goals that naturally assure that everyone will work together toward
the common good. Some form of linkage mechanism is needed to tie the
interests and actions of the various units together. This section discusses a
number of these mechanisms.
A highly visual/spatial approach is to reconfigure the physical work
space. Often, simply removing physical barriers and co-locating depart-
ments that have to work together greatly improves the level and quality
of cooperation and interpersonal interactions, increases trust and under-
standing, and facilitates joint problem solving and ideas. It often has a
considerable symbolic “shock” effect as well. Recall Wilf Blackburn, the
turnaround specialist at Allianz discussed in Chapter 2. By the time we
met him, he already had developed a reputation within Allianz for “blow-
ing out walls” when he was put in charge of a unit, as he did at Ayudhya
Allianz. We visited him in Shanghai just five months after he had been
appointed CEO of Allianz China. When Blackburn took over, he was under
pressure from headquarters to cut costs and increase profitability, and to
62 | THE IdEA-dRIvEn ORGAnIzATIOn
do so rapidly. But instead of simply looking for things he could cut imme-
diately, Blackburn invested considerable money in breaking down barriers
and building his organization’s flexibility and innovativeness. For him,
this was one of his primary leverage points for transforming the company.
One of his first acts was to tear down the walls of his own office and
replace them with floor-to-ceiling glass. Much as he would have liked a
private office, he was sending a message to his organization: we will be
transparent and collaborative in the way we work. A few weeks later, con-
struction crews removed the physical walls between departments, and the
high cubicle dividers were replaced by ones of waist height. This created
enough new space to allow Blackburn to consolidate his two-building
operation into one, further integrating his workforce while also saving
money. Blackburn told us that his goal was to create a headquarters build-
ing with an open layout that encouraged people to communicate and work
together, in order to create a more flexible, idea-driven company.
Another tactic that gets people to think in terms of the whole is to cre-
ate an ambitious unifying vision for the entire organization—a “Big Hairy
Audacious Goal,” or “BHAG,” as Jim Collins and Jerry Porras term it in
their classic 1994 book Built to Last: Successful Habits of Visionary Compa-
nies. Subaru Indiana Automotive’s quest for zero landfill, discussed more
in Chapters 7 and 8, is a good example of such a goal. It excited everyone,
and everyone could contribute to achieving it with their ideas and actions.
The horizontal alignment created by this BHAG was critical because
almost every green idea requires cross-departmental collaboration. Con-
sider, for example, the many simple ideas that came in to return packaging
material to various suppliers for reuse. Who needed to be involved? The
ideas originated in operations from the people who unpacked the parts,
but engineering was needed to certify that the materials could be reused,
and purchasing had to negotiate with the suppliers, who needed to change
their processes to take back and reuse the materials. There were also cost
and price implications. Transportation and logistics had to get involved
in handling, packaging, and shipping the materials back to the suppliers,
and accounting had to deal with any budget and control ramifications.
Unless everyone shared the green vision, progress on these ideas would
have quickly bogged down.
ALIGnInG THE ORGAnIzATIOn: STRATEGY, STRUCTURE, And GOALS | 63
Over the years, considerable thought has been put into how to get
people to think beyond their own limited piece of an operation. Take, for
example, the notion of “internal customers,” popularized by the quality
expert Joseph Juran in the late 1980s. The thinking was that each person
(or group) in a larger process should identify his internal customers—the
people immediately downstream in the process that received his output—
and focus on the best ways to meet their needs. If everyone satisfies their
internal customers, the quality delivered at the end of the chain should
satisfy the final “external customers,” too. The internal customer concept
was a way to inject awareness of the larger process into people’s thinking,
and it is easy to adopt without making many additional changes in an
organization or its structure. Its drawback is that it links units only with
their immediate neighbors.
Performance bonuses, when properly designed, are another way to tie
people directly to everyone else in a process. Nucor Steel uses a weekly
bonus system, based on the previous week’s output, to focus everyone’s
attention on the output of an entire steel mill. A worker’s bonus, which
can more than double his or her weekly pay, is not based on individual
performance or even the performance of the group, but on the output of
the entire process—the work of all shifts in all departments combined. In
this way, people are rewarded not only for their performance but for how
much their work helps the performance of other departments and the mill
as a whole.
The approaches we have discussed so far are intended to create a com-
mon purpose by making people think in terms of the impact of their ideas
on the entire process. But none of these approaches offer all the advantages
of fully horizontal structures that directly integrate interrelated operations
into a single stream.
One of the early champions of process thinking was Henry Ford. Break-
ing with the scientific management tradition of his era, which focused on
maximizing the productivity of individual operations and reinforcing it
through the use of piece rates, Ford optimized his entire process to achieve
continuous flow. Half a century later, Toyota raised process thinking to
a new level. Among other things, it introduced the concept of value-
stream mapping, a tool that allowed its people to graphically illustrate the
64 | THE IdEA-dRIvEn ORGAnIzATIOn
structure and performance of an entire supply chain. It allowed people to
easily see where improvement efforts should be focused to enhance the
process as a whole.
We often think back to a comment in 1989 by Shigeo Shingo, one of
the developers of the Toyota Production System. He told us that he felt that
most managers around the world were continuing to miss the significance
of the difference between processes and individual operations, and this
lack of understanding was one of the biggest things holding productivity
down. Since that time, a lot has changed. Today, while more managers
recognize the importance of process and are applying many improvement
techniques that do focus on the process as a whole, they are still battling
organizational structures fundamentally designed around individual
operations rather than the process as a whole.
STRUCTURInG FOR IdEAS
Up to this point, we have discussed how to overcome vertical and horizon-
tal misalignment in organizations with more or less traditional structures.
Such problems can be avoided in the first place by designing an organi-
zation specifically for the purpose of getting and rapidly implementing
large numbers of ideas. A good example is Zara, the “fast-fashion” retailer
discussed in the last chapter. In the fashion industry, it normally takes
a year or more to create and deliver new clothing. At Zara, it takes less
than fifteen days to create a new design and deliver the finished clothing
to its thousands of stores around the world. Every aspect of the company
is designed to promote speed, particularly speed in getting and acting on
information and ideas.
Rather than using a conventional departmental structure that would
group people doing given tasks according to their specializations, Zara
organizes its development process around three-person teams: a designer,
who does the actual design work; a commercial, who coordinates the mate-
rial and production tasks; and a country manager, who coordinates the
retail operations in a particular country. These teams are responsible for
developing new clothing and shepherding it from concept through design,
prototyping, manufacturing, and delivery. The company’s design floor is
ALIGnInG THE ORGAnIzATIOn: STRATEGY, STRUCTURE, And GOALS | 65
the size of an aircraft hangar, with an open layout and no walls. One end
of the floor has clusters of desks arranged by team, with the designers’
CAD systems located nearby. Founder Amancio Ortega’s desk is located
here as well.
Another important component of Zara’s business model is to make
clothing in small batches of only three to four weeks of demand. This
means that individual design decisions do not carry high stakes, so they
can be made at the team level. New design ideas for clothing or accesso-
ries are shared among team members, and the teams make their decisions
quickly—usually in just a few hours. It is striking how young these team
members are—most are in their twenties or early thirties. This means
the people making the design decisions match the demographics of the
typical Zara customer. The result is more successful design choices and
reduced risk.
Compare this process with that of a typical fashion clothing company,
where designs are generated by designers who have branded themselves
over years in the business. Final design and purchasing decisions, which
involve orders for an entire season, are made by senior vice presidents. Then
the clothes are made in large batches by manufacturers half a world away.
It is not surprising that the typical design-to-retail cycle is a year or more.
While new design ideas at Zara come from a wide variety of sources,
including the fashion runways of Milan, Paris, and New York, most come
from Zara’s front-line retail associates. Each country manager talks with
every one of his or her store managers at least twice a week. The main
topics of conversation are the observations made by the retail staff about
which products are moving well, what the more fashionable customers are
wearing, and what items are being requested that the store does not carry.
For example, when employees in Northern European stores began report-
ing that the more fashionable customers were wearing higher boots, the
message was quickly forwarded to the design teams in Spain. Both high
boots and clothing that would complement them were quickly created and
added to Zara’s line.
Once a design is finalized by a team, it is sent from the team’s CAD
system to the prototyping area on the other side of the design floor. Within
hours, samples are constructed on various sizes of manikins. Each team
66 | THE IdEA-dRIvEn ORGAnIzATIOn
meets around the manikins, where any ideas for modifications or finish-
ing touches are discussed and decided upon before the final version is sent
to manufacturing. While most fashion companies source all their man-
ufacturing from suppliers in low-labor-cost countries such as Vietnam,
Bangladesh, or Sri Lanka—and Zara does this, too, for some of its staple
clothing products—the company contracts all of its fast-fashion locally
in northwest Spain for greater speed and flexibility. Finished clothing is
shipped by truck to stores in Europe and by air to stores in the rest of
the world.
Zara’s competitive advantage is its ability to provide customers with
the latest fashion in clothing at a reasonable price. To do this, it has to be
able to tap large numbers of ideas from customers and staff, and act on
them quickly. Remember from Chapter 2 that Ortega started his business
out of frustration at his boss’s unwillingness to listen. Everything about
Zara is designed for ideas: the constitution of the design teams and the
authority granted to them, the communication protocols with the stores,
the physical layout of the design-to-prototyping facility, and the decision
to source manufacturing locally.
This last point is significant. Managers at another fashion company
we worked with told us that one of their biggest problems was that only
one person spoke English at the Chinese factory where they sourced their
product. Communication was difficult and highly error prone, and costly
and time-consuming mistakes occurred every day. Zara’s suppliers, in
contrast, are close by—most are in the same community—and communi-
cations are clear and simple. Literally, nothing is lost in translation.
Structure and goal alignment are the strategic aspects of realignment.
In the next chapter, we turn to the operational aspects—that is, how to
align an organization’s management systems for front-line ideas.
ALIGnInG THE ORGAnIzATIOn: STRATEGY, STRUCTURE, And GOALS | 67
| K E Y P O I N T S
✓✓ Becoming idea driven involves more than simply layering an idea
process onto an existing organization. The entire organization must be
aligned to support the development and implementation of ideas.
✓✓ In far too many organizations, ideas are forced to run a gauntlet of
misaligned elements that is often unsurvivable. While alignment is
conceptually simple, in practice, it is challenging to get right, and very
few organizations do it well.
✓✓ Many leaders assume that their pro forma processes of cascading
goals down their organizations are much more effective than they
actually are. When passing goals down, it is important to frame them
in terms that are meaningful to and actionable by the people on the
front lines.
✓✓ Horizontal goal misalignment is extremely prevalent and very costly.
When setting goals, most leaders focus on rolling down their goals,
with little thought about how these goals might conflict at lower levels.
✓✓ Most work in organizations requires some form of interaction between
different departments or units. Idea-driven organizations create mech-
anisms to link the interests and actions of their various units together.
✓✓ Although many managers recognize the importance of taking a process-
centric approach, they are still battling organizational structures funda-
mentally designed around individual operations rather than the process
as a whole. Such problems can be avoided in the first place by design-
ing an organization specifically for the purpose of getting and imple-
menting large numbers of front-line ideas rapidly.
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69
The Idea-Driven Organization
Aligning the Organization: Management Systems
4
A l i gn ing the
O rgan i z a t i on t o
Be Ide a d r i ven:
Management Systems
An ORGAnIzATIOn’S MAnAGEMEnT systems consist of all the pro-
cesses and procedures used to govern the way it works, from the budget-
ing 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. Con-
sequently, the management systems in most organizations are seriously
misaligned for bottom-up ideas.
While many aspects of goal misalignment discussed in the last chap-
ter can be corrected in a single planning cycle, fixing the elements dis-
cussed 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 misalign-
ments completely, and new ones are created all the time. Even the best
70 | THE IdEA-dRIvEn ORGAnIzATIOn
idea-driven organizations still find subtle misalignments after years of
constant vigilance and ongoing effort to root them out.
In this chapter, we continue the march down the framework for align-
ment given in Figure 3.1, discussing how to realign each of the manage-
ment systems in it for ideas.
BUdGETInG And RESOURCInG
THE IdEA PROCESS
We were once invited to help a division of a venerable Wall Street financial
services company become more innovative. Its products and services were
aging, its once-huge margins were eroding, and its leaders were concerned
about the division’s lack of new products. It had not introduced a single
new product or service in more than ten years. As we interviewed manag-
ers and employees, a clear pattern emerged. In its attempts to maximize
short-term profits, management had overloaded the staff. No one had time
to work on anything new. When we pointed out to the leadership team that
its overemphasis on exploiting existing products and services was under-
mining its people’s ability to explore for new ones that would increase mar-
gins and drive the organization’s future profits, its members were rattled.
After considerable debate about the ramifications of this practice, the lead-
ership team decided that margins were still good enough, and the com-
pany would continue to focus on exploiting existing products, rather than
investing the valuable time of its skilled financial professionals in working
on new products with uncertain futures. This decision was not surprising,
given that senior managers’ performance evaluations and bonuses were
based on current profits.
Ideas are an investment in the future. As with any investment,
resources need to be committed up front. A surprisingly large number
of leaders sacrifice their organizations’ futures by focusing too eagerly on
current profits and failing to allocate the resources their people need to
work on developing and implementing new ideas.
In this section, we address the three most common resourcing needs
for bottom-up ideas: time, money, and assistance from support functions.
ALIGnInG THE ORGAnIzATIOn: MAnAGEMEnT SYSTEMS | 71
Resourcing for Time
People need time to develop and implement ideas. Finding this time for
front-line employees, however, can be a real challenge, particularly at first.
Managers frequently ask how much time front-line employees should
be given to work on ideas. We generally recommend that everyone should
have a minimum of an hour and a half per week—a half an hour for their
idea meeting, and another hour to develop or implement ideas (more on
the mechanics of idea processes in the next chapter). It is hard to make
progress at a satisfactory rate with anything less than this time allotment.
Idea-driven organizations typically commit between 4 and 7 percent of
their front-line employees’ time for ideas. The most aggressive commit-
ment of front-line time we have ever encountered was at Softwin, a Roma-
nian software company best known for its BitDefender antivirus program.
The company expected everyone to spend 25 percent of their time working
on their own ideas.
When managers and supervisors first realize how much time their
people will need to work on ideas, they often worry about where this time
is going to come from. One tactic that is particularly helpful in this regard
is to start out by asking employees to focus on time-saving ideas or ideas
on non-value-adding tasks that their teams could stop doing. Almost every
time we have seen this tactic used, the resulting ideas have quickly freed
up more time per week than the teams needed to work on ideas. A typical
example of this phenomenon occurred a few years ago at a call center of
a large retail chain. By the end of the second week of its idea system pilot,
the staff’s ideas had permanently freed up the equivalent of two hours per
employee every week. As the saying goes, “Never be too busy to find out
how to be less busy.”
In most situations, these early time-saving ideas combined with the
scheduling discretion of managers are all that is needed to make the time avail-
able. However, sometimes one of the management systems blocks such moves,
and the involvement of higher-level managers is required to fix the problem.
A number of years ago, a medical products division of a Fortune 500
company asked us to help improve its idea system. When we talked with
72 | THE IdEA-dRIvEn ORGAnIzATIOn
front-line workers, the primary reason for the system’s poor performance
quickly emerged. The division’s cost allocation system required that every
minute of each front-line employee’s time had to be charged to the produc-
tion of a specific product. The simple fact that there was no job code for
improvement time made it impossible for people to work on their ideas
on company time. Employees who wanted to work on ideas had to do so
on their own time. This company was going to have to change the way it
accounted for the time of its front-line workers if it wanted to improve the
performance of its idea system.
One way to assure that employees have the time they need to work on
ideas is to directly incorporate this time into the overall work schedule. At
the Swedish truck maker Scania’s main engine plant outside Stockholm,
for example, the assembly line is shut down for twenty-six minutes once
a week for every area to hold its idea meeting. Furthermore, each team
(typically nine to fourteen people) is deliberately overstaffed by two people
in part to give team members enough time to implement improvement
ideas. This resource commitment is a major reason that the company has
been able to routinely improve overall productivity by 12 to 15 percent
every year.
Aligning Funding for Ideas
Even small ideas often need a little money or a few supplies to implement.
The key question here is, Can employees easily get the resources they need
to develop and implement their ideas? Most organizations have never
really dealt with large quantities of front-line ideas, so they are not set
up to provide these resources in a streamlined manner. In some organi-
zations, resources are so tightly controlled that front-line workers find it
impossible to get what they need.
We encountered a poignant example of such tight control during the
pilot stage of an idea system in the special orders department of a national
retailer. A worker in that department did a lot of stapling as part of her
job. She would often need to staple through cardboard to keep paperwork
and samples together. Frequently, her attempts would go awry, and she
would have to remove the mangled staples and start over. On days when
ALIGnInG THE ORGAnIzATIOn: MAnAGEMEnT SYSTEMS | 73
she had a lot of such work to do, she would go home with very sore hands.
Her solution: get an electric stapler. Her team and supervisor thought it
was an excellent idea. But when she submitted the request to the supplies
department, she was told that her job classification did not entitle her to
an electric stapler. Undaunted, she stopped by a local Walmart on her way
home that evening, purchased her own electric stapler, and brought it into
work the next day. The new stapler dramatically increased her productivity
and meant she no longer left work with sore hands. Everything was fine
until she ran out of staples and requested some more. The response was
that because she was not entitled to an electric stapler, she was not entitled
to get any staples for it, either.
Restrictive and petty purchasing policies like this one make it hard for
people to implement ideas. Even when specific purchases are technically
allowed, sometimes the checks and balances incorporated into the pur-
chasing process make it bureaucratic and frustrating for employees. We
encountered one such situation while piloting an idea system at a medium-
sized specialty manufacturer in New England. One of the first ideas to
come in was from a machine operator who wanted to eliminate an irri-
tating problem that cost him about fifteen minutes every day. At the end
of each shift, he was required to shut off his machine and check its fluid
levels and settings. Because he needed a light to see inside it, he would have
to go to the tool room, check out a trouble light, return to his work area,
plug in the light, string the wire over to his machine, open it up, check
the necessary levels, and make any required adjustments. Then he would
have to close the machine back up, unplug the light, recoil the wire, and
take it back to the tool room to check it back in. His idea: purchase a flash-
light with a magnetic back—for about $10—and stick it to the inside of his
machine. It would then take only a minute for him to do all his checks. His
team and supervisor liked the idea and approved it. But when we checked
on the status of unimplemented ideas two months later, we found that the
machine operator didn’t have his flashlight yet. His request was still tied
up in purchasing.
The slow purchasing process both deterred ideas and cost the company
a tremendous amount in unrealized cost savings. In this case, assume that
the machine and operator costs totaled $100 per hour. The $10 flashlight
74 | THE IdEA-dRIvEn ORGAnIzATIOn
would have saved fifteen minutes, or $25 per day, and paid for itself the
first time it was used! Instead, its arrival was delayed for more than fifty
work days, potentially costing the company $1,250 in unrealized savings
(50 days × $25 per day). Clearly, this company’s purchasing process was
poorly aligned for ideas.
These types of problems, and the frustration that accompanies them,
can easily be addressed with modest budgets and streamlined purchasing
processes for small front-line ideas. Some organizations give each team and its
leader a small monthly idea budget—say, between $100 and $500—and allow
them to make direct purchases with a company credit card or on account
from specified vendors. Other companies allow teams or departments to
spend a small amount on each idea, perhaps up to $100, using a stream-
lined purchasing process. Although some managers are initially nervous
about giving front-line teams and supervisors such spending authority, in
our experience, the front-line teams and departments typically appreciate
the trust shown in them, are very careful with the money, and the payback
periods for their purchases are generally very short. And besides, middle
and upper managers can—and should—review each team’s purchasing
records on a monthly basis. It is much easier and quicker to operate this
way than to have to give separate permission for each small request.
Aligning Support Functions for Ideas
Before launching the pilot at the New England specialty manufacturer dis-
cussed earlier, the CEO had waved aside the concerns of his maintenance
manager. He told the manager that for the duration of the three-month
pilot, he was to make it a top priority to help workers in the pilot areas
implement their ideas. At the end of the very successful pilot, the CEO
polled his managers to see how many would support launching an idea
system companywide. All of them were eager to do so, except the mainte-
nance manager.
“I really can’t support it,” he said. “The pilot process alone nearly killed
us. We had to postpone a lot of other maintenance work just to keep up
with all the ideas.”
ALIGnInG THE ORGAnIzATIOn: MAnAGEMEnT SYSTEMS | 75
Many ideas require the help of support functions such as information
technology, maintenance, engineering, or purchasing. But these functions
are typically not resourced, staffed, or tasked to support front-line ideas.
If, in addition to their “normal” work, support functions are suddenly
required to help implement large numbers of front-line ideas, they will be
quickly overwhelmed, as that maintenance manager was.
Leaders of idea-driven organizations make sure their support func-
tions are tasked and staffed to respond rapidly to front-line ideas. For
example, when Allianz China’s new chief information officer asked CEO
Wilf Blackburn for permission to hire an additional IT technician, Black-
burn’s response was, “You can hire as many people as you need. But I never
want to hear that an idea has not been implemented because of a backlog
in IT.” At Brasilata, the Brazilian company discussed in Chapter 1, spe-
cial teams in each of its four manufacturing centers are dedicated solely
to helping implement ideas. Each team consists of five or six members—
including engineers, mechanics, an electrician, and a toolmaker. (More on
Brasilata’s system in the next chapter.)
Aligning support functions for front-line ideas can be challenging. It
is never clear before an idea system is launched precisely how much of what
kind of help will be needed from which support functions. Managers are
understandably reluctant to commit additional resources before gaining
some experience with ideas. This is why practically every high-performing
idea system is launched with a shortage of support function resources in
one area or another. To prevent their idea initiatives from stalling, man-
agers must stand ready to react quickly as stress points emerge. Until the
new levels of support resource needs become clearer, managers can tem-
porarily add or reallocate resources, contract out for more support, ration
support resources, or limit the number of ideas from each team that can
call on specific support function resources.
Before launching his idea system, Brasilata’s CEO did not sit down and
calculate that his company would need eighteen more support people. Nor
did Pete Wilson of Pyromation hire consultants to determine how much
he would have to staff up his maintenance department in order to give his
teams the support they needed to implement their ideas. What these two
76 | THE IdEA-dRIvEn ORGAnIzATIOn
men did was to reallocate resources to where they were needed in a mea-
sured fashion as the situation evolved.
ALIGnInG POLICIES And RULES
The word policy derives from the sixteenth-century French word police. In
an organizational setting, policies are guiding principles or rules intended
to police—that is, to direct, limit, and control—people’s decisions and
actions. Good policies streamline processes, save time, ensure fair treat-
ment of employees, prevent fraud and ethical problems, assure high-levels
of customer service, and make certain that money is spent wisely.
But most organizations have their share of bad policies as well. Such
policies create unnecessary bureaucracy, raise the cost of performing tasks,
annoy customers and employees, and generally impede progress. They can
also directly or indirectly hinder the flow of ideas. A significant amount
of the work in realigning an organization for ideas involves rooting out
and then modifying or eliminating these idea-hampering policies. As with
every element of the management system, keeping an organization’s poli-
cies aligned for ideas is an ongoing effort, as existing policies are changed
and new ones are introduced all the time.
Even a single bad policy can cause an otherwise sound idea initiative
to fail. Some years ago, the new CEO of a midsize utility company in the
northeastern United States was under severe pressure from his board to
cut costs. He spent the first several weeks visiting the company’s front-
line operations. During this process, he was struck by the number of good
ideas he received from front-line employees. Not surprisingly, one of his
early initiatives was to set up an idea system to systematically gather these
ideas. His system was basically sound, but he made one crucial mistake: in
his enthusiasm to generate quick results, he instituted a policy to ensure
that the estimated cost savings from ideas would be immediately reflected
in the company’s bottom line. He ordered that as soon as an idea was
implemented, its projected savings were to be pulled from the appropri-
ate middle manager’s budget.
This policy devastated the idea initiative. Middle managers told us pri-
vately that, because the savings projected by the suggestion system office
ALIGnInG THE ORGAnIzATIOn: MAnAGEMEnT SYSTEMS | 77
were always optimistic (the office was evaluated on the system’s savings,
after all), it was dangerous for them to implement ideas. The controller
would immediately take more from their budgets than the idea would
actually save. So the only way for middle managers to protect their budgets
was to quietly sit on approved ideas. At one point while we were study-
ing this company, an eighteen-month backlog of unimplemented ideas
was costing the company an estimated $2 million per year in unrealized
savings. More important, as employees saw their ideas going unused, the
stream of new ideas slowed to a trickle.
Most policies have unintended consequences, many of which the poli-
cymakers never become aware of. As far as we know, that utility com-
pany CEO never realized how his policy undermined his own goals and
how his middle managers were being forced to use their creativity to come
up with delaying tactics for ideas rather than ways to implement them
more quickly.
Policymaking is not the exclusive domain of senior management. In
fact, a complicating issue with policies is that they are typically made by
many people at different levels working in different parts of the organiza-
tion, each of whom is trying to deal with problems from his or her per-
spective. For example, IT dictates how it will prioritize requests for help in
order to optimize the use of its staff; or purchasing sets policies requiring
multiple bids in an effort to ensure the company doesn’t overspend for
goods and services. The resulting tangled web of policies can create signifi-
cant obstacles for the rapid implementation of ideas.
In many situations, bad policies can be dealt with informally or even
through the idea system. But in complex environments, a separate system
may be needed to thoroughly check into the reasons the policies were put
in place and to determine all the ramifications of changing them. A good
example of such a system was the “Kill Stupid Rules” (KSR) program set up
at a large U.S. bank. Its purpose was to empower front-line bank employ-
ees to point out policies and rules that, from their perspectives, degraded
customer service unnecessarily.
The name “Kill Stupid Rules” was memorable, as well as a clever way
to admit that managers occasionally created stupid policies and to invite
employees to point them out. As the director of the KSR system put it, the
78 | THE IdEA-dRIvEn ORGAnIzATIOn
bank needed to know whether a policy to solve one problem had inadver-
tently created other problems. Before we describe the KSR process and the
lessons to be learned from it, let’s look at some examples of policies that
were successfully killed.
� Whenever business customers deposited large quantities of coins, they
were charged a small processing fee. But as one employee pointed out,
when noncustomers exchanged large amounts of coins for banknotes,
they were not charged this fee. In other words, if you wanted the bank
to count your coins, you were better off not being a customer. The rea-
son for this policy, it turned out, was that the bank’s computer system
was not set up to charge noncustomers. After weighing the revenue
from coin counting against the negative impact on customer service,
the bank dropped the fee.
� The process to remove a deceased spouse from a couple’s joint account
required that the account be closed and a new one opened for the sur-
vivor. An employee pointed out that this was time-consuming, insen-
sitive to the grieving spouse, and practically invited that person to take
her or his business elsewhere. It turned out that the policy had been
created years earlier by the legal department in an overkill response to
federal regulations enacted to protect the estates of deceased individu-
als. After some research by KSR analysts, it became clear that a valid
death certificate was sufficient evidence to simply remove a deceased
partner from an account.
� When adding a signer to a business account, businesses had to resub-
mit a new signature form with all signers. Bank staff would then have
to reinput all the data by hand and rescan each signature. With some
accounts having forty or more signers, this was a huge waste of time
for both customers and the bank. The only justification that could
be found for the policy was that no one was sure if the system could
properly retain the information on existing signers when a new one
was added. After assurance from the IT department that no existing
signatures would be lost, the policy was killed.
Here is how KSR worked. An employee would submit a KSR request
via a call or e-mail to the KSR team. The proposed policy change went to
ALIGnInG THE ORGAnIzATIOn: MAnAGEMEnT SYSTEMS | 79
one of several full-time KSR analysts for initial review. The analyst first
called the submitter to get more information about the policy in ques-
tion—which also showed the suggester that the proposed policy change
was being followed up on. If the analyst agreed that the policy should be
reviewed, the next step was an initial analysis to find out why the policy
existed, who it impacted and in what way, and what it would take to change
it. Each area of the bank had an assigned contact person that the KSR ana-
lyst dealt with. Experience had shown that the more thoroughly the initial
case was researched, the easier the rest of the process went.
Once the preparatory research was done, the proposed change was
taken to the monthly “User Group” meeting. The group, consisting of
some twenty people from the bank’s key functional areas (e.g., compli-
ance, audit, legal, operations, product, staff support, and training), typi-
cally discussed up to twenty-five proposed policy changes in each meeting.
The analysts explained the issues involved with each policy and proposed
some initial options for changing it. The group decided whether the policy
change was worth pursuing further, determined whose input was needed,
and identified any specific areas of concern. The analyst then did any addi-
tional research required and managed the final policy change process.
The bank gave us copies of several analyst research logs in which every
contact made and each piece of information obtained was recorded. The
logs demonstrate the extensive research, attention to detail, and amount
of communication needed to change a policy in a complex and highly
interconnected organization. Some of the policies have more than a hun-
dred entries, such as “Talk to X,” “Sent e-mail to Y asking for clarifi-
cation,” “We have 60,000 accounts to which this policy applies,” “Got
e-mail from Z—she is OK with the change,” “Get new verbiage for mar-
keting documents,” and “Conducted survey of 120 employees—32%
report customer complaints on this topic.” Over the lifetime of the KSR
process, it killed or amended hundreds of bad policies and empowered
the bank’s front-line employees to remove policy-related problems and
impediments much more easily than their peers at other institutions.
(Unfortunately, the KSR program was killed when the bank was acquired
by an even larger bank, one not known for its enlightened management or
customer service.)
80 | THE IdEA-dRIvEn ORGAnIzATIOn
The KSR process was more involved than a normal idea process,
because it is difficult to anticipate all the ramifications of removing or
changing a policy. What may seem like an obviously bad policy is some-
times in place for very good reasons.
An important lesson that the bank drew from its KSR experience was
that in order to reduce the painful process of changing policies, managers
need to be more thoughtful and skillful when making policies; and when
creating new policies, they need to document the reasons for them.
A Brief Primer on Policymaking
Given the extensive use of policies in organizations, it is surprising how
little training managers typically get in policymaking. Equipping manag-
ers with some basic knowledge in this area, together with an appreciation
of how policies directly and indirectly affect the flow of ideas, will dra-
matically improve the effectiveness of the policies they make.
Most policies are created to prevent problems—real or perceived.
While the new policies may solve the policymakers’ immediate problems,
they frequently create more and bigger problems elsewhere.
Take, for example, what happened to the new director of R&D at a
high-technology Fortune 500 company. During his first week, the director
noticed that many of his scientists and engineers were not at their desks
by the official 8 a.m. starting time and were gone before the 5 p.m. offi-
cial closing time. Determined that there would be no slacking off on his
watch, he issued a new policy: everyone was required to be at their desks
by 8 a.m. and was not to leave before 5 p.m. The director began walking
around to check which workers were at their work stations, and which
were not.
The scientists and engineers, most of whom were accomplished pro-
fessionals with advanced degrees, resented such a demeaning directive. It
showed how little the director understood about the nature of their work
and that he did not appreciate that they were intrinsically motivated peo-
ple who typically worked fifty hours or more per week, often taking work
home with them. In fact, many started work well before 8 a.m., and 7 a.m.
ALIGnInG THE ORGAnIzATIOn: MAnAGEMEnT SYSTEMS | 81
breakfast meetings were common. By the time the director arrived closer
to 8 a.m., many of his scientists were already working in other areas of
the company, and many didn’t get back to their desks until long after the
director had left for the day. Besides, what was wrong with leaving work
early to watch your daughter’s soccer game after putting in sixty hours the
week before to meet a deadline?
The employees responded collectively by following the new director’s
policy to the letter. Each researcher began arriving at his desk precisely at
8 and leaving immediately at 5. Soon, the lab started missing critical mile-
stones and deadlines—something that rarely happened under the previous
leadership—and new product ideas all but dried up. It took the director
months to figure out why.
Most of the company’s truly novel and most profitable products could
be traced to ideas that were unrelated to the researchers’ official work
assignments. In the past, the researchers would come in early or stay late to
work on such ideas. They would test their concepts or meet with colleagues
to discuss and develop the ideas further. Only when an idea seemed to hold
promise did they bring it to management, which could then launch it as
an official project.
This new lab director made the same mistake that many managers do
when creating a policy: he focused too narrowly on a specific perceived
problem. He neither verified his assumptions nor thought about the
broader context and the tangible and intangible implications of his policy.
Consequently, he created new problems that were much more damaging.
A useful framework for policymaking is the Policy Analysis Matrix in
Table 4.1. The R&D director focused on eliminating a problem (Quadrant
1) without considering the other three quadrants. To begin with, he did
not consider the cost of his new policy in terms of the advantages it would
eliminate (Quadrant 2). The policy demotivated an already hardwork-
ing workforce. With the new policy, he (unwittingly) accepted an 8-to-5
workforce that would be less innovative and was willing to miss important
deadlines (Quadrant 3). As far as we could tell, the policy retained or cre-
ated no advantages for him (Quadrant 4), other than his feeling of being
in control and that his people were not slacking off.
82 | THE IdEA-dRIvEn ORGAnIzATIOn
Had he gathered more data and thoughtfully considered this aspect of
the issue, he would more likely have chosen to accept a few people occa-
sionally coming in late or leaving early in order to retain his workforce’s
productivity and high level of intrinsic motivation.
There are usually more effective ways to govern people’s actions than
to issue sweeping edicts, which can easily create a host of additional prob-
lems. If the director was concerned about his people slacking off, a more
nuanced and targeted approach would have worked much better. Had he
discussed his concerns with his managers, he would have learned that
the problem was not nearly as pervasive as it first appeared, and that they
could deal with the few actual transgressors individually. This would have
been a much better solution than dropping a policy bomb that turned the
majority of his scientists into collateral damage.
There is a natural tendency to reach for policies when trying to elimi-
nate problems. They appear to offer quick and easy solutions. But policies
are generally blunt instruments with a limited ability to take situational
nuances into account. They may work well in some circumstances, but in
most situations a more subtle, flexible, or targeted approach will be more
effective at addressing the underlying problem.
When a policy is the best tool for the job, it should not be created with-
out thoughtful analysis and great care to identify as many of its ramifica-
tions as possible. The Policy Analysis Matrix can help the decision maker
TABLE 4 .1 The Policy Analysis Matrix
Problems Advantages
Eliminate
Quadrant 1
Problems the policy
will eliminate
Quadrant 2
Advantages the policy
will eliminate
Retain/Create
Quadrant 3
Problems the policy
will retain/create
Quadrant 4
Advantages the policy
will retain/create
ALIGnInG THE ORGAnIzATIOn: MAnAGEMEnT SYSTEMS | 83
more broadly frame potential policy solutions with a better understanding
of their consequences.
So far, we have discussed only how to avoid the negative side effects of
policies. But we should also note that well-considered policies can be very
beneficial, sometimes even because they are blunt instruments and leave
little room for any nuance or interpretation. We have come across a num-
ber of organizations with policies incorporated into their idea systems
that energize and stimulate idea efforts, and articulate clear commitments
about how ideas will be managed. Here are some of the more memorable
examples we have seen:
� When Roger Milliken, former CEO of Milliken Corporation, the
global textile company, started his company’s idea system, he estab-
lished two important policies. First, every idea would be acknowl-
edged within twenty-four hours and acted on within seventy-two
(i.e., it would be rejected, implementation of it would begin, or further
study of it would be initiated). Second, improvement ideas were always
to be put first on the agenda at every management meeting.
� As discussed earlier, many organizations have policies that give front-
line teams specified spending authorities to implement ideas. The
highest spending authority we have seen was in the early 2000s at a
Dana facility in Missouri (Dana is a Tier 1 automobile industry sup-
plier) which gave its front-line teams up to $500 to spend, without
management approval, to implement each idea. Team members told
us that when tackling bigger problems, they would often fund their
efforts by attacking the problems with a series of smaller ideas, which
allowed them to gin up a bigger budget.
� At the Swedish ventilation company Fresh, any spending from the
team’s idea budget must be voted on by the team itself. The team’s
manager alone does not have the authority to make spending deci-
sions related to this budget.
� ThedaCare, the health care provider discussed in Chapter 2, has a pol-
icy that 8 a.m. to 10 a.m. is a “meeting-free zone,” so managers can do
their gemba walks and support improvement efforts.
84 | THE IdEA-dRIvEn ORGAnIzATIOn
ALIGnInG PROCESSES
And PROCEdURES
Some years ago, the vice president of quality at a medium-size software
firm called one of us to ask for help in getting his company ISO 9001 certi-
fied (ISO 9001 is the International Standards Organization’s standard for
an organization’s quality management system). During our initial conver-
sation, the vice president explained his problem.
“We [the quality department] have already written all of the proce-
dures, but we can’t get our employees to follow them. We need your team
to make that happen.”
The vice president’s request dropped us right into the thick of a long-
standing debate over the question of whether it is better for management
to impose standardized procedures from above, or to have them developed
and owned by the people doing the work. This question was a central point
of debate in the early days of scientific management between the move-
ment’s two most eminent champions and their followers. Frederick Taylor
believed that management should write the procedures based on its own
analysis of the work, and then impose them on the workers as a means of
control. Frank Gilbreth also sought to use best practices, but he realized
that a great deal of knowledge about how best to do the work resided with
those who actually did it. In his view, the procedures were the basis for
continuous improvement, which should be driven by the people doing the
work, with one important proviso:
It is seldom appreciated by the layman that the only inventions and
improvements that are not wanted are those that are offered by the
employee before he has first qualified on the standard method of
procedure. . . . The condition precedent to an audience for offering
a suggestion for improvement is to have proved that the suggester
knows the standard method, and can do the work in the standard
way of standard quality in the standard time. Having thus quali-
fied, he is in a position to know whether or not his new suggestion
is a real improvement.1
ALIGnInG THE ORGAnIzATIOn: MAnAGEMEnT SYSTEMS | 85
By trying to force his procedures on the workforce, that VP had lost
the benefits of having his front-line workers develop them, and then con-
tinue to think about how to improve them. What he should have done, and
what we advised him to do, was to ask his front people to document how
they actually did their work. Only then should the VP have had his staff
review the worker-generated draft procedures to see if they complied with
the requirements of the ISO 9001 standard. Where they did not, his staff
should have provided coaching and worked with the front-line workers to
figure out how best to modify their work methods to meet the standards.
This more inclusive approach might have taken a little extra time up
front, but it would also have gotten the company certified much more
quickly. It would have eliminated the need for management to force front-
line workers into following management-designed procedures, only to dis-
cover after much pain that many of them were impractical and needed to
be changed. When, from the start, the documented procedures accurately
reflect how the work is performed, the foundation is laid for ongoing pro-
cess improvement.
Ideally, processes and procedures should reflect the organization’s
accumulated knowledge at any given point in time, and they should be
constantly modified and tweaked as new knowledge emerges. One of the
fundamental differences between traditional and idea-driven organiza-
tions lies in who owns the processes—that is, who is responsible for their
performance and who has the authority to change them. It is impossible to
have a high-performing idea system without the processes and procedures
being owned by the people using them. Many of their ideas will be for
improvements to the very processes and procedures they work with; and
the quicker they can implement these ideas, the faster the organization
will capture the new knowledge in them, and the faster the organization
will improve. If management owns the procedures, the rate of improve-
ment is limited by the amount of time that management can commit to
improving them and its incomplete understanding of what goes on at the
front-line level.
Unfortunately, shifting ownership of processes and procedures to the
front lines is more than a matter of simply deciding to trust employees and
86 | THE IdEA-dRIvEn ORGAnIzATIOn
then dumping the responsibility on them. It requires careful goal align-
ment, well-defined responsibilities and authorities, systematic account-
ability, and systems to assure that front-line people have the proper skills
and information. To us, the common lack of consideration for these ele-
ments explains why so many organizational empowerment initiatives
experience false starts and failures.
ALIGnInG EvALUATIOn And
REWARd SYSTEMS
Evaluation and reward schemes are notoriously difficult to get right. So
before trying to integrate ideas into existing schemes, it is important to
understand what actually motivates people to step forward with ideas.
An exercise we often use in our seminars sheds light on this question.
We ask participants to do the following:
1. Think of an idea that you came up with at work and brought to the
attention of your colleagues or boss.
2. Write down what caused you to have this idea and what made you step
forward with it.
3. Together with the other people at your table, share and discuss
your answers.
Typical responses include “It made my job easier,” “It saved me time,” “It
eliminated a problem or source of frustration,” “It improved customer ser-
vice,” “I wanted to help the company,” and “I felt pride about my work”—
all of which are expressions of intrinsic motivation. Rarely does anyone
say, “I did it for a reward.” This exercise illustrates that people naturally
want to share ideas and do not need to be bribed to do so. In fact, we rec-
ommend that organizations not set up a separate system of rewards for
individual ideas, as many suggestion box–type systems used to do, as this
approach creates serious behavioral issues and misalignments on many
levels. (For more on the dysfunction created by rewards for individual
ideas, see Chapter 3 of Ideas Are Free.)
ALIGnInG THE ORGAnIzATIOn: MAnAGEMEnT SYSTEMS | 87
Ideas should be treated just like any other important aspect of per-
formance. Every organization has mechanisms to evaluate and reward its
people; these include performance reviews, bonuses, merit increases, and
promotions. In idea-driven organizations, where ideas are a normal part of
everyone’s job, idea performance needs to be integrated into these mecha-
nisms, too.
In our experience, it is usually relatively straightforward to do this.
Most personnel evaluation schemes already include competencies such
as “Willingness to change,” “Creativity,” “Adaptability,” and “Improve-
ment orientation” that can be easily adapted to include idea performance.
And many idea-driven organizations have linked bonuses to idea perfor-
mance as well.
COnCLUSIOn
Three elements remain to be covered in the Framework for Alignment (Fig-
ure 3.1). Chapter 7 addresses the “skills” element, which is best explained
after the idea management processes have been laid out in Chapters 5 and
6. And because of the integrated nature of “culture” and “behavior,” they
are discussed throughout the book.
Realignment for ideas is a game-changer. Without this piece, it is
impossible for an organization to become truly idea driven. People can-
not be expected to offer their ideas if every day the way the organization
is structured, managed and led tells them these ideas are not welcome.
And once an organization is aligned, keeping it aligned requires constant
vigilance and ongoing effort.
With this in mind, we are now ready to turn to the “how-to” of setting
up, launching, and managing the idea process itself.
88 | THE IdEA-dRIvEn ORGAnIzATIOn
| K E Y P O I N T S
✓✓ An organization’s management systems are generally set up and evolve
incrementally over time with little thought given to their impact on the
flow of ideas. Consequently, the management systems in most organi-
zations are seriously misaligned for bottom-up ideas.
✓✓ Ideas are an investment in the future. Leaders have to give their
employees time to work on ideas, together with small budgets and easy
access to assistance from support functions, if they expect their orga-
nizations to improve and innovate at a rapid rate.
✓✓ Policies that directly or indirectly reduce the flow of ideas need to be
modified or eliminated. This process can be very challenging. Policies
are typically made by many people in different parts of the organiza-
tion, each of whom is dealing with problems from his or her perspec-
tive, with little thought to how these policies may affect the flow
of ideas.
✓✓ Given the extensive use of policies in organizations, it is surprising how
little training managers typically get in policymaking. Equipping man-
agers with some basic knowledge in this area will dramatically improve
the effectiveness of the policies they make.
✓✓ It is impossible to be an idea-driven organization without the pro-
cesses and procedures being owned by the people using them.
Processes and procedures should reflect the organization’s accumu-
lated knowledge at any given point in time and should be constantly
modified and tweaked as new knowledge emerges.
✓✓ Ideas should be treated just like any other important aspect of per-
formance and integrated into an organization’s existing performance
reviews, bonuses, merit increases, and promotions. This is usually
quite straightforward to do.
89
The Idea-Driven Organization
How Effective Idea Processes Work
5
How E f f e c t i ve
I de a Pro ce s s e s
Wo rk
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 com-
pany 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 sugges-
tions, Edelston encountered one for a software improvement from a pro-
grammer 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.
90 | THE IdEA-dRIvEn ORGAnIzATIOn
Then came an epiphany. Edelston had hired the programmer for his
expertise. He understood far more about the company’s IT systems than
Edelston ever would. Why should Edelston be the one to decide whether
the software change made sense or not? And, in general, weren’t decisions
about ideas best made by those most familiar with the situation involved?
Realizing that he was only getting in the way, Edelston changed the rules.
Effective immediately, most decisions about ideas would be made by the
front-line employees in their weekly department meetings. The only ideas
he needed to see were the ones involving significant investments or mul-
tiple departments. Making all other decisions at the lowest possible level in
the company would result in less work, better decisions, and faster imple-
mentation. (See Ideas Are Free for more on the Boardroom story.)
But if Edelston personally had to review and evaluate every idea, he
was merely running a suggestion system, and the success of the system
would be limited by his knowledge and time. The underlying assumption
in a suggestion system—whether the suggestions are collected in a box
or online—is that management knows best. Regular employees cannot be
trusted to do what is best for the organization, because either they lack
the necessary knowledge and judgment, or they will put their personal
interests ahead of those of the organization. So the “adults” have to be
involved in approving even the smallest changes. Under such a regime, it
is hardly surprising that management becomes a bottleneck and employ-
ees feel disempowered. This is one reason that most suggestion systems
get less than half an idea per person per year and implement less than a
third of those.
Edelston’s epiphany was precisely what he needed to create a high-
performing idea system. The quantity and quality of ideas soared, and
by the mid-1990s the company was averaging over a hundred ideas per
employee per year, with implementation rates over 90 percent.
When leaders feel they can trust their workers to make decisions about
their own ideas, the question becomes how to design a system that opera-
tionalizes this trust. In the rest of this chapter, we describe the three arche-
types of high-performing idea processes that do just that: the kaizen teian,
idea meeting, and idea board processes.
HOW EFFECTIvE IdEA PROCESSES WORK | 91
THE KAIZEN TEIAN PROCESS
We first encountered the kaizen teian (Japanese for “improvement sugges-
tion”) process—which we consider the first generation of high-performing
idea systems—in Japan in the mid-1980s, where it was being used in many
large companies. By the early 1990s, as leading Japanese companies began
to globalize their manufacturing, they introduced this process to the rest
of the world. Although the kaizen teian system historically grew out of
the suggestion box process, and the two processes have many outward
similarities, the kaizen teian approach evolved to mitigate or eliminate
most of the flaws of the suggestion box. The best way to understand how
this archetype works is to look at an example. We have chosen to describe
the system of Brasilata, the Brazilian can maker we discussed in Chapter 1,
to demonstrate that kaizen teian can also work in a non-Japanese setting.
CEO Antonio Texeira started the company’s idea system in the early
1990s, after reading a number of Japanese books and articles, and becom-
ing intrigued by the dramatic results produced by kaizen teian processes.
Today, Brasilata gets around 150 ideas per person each year, implements
90 percent of them, and is ranked as one of the most innovative companies
in Brazil.
Each of Brasilata’s four facilities around Brazil has a full-time staff to
support the idea system. At the company’s main operation in São Paolo,
for example, ideas are processed by a team of seven experienced work-
ers on temporary assignments from the factory floor (whose knowledge
allows them to understand the ideas better and gives them credibility
with suggesters). In addition, a team of two mechanics, two engineers, a
toolmaker, and an electrician is dedicated to helping implement the ideas.
Similar teams exist in the company’s other three facilities.
There are two ways to submit ideas, online or on paper. To facilitate
online access, Brasilata set up a number of Internet cafés throughout its
facilities, but some employees still find it easier to write their ideas on
paper. The paper ideas are put into special collection boxes, from which
they are picked up twice a day and entered into the system within twenty-
four hours.
92 | THE IdEA-dRIvEn ORGAnIzATIOn
Whenever possible, employees implement their own ideas before sub-
mitting them. They simply approach their coordinators (Brasilata’s term
for front-line managers) who can approve ideas that cost less than 100
reals (about $50) to implement. A director (the coordinator’s boss) can
authorize up to 5,000 reals (some $2,500); above that amount, ideas go
directly to the CEO. About 70 percent of ideas are implemented directly by
the workers themselves, and a further 10 percent by the coordinators. The
remaining 20 percent are escalated or become the responsibility of one of
the implementation teams.
When an employee does not have the authority or ability to imple-
ment an idea him- or herself, that worker is expected to recommend the
best person to review it. Often, this person is the employee’s coordinator,
although it could be anyone in the company. Whoever ends up getting the
idea has seven days to evaluate and respond to it before the item turns red
on that person’s idea summary screen. Once an idea is approved, it must
be implemented within 45 days. Once a month, the CEO reviews a list of
ideas that have gone red or whose implementation is overdue, and follows
up with delinquent managers with what a group of coordinators told us is
often a “very hard talk.”
All in all, out of almost a thousand employees in the company, more
than forty work full-time on processing or implementing employee ideas.
Additional support is provided by Brasilata’s technical support depart-
ments. Coordinators told us that they spend about 10 percent of their time
working with employee ideas.
Kaizen teian–type systems are rare in organizations without some
kind of connection to Japan. As stated earlier, they are essentially tradi-
tional suggestion box–type systems that have been highly streamlined to
mitigate their inherent limitations. To work well, they also require a culture
of improvement that strongly encourages individuals to step forward with
ideas. Because they depend on a strong culture, building high-performing
kaizen teian systems requires persistence and discipline over a period of
many years. It took several decades for Brasilata to get its system up to its
current level of performance. We believe that the extraordinary patience
and sustained discipline needed to build and nurture the unusually strong
HOW EFFECTIvE IdEA PROCESSES WORK | 93
improvement culture that drives a kaizen teian system explains why so few
organizations use this type of system today.
TEAM-BASEd PROCESSES
Most organizations setting up high-performing idea systems today use the
second and third archetypes of idea processes, the idea meeting and idea
board processes, which are both team based. They can be ramped up much
more quickly than kaizen teian systems, as they are integrated into the way
that regular work is done, so they can start producing good results in a
relatively short period of time. Team-based processes are designed so that
people bring “opportunities for improvement” (OFIs) to their work groups
or departments. An OFI is a problem, an opportunity, or an idea. (As an
opportunity is the flip side of a problem, from now on we will use the word
problem to mean both problems and opportunities.)
It is important that both processes encourage people to offer prob-
lems as well as ideas. Most people have learned through experience to view
problems as negative, to be avoided or hidden. After all, no one wants to
be blamed for them or to be viewed as a complainer for bringing them up.
But because every idea begins with a problem, teams must learn to seek out
and embrace problems, instead of avoiding them.
Opening the process up to problems will significantly increase both
the quantity and quality of a team’s ideas. The quantity of ideas goes up
because often the person who identifies a problem has no idea about how
to solve it, but a teammate does. The quality of ideas is improved because
the team brings multiple perspectives and much more knowledge to bear
on the problem, so the solution will be better thought out. Sometimes, an
idea is an unworkable solution to a real problem. In rejecting the idea, it is
easy for people to miss the underlying problem. But by returning to it, the
team can often find an effective solution.
We came across a good example of how this works at Springfield
Technical Community College (STCC), a college serving more than nine
thousand students in the inner city of Springfield, Massachusetts. STCC
is one of the few institutions of higher education we are aware of with a
94 | THE IdEA-dRIvEn ORGAnIzATIOn
high-performing idea system. A number of years ago, when the system was
launched, during the first idea meeting of a team in one of the pilot areas,
an employee posted an idea: “Let’s put posters and table tents around cam-
pus to remind students to use the online campus system that allows them
to check grades, pay bills, preregister for classes, etc.” STCC’s idea board
process gave every team member two votes on which ideas the department
should work on, and no one voted for her idea. Struck by this, toward the
end of the session, the facilitator asked the suggester to explain the under-
lying problem.
The problem, she explained, was that students were not using the cam-
pus online system and instead were stopping into departmental and stu-
dent support service offices to ask staff for the information they wanted.
“Every semester, employees spend countless hours helping students who
could easily be helping themselves,” she told the group. Hence her idea:
advertise the online campus system to get students to use it.
The team agreed that students were not using the online tool and that
they could easily answer their own questions if they did. “Why, then,” the
facilitator asked, “did no one vote for this idea?”
The answer turned out to be that the idea had already been tried in
several different forms and had failed. Many departments had created
posters, signs, and table tent cards to advertise the online system, but the
advertising had made little difference. Students continued to ask staff for
the information they wanted.
The facilitator realized that, in rejecting the proposed solution, the
team had also lost the opportunity to work on solving the underlying
problem. But when she brought the group back to the problem, its mem-
bers realized that just because advertising had failed, it didn’t mean that
they couldn’t solve the problem another way. After a brief discussion, the
group agreed that if students knew how to use the online system, they
would. In other words, the root cause of the problem was a lack of training,
not a lack of awareness. So the team proposed that the college implement
self-help stations at various campus registration sites staffed by work-study
students whose jobs would be to assist their peers in understanding and
fully utilizing the online campus system. The idea proved successful, and
HOW EFFECTIvE IdEA PROCESSES WORK | 95
the college estimated that it saved the staff almost seven hundred hours
per year.
Most teams start out by wanting to work only with ideas and view-
ing their task as simply giving the thumbs-up or thumbs-down to each. It
takes time and effort for teams to learn how to move smoothly back and
forth between problems and potential solutions as the situation dictates,
but when they do, they will produce significantly more and better ideas.
The Idea Meeting Process
We first encountered idea meetings at Boardroom in 1996. At the time,
as we mentioned earlier, the company’s weekly meetings were generating
more than a hundred ideas per employee every year, with implementation
rates over 90 percent.
In the generic idea meeting process, people bring their OFIs to a regu-
larly scheduled meeting. This could be a dedicated idea meeting or a stand-
ing agenda item in a regular team/department meeting. The meeting is
usually held every week or two. Any less frequent than this makes it dif-
ficult for the idea process to gain traction and become a regular part of
everyone’s work routine.
The facilitator begins the meeting by reviewing the progress made on
actions assigned at the previous meeting and addressing any issues that
have arisen with them, and then calls on each member to read out and
explain his or her OFIs. Each OFI is then discussed and the group decides
what actions (if any) it wants to take on it. These actions could be to con-
duct further research into the issue, to implement an agreed-on idea, to
escalate an idea to the next level of management, or to put it in a “parking
lot” to revisit it sometime in the future.
Actions requiring follow-up work are assigned to individual team
members and then entered into a tracking system, which is often a simple
spreadsheet. This tracking sheet includes all pertinent information about
the OFIs: what actions are to be taken, who is responsible for taking them,
and the anticipated completion dates. It also records ideas that have been
escalated and OFIs that the team wishes to table for possible action later.
96 | THE IdEA-dRIvEn ORGAnIzATIOn
The Idea Board Process
The idea board approach is essentially an idea meeting process in which
each team or department manages its ideas using an idea board. This
board might be a whiteboard, any other type of visible board, or an elec-
tronic flat-screen, placed prominently in the team’s workplace. For sim-
plicity here, we will explain the process using a whiteboard.
The specific design of the boards varies greatly across organizations,
but at a minimum all of them allow team members to post OFIs, record
action items, and track their progress. Figure 5.1 illustrates a basic idea
board layout for a team or department. The boxes across the top half are
used to collect the team’s OFIs for each of its designated focus areas, which
should correspond to the goals that have been rolled down from above.
The bottom half of the board is used to manage the actions being taken.
We will explain the design of this idea board in more detail shortly.
The idea board process has several advantages over the idea meet-
ing approach. The boards’ highly visual nature reminds people about the
F IGURE 5.1 Sample team idea board
Accounts Payable
Focus Area #1 Focus Area #2 Focus Area #3
Ideas for Implementation Implementer Due Date
HOW EFFECTIvE IdEA PROCESSES WORK | 97
importance of ideas, keeps them focused on key team goals, and creates
social pressure to complete assigned tasks on time. It also allows higher-
level managers to see instantly how active each idea group is and to review
its current improvement projects.
The Process. A typical weekly idea meeting begins with a review of the
status of previously assigned actions. Completed actions, including ideas
that the team has worked on and wishes to escalate, are recorded in a data-
base and removed from the board, and the status of any actions that are
still in progress is updated. Unanticipated delays on assigned OFIs are dis-
cussed and, if necessary, addressed with additional assignments.
Then the group turns to the OFIs posted on the top half of the board
and prioritizes which ones to work on. Some of these will have been newly
posted during the previous week; others will be holdovers that the group
has not yet chosen to work on. The team decides what actions will be
taken to move each of the chosen OFIs forward, assigns these actions with
expected completion dates to team members, and records them on the
bottom section of the board to manage follow-through.
The Board. As mentioned earlier, although all idea boards work in essen-
tially the same way, their specific layout can vary considerably. On the
basic board shown in Figure 5.1, the top is divided into three boxes, one
for each of the team’s goals or focus areas. (Recall that in Chapter 3, we
discussed how idea-driven organizations carefully align each team’s goals
with the organization’s overall strategic goals.) Team members post their
individual OFIs in the box they pertain to. Some board designs have more
than three focus areas or include additional boxes for other purposes, such
as one-time themes, “parking lots” for ideas put on hold, escalated ideas,
or OFIs that don’t fit any of the focus areas.
Depending on the circumstances and nature of the department or
team, the goals can be highly specific or relatively broad. For example,
the focus areas picked by the warehouse manager at that Spanish/Por-
tuguese electronics retailer described in Chapter 3 were “Shipments per
week per employee,” “Percentage of orders shipped same day and correctly,”
and “Inventory turnover.” This level of specificity was very effective for the
98 | THE IdEA-dRIvEn ORGAnIzATIOn
well-defined task of filling orders in a distribution warehouse. In a less struc-
tured and more complex environment, more general focus areas might work
better. In the claims department of a U.K. insurance company, the focus
areas chosen were “productivity/efficiency,” “customer service,” and “reduc-
tion of rework.” Management felt that more narrowly defined metrics such
as “claims processed per hour,” “customer complaints” and “errors per 100
claims” would have been too restrictive and would have limited ideas.
From time to time, we are asked how OFIs should be posted on the
board. Some organizations use sticky notes, preprinted cards, or slips of
paper. Others ask employees to write on the board directly. Each approach
has advantages and disadvantages. Often, when people think of an OFI,
it is inconvenient to get to the board immediately. So if the OFI has to be
written on the board, it might be lost. If the system uses cards, a person can
carry them in a pocket or briefcase and write down OFIs as they come up
(even while at home or traveling) and post them on the board later. Posted
cards can also be easily moved, and OFIs on related topics can be clustered
easily without erasing and rewriting. Preprinted cards typically include
spaces for the submitter’s name, the date, a description of the underlying
problem, and an idea to address it, if there is one. The name and date help
with accountability, and the explicit problem statement helps in getting the
group to consider the underlying problems and alternative solutions for
them. The advantage of writing directly on the board is that the OFIs are
more visible, and during the meeting people can see all the ideas at once.
This makes the idea meetings go faster and helps keep people engaged.
Teams are often concerned about publicly posting their problems on
boards that can be read by visitors or people from other departments. But
unless there is proprietary or sensitive information involved, making the
boards visible demonstrates that the team, and the entire organization, is
open to recognizing and addressing problems. In our experience, instead
of embarrassing the team in front of visitors, it invariably impresses them.
For example, the CEO of a medium-sized New England company once
hosted a group of bankers who were considering his company’s application
for a major expansion loan. At one point, the bankers stopped in front of
an idea board and one of them asked what it was. The CEO explained that
the board showed some of that area’s problems and what the employees
HOW EFFECTIvE IdEA PROCESSES WORK | 99
were doing about them. It also had some “before” and “after” photographs
of completed projects. Later, the CEO told us that the moment those bank-
ers realized the implications of what they saw on the board was also the
moment when they decided to grant the loan. Companies that are open
about their problems, and ensure that their people are constantly working
to solve them, are the ones worth banking on—literally!
Publicly visible idea boards also communicate the specific issues a
team is working on to employees and managers from other departments.
People will often read other teams’ boards out of curiosity and to get
insights and ideas for their own teams. We are often asked whether people
should be allowed to post OFIs on other teams’ boards. In principle, this is
something to encourage, but it can be a very sensitive area, as OFIs coming
from outside the team can be viewed as criticisms. Our recommendation,
at least until an organization’s idea system and culture are mature, is that
if someone has an OFI to share with another team, that person should
recruit one of that team’s members as a cosponsor.
Some organizations use dedicated electronic flat-screens as idea
boards. One advantage of electronic boards is that they can easily be set
up to allow team members to access them remotely at any time from their
computers or mobile devices. In some situations, such as when team mem-
bers are geographically dispersed, organizations take their boards and
meetings completely online, typically using some kind of web-based proj-
ect management application. While this reduces the quality of the team
interactions somewhat, it does allow idea meetings to take place when
face-to-face ones would be impossible.
FACILITATIOn
Because so much depends on drawing out the knowledge and creativity
of team members, idea meetings must be well facilitated. Usually, facili-
tators are team leaders or supervisors, but they can also be members
of the team. They do not have to be the most knowledgeable person in
the room but must be skilled at managing a group process. Facilitators
have to elicit input from all team members, particularly those who tend
to be quiet. They must keep the group focused on issues that are largely
100 | THE IdEA-dRIvEn ORGAnIzATIOn
within its domains and get it to prioritize the OFIs it wants to work on.
They have to decide which OFIs the group should deal with quickly, which
require more in-depth discussion, and which need more research. Facili-
tators have to get agreement on what actions to take, who will take them,
and when they should be completed. And while keeping all this moving
along briskly, they need to keep everybody engaged. Great facilitators
even make meetings fun. Expert facilitation is critical to running effec-
tive idea meetings, and investing in training and coaching in this area
pays quick dividends.
We have several tips on idea meeting facilitation. The first deals with
larger ideas. Often a team will want to take on an idea that is too big to
be completed in a week or two. Rather than assigning the entire task to a
single person or small group, it is usually better to turn the idea into a proj-
ect and break it down into smaller tasks. This allows the team to spread the
tasks across many people and match their skills with the required work.
The idea meetings then double as project meetings to monitor progress,
assign new tasks, and decide on any adjustments needed as the project
progresses.
A similar tactic can be used to incrementally attack large complex
problems that are not resolvable with a single idea. By tackling such a
problem with many small and easily implemented ideas, the team can
incrementally reduce its negative impact and perhaps even completely
solve it over time.
Second, ideas will often emerge that cannot be used immediately. Such
ideas might include improvements requiring capital expenditures that
need to wait for the next budget cycle, facility improvements that are best
included in an upcoming renovation, modifications to software or equip-
ment that are currently impractical but could be incorporated into the
next upgrade, and product or service features that could be incorporated
into future design changes. Such ideas should be recorded in one or more
idea parking lots to be easily retrieved when the time is right.
Third, someone other than the facilitator should act as scribe in the
meetings to record OFIs and decisions. A facilitator also serving as a scribe
is distracted from the primary role of guiding the team as it addresses
problems and develops ideas.
HOW EFFECTIvE IdEA PROCESSES WORK | 101
Fourth, facilitators need to know how to deal with ideas that cannot
be implemented. Few things will shut down ideas faster than employees
feeling their thoughts and ideas are not taken seriously. Otherwise good
ideas might not be implementable for many possible reasons: money is
not available; the ideas don’t support the company’s goals; other planned
changes will supersede them; legal or regulatory restrictions may prohibit
them. A good facilitator makes sure that the reasons for not going forward
with an idea are drawn out and understood.
At this point, the facilitator has two choices: drop the idea, or, if appro-
priate, take the group back to the original problem to see whether it can
take advantage of any underlying opportunities embedded in it.
Take, for example, what happened with one group we worked with. The
director of a university alumni relations department had invited us to give
a brief talk to her department on the benefits of starting an idea system,
which we did. Several months later, she called us again. She told us that her
department had enthusiastically set up a system and forged ahead. However,
she and the staff had some concerns about how the process was working and
wondered if we could come back and give them some additional help.
A few weeks later we went back and found the entire department of
about thirty people assembled in a conference room. “Our biggest chal-
lenge,” the director said to nods of agreement from around the room, “is
that we have no difficulty thinking of good ideas, but we don’t seem to have
the time or resources to implement any of them.”
We asked her for an example. She picked up the list of ideas that had
come in so far and read out the first one: “Give everyone training in Excel.
“This is an excellent idea,” she continued. “We all use Excel all the
time. But when we looked into the cost of sending everyone to training,
it was more than $15,000, and we would have had to shut down the office
for two days.”
“Who came up with this idea?” we asked, looking for the problem that
triggered the idea. A woman in the back raised her hand.
“What made you think of it?” we asked her.
“I needed to make a [particular kind of] chart in Excel but couldn’t
figure out how to make it work,” she told the group. “It made me think that
we could all use some Excel training.”
102 | THE IdEA-dRIvEn ORGAnIzATIOn
“I know how to make that kind of chart,” the person sitting next to her
interjected. “If you have a couple of minutes after this meeting, I’ll show you.”
This solved the woman’s problem, so we moved on to the next idea. As
we continued down the list, a pattern emerged. Many of the ideas involved
throwing large amounts of money at problems that could be addressed
more effectively and inexpensively with a little thought and creativity.
(Unsophisticated problem-solvers often do this.) To illustrate the lesson
that money and resourcefulness offset each other, we went back to the
first idea.
“Clearly the office will run more efficiently if everyone knows more
about Excel. But you can’t justify $15,000 on Excel training. Suppose you
had only $50. What could you do?” Ruling out the expensive solution is a
facilitation “trick” that forced the group to think more creatively.
Based on the exchange between the two women in the back, it didn’t
take long for the group to come up with a much better solution than “Excel
training for everyone.” In an office of thirty users of Microsoft Office,
chances are that someone has the answer to almost any question about
it. Why not put up a bulletin board (cost: $25) for questions people have
about any of the Microsoft Office suite? Or why not identify several
“power users” in the office as “go-to” people for questions? By going back
to the underlying problem and ruling out the possibility of throwing
money at it, the group developed a set of inexpensive ideas that solved
it elegantly and much more effectively than two days of offsite training
would have.
Most supervisors will need some coaching to hone their facilitation
skills. One way to do this is to have higher-level managers regularly attend
idea meetings in their areas of responsibility. They can observe their
supervisors in action and coach them. Particularly in the beginning, it
is helpful to make structured feedback an integral part of these visits to
ensure that the coaching is done in a consistent and effective manner.
Formalized feedback can be as simple as filling out a short form stating
what the supervisor/facilitator did well and how he or she could improve;
the form should be completed by the observer during the meeting and
discussed with the supervisor immediately afterward.
HOW EFFECTIvE IdEA PROCESSES WORK | 103
ESCALATIOn
Sometimes decisions about ideas cannot be made on the front lines and
will need to be escalated to higher levels. The ideas may require resources
that are not available to the front-line teams (such as skills, time, and/or
money), may require the involvement of other departments or functions,
may require dedicated problem-solving resources (such as Six Sigma proj-
ects, kaizen events, or R&D initiatives), or may simply involve issues that
require higher-level scrutiny or permission.
The escalation process should be rapid and transparent, clearly define
how the various types of ideas will be routed, and articulate the decision-
making authorities and expectations for follow-through at each level.
When no clear escalation process exists, ideas are handled in an ad hoc
manner and can easily get lost or stalled. Whenever escalated ideas are not
promptly addressed, employee trust in the system erodes.
The escalation process at Scania, the Swedish truck maker whose sys-
tem we discussed earlier, has all of the necessary attributes. At the end of
each front-line team’s weekly idea meeting, the team leader puts escalated
ideas on his or her supervisor’s board for consideration at that person’s
weekly meeting with all his or her team leaders. If the supervisor’s idea
meeting decides that an idea needs to be escalated further, it goes to the
line manager’s board, and from there, if needed, to the leadership team’s
board. Because the boards at each level are visible to everyone, front-line
workers can follow the progress of an escalated idea all the way up the
chain of command.
At Scania, most escalated ideas are dealt with in a week or two. But
some may need more investigation or coordination among groups, and
still others may have to wait until the next budgeting cycle. For example,
one idea in the diesel engine assembly plant outside Stockholm had to
do with the workstation instruction-sheet packets that traveled with each
engine through the plant. Scania’s engines are custom-made, so every
workstation needs specific assembly instructions for every engine. The
idea was to replace the physical packets of documentation with flat-panel
screens mounted on the conveyor carriages used to transport the engines
104 | THE IdEA-dRIvEn ORGAnIzATIOn
from station to station. With the appropriate processing information dis-
played on the screen as the engine arrived at each station, an enormous
amount of paperwork would be eliminated, documents would no longer
get misplaced, and time would be saved since the workers would no longer
need to shuffle through paperwork for their instructions. Because the idea
had plantwide implications and would require a large investment, it was
escalated all the way up to the leadership team. There, it was parked until
it could be considered in the next year’s capital budgeting process, where it
was approved. Although it took some time to approve and implement the
idea, the important thing was that the front-line team members who came
up with it knew exactly what was happening with it every step of the way.
An important rule in escalation is that before an idea can be escalated
to the next level, all the research and support work that can be done for
it at the lower levels needs to have been done. Borrowing a term from the
British Army, we refer to this requirement as the need for “completed staff
work.” Keeping staff work as low in the organization as possible allows
more ideas to be handled faster and at a lower cost.
Ideas that are escalated with poor or incomplete staff work represent
coaching opportunities. Not only should the ideas be sent back down for
further work, but the reasons that the staff work was deficient should be
clearly explained. If this is done consistently, over time team members will
come to understand the kinds of information that upper managers need to
make their decisions and will learn how to make stronger cases for ideas.
Teams will then prefilter their own ideas, and decisions on the ideas they
do escalate will be much easier and usually positive. As Larry Acquarulo,
CEO of Foster Corporation, a medium-sized, Connecticut-based medi-
cal products company, observed after revamping his escalation process to
require completed staff work:
It used to be that I would get all kinds of ideas, many of them half-
baked, that I would have to check out myself. It wasted a lot of my
time. Now I have become largely a rubber stamp.
In a similar vein, when ideas are escalated that should have been
decided on at a lower level, it indicates that people may be uncertain
about their responsibilities and levels of authority. We encountered such a
HOW EFFECTIvE IdEA PROCESSES WORK | 105
situation during the pilot phase at the Big Y supermarket chain discussed
in Chapter 2. A checkout clerk at one of the stores suggested that signs be
put up in the parking lot to remind people to bring in their eco-bags. He
had noticed that customers would often express embarrassment to him
about forgetting to bring in their reusable eco-bags. His team liked the
idea and forwarded it to the store director. This director, who had been
with the company only a couple of months, also liked the idea and imme-
diately escalated it to his boss, the district director. The district director
also thought that it was a good idea, but because a store’s parking lot was
the store director’s responsibility, he assumed the store director was tak-
ing care of it and took no action. However, after three weeks, the tracking
software flagged the idea as stalled due to the district director’s inaction,
and it was highlighted for review at the next senior management meeting.
In the ensuing discussion, the group confirmed that the idea should have
been implemented by the store director, and that the incident provided an
excellent opportunity for the district director to talk with his new store
director about his authority and responsibilities.
Many organizations also use their escalation processes to replicate
ideas that can be used elsewhere in the organization. While the eco-bag
sign idea was not escalated for this purpose, it did bring the idea to the
attention of top management, who then made sure it was implemented
systemwide. And when it was used in all of Big Y’s sixty stores, its value
was greatly multiplied.
One final note on escalation: it is important to link your front-line
idea system with the other improvement and innovation systems in your
organization, such as lean, Six Sigma, quality improvement, and product
development or R&D. Many of these links should be designed into the
escalation process. We will discuss this topic more in Chapters 6 and 8.
THE ELECTROnIC
SUGGESTIOn BOX TRAP
It is important not to confuse high-performance idea processes with tradi-
tional suggestion systems. Almost every organization of any size has tried,
at one time or another, to set up some kind of system to collect employee
106 | THE IdEA-dRIvEn ORGAnIzATIOn
suggestions. Although today’s suggestion systems are generally online,
almost all of them are based on suggestion box thinking, and they handle
ideas in exactly the same way as a nineteenth-century suggestion box pro-
cess. Automating the process does not get away from its intrinsic limita-
tions. You can put lipstick on a pig, but it is still a pig.
To avoid the mistake of setting up a glorified suggestion box process, it
is vital to understand why such processes are fundamentally flawed.
The basic suggestion box process is as follows. Employees submit sug-
gestions to defined collection points. Each suggestion is given an initial
review and routed to an appropriate manager, subject-matter expert, or
committee for evaluation. This person’s or committee’s recommendation
is then sent to a decision maker, or sometimes a decision-making com-
mittee. If the suggestion is accepted, it is assigned to someone to imple-
ment. If it is rejected, the suggester is sent a nice note with some kind of
explanation. Electronic suggestion boxes merely automate the submission,
routing, tracking, and notification components.
Standard complaints about suggestion box–type processes include the
following:
� They get very few ideas, most of which are of questionable quality.
� They are bureaucratic, slow, and biased toward rejecting ideas.
� The results obtained are rarely worth the time, hassle, and overhead of
running the system.
Armed with an understanding of how high-performing systems work, it is
easy to see the reasons for the deficiencies of suggestion boxes.
The quantity and quality of ideas are low because the suggestion box
process generally collects suggestions made by individuals from their own
limited perspectives. The quantity is low because the suggestion box process
is voluntary and not integrated into regular work, there is little account-
ability for managerial follow-through, front-line workers aren’t empow-
ered to take initiative, and the process is limited to solutions and does not
accept problems. The quality of suggestions is low because they do not
have the benefit of being vetted by colleagues who discuss the underly-
ing problems and consider possible alternative solutions. Furthermore, the
HOW EFFECTIvE IdEA PROCESSES WORK | 107
suggestion box process does not focus people on the organization’s strate-
gic goals, so most of the suggestions are of limited value.
Suggestion systems are slow and bureaucratic because of problems
with how ideas are evaluated. Since the task of evaluating ideas is usually
assigned to managers in addition to their regular work, it gets a low priority
and responses are slow in coming. And when an idea is approved, imple-
menting it becomes extra work for someone else who is also already busy.
What is more, the evaluation is usually done at some distance from the
front lines, often by a person who has little understanding of the context
of the idea, feels little urgency about the underlying problem, and has little
time to spare. (We have come across cases where the evaluator was liter-
ally thousands of miles away from the situation involved.) To be confident
in approving an idea, this distant evaluator needs more information and
time to become familiar with the situation involved. But time pressure,
combined with the risk involved in approving a bad idea, means rejecting
an idea is safer than accepting it. After all, approving it means the evalu-
ator accepts some responsibility if it fails. Rejecting it means doing noth-
ing, which will not make anything worse. All this creates a strong bias for
rejection.
In short, suggestion box–type processes are gigantic doom loops. Their
voluntary nature means employees are going beyond their job descriptions
to give in ideas. The poorly designed process means that the ideas are usu-
ally not of very high quality and represent extra work for the evaluators,
who find it easier and safer to reject them. So employees lose interest and
give in fewer ideas. When management doesn’t see many good ideas com-
ing in, it thinks that employees don’t really have many good ideas and so
gives the system even less support. The system spirals down into relative
or even total oblivion.
It would be hard to come up with a plausible process that is better
designed to shut down ideas than a suggestion box–type process. In many
ways, having such a process is worse than having no process at all.
108 | THE IdEA-dRIvEn ORGAnIzATIOn
| K E Y P O I N T S
✓✓ There are three archetypes of high-performing idea processes:
� Kaizen teian systems, the first generation of high-performing pro-
cesses, are essentially suggestion systems that have been highly
streamlined to mitigate their inherent processing problems and
turbocharged with a strong culture of improvement.
� In the idea meeting process, people bring “opportunities for
improvement” to their regular team or department meetings,
where they are discussed and implementation actions are decided.
� The idea board process also has regular idea meetings but incor-
porates a large visible board to help collect and process ideas. The
board’s highly visual nature helps keep ideas front-of-mind on a
daily basis and creates social pressure to complete assigned tasks
on time. It also allows higher-level managers and colleagues to see
instantly how active each idea team is and its current improve-
ment projects.
✓✓ Take a problem-focused perspective with ideas. Often the person who
identifies a problem is not the right person to solve it, and even when
a solution is offered, it frequently pays to go back to the underlying
problem to explore alternative approaches.
✓✓ Sometimes decisions about ideas cannot be made on the front lines
and will need to be escalated to higher levels. The escalation process
should be rapid and transparent, clearly define how the various types
of ideas are routed, and articulate the decision-making authorities and
expectations for follow-through at each level.
✓✓ High-performance idea processes are completely different from
traditional suggestion systems. Although today’s suggestion systems
are generally online, they handle ideas in exactly the same way as a
nineteenth-century suggestion box process. Automating the process
does not get away from its intrinsic limitations.
109
The Idea-Driven Organization
Implementing a High-Performing Idea System
6
Imp lemen t ing a
H igh – Pe r f o rming
Ide a Sy s tem
SEvERAL YEARS AGO, a vice president at a Fortune 500 financial ser-
vices 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
110 | THE IdEA-dRIvEn ORGAnIzATIOn
VP. Shortly thereafter, the team’s leader left the company, and the effort
disintegrated.
The mistake this vice president made was to assume that setting up
an idea system was relatively straightforward, simply a matter of layering
a collection and evaluation process on top of the existing organization.
Unfortunately, this is a common assumption. But launching an idea sys-
tem without properly preparing both the organization and its people usu-
ally dooms the initiative to failure.
This chapter is a step-by-step guide to implementing a high-performing
idea system. It is based on what we have learned over the last two decades
from studying, watching, and participating firsthand in both successful
and failed launches. The implementation process we recommend has the
following nine steps:
Step 1. Ensure the leadership’s long-term commitment to the new
idea system.
Step 2. Form and train the team that will design and implement
the system.
Step 3. Assess the organization from an idea management perspective.
Step 4. Design the idea system.
Step 5. Start correcting misalignments.
Step 6. Conduct a pilot test.
Step 7. Assess the pilot results, make adjustments, and prepare for
the launch.
Step 8. Roll out the system organization-wide.
Step 9. Continue to improve the system.
How long each of these steps take depends on the size and complexity
of the organization and the overall sense of urgency. A small and sim-
ple organization can get a system up and fully deployed in less than six
months, whereas a large global organization may need a couple of years or
more, depending on the resources committed to the initiative.
IMPLEMEnTInG A HIGH-PERFORMInG IdEA SYSTEM | 111
STEP 1
Ensure the Leadership’s Long-term Commitment
to the new Idea System
When a leadership team sees an idea system as an important capability-
building initiative, its members are more likely to have the patience and
perseverance to provide the long-term leadership needed to deploy the sys-
tem in a strategic manner.
Consider how the high-performing idea system at Alpha Natural
Resources (“Alpha” for short), the second-largest coal-mining company
in the United States, gave it a unique capability that was an important ele-
ment in making a major strategic acquisition.
On April 5, 2010, an explosion at the Massey Energy Company’s Upper
Big Branch coal mine resulted in the deaths of twenty-nine miners. These
were not the first deaths in Massey’s mines. The company had one of the
worst safety records in the industry and was constantly in conflict with
the Federal Mine Safety and Health Administration (MSHA). The back-
lash and lawsuits from the disaster suddenly put the ongoing viability of
Massey into question. In June 2011, Alpha, a mining company of approxi-
mately its same size, stepped in and acquired Massey.
Although both companies used similar equipment and technologies,
the way they dealt with their employees was vastly different. Massey was
highly autocratic, whereas Alpha put a great deal of emphasis on listen-
ing to its employees and getting their ideas. Since its founding in 2002,
Alpha’s guiding principles were incorporated into what it called its “Run-
ning Right” philosophy, which focused on the importance of the front-line
miner. The Running Right idea system had been started with a focus on
safety but grew to include front-line ideas on productivity and other areas
as well. Instead of having Massey’s management-dictated approach to
safety, Alpha involved its miners in identifying safety problems and com-
ing up with ideas to address them. As the system took hold, Alpha noticed
that the more ideas per miner a mine got, the fewer safety problems it had.
For Alpha’s CEO Kevin Crutchfield and the members of his leader-
ship team, running safe mines was a fundamental value and vital to the
company’s long-term success. Having all been former miners themselves,
112 | THE IdEA-dRIvEn ORGAnIzATIOn
they had firsthand knowledge of the inherent dangers in mining. Studies
by Alpha showed that 88 percent of safety incidents were due to unsafe
behavior on the part of the miners, not to deficiencies in equipment, tech-
nologies, or safety policies. And the best way to get safe behavior, Alpha’s
leadership reasoned, was not through top-down edicts, but by listening to
the miners’ safety concerns and rapidly acting on their ideas. After all, the
miners paid a steep price for poor safety. Alpha’s leaders never questioned
the time, effort, and resources needed to make their idea system successful.
Soon after Alpha acquired Massey Energy, it moved aggressively to
integrate the Running Right idea system and the Alpha culture into every
one of the former Massey mines. Each mine was shut down for a day of
training in order to assure that the miners learned about the Running Right
philosophy, why this philosophy was important to them and the company,
and how the idea system worked. A member of Alpha’s leadership team
attended each mine’s training day to personally commit the company to
acting on the miners’ ideas. The commitment shown by Alpha’s leadership
in shutting down the mines for this training was not missed by the miners.
It was inconceivable that their former bosses would have stopped produc-
tion for training, much less an entire day of it!
A second early move by Alpha’s leaders was to hold a two-day “Leader-
ship Summit” for the company’s 220 top managers—roughly half of
whom came from Massey. For longtime Alpha managers, the summit was
a chance to work on what the Running Right philosophy meant for the
future; for former Massey managers, it was an introduction to an entirely
new way of managing. CEO Crutchfield framed the importance of the
company’s front-line focus in a poignant way: When all the company’s top
managers were attending the summit, every mine continued to operate
normally; but when the miners were being trained, all production stopped.
The front-line miners, not management, Crutchfield emphasized, were the
people most critical to the company’s success.
The investment paid off. Within five months of the acquisition, a num-
ber of the former Massey mines had reached or exceeded Alpha’s average
number of ideas per miner, and their safety performance had improved
dramatically. The leadership team then proceeded to develop a five-year
plan to keep improving the idea system’s performance so it could continue
IMPLEMEnTInG A HIGH-PERFORMInG IdEA SYSTEM | 113
to deliver major strategic advantages. (Disclosure: one of the authors
advised the company during this process.)
The success of Alpha’s acquisition of Massey depended on rapidly fix-
ing Massey’s safety problems, which would have been very difficult with-
out the Running Right idea system and Alpha’s leaders’ quick action to
integrate it into the newly acquired company.
When considering whether to launch a high-performing idea system,
the first question that needs to be asked is why. What are the key strategic
capabilities that the organization wants from the initiative? In the case of
Alpha, its leaders knew that mine safety was critical for the company’s suc-
cess, and set up its idea system with this in mind. From there, it grew into
providing additional strategic capabilities.
STEP 2
Form and Train the Team That Will
design and Implement the System
As we have said before, a high-performing idea system has to be designed
so it can be integrated into the way the organization already works. Step 2
is to form and train a team that has the power, credibility, and collective
knowledge to design such an integrated system, to address the potentially
significant organizational issues that will inevitably arise, and to lead the
launch organization-wide.
To see how this works, consider how Health New England (HNE),
a medium-sized health care insurance company, put together its seven-
member team to design and oversee the implementation of its idea system.
The team comprised
� the company’s well-respected IT director as its leader;
� the company’s general counsel and a member of the Executive Leader-
ship Team (ELT), who volunteered to be the executive champion;
� four middle managers, one each from operations, sales, marketing,
and technology; and
� a front-line employee who was known for constantly proposing
improvement ideas.
114 | THE IdEA-dRIvEn ORGAnIzATIOn
Note the composition of this design team. First, it had a respected
upper middle manager as leader. Second, it included a member of the ELT
to provide top management’s perspective, help the team navigate sensi-
tive issues, and promote the idea system at the highest level. Some of the
team’s recommendations would require modifications in corporate-level
policies and practices, or commitments of corporate-level resources. The
ELT member was able to provide an executive perspective and offer critical
advice, such as “It might be best to say this in a different way” or “Some
members of the ELT might have a problem with this for the following
reasons.” He also acted as a conduit for information between the team
and the ELT.
Third, the team included a cadre of middle managers, who represented
an important constituency that would be critical for the success of the new
system. Finally, the front-line employee brought a perspective to the team
that the other members lacked. For example, during a discussion of how
much time employees would be given to work on improvement ideas, and
how this time would be allocated, one of the managers commented that he
thought supervisors would be very supportive of freeing their people’s time
to work on ideas. After all, he reasoned, these ideas would improve their
units. But the front-line employee said, “With respect, the situation in the
work centers is actually quite different from what you imagine. Supervi-
sors are under a lot of pressure to service the customers in a timely fashion.
Just today, my supervisor told me that we had so many claims to process
that she was reluctant to let me attend this meeting. I will have to some-
how make up the work later today. My biggest concern is that supervisors
won’t support the system. They will see it as interfering with the work
that has to get done.” This point led to a discussion of staffing issues, the
need for more training and coaching support for the supervisors, and the
importance of holding supervisors and managers accountable for ideas.
The team also realized that CEO Peter Straley would have to communicate
strongly to the supervisors that ideas were a priority, and it was now com-
pany policy that employees were to be given release time to work on them.
Once the design team is assembled, it must be provided with a thor-
ough education in idea management. Its members will need to have a
strong understanding of what high-performing idea processes look like,
IMPLEMEnTInG A HIGH-PERFORMInG IdEA SYSTEM | 115
how they work, and how to address the challenges they will face in creat-
ing one. The initial training can involve classes taught by experts, reading
relevant books, and perhaps visits to idea-driven organizations. For the
HNE team, the process began with a day of training in idea systems, and
then reading and studying two books on managing ideas.
Once the team began to apply its new knowledge, it began to learn by
doing, starting with the assessment of HNE from an ideas perspective (see
Step 3). As the team members interviewed front-line employees, supervi-
sors, and middle and upper managers, they discovered impediments to the
flow of ideas that needed to be addressed. This “action learning” continued
as the team designed their system and rolled it out through their com-
pany. In the end, the members of the design team developed considerable
expertise in the management of ideas, and HNE went on to successfully
implement a high-performing idea system.
If you take care to choose the right people for your design team, and
then provide them with the training and time they need to do their job
well, you will be setting your new idea system up for success.
STEP 3
Assess the Organization from an
Idea Management Perspective
The assessment has two purposes. First, it must identify misalignments
and any potential challenges to implementing the idea initiative. Second, it
should try to find opportunities to integrate the idea system into the orga-
nization’s existing systems. The assessment typically includes interviews
with front-line workers, supervisors, and managers to discover what might
hinder the flow of ideas and what might help it. Here are some typical lines
of inquiry:
� Have the interviewees been involved in implementing any ideas or
improvements in the past in the organization? If so, what were the
challenges they faced and what helped them along the way?
� How easy is it for employees and supervisors to get the resources and
support they need to implement their ideas?
116 | THE IdEA-dRIvEn ORGAnIzATIOn
� What other mechanisms for bottom-up ideas does the organization
have? How well do these work, and what, if any, are the problems
with them?
� Have there been any failed idea initiatives in the past? Why did they fail,
and what are the implications of their failures for the new initiative?
� How can existing practices and forums—such as annual evaluations,
bonuses, reporting systems, newsletters, CEO e-mails, corporate vid-
eos, regular meetings—be used to support the idea initiative?
� Does the culture, and the way people are evaluated and rewarded,
support innovative behavior? What changes, if any, are needed in
these areas?
� What problems, if any, might keep the upcoming idea system from
being successful?
Some of the issues that assessments uncover are relatively easy to
fix, such as adding a modest budget to allow teams to make purchases
to implement small ideas, retasking support departments to provide help
with implementing ideas, or amending policies to increase the decision-
making authority of people at lower levels. But assessments almost always
flag more fundamental concerns as well. Take, for example, the issues we
identified from an assessment of an international division of a Fortune 500
food and beverage company (sample supporting comments from inter-
viewees are in italics):
� Past leadership behavior was creating serious concern that top man-
agement would only support the idea initiative and not provide the
active leadership it would need.
� My biggest fear is that top management will pay only lip service to
this [the idea system] and not realize that it will require work from
them, too.
� To be successful, this initiative really must come from the top and be
led by the top.
� Top management’s overdependence on the numbers when making
decisions was creating a lot of non-value-adding work and leading to
some poor decisions.
IMPLEMEnTInG A HIGH-PERFORMInG IdEA SYSTEM | 117
� One new product was clearly terrible. All thirty members of its
marketing team agreed that it was a disaster. Yet we still had to
spend several months and $40,000 to prove it to top management.
� Innovation can dilute margins in the short term, and if you don’t hit
your quarterly numbers, you are dead here.
� We focus on costs and budgets so much that it is usually much easier
not to do anything new.
� The company does not have a culture of innovation. “Innovations” are
limited to minor line extensions and packaging changes.
� This company kills anything that has a germ of innovativeness in it.
We require too much analysis and make people jump through too
many hoops.
� We need to carve out time for innovation, and not have it be just
an add-on.
� We are told it’s OK to fail, but it isn’t, really.
None of these issues came as a complete surprise to anyone. But when the
design team brought the documented list of them to the leadership team,
the problems could no longer be ignored.
A tactic we use to elicit deeper conversations among the design team
members about the issues the team needs to face is the pre-mortem: “Sup-
pose we were to get in a time machine and go forward three years, and
you were to learn that the idea initiative had failed. Why would this have
happened?” This question usually surfaces some “brutal facts” that would
otherwise stay buried.
Another purpose of the assessment is to identify potential opportuni-
ties to integrate the idea system into existing management systems, and
how these, in turn, might be adapted to support the needs of the idea
system. This is an application of the principle of “minimal intervention”;
that is, whenever doing something new in an organization, it is much
better, wherever possible, to take advantage of what is already being done
instead of creating entirely new mechanisms. Existing systems, policies,
and practices incorporate a great deal of previous learning. Building on
them takes advantage of this learning while reducing the risk of intro-
ducing new problems. In addition, it is more effective and respectful of
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people to fit the necessary changes into their existing work routines as
much as possible. The principle of minimal intervention encourages this
integration, makes adapting to the new system easier, and reduces resis-
tance to it.
Some examples of the questions we use to identify these minimally
intervening opportunities are as follows:
� Can idea meetings be integrated into regular department meetings?
� Can idea performance be incorporated into existing review processes
for both workers and managers? What about the merit, bonus, and
promotion processes?
� Can idea system training be incorporated into new employee orienta-
tion? Can idea activator training modules (discussed in Chapter 7)
be incorporated into the organization’s existing training matrix? Are
there any existing training modules that could be tweaked into idea
activators?
� Are there existing communication forums, such as corporate newslet-
ters or Internet portals, that can be used to support the idea initiative?
� How can the idea system help, and be helped by, existing improvement
and innovation efforts—such as Six Sigma, lean, innovation centers,
or new product development?
The more completely the idea system can be integrated into existing
practices and procedures, and the fewer new practices and procedures
are created especially for it, the more easily and quickly it will become
accepted as a regular part of the way the company works, and the better
it will perform.
By the end of the assessment step, you will not have a complete inven-
tory of every misalignment and integration opportunity. However, you
should have identified the major misalignments that you need to correct
before you start, as well as some integration opportunities that will make
the idea system easier to deploy and more readily accepted by the organi-
zation. As we have previously discussed, removing misalignments is an
ongoing process that never ends. The same is true of discovering and creat-
ing new integration opportunities.
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STEP 4
design the Idea System
As Oliver Wendell Holmes once put it:
I would not give a fig for the simplicity this side of complexity, but I
would give my life for the simplicity on the other side of complexity.
Many design teams begin their work thinking that it will be simple—
all they will need to do is to set up a process to collect ideas from front-line
employees. But by the end of their training and the assessment, almost
every design team feels overwhelmed by the complexity of setting up a
major new management system whose implications cut across the entire
organization. The team’s goal—which can be very challenging—is to come
up with a simple system that successfully addresses all this complexity.
The system has to be simple in order to handle large numbers of ideas
efficiently.
To push design teams to attain the necessary simplicity, we like to
ask them—even in large organizations—to come up with a document of
no more than five pages laying out the entire system. To do this, the team
members will have to address a number of issues about the mechanics of
the new system and how it will be managed and led, such as these:
� Who will be responsible for overseeing the system?
� What will the mechanics of the idea process look like? That is:
� How will ideas be collected, processed, and implemented at the
front-line level?
� What levels of authority are needed to implement which
kinds of ideas?
� What budgets and resources will each level have access to?
� What will the escalation process look like?
� How will the process integrate with other problem-solving and
improvement mechanisms?
� How will good ideas be replicated?
� What metrics will be used to measure idea performance and how will
managers and employees be held accountable for them?
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� Will the company offer recognition to employees and/or managers?
If so, how?
� What is the role of middle managers and senior executives in the idea
system? What will be their new “leader standard work” (discussed in
Chapter 2) to support ideas?
� What initial and ongoing training will be given to employees, supervi-
sors, managers, and the leadership team?
� How will the performance of the idea system itself be evaluated
and improved?
STEP 5
Start Correcting Misalignments
It is impossible, and also unnecessary, to align your organization perfectly
before launching your idea system. As we discussed in Chapters 3 and 4,
the process of alignment takes time, and maintaining and improving it
will be an ongoing effort.
The true nature and full ramifications of some misalignments will
become clear only after the system launches. Others will be clear from
the outset, but dealing with them will need to be deferred for practical or
political reasons, or because fully correcting them will require more time
than is available. But before the launch, it is important to eliminate any
misalignments that are going to seriously hinder the implementation of
front-line ideas.
Recall, for example, that large national retailer where front-line super-
visors and managers were forwarding even the smallest decisions to their
bosses. Senior executives complained to us about the number of low-level
decisions requiring their approval. In one case, a straightforward request
for a whiteboard marker had gone up through four levels of management
until it landed on the desk of the vice president for purchasing. Such ridic-
ulous misalignments in decision-making authorities had to be corrected
before the launch, or making even the most obvious small improvements
would be painful. The supervisors’ spending authority was increased sig-
nificantly, and each department was given a modest budget for purchasing
supplies for small improvements.
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But a related, more delicate misalignment needed to be dealt with more
diplomatically. Several members of the leadership team believed that while
the company should move in the direction of a more empowering culture,
pushing too far too fast would be imprudent. So the leadership adopted a
go-slow approach. At first, the idea system would focus on small ideas at
the departmental level. Cross-functional ideas would be handled at the
discretion of the managers involved, using existing or informal channels.
Vice presidents who wanted to move faster could encourage their manag-
ers to take more initiative on bigger or more cross-functional problems,
and the vice presidents who wanted to go slower could do so.
STEP 6
Conduct a Pilot Test
A pilot test is a small-scale live test of the idea system before it is rolled out
to the entire organization. For larger organizations, it typically involves
running the idea system in a small set of departments or teams (typically,
three to five). In small organizations—say, those with less than forty peo-
ple—the pilot test may involve everyone and simply be a designated time
frame of experimentation and learning after the idea system is started up,
but before it is considered to be “officially” launched.
From time to time, we encounter impatient leaders who insist on
launching their idea initiatives without a pilot test. While omitting or
shortcutting the pilot might appear to get the idea initiative off to a faster
start, doing so will dramatically slow things down later. Problems will go
undiscovered that will become increasingly disruptive and difficult to cor-
rect when the system is broadly deployed. Also, opportunities to enhance
the system’s performance and increase its acceptance across the organiza-
tion will be lost.
For example, a few years ago, the leadership of a U.S. military base
was anticipating severe budget cuts. Eager to find cost savings while also
meeting increasingly demanding service requirements, the base’s leader-
ship launched its idea system without a meaningful pilot test. Nine months
later, only 25 percent of the idea teams were functioning well. A major rea-
son for this shortfall was that the training for supervisors had been limited
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to a mandatory viewing of a fifteen-minute video explaining the process.
This video, though well intentioned, had been rushed into production.
It was uninspiring, factually incorrect about the process, and contained
a great deal of bad advice. As a result, more than a hundred front-line
managers had been running painfully unproductive idea meetings for
months, and significant resentment toward the idea system had developed
throughout the base. A well-executed pilot step would have detected and
fixed the problematic training before it created the much bigger problem
that required considerable leadership time and energy to correct. As it was,
the system struggled for almost two years before gaining any real traction.
A pilot test should
� provide a small-scale live test of the idea system to identify opportuni-
ties to make it better,
� generate evidence of the value of the system that can be used to build
support for it,
� develop a cadre of coaches and champions experienced in managing ideas
to support the new system as it rolls out across the organization, and
� help replace uncertainty about the new initiative with anticipation.
Live Test. The launch of an idea system introduces many changes across
the organization, the full ramifications of which are impossible to predict.
The pilot provides an opportunity to identify any resulting problems and
fix them before they can do much damage. It allows people to point out
these problems without the risk of being viewed as complainers. The status
of “pilot” also gives a license to experiment and to make even substantial
changes to the initial design without anyone losing credibility or being
embarrassed. In this way, the pilot is a safety zone.
Even when significant problems have been identified through the
assessment (Step 3), sometimes decision makers need more evidence before
being willing to tackle them. For example, at a large European insurance
company, the assessment had predicted that the limited IT support for
employee ideas would create a bottleneck, but management was reluctant
to dedicate more IT resources prior to the pilot. However, when the CEO
and CIO (chief information officer) were shown a list of the ideas from
IMPLEMEnTInG A HIGH-PERFORMInG IdEA SYSTEM | 123
the pilot that had been put on hold as a result, along with estimates of the
opportunity costs of each week’s delay in implementing them, the CIO
immediately reassigned a small team to support the idea system.
Problems with training, linkages with other systems and processes,
resourcing, and behavior are recurring themes in the pilot phase. But
because these are often situation-specific, they can be difficult to see or
solve until the ideas start coming in and the exact nature of the problems
is understood.
Evidence of Value. It is always useful to develop early evidence of the
value of the idea system. Almost every organization has some managers
who have previously had bad experiences with suggestion box–type sys-
tems or other poorly conceived idea initiatives, and who naturally have
reservations about the value of the new idea system. Our favorite method
to start addressing these reservations is to provide these managers with a
list of front-line ideas implemented during the pilot, as we did for the CEO
of the insurance company described earlier. Such a list also helps reduce
any concern or hesitation on the part of the employees, as it demonstrates
that the ideas coming in are not only nonthreatening, but helpful.
Develops a Cadre of Coaches and Champions. By the end of the pilot
at STCC (the community college discussed in the last chapter), the super-
visors in charge of each of the three pilot teams had become very profi-
cient at managing ideas. The counsel of this small cadre of experts proved
invaluable. During the college-wide rollout of the idea system, this trio
volunteered to attend meetings in the newly launched areas to provide
coaching, and they invited supervisors in these areas to observe their own
meetings. One issue they helped with, for example, was that some of the
more recently promoted supervisors were still feeling out their roles, and
their people’s ideas were frequently putting them in situations where they
were unsure of their responsibilities and authority. Did they have to accept
all the ideas their team voted to do, even the ones they disagreed with? Was
it appropriate for their subordinates to approach other supervisors, with-
out their being present, if they needed information or help with ideas? And
what happens when a team wants to work on an idea, but the supervisor
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has sensitive information he or she cannot share that is relevant to how
well the idea will work? The members of the cadre, who had wrestled with
these kinds of issues themselves, had both the legitimacy and experience
needed to help the new supervisors work through them.
Replacing Uncertainty with Anticipation. When the decision to launch
an idea system is announced, typically everyone has a lot of questions and
concerns: “How will it affect my job?” “How much time will it take, and
how can I find that time?” “How can I come up with all the ideas expected
of me?” “Is the effort really worthwhile?”
A successful pilot test turns these concerns into a positive anticipation
by answering these questions and demonstrating the benefits of front-line
ideas. At the national retailer we discussed in Step 5, when workers in
other departments saw their colleagues in the pilot areas using their new
idea systems and spending authority to eliminate long-standing annoy-
ances, they began pestering their managers about when they could start to
work on their problems, too.
Organizing the Pilot
To fulfill its purpose, a pilot has to be successful both from the technical
perspective and the management-of-change perspective. That is, it has to
verify that the idea system design basically works, and it has to demon-
strate the advantages of the system. If the design team has done its job,
technical success should be straightforward. Consequently, the overriding
consideration becomes demonstrating the system’s value.
The critical design questions for the pilot are as follows:
� Which areas should be selected for the pilot test?
� What kind of training and support should be provided to pilot-area
supervisors and employees?
� How long will the pilot last?
A key consideration in selecting pilot areas is their managers’ leader-
ship skills and enthusiasm for the initiative. The single-biggest factor in
making a pilot area successful is the quality of its manager. The pilot test
IMPLEMEnTInG A HIGH-PERFORMInG IdEA SYSTEM | 125
is not a time to work with difficult managers, troubled teams, or areas
with logistical issues that would add to the challenges of starting an idea
process. The time to tackle challenging areas is after the organization has
developed expertise in idea management.
Once the pilot areas are selected, their managers need to receive train-
ing as well as plenty of support and coaching. The certification program
we described in Chapter 2 is a good example of what this might include.
The pilot period is generally three or four months long. People need
enough time to learn their new roles, enough ideas need to be processed to
give the system a realistic “stress” test, and enough ideas need to be imple-
mented to demonstrate the value of the system.
Make Corrections While the Pilot Is Still Running
It is important not to wait until the pilot test is over to review performance
and make changes. The earlier that problems are identified and action is
taken, the better the results of the pilot test will be.
The trick to rapid problem identification is getting good information
in a timely fashion. Design team members and managers should observe
idea meetings and interact with the people in the pilot areas. Everyone in
these areas should be encouraged to “yell loudly” when they become aware
of system-related problems. In addition, pilot area supervisors should meet
regularly with the design team to discuss issues and concerns.
The insights gained through these interactions will help the design
team understand what is driving the quantitative data it collects. Such data
typically includes the numbers of implemented ideas in each area, how
many escalated ideas have been forwarded to whom, and how many have
been responded to in a timely manner. To provide quantitative data in
near real time, some organizations develop highly visual “dashboards”—
typically driven by web-based programs that draw information directly
from the databases used to record and manage ideas. Dashboards allow
managers to easily monitor how ideas are flowing, analyze patterns, and
quickly identify problems. Taken together, the qualitative and quantitative
information gives the design team a holistic view of the system and allows
them to quickly flag areas that need help.
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For example, during the three-month pilot test at the large national
retail chain we discussed earlier, the pilot area supervisors were encour-
aged to complain whenever they experienced problems or bottlenecks,
and to propose system improvements. To make this process as easy as
possible, every week each pilot area supervisor and his or her man-
ager met with a member of the idea staff to talk about opportunities to
improve the system. In addition, once a month, the idea staff organized
a one-hour meeting with all the pilot area supervisors and their manag-
ers so they could share experiences, discuss tactics and problems, and
swap solutions. In the first meeting, several items came to light and were
quickly resolved:
� Supervisors reported that ideas requiring even modest purchases were
getting backlogged in the procurement process. The VP of human
resources, who was also the idea system’s executive champion, met
with the head of purchasing, who agreed to initiate a fast-track pur-
chasing process for front-line ideas and to staff it with an energetic
purchasing agent instructed to help the pilot departments in any way
she could.
� It became apparent that the supervisors’ idea facilitation skills were
weak. Within a week, a training/coaching program was developed and
delivered to each supervisor on an individual basis.
� Because the front-line teams turned out to be much more responsible
with their budgets than management expected, their spending limit
was raised from $25 to $250 per idea.
As we mentioned earlier, the status of “pilot” confers a license to sus-
pend normal operating rules and to make changes to the idea system, and
to the management systems, while the pilot is still underway. As evidence
begins to accumulate that certain policies or procedures are hindering
ideas, top managers are often willing to suspend or allow temporary work-
arounds to them during the pilot period. Such changes are generally low-
risk given that they will automatically expire with the completion of the
pilot test. But if they do prove effective, it is then much easier to make the
case for a permanent change.
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STEP 7
Assess the Pilot Results, Make Adjustments,
and Prepare for the Launch
Once the pilot has been completed, a full review of it should be conducted
with the intent to
� Identify any problems with the idea-handling process, including those
caused by misalignments in the organization’s management systems.
� Determine whether additional resources are needed in any crit-
ical areas.
� Capture “lessons learned” that will help with the organization-
wide rollout.
Many of the issues identified in the review, such as training shortfalls
or glitches in the mechanics of the idea process, will be solvable by the
design team. But some issues will require senior management involve-
ment. Two of the more common ones are (1) difficulties with the esca-
lation process and (2) decision-making processes that are cumbersome,
inappropriate, or flawed.
Few organizations have systems in place to effectively handle ideas
escalated from the front lines. Until managers experience the challenges
involved, it can be hard for them to get their minds around how their
escalation process should work. Recall that ideas are escalated for three
reasons: (1) they need permission from higher levels; (2) they need more
resources than are available to front-line teams; or (3) they are cross-
functional—that is, they require the involvement of different areas of the
organization. Ideas escalated for either of the first two reasons can usually
be handled through the existing chain of command. But cross-functional
ideas originating from the front-lines are a different story.
While almost all organizations have experience working with cross-
functional ideas, this experience is typically with ideas that come down
from higher up in the organization. They usually address larger issues and
are handled either through regular management meetings, by special ad
hoc project teams, or with informal manager-to-manager interactions.
128 | THE IdEA-dRIvEn ORGAnIzATIOn
Such approaches are impractical for handling large numbers of (gener-
ally smaller) bottom-up cross-functional ideas addressing problems on the
front lines that are not so visible to management. These kinds of ideas need
streamlined mechanisms capable of handling them quickly and efficiently.
Because an escalation process will define how senior managers will inter-
act with bottom-up ideas, senior managers need to be directly involved in
its design.
A second issue that often requires senior management attention is
when decision-making processes are too cumbersome, inappropriate, or
flawed to handle large numbers of bottom-up ideas. Proposed improve-
ments may require too many approvals, approvals at too high a level, or
approvals from the wrong people. Rationalizing these kinds of decision-
making problems may require some political wrangling, but conceptually
they are simple to correct.
A decision-making problem that is more challenging to address is
when management puts too much emphasis on the numbers and requires
detailed cost-benefit analyses (CBAs) for even the most obvious ideas. As
we discussed in Chapter 2, CBA is a poor decision-making tool in most
situations because it is inherently inaccurate. Furthermore, insisting on
CBA as the default decision-making tool merely creates a lot of non-value-
adding work for front-line employees. Because this institutional mindset
typically comes from the top, it typically has to be changed by the top, too.
A good way to start is to present senior managers with strong evidence that
too much emphasis on CBA is actually costing them money by blocking
profitable ideas.
For example, during the assessment phase at a financial services com-
pany, many people warned us that the leadership’s myopic focus on the
numbers was blocking the flow of ideas. For example, a secretary in accounts
receivable told us that the company was printing the wrong return mail
address on its invoices, causing hundreds of checks per week to go to the
wrong office some twenty miles away across a major city. But she couldn’t
get the problem corrected without doing a thorough CBA to prove that the
money saved would justify the expense of the change. Because she didn’t
know how to do this, she dropped the idea. She brought it up again during
the pilot phase of the new system, when the CBA requirement had been
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suspended for obvious low-cost improvements. The problem took the IT
department only a few minutes to correct. In its quest to build evidence for
making the temporary suspension of CBA permanent for obvious small
improvements, the design team went back and calculated that the delayed
depositing of checks had been costing the company tens of thousands of
dollars annually in lost interest.
Over the course of the pilot test, it became obvious that the company’s
emphasis on CBA had indeed imposed a huge barrier to many good ideas,
and the policy mandating its use was permanently dropped except for
ideas where larger expenditures were involved.
The second goal of the postpilot review is to determine what addi-
tional support-function resources will be needed once the idea system is
launched organization-wide. As we discussed in Chapter 4, this infor-
mation is difficult to gather in advance. But the experience gained from
the pilot will provide a good indication of where more support-function
resources will be needed.
The third goal of a postpilot review is to identify ways to make the
organization-wide launch go as smoothly as possible. For example, at the
U.S. military base mentioned earlier in this chapter, a concern emerged
from the short pilot that middle managers (some of whom were midrank-
ing officers) were not observing enough idea meetings and doing enough
coaching of their supervisors. When the middle managers heard this, they
requested help with what exactly they should be looking for when apprais-
ing a team, and how they should respond to what they saw. As a result, a
list of specific things to look for was generated, along with corresponding
coaching and advising tips.
STEP 8
Roll Out the System Organization-wide
The pace and nature of an idea system launch depend on the organization’s
size, structure, culture, resources, and leadership team’s sense of urgency.
If the unit is small, it may make sense to train everyone together, and
launch the whole system at once. But even in medium-sized units, rolling
the system out gradually has a number of advantages. The first involves
130 | THE IdEA-dRIvEn ORGAnIzATIOn
resources. Each department will require support during its startup phase.
Managers, supervisors, and employees will all need to be trained and
coached. Few organizations have the resources to do this for everyone at
once. Pacing the rollout to match the available resources also destresses the
launch and allows support functions such as IT, maintenance, purchasing,
and engineering to more gradually adjust to their added responsibilities to
help with front-line ideas. Furthermore, a phased rollout gives higher-level
managers more time to get involved in each area’s launch.
The second advantage of a gradual rollout is that each departmental
launch benefits from the experience gained by its predecessors. The grow-
ing number of managers with deep expertise can be particularly helpful
when rolling out the system to departments with special challenges—
which is one reason that it is a good idea to schedule such departments
later in the rollout.
A final advantage to a rollout launch is that departments with more
reluctant managers can be scheduled near the end. By that time, they
should have witnessed the system’s success across the organization and
have heard from their colleagues how helpful front-line ideas have been to
them in meeting their goals. The momentum of the system and its obvious
benefits makes continued resistance foolish.
Training
For a successful launch, significant training is needed at every level. Man-
agers need to understand the philosophy behind the new idea system,
their own roles in it, and how front-line ideas can be used to help them
to achieve their group’s goals. While much of the conceptual knowledge
needed can be delivered through prelaunch workshops, the actual idea
management skills can only be honed through practice and coaching. And
the best place to get this practice and do this coaching is when managers
are working with their own teams on real ideas in their own areas.
Many leaders make the mistake of throwing their supervisors into
their new roles with little or no training. In idea-driven organizations,
a supervisor’s job switches from making sure that the work gets done to
making sure that the way the work gets done is constantly improving.
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Supervisors need training, practice, and coaching to develop the skills and
attitudes required for this new mindset and role.
In the beginning, front-line employees will need a short training mod-
ule on how to participate in the idea management process, but this is only
the beginning. Most of their training will be done on an ongoing basis,
and it should be primarily aimed at making them able to identify problems
that were previously invisible to them. This is the focus of the next chapter.
STEP 9
Continue to Improve the System
An idea system is not a “fire and forget” initiative. Even mature idea-driven
organizations are continually finding ways to improve how they manage
ideas. For example:
� Allianz Slovakia (which in 2009 won the award for most innovative
“Operating Entity” in Allianz’s global network of 120 insurance com-
panies) extended its idea system in 2010 to include its two-hundred-
plus independent agents around Slovakia. Now, if agents have ideas
or wish to report problems, a single function key on their computer
opens a window that allows them to do so.
� The Utah group of Autoliv, the automotive safety systems company,
has long been among the most idea-driven companies in the world,
consistently averaging more than fifty implemented ideas per person.
Over the last few years, its managers have implemented a number of
initiatives to put extra emphasis on high-leverage areas for ideas. One,
for example, was to set up a “Jidoka Wall of Heroes.” Jidoka is the
lean concept of stopping work to address problems or defects as they
occur. The smallest problem, if not caught and corrected early, can
become extremely costly later. When a worker flags a problem that
could eventually become much larger, his or her picture and an expla-
nation of the importance of that employee’s actions are posted on the
Wall of Heroes.
� When Pyromation discovered that most of each team’s ideas were
being implemented by only one or two people, it redesigned its idea
132 | THE IdEA-dRIvEn ORGAnIzATIOn
process to assure that no one could work on more than two ideas at a
time, and everyone would be assigned at least one.
No matter how much care goes into the initial design of your idea
system, it should be made clear to everyone that the system will need to
constantly evolve and improve. A system that is designed for continuous
improvement should itself be continually improving.
| K E Y P O I N T S
We recommend a process for implementing an idea system that has the
following nine steps:
Step 1. Make sure the leadership understands that a high-performing idea
is a long-term initiative to create a significant new strategic capa-
bility. Then the leaders will have the patience and perseverance to
provide the long-term leadership needed and be able to deploy the
system in a strategic manner.
Step 2. Form and train the team that will design and implement the sys-
tem. The team should have the power, credibility, and knowledge to
design a system that integrates well with how the organization already
works, to address the potentially significant organizational issues that
will arise, and to lead the launch organization-wide.
Step 3. Assess the organization from an idea management perspective to
identify misalignments, potential implementation challenges, and any
existing systems that can be built upon or that should be integrated
with the idea system.
Step 4. Design the idea system. The better the idea system can be inte-
grated into existing practices and procedures, and the fewer new
practices and procedures are created especially for it, the more easily
and quickly it will be accepted as a regular part of the way the com-
pany works, and the better it will perform.
IMPLEMEnTInG A HIGH-PERFORMInG IdEA SYSTEM | 133
Step 5. Start correcting misalignments. Before the launch, it is impor-
tant to eliminate obvious misalignments so that front-line teams can
implement most of their ideas without undue heroics.
Step 6. Conduct a pilot test. Without a good pilot, many problems that
are easy to correct if caught early become disruptive and difficult to
deal with when the system is broadly deployed.
Step 7. Assess the pilot results, make adjustments, and prepare for
the launch.
Step 8. Roll out the system organization-wide. The pace and nature of
an idea system launch depends on the organization’s size, structure,
culture, resources, and leadership team’s sense of urgency. In most
situations, it is better to roll the system out in a measured fashion.
Step 9. Continue to improve the system. An idea system is not a “fire and
forget” initiative. Even mature idea-driven organizations are continu-
ally finding ways to improve how they manage ideas. A system that
is designed for continuous improvement should itself be continually
improving.
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135
The Idea-Driven Organization
Ways to Get More and Better Ideas
7
Way s t o Ge t Mo re
and Be t t e r I de as
WHEn An IdEA SYSTEM is launched, rarely is there a shortage of ideas.
Front-line employees are already aware of many problems and opportu-
nities 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 unneces-
sarily every day?
� (Deli Counter) Why does it take nine keystrokes to key in a slice of pizza
in the deli section? Please fix.
136 | THE IdEA-dRIvEn ORGAnIzATIOn
� (Meat Section) Put a mirror above the partition between the service
counter and the back room where we cut the meat so we don’t have to
put down our work every three minutes to come out and see if a cus-
tomer is waiting.
� (Groceries) We currently sell tubes of flavored ice unfrozen, for people
to take home and freeze for their children. In the summer, why not put
some in the freezer for impulse buys?
These are all good ideas that were quickly implemented. But notice
how they are also commonsense responses to problems that have made
employees’ jobs harder or are straightforward responses to repeated cus-
tomer requests. Such ideas usually get an idea process off to a good start.
But once the obvious problems have been addressed, the rate at which ideas
come in typically slows dramatically. The remedy is to provide ongoing
training and education to help your front-line people continually generate
new types of ideas. This chapter is a primer of easy-to-use “street-smart”
techniques to keep ideas coming in.
PROBLEM FIndInG
In its most basic form, creativity can be divided into two parts: problem
finding and problem solving. Historically, most organizations have focused
on problem solving. This is only natural, because most organizations
struggle to keep up with the onslaught of obvious problems that pop up
in the normal course of daily work. Why would they go looking for more?
A huge industry has built up around problem solving, and many books,
tools, and training programs are available for help in this area.
A good idea system significantly multiplies an organization’s problem-
solving capacity, so it burns through the obvious problems faster than they
come in. To keep improving, it has to get better at problem finding. This
effort has two components: (1) developing employees’ problem-finding
skills and (2) creating organizational mechanisms that bring more prob-
lems to the surface.
Problem finding is a matter of perspective. So a quick and easy way to
enhance your employees’ problem-finding abilities is to expose them to
WAYS TO GET MORE And BETTER IdEAS | 137
fresh perspectives on how the organization can be improved. These alter-
native perspectives will cause them to see problems and opportunities that
they would not have seen otherwise. Two methods to do this are idea acti-
vators and idea mining.
Idea Activators
Idea activators are short training or educational modules that teach people
new techniques or give them new perspectives on their work that will trig-
ger more ideas. Depending on the nature of the information to be imparted,
these modules can be anything from a ten-minute talk to a formal classroom
training session of several hours. To see how idea activators work, let us look
at how Subaru Indiana Automotive (SIA) used a series of carefully targeted
activators to reach the very ambitious goal mentioned briefly in Chapter 3.
In 2002, Fuji Heavy Industries, SIA’s Japanese corporate parent, gave
it the goal of becoming “zero landfill” by 2006. SIA’s leadership team knew
that to reach this goal in a cost-effective manner, they had to involve their
front-line associates. They were the ones who first handled materials (such
as packaging, used solvent, and steel scrap) after they had served their
intended purpose and become waste.
However, the leadership team also knew that simply asking associates
for their “green” ideas would not be enough. Most people have a fairly
limited understanding of how to reduce an organization’s environmen-
tal impact. For example, everyone knows about recycling, but most recy-
cling offers only limited environmental advantages and is generally not
cost effective. So SIA set out to increase its people’s ability to spot green
improvement opportunities by using idea activators. These activators
introduced them to simple concepts that the company thought would
spark large numbers of small ideas to eliminate landfill waste.
The Three Rs. SIA began with a brief orientation session on the Three Rs:
reduce, reuse, recycle. The Three Rs are the central components of what
is often referred to as the “waste management hierarchy” (see Figure 7.1).
Starting from the bottom, this hierarchy ranks the different kinds of envi-
ronmental actions in increasing order of environmental benefit:
138 | THE IdEA-dRIvEn ORGAnIzATIOn
� Burning material for energy is better than sending it to a landfill.
� Recycling it is better than burning it.
� Reusing material is better than recycling it.
� Reducing the amount needed is better than reusing it.
� Eliminating the need for material is better than reducing it.
The Three Rs framework was a good initial idea activator for SIA’s
purpose, because it was easy to remember and got people to think of ideas
beyond simple recycling. Employees were taught to try to move what was
done with waste materials further up the hierarchy, because this produced
both greater environmental benefits and more cost savings.
One set of ideas, for example, moved the packaging for engine com-
ponents from recycling to reuse. These components came from a Japanese
supplier in large shipping containers, packed tightly in specially contoured
protective Styrofoam blocks. Formerly, as employees unpacked these parts,
they would put large amounts of Styrofoam into recycling bins. Recycling
Styrofoam is expensive, as its low density increases handling and ship-
ping costs, and it requires more processing and energy than most other
polymers. But after Three R training, an employee team began to wonder
F IGURE 7.1 The waste management hierarchy
Eliminate
Reduce
Reuse
Recycle
Burn for Energy
Landfill
B
et
te
r
WAYS TO GET MORE And BETTER IdEAS | 139
whether it wouldn’t be feasible to reuse this packaging. Since the empty
shipping containers were already being sent back to the supplier, why
couldn’t they be repacked with the used Styrofoam so it could be reused
by the supplier for a future shipment?
After analyzing the feasibility and costs of this, the team discovered
that the idea would actually be profitable, and it quickly led to other ideas
to return packaging materials to that supplier for reuse. Eventually, some
eighty different kinds of plastic caps, metal clips, cardboard spacers, and
various other packing materials were being returned to Japan for an annual
savings of more than $3 million. When the Styrofoam packaging material
is considered no longer suitable for reuse, the Japanese supplier melts it
down and reuses the polymer to make new packaging material.
Other ideas, some extremely simple, reduced the company’s usage
of materials. One, for example, was to have parts arrive in open-topped
boxes. Since they were delivered on wrapped pallets anyway, the tops
weren’t needed. This idea not only saved cardboard but also meant work-
ers no longer had to use box cutters to open the boxes—hence, a safety and
productivity improvement as well.
Dumpster Diving. If nothing was to be thrown away, everything put into
the dumpsters had to be eliminated—recycled, reused, or not generated
in the first place. Even the dumpsters themselves had to go. To this end,
SIA developed another activator called “dumpster diving.” Dumpster-
diving teams overturned the dumpsters in their areas, spilling their con-
tents onto the floor where they were sifted and sorted by source and type.
Then the teams came up with ideas to deal with each type of waste using
the Three Rs.
The effectiveness of this tactic is illustrated in the case of the dumpster
that was located near the robotic welders used to assemble the car bodies.
The dive team quickly realized that the “dirt” in the dumpster was actually
the remnants of sparks generated during the welding process. These sparks
are small particles of welding slag, which includes copper oxide blown off
the copper welding tips by the arcing of the high-amperage electric current
used to fuse the steel together. If zero landfill were the goal, sending the
floor sweepings to the landfill would no longer be an option. After some
140 | THE IdEA-dRIvEn ORGAnIzATIOn
searching, SIA found a company in Spain that could process the slag to
recover the copper.
While processing the welding slag kept it out of the landfill, it was
expensive to ship it to Spain (and the shipping added to the company’s
carbon footprint). So SIA set out to reduce the amount of sparks created
in the welding process. Because sparks are caused by arcing between the
copper welding tips and the steel, the better the fit between the tip and the
steel, the fewer the sparks that are generated. A new tip of the proper shape
sparks very little. But with use, the hot copper welding tips soften and
deform, degrading the fit and creating more sparks. Because it is expensive
and disruptive to replace the copper tips as they start to deform, stan-
dard practice is to increase the amperage on the welder every two hours to
assure a good weld. The extra power produces even more sparks and heat,
creating more tip deformation, which requires even more amperage, and
so on. Now, instead of turning up the electricity when the tips deform, a
special device mounted on each welder quickly machines them back to
the optimal shape. The result—fewer sparks, less electricity used, and a 73
percent reduction in the number of welding tips consumed.
Compressed Air. The largest consumers of electricity at SIA were the air
compressors. Compressed air was used extensively throughout the facility
in a wide range of manufacturing processes. To reduce its consumption,
SIA developed an idea activator that showed employees the high envi-
ronmental and financial cost of generating compressed air and provided
them with a number of clever tips on how to identify opportunities to
cut its usage. This information resulted in thousands of ideas throughout
the facility to plug air leaks and to replace O-rings in leaking pneumatic
equipment, to improve maintenance regimes on air-powered tools and air
cylinders, and to install shut-off valves for areas that did not need com-
pressed air all the time. Here are some of the more creative ideas:
� Turning the plantwide compressed air level down from ninety-two
pounds per square inch (psi) to eighty-seven, because the last few psi
require a disproportionate amount of energy to generate and were not
necessary—especially with the better-maintained pneumatic equipment
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� Using a sensitive sound meter (when the facility is not operat-
ing and quiet) attached to a pole to listen to compressed air pipe
joints high up near the ceiling for even tiny air leaks that humans
couldn’t hear
� Connecting two areas of the plant that had separate compressed air
systems with an air pipe so that when combined demand was low
enough, the two areas could share a single set of compressors
Cumulatively, the resulting front-line ideas to save compressed air cut the
amount of electricity needed to generate compressed air in half, and SIA
was able to take two of its four large air compressors offline.
Recycling Versus Downcycling. Another idea activator taught the dif-
ference between recycling and downcycling. Downcycling occurs when the
method of recycling reduces the value or quality of the material. In most
plastic recycling, for example, a wide assortment of different types and
colors of plastics is melted down into an amorphous polymer blend use-
ful only for low-value applications such as parking bumpers and plastic
boards. Most “recycling” is actually downcycling. Whereas downcycling
degrades the material, true recycling maintains its original physical char-
acteristics and quality.
Armed with this new understanding, employees generated hundreds
of ideas to change processes in order to avoid downcycling whenever pos-
sible. For example, a large number of ideas involved getting suppliers of
different parts to use uncolored plastic of a standardized grade for packag-
ing, so the different parts could be recycled together without degrading the
value of the polymer.
SIA’s green idea activators enabled its front-line employees to come up
with large numbers of ideas without the need for disruptive and expensive
formal training programs. Most of the activators were short enough to be
delivered to work teams at their regular stand-up preshift team meetings.
In the end, SIA sent its last waste shipment to a landfill in May 2004, two
years ahead of its deadline, having also reduced its annual operating costs
by millions of dollars.
142 | THE IdEA-dRIvEn ORGAnIzATIOn
Like at SIA, the specific sequence of idea activator training sessions
that you need to develop will depend on your organization and its stra-
tegic goals. Some of these activators may be generic improvement tools
that are already widely used to identify and solve common problems. By
way of example, many lean tools—such as 5S (good housekeeping), poka-
yoke (error-proofing), process charting, and value stream mapping—are
reliable triggers for a large number of ideas. For instance, Bumrungrad
Hospital in Bangkok, Thailand, one of the leading hospitals in the world,
has radically reduced or almost entirely eliminated many kinds of medical
errors through extensive application of poka-yoke principles at every stage
of the health care delivery value stream.
Idea activators do not have to address only the major goals of top
management. They can address smaller targets of opportunity as they are
identified at the front-line level. For example, in a U.K. financial services
company, many ideas requested the IT department to write Excel macros
to save office workers’ time on repetitive tasks. After seeing a number of
these ideas over a few months, a middle manager suggested providing a
quick idea activator on how to create Excel macros, so staff members could
do it themselves. This certainly saved the IT function time, but it also trig-
gered many ideas from people who could now see more applications for
macros and also easily create them themselves.
Idea Mining
Many ideas have novel perspectives embedded in them. These perspectives
are usually implicit, but if drawn out, they have the potential to trigger
more ideas. The process of digging out these implicit novel perspectives is
what we call idea mining.
We once witnessed a senior manager at a European insurance com-
pany put the concept to use immediately after a short training session on
idea mining. Sitting in the back of an idea meeting in one of the company’s
small animal pet insurance call centers, we were observing the employ-
ees discuss problems and brainstorm ideas. One problem on their board
was that customers were frequently calling the department for help with
equine policies. The equine insurance division was in a different part of
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the country, and there was no way for the representatives to transfer these
calls. Such calls were occurring some ninety times per week, and each
wrong number took two or three minutes to deal with. The representative
had to apologize, explain to the customer that he or she had called a wrong
number and that there was no way the call could be transferred, wait for
the customer to get a pencil and a notepad, provide the customer with the
correct number, and perform any other needed service recovery. Two min-
utes per call, ninety times per week, meant that the problem was wasting
about three hours per week.
One employee pointed out that the reason for all the wrong numbers
was that the company’s Yellow Page ad was confusing. The ad contained
many phone numbers, and its graphics and layout made it easy for custom-
ers to call the wrong number. “I’ll let the marketing department know,
as they are about to place the new ads in this year’s Yellow Pages,” their
manager said, and then began to move onto the next idea.
“Wait!” the senior manager piped up from the back. “Before you move
on, let’s make a new rule. Every time a customer is confused, let’s write
down the source of confusion on the idea board and see if we can fix the
problem. When customers are confused, it is frustrating for them and
wastes both their time and ours.” He had noticed that the idea embodied
a fresh perspective that the group could use to come up with new types of
ideas to improve customer service. By drawing this new perspective out
and making customer confusion a “problem flag” for the group, the senior
manager made this single idea the seed of many more.
Not long afterward, we shared this example in a training session at a
U.S. health insurance company. On our next visit, the idea system man-
ager proudly remarked that the company had created its own problem flag.
“Every time a customer calls, write down the reason why. After all, cus-
tomers do not call just to say hello or to wish us Merry Christmas. They
call because something we did, or did not do, made it necessary for them
to call.” Think of all the customer service improvements and other ideas
that insight led to!
In our seminars, we often use an idea mining exercise to illustrate
how easy it is to draw out novel perspectives from a set of ideas. For our
explanation of this exercise, we will work with the sheet of “Ideas from the
144 | THE IdEA-dRIvEn ORGAnIzATIOn
Clarion-Stockholm Bar” given in Table 1.1. For convenience, we reproduce
a numbered version of the sheet here as Table 7.1.
We begin by dividing the participants into small groups and asking
each group to pick a number between one and eighteen (the number of
ideas on the Clarion sheet). We then give them the idea sheet. Each group
is asked to find the idea on the sheet that matches the number it picked.
(Making participants pick their numbers before giving them the sheet
keeps them from “cherry-picking” ideas to work with.)
We then instruct the groups to discuss their chosen ideas and consider
the following questions, in order to identify any related ideas and tease out
any novel perspectives that are implicit in their chosen idea:
� What other ideas does this one suggest?
� What other areas for improvement does this idea suggest?
� What fresh perspectives about how the organization can be improved
does this idea suggest?
To show how this works, let us take the example of a group that picked
the number six, which corresponds to Tim’s idea:
Whenever the bar introduces a new cocktail, have a tasting for the
restaurant staff, just as the restaurant always does when a new menu
or menu item is introduced, so servers know what they are selling.
Here are some responses the group might have given for this particular idea:
� Whenever the hotel introduces a new product or service, have the staff
sample it and have it explained to them so they will be able to answer
customer questions about it, will think of recommending it when appro-
priate, and be better able to sell it when they do.
� What other products and services could be sold more effectively if the
staff were given the proper training and information about them?
� This is an example of improving cross-selling. One area (the restaurant)
is selling products from another (the bar). In what other ways can we
cross-sell products and services within the hotel?
Although it is impractical to try to mine every idea, and not every idea
is worth mining, it is astonishing how many potential perspectives can be
WAYS TO GET MORE And BETTER IdEAS | 145
TABLE 7.1 Clarion Hotel Stockholm: Ideas from the bar
1. Marco Get maintenance to drill three holes in the floor behind the bar and
install pipes so bartenders can drop bottles directly into the recycling
bins in the basement.
2. Reza When things are slow in the bar, mix drinks at the tables so the guests
get a show.
3. Nadia Many customers ask if we serve afternoon tea. Currently, there is no
hotel in the entire south of Stockholm that does. I suggest we start
doing this.
4. Tess Have an organic cocktail. Customers often ask for them, and we don’t offer one.
5. Nadia Clarion conference and event sales staff often meet prospective
customers in the bar. Give the bar staff information in advance about
the prospects so they can be on alert and do something special.
6. Tim Whenever the bar introduces a new cocktail, have a tasting for the
restaurant staff, just as the restaurant always does when a new menu
or menu item is introduced, so servers know what they are selling.
7. Fredrik When the bar opens at 9:30 in the morning, many guests ask for
vitamin shots (special blends of fruit juices). Put these on the menu.
8. Nadia Have maintenance build some shelves in an unused area in the staff
access corridor behind the bar for glasses. Currently, there is so little
space for glasses in the bar that they are stored upstairs in the
kitchen, and it takes 30 minutes, several times a night, for one of the
two bartenders to go and get glasses, which means lost sales.
9. Marco In the upstairs bar, we have to spend an hour bringing up all the
alcohol from downstairs when we open and putting it away when we
close. We wouldn’t have to do this if locks were installed on the
cabinets in the bar.
10. Marin On our receipts, when guests pay with Eurocard, it says “Euro.” This
confuses many guests, who think they have been charged in euros
instead of kronor. Get the accounting department to contact our
Eurocard provider to see if we can change the header on the receipts.
11. Nadia The bartending staff often act as concierges, telling people about the
hotel, local shops, restaurants, and attractions, and giving directions.
We have a concierge video that we show on our website. Offer this on
the Tvs in all hotel rooms.
12. Tess Currently we close at 10 p.m. on Sundays, and many guests complain
about this. Because we have a red dot on our liquor license from a
single violation many years ago, we must have four security guards in
the bar to be open after 10 on Sundays, and this is too expensive.
Apply to have red dot removed, and then we can stay open with only
one security guard.
(continued)
146 | THE IdEA-dRIvEn ORGAnIzATIOn
extracted from a routine set of ideas. Table 7.2 gives sample responses for
just the first five ideas on the Clarion-Stockholm sheet. Moreover, the con-
cept of idea-mining is not difficult to grasp and can easily be demonstrated
and taught during a team’s regular idea meeting.
The exercise just described is often eye-opening for managers. It shows
them the value of targeted idea training and lays to rest the fear that sooner
or later employees will run out of ideas. In fact, in our experience, rather
than worrying about running out of ideas, after this exercise many manag-
ers become more concerned about being overwhelmed by them.
We recommend keeping track of some of the more useful perspectives
that come out of idea mining in your meetings. Over time, you can build
up a very useful list of broadly applicable questions that can be shared
across your organization and used in problem-finding training and in
training for new employees. Consider these examples:
TABLE 7.1 (continued) Clarion Hotel Stockholm: Ideas from the bar
13. Nadia The late night security guards are sometimes curt and rude to the
customers (the security service is subcontracted). These guards
should be required to take the same “Attitude at Clarion” training that
all Clarion staff take.
14. Marco Increase the font size and make clearer that the coupons that
conferences give out are for discounts at the bar, not for free drinks.
15. Nadia Have the kitchen mark the prewrapped ham sandwiches that the bar
sells. Bar staff currently have to cut them in half to tell the difference
between them and the ham-and-cheese sandwiches.
16. Marin Put an extra beer tap in the bar, so we can sell more beer. Currently,
there is only one, and it is a bottleneck.
17. Nadia Have maintenance put some sandpaper safety strips on the
handicapped ramp in the bar. Children currently use it as a slide, and
the bar staff has to deal with minor scrapes and cuts on a daily basis.
18. Nadia Give the bar staff information about how many guests are staying in
the hotel, so they can stock and staff the bar appropriately.
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TABLE 7.2 Perspectives drawn out of Clarion bar ideas
1. Get maintenance to drill three holes in the floor behind the bar and install pipes
so bartenders can drop bottles directly into the recycling bins in the basement:
� What other things do bartenders have to leave the bar to fetch or do that could be
streamlined or improved?
� What aspects of the bartenders’ jobs that are non-value-adding—i.e., that take them
away from serving customers—can we eliminate or streamline?
� Are there other places in the hotel where we can make recycling easier?
� Can we reduce the amount of bottles and cans we use in the first place?
2. When things are slow in the bar, mix drinks at the tables so the guests get a
show:
� What other things can we do to make our service flashy and entertaining?
� What other things could we do at the tables that would be different and interesting?
� In what other ways could we use extra bartending capacity when things get slow?
3. Many customers ask if we serve afternoon tea. Currently, there is no hotel in the
entire south of Stockholm that does. I suggest we start one:
� What other drinks and foods are customers asking about, and can we provide these?
� Afternoon tea is a British concept. What other national or ethnic traditions can we cater to?
� What other things are offered in bars and hotels that we don’t offer?
4. Have an organic cocktail. Customers often ask for them, and we don’t offer one.
� What other health needs or lifestyle trends (fair-trade, gluten-free, etc.) do our customers
care about?
� Are there any fashion/political trends we can offer drinks in line with?
� Ask customers for ideas about drinks we currently don’t offer that they would like.
5. Clarion conference and event sales staff often meet prospective customers in
the bar. Give the bar staff information in advance about the prospects so they
can be on alert and do something special.
� What other potential customers are brought to the bar—birthday parties, weddings, and
other events—that it would be useful for the bar staff to know about in advance?
� What kinds of special services can bartenders provide, and which will work best?
� What other visitors to the bar may be particularly important to the hotel—VIPs, famous
people—and could the bar get a heads-up on those people too?
� What other hotel services could bar staff be involved in selling?
� Might there be ways to do “something special” for all guests?
148 | THE IdEA-dRIvEn ORGAnIzATIOn
� Every time a customer asks you for something you or your organiza-
tion can’t do, ask why it isn’t currently possible and what could be done
to make it possible.
� Anytime it takes you more than fifteen seconds to find some-
thing, ask why.
� Anytime something comes back to you or your group because it was
not done correctly the first time, ask why.
� Anytime customers ask questions or seem confused, ask why.
� Anytime you realize that you or your coworkers are making mistakes
due to a poor process, think what could be changed.
� Anytime you throw something out, ask why it is there in the first place
(a green perspective).
The Clarion-Stockholm Hotel also encourages its people to use two
additional “digging” techniques that are similar in spirit to idea mining:
aggressive listening and thoughtful observation. An example of aggressive
listening is that when guests come to reception to check out, the staff will
always ask them how their stay was. If a guest has a complaint, the front-
desk clerk is careful to get all the details he or she can in order to fully
understand what happened. So far, this is no different from most good
hotels. The difference comes when a guest responds with simply “Fine”
or “OK,” but the clerk can tell that something might be bothersome. The
staffer will not simply let it go at that and will politely probe further. When
such deeper inquiry is done properly, it becomes a pleasant and sincere
conversation while the guest’s receipt is being processed. The guest is shar-
ing a concern or observation with a “friend” that they would normally not
mention to a stranger. Think of how many times you have wanted to tell
a hotel checkout person about a problem or give a suggestion about how
the hotel could do better, but held back because you felt the staffer was not
really interested.
The Clarion-Stockholm also encourages its employees to observe
customers closely to notice subtler problems and opportunities that cus-
tomers may not formally articulate. One astute observation, for example,
came from a server in the dining room. She noticed that many customers
left their reading glasses at home and had trouble reading the menu. Her
WAYS TO GET MORE And BETTER IdEAS | 149
suggestion: have a box with various strengths of reading glasses to lend to
diners who need them.
The increased thoughtfulness about the guest experience results in
some unique touches at the hotel. For example, one day a guest arrived in a
panic. He was about to lead a workshop, the battery on his laptop computer
was almost dead, and he had forgotten to bring his charger. A member of
the front desk staff scoured the hotel to find one that would work. Once the
guest’s problem was solved, the staffer submitted an idea: purchase spare
chargers for the most popular laptop computers for guests with emergen-
cies, and keep these chargers on hand in the hotel’s two business centers.
CREATInG A PROBLEM-SEnSITIvE
ORGAnIzATIOn
Our focus so far in this chapter has been on ways to enhance individual
problem sensitivity. This section looks at how to use policies and processes
to increase an organization’s problem sensitivity.
Graniterock is a Malcolm Baldrige National Quality Award–winning
supplier of rock, sand, gravel, concrete, asphalt, and other materials to the
construction industry south of San Francisco, California. In 1989, CEO
Bruce Woolpert introduced his “short-pay” policy, which states that “If
you [the customer] are not satisfied, . . . don’t pay us.” If a customer is not
satisfied with some aspect of the products or services he receives from
Graniterock, he simply deletes the relevant charge on its invoice and pays
the rest.
According to Woolpert, organizations are very skilled at building thick
“defensive crusts” that isolate them from customer complaints. The short-
pay policy was put in place to cut through this crust by making sure that
customers voiced their problems and that the organization acted on them.
Before putting the policy in place, Woolpert made sure his organiza-
tion was ready for it. As he put it to us:
When we introduced the short-pay policy, I was very careful to go
around and make sure that people felt—in their hearts and in their
minds—that we really should not be paid if we didn’t make someone
150 | THE IdEA-dRIvEn ORGAnIzATIOn
happy. The reason I did this was that I wasn’t sure what the reac-
tion would be to a customer actually doing a short-pay . . . because
it could seem that doing a short-pay is a confrontational thing, but
it’s not. . . . We made sure people felt that it was really unethical to
make people pay for something for which they really didn’t receive
good value.
Once the policy was introduced, the company promoted it heavily;
and in the first year some six hundred short-pays cost the company the
equivalent of 2.3 percent of its sales. While this would be a major sacrifice
for any company, it was even more so for Graniterock, because the gravel
and concrete industry operates on particularly low margins. Today, with
a lot of problem solving under its belt, the cost of Graniterock’s short-pay
policy is under 0.2 percent of sales, far less than what most companies set
aside for returns.
When a customer short-pays, Graniterock goes through a process
to understand the incident and fix the problem. The customer is called
immediately, given an apology, and assured that the short-pay has already
been taken off the bill and that the purpose of the call is for Graniterock
to learn and improve. Once the customer understands that the call is not
about the money, he or she is asked to explain the incident in detail so
the Granite rock team can understand exactly why he or she was disap-
pointed. Here are several examples of improvements the short-pay policy
has triggered:
� The biggest problem the short-pay system flagged early on was poor
on-time delivery performance. Part of the reason was that the com-
pany didn’t have a good dispatching system—the dispatching office
used large poster-sized sheets of paper on the wall to write down
orders as they came in, and highlighter pens to track the status of the
loads throughout the day. On busy days, it was hard for dispatchers to
keep track of all of the information coming in, and deliveries would
inevitably fall behind. The improvement team searched for software
that could help. Today, there are plenty of options, but back in 1989
the company had to create its own dispatching software by adapting
software designed for other industries.
WAYS TO GET MORE And BETTER IdEAS | 151
� Another recurring reason for early short-pays (more than fifty in the
first year) was problems with colored concrete. Customers would order
concrete in different colors, usually red, beige, or some other earth
tone. Many contractors short-paid because the color of the concrete
was too light or it was blotchy. In these situations, Graniterock was
not only hit by the short-pay itself but also often paid for the concrete
to be torn up and replaced. At the time, poor color control was the
norm in the concrete industry. Every concrete vendor had problems
with color consistency, and Graniterock was no different. But for the
contractors who had to put up with it, it was a huge problem. Colored
concrete is typically used in highly visible places as part of the design
concept, such as elaborate patios or swimming pool areas. Although
Graniterock had known of the problem, it was only when its teams
began visiting the short-paying customer sites that it realized how big
the problem actually was. Before the short-pay policy, Graniterock had
received only a few complaints about color each year and had never
considered the problem to be significant.
Standard industry practice was to add color after the concrete had
been loaded in the delivery mixer trucks. The driver would climb up
on a loading platform, cut open the heavy bags of coloring powder,
and pour the powder into the concrete. The powder then mixed into
the concrete on the way to the customer’s site. Before short-pay, when
the company had gotten complaints, it had assumed the problem was
a dosage error, and someone from the main office would contact the
driver to ask how many bags he had put in. Often, the driver couldn’t
remember and was simply reminded to be more careful next time.
Now that the short-pay policy was making the problem expensive,
the Graniterock team began trying to find its root cause in earnest.
It turned out that the problem wasn’t the dosages, but clumping. Even
when the driver added the correct amount, the dry powder would
often clump as it entered the wet concrete and not get blended in thor-
oughly. So Graniterock found suppliers who could provide the color
in liquid form, and the problem was solved.
� Another recurring short-pay problem arose from late deliveries to
construction sites in new areas whose roads were not yet on the maps.
152 | THE IdEA-dRIvEn ORGAnIzATIOn
Drivers often spent significant amounts of time driving around look-
ing for the sites. The solution was to use fire department maps, which
by regulation had to have all information up-to-date. A collage of fire
department maps was put up on a large wall in the dispatching area so
drivers could study it and visualize where their construction sites were.
� Individual short-pays alerted Graniterock to the fact that customers
often had unique unstated needs that they simply assumed the com-
pany would meet. For example, some customers would state a deliv-
ery time but expect the truck to actually arrive fifteen minutes before
the concrete was to be poured. Others would expect certain quality
and performance additives in every load. These were an added cost,
so Graniterock would not include them unless they were specified in
the order. But some customers expected these mixes in every load,
whether stated or not. After looking into the reasons behind these
kinds of short-pays, it turned out that as Graniterock was improving
its service, its regular customers were increasingly looking upon it as a
partner, and they expected the company to remember their particular
requirements. As Woolpert put it, “the short-pay system taught us over
time how unique two-thirds of our customers are.”
In the beginning of the drive to improve delivery times, Woolpert had
made a bet with a friend—the owner of the regional franchise for Domi-
no’s Pizza, a company renowned for its on-time delivery. The bet was about
which company would have the better delivery performance over a speci-
fied period. The losing company would supply the winner with pizza for
all its employees. In the end, Graniterock won in some cities, Domino’s in
others, and the bet was declared a wash.
After more than twenty years of operating with short-pay, the company
has fixed its more obvious customer-related problems. Today, its short-pay
system continues to dig deeper and identify subtler and subtler issues for
Graniterock to tackle, giving the company capabilities that its competitors
lack. In recent years, the company has developed such a strong reputation
for quality that inspectors sometimes waive tests when they find out that
Graniterock delivered the concrete. They know the concrete has already
passed more stringent tests at Graniterock than they would put it through.
WAYS TO GET MORE And BETTER IdEAS | 153
And many of its customers told us that they were willing to pay a premium
to buy from Graniterock, because there would be fewer headaches, and the
ease of doing business with the company meant that their total costs for
many jobs would actually be lower. The company is also a leader in making
“green concrete”—that is, concrete that is more environmentally friendly
without sacrificing any loss in its engineering performance.
Organizational problem sensitivity requires an infrastructure that
makes it easy to capture, analyze, and solve problems. The Clarion-Stock-
holm puts terminals in behind-the-scenes corridors and staff areas to
make it easy for employees to record problems. The application used is
the same one that is used to capture ideas, and it categorizes customer
problems in a way that makes them easy to analyze. Among other things,
this approach allows the hotel to build a stronger case for headquarters
in Norway when a bigger problem needs corporate-level involvement
or resources. For example, when the hotel first installed Internet in the
rooms, the system—which had been negotiated centrally for all hotels by
headquarters with the Internet provider—required customers to use cards
with access codes that were valid for only eight hours. Guests were sup-
posed to drop by the front desk each day to get their free card and to buy
any additional cards if needed. From the outset, customers complained
about this system. If a business guest checked e-mail in the morning for
ten minutes, the access code would have expired by the time that guest
returned at the end of the day.
The receptionists had been telling their supervisors about the guest
discontent from the beginning, the supervisors had been telling hotel
management, and management had tried to persuade headquarters to
negotiate a less cumbersome arrangement with the Internet provider—all
to no avail. However, after the idea system was put in place, the staff was
able to document the high volume of guest complaints on this topic and
demonstrate the extent of the problem. Headquarters relented and rene-
gotiated a better contract.
A similar situation arose with the ventilation system. From the
moment the hotel opened, the guests complained incessantly about it. Cer-
tain floors had little air circulation and were often stuffy. Unfortunately,
it would require a major capital project costing several million dollars
154 | THE IdEA-dRIvEn ORGAnIzATIOn
to correct the problem, and headquarters was reluctant to authorize the
expense. But after being confronted with reports of hundreds of guest
complaints about poor ventilation, headquarters got the message and con-
tracted to have the problem corrected.
| K E Y P O I N T S
✓✓ When an idea system is launched, rarely is there a shortage of ideas.
Front-line employees are already aware of many problems and oppor-
tunities that they have never had a way to correct before. But once
the obvious problems have been addressed, the rate at which ideas
come in typically slows dramatically. The remedy is ongoing training
and education to continually sensitize front-line people to new types
of problems.
✓✓ Creativity can be divided into problem finding and problem solving.
Historically, most organizations have focused on problem solving. But
a good idea system significantly multiplies an organization’s problem-
solving capacity, so it will burn through the obvious problems faster
than they come in. To keep improving, an organization has to get bet-
ter at problem finding.
✓✓ Problem finding is often a matter of perspective. An easy way to
enhance your employees’ problem-finding abilities is to expose them
to fresh perspectives on how the organization might be improved. This
will help them to see problems and opportunities that they would not
have seen otherwise.
✓✓ Idea activators are short training or educational modules that teach
people new techniques or give them new perspectives that will trigger
more ideas.
WAYS TO GET MORE And BETTER IdEAS | 155
✓✓ Many ideas have novel perspectives embedded in them. These per-
spectives are usually implicit, but if drawn out, they have the potential
to trigger more ideas. The process of digging out these implicit novel
perspectives is called idea mining.
✓✓ Graniterock’s “short-pay” policy—“if you the customer are not satis-
fied, . . . don’t pay us”—is an example of a system to increase an
organization’s problem sensitivity.
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157
The Idea-Driven Organization
Front-Line Ideas and Innovation
8
Fron t – L ine Ide as
and Innova t i on
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 pro-
duce breakthrough innovations on a consistent basis. First, the syner-
gies 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.
158 | THE IdEA-dRIvEn ORGAnIzATIOn
InnOvATIOnS OFTEn nEEd
FROnT-LInE IdEAS TO WORK
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.
One of the more toxic chemicals in the automobile manufacturing
industry is the solvent used to flush paint systems between color changes.
At SIA, this typically occurs every three or four vehicles. Previously, the
toxic used solvent was shipped off-site for processing, a costly affair that
required special handling and transportation procedures. An employee
had the idea to develop an on-site distillation process to recover the solvent
for reuse. When looking for vendors of such technology, SIA found one
that proposed an innovative approach that would be significantly more
environmentally friendly. Traditional distillation technology left a highly
toxic sludge of paint residue and solvent in the bottom of the still. This
vendor suggested a new approach: distill the solvent in a vacuum. Vacuum
distillation would make it possible to extract almost all of the toxic solvent
and leave only a trace in a dry cake in the bottom of the still. SIA liked the
idea and gave the vendor the contract.
Unfortunately, the vendor struggled to get the new technology to work,
and it went bankrupt before succeeding. The responsibility for completing
the project fell onto the shoulders of one of SIA’s maintenance crews. By
the end of the project, these workers had come up with hundreds of small
ideas that cumulatively solved the problems that the vendor’s engineers
could not. With the new vacuum distillation process in place—the first of
its kind in the industry—the company’s solvent use dropped from three
to five truckloads a month to less than one every quarter, and the need
to truck tankerloads of contaminated solvent off-site for processing was
eliminated.
Additional front-line ideas quickly exploited the innovation and
enhanced its impact. Rather than shipping the dry still-bottom residue to
a special toxic-waste incineration plant almost five hundred miles away,
FROnT-LInE IdEAS And InnOvATIOn | 159
an employee suggested a way to recycle it. She identified a company that
could extract the organic elements from the still-bottom residue and reuse
them. The char left over from this organic recovery process went to local
steel companies that used it in the protective coatings they applied to the
ladles they used to pour molten steel.
Another idea involved the rags used to clean the painting equipment.
As had been the case with the solvent-contaminated sludge, solvent-soaked
rags needed to be shipped as toxic waste to the special incineration plant.
A worker suggested that the rags could be centrifuged to extract the sol-
vent, which could then be distilled for reuse. The idea worked. For every
thirty-four barrels of rags that were centrifuged, one barrel of solvent was
recovered. This, in turn, led to another idea. Since the polyester rags no
longer held toxic solvent, they could now be recycled. They were sold to
a company that used them as raw materials in making the plastic for the
wheel-well linings it manufactured for another auto company. So, ironi-
cally, one of Subaru’s waste streams ended up in a competitor’s cars.
Suppose Subaru had been unable to tap the front-line ideas it needed
to get the distillation process working. Instead of pioneering an innova-
tive green solvent recovery system and building on it to eliminate other
streams of waste, it would have been hauling away a bunch of useless new
distillation equipment, and returning to a more expensive, much more
environmentally damaging approach to handling solvents.
FROnT-LInE IdEAS CREATE CAPABILITIES
THAT EnABLE InnOvATIOnS
Large numbers of small ideas can create substantial new strategic capabili-
ties that allow an organization to innovate in ways that would otherwise
be impossible. In 2009, Allianz China won an award from one of China’s
leading financial newspapers for that year’s “Most Innovative Life Insur-
ance Product.” Called “Super Fit,” the product was a totally customizable
life insurance policy, for which customers could choose their benefit and
payment periods, select from a menu of “rider” options for various causes
of death, and tailor the maturity payouts to their personal needs. The idea
for the product came from a staffer who had been talking with a friend
160 | THE IdEA-dRIvEn ORGAnIzATIOn
who had just purchased life insurance. The friend was thirty-one years
old and, due to his financial situation, had wanted to pay premiums over
eleven years, with the amounts based on his lucky numbers. But no insur-
ance company offered that kind of flexibility in how life insurance policies
were structured. The staffer wanted to know whether there was some way
for Allianz China to offer customers the ability to tailor their policies to
their needs, whatever these were. Focus groups loved the idea, and the
company began developing a flexible life insurance product.
As we discussed in Chapters 2 and 3, when CEO Wilf Blackburn took
over Allianz China, one of his first actions had been to start an idea sys-
tem. The ideas this system brought in, he told us, had over time made the
company extraordinarily flexible, which is what enabled it to both cre-
ate and deliver such an innovative product. Unique products are rare in
the Chinese insurance market, because competitors copy each other’s new
products within months. But two years after Super Fit was launched, senior
managers at a leading competitor were still expressing amazement at how
Allianz China could offer such a flexible product.
FROnT-LInE IdEAS CAn TRAnSFORM
ROUTInE InnOvATIOnS InTO
MAJOR BREAKTHROUGHS
Some years ago, Task Force Tips (TFT), the innovative firefighting equip-
ment maker discussed in Chapter 3, came up with an interesting new
product idea at a firefighting equipment trade show. During the show, sev-
eral distributors stopped by its display booth and asked when TFT was
going to add a “monitor” to its product line. A monitor is a large water can-
non that is fed by several fire hoses and is used to spray large quantities of
water onto major fires from safe distances. This was not the first time that
customers had asked about a monitor, and the company was well aware
of this gap in its product line. But TFT had a long-standing policy that it
would develop a new product only if it would be clearly superior to every
other similar product on the market, and the company had not yet figured
out how to do this with a monitor.
FROnT-LInE IdEAS And InnOvATIOn | 161
The problem with monitors was that, while they were very effective
at fighting larger fires, they were also heavy (typically requiring two fire-
fighters to carry and set up) and dangerous to operate. The pressure of the
water coming from several hoses meant that extra care had to be taken
when setting up the monitor and anchoring it to the ground. Even when
the monitor was properly anchored, a pressure surge in the water mains
could tear the monitor loose and cause it to buck up and lash around like
an angry snake. Many firefighters have been injured or killed by out-of-
control monitors.
One evening during the trade show, the TFT team met to review that
day’s activities. The group got to talking about the latest round of requests
for TFT to develop a monitor. Some team members felt strongly that the
company should do it, others—including Stuart McMillan, the presi-
dent—felt strongly that it should not. A lively discussion ensued. McMillan
reiterated the company policy of making only products that were clearly
superior to those of its competitors, and he observed that there was no way
to correct the basic problems with monitors.
The vice president for sales disagreed, “All we need to do is to add a
pressure gauge so firefighters can see when a pressure surge is happening.”
McMillan’s immediate response was “How is a firefighter supposed to
watch a gauge while fighting a fire? Even if he could, the gauge would report
the problem only after it happened—too late for the firefighter to shut off
or get away from the bucking water cannon.” As an aside, he commented,
“It would be better if the monitor simply shut off when it started bucking.”
Everyone knew immediately that McMillan had stumbled onto a
potential solution. A monitor that would automatically shut off when it
lifted off the ground would be much safer.
Back at the company, McMillan scheduled a concept meeting to discuss
how TFT might use the shut-off idea to create a superior monitor. Everyone
interested in participating was invited to a pizza party and brainstorming
session. More than twenty people came, including many front-line work-
ers who were also volunteer firefighters. In addition to consuming a lot of
pizza, the participants generated ideas for twenty-one unique features for
the new TFT monitor, including spring steel legs (rather than cast iron) so
162 | THE IdEA-dRIvEn ORGAnIzATIOn
that the monitor would automatically sit level on uneven ground and not
need to be shimmied level; sharp tungsten carbide teeth at the end of each
leg designed to bite into clay, asphalt, or even concrete in order to keep the
monitor from shifting; a special electrodeposited coating that would never
wear off like regular paint; laser-etched (rather than stenciled) instruc-
tions and safety warnings; a special design to shoot the water from a cen-
tral point much closer to the ground in order to provide greater stability;
lightweight aluminum cast construction; cranks for adjusting the direc-
tion of the nozzle both vertically and horizontally; tie-down straps stored
inside the monitor and attached to one of the caps so that when firefighters
pulled the cap off to attach the hose, the tie-down strips would pop out
and they wouldn’t forget to lash down the monitor; and, of course, a pres-
sure gauge. In accordance with TFT’s new product policy, the monitor was
clearly superior to its competitors. It was less than half the weight, more
versatile and compact, and easier to use. Most important, it was much,
much safer than the other monitors on the market. The product ultimately
received a patent and won an award for the best new product of the year
from the International Association of Fire Chiefs. It was the first in a TFT
line of innovative new monitors and water cannons.
While McMillan’s idea to cut off the water when the monitor bucked
had provided the starting point, it was the additional ideas from TFT’s
people that made the new product truly exceptional.
TFT has a number of ongoing ways to assure that front-line ideas are
integrated into all its design work. For example, the design department has
a door opening directly onto the manufacturing floor. When designing or
modifying products, designers work closely with production workers to
capture their ideas on how to improve the designs and make them more
manufacturable. This close working relationship also allows machinists to
keep the design staff up to speed on newly acquired manufacturing tech-
nologies and the added capabilities they provide.
As we mentioned earlier, many TFT employees already understand
their customers’ needs well because they are volunteer firefighters
themselves. Even so, the company is always on the lookout for creative
approaches to deepen its workers’ appreciation of the needs of its custom-
ers. For example, a few years ago, when gasoline prices jumped during the
FROnT-LInE IdEAS And InnOvATIOn | 163
summer driving season, McMillan overheard several employees talking
about their summer vacation plans. One worker was saying that because
of the high gasoline prices, he and his family were going to stay closer to
home. McMillan learned that other employees were also cutting back on
their vacation travel for the same reasons. He thought this situation was
unfortunate, and it led him and his management team to come up with
a creative way to help employees with their summer vacations while also
helping to promote the company a bit. They launched the “Take Family
Traveling” (yes, the “TFT”) program. While on vacation anywhere in the
continental United States, if the worker was willing to visit a fire station,
he or she would be reimbursed twenty-five cents per mile for the round-
trip distance (according to MapQuest) between that station and TFT and
receive a modest additional sum (depending on the destination) to offset
other expenses. (Naturally, the employees were careful to visit the fire sta-
tions at the farthest point of their journey away from TFT!) Workers were
expected to introduce themselves and TFT to the firefighters, get their
picture taken with them in front of the station, and give them a bag of
paraphernalia, which included some innovative TFT safety gadgets and
information about the company and its products. When the employees
returned from vacation, the photos were posted on a bulletin board, and
pins were placed on a nearby map to designate the locations of the fire sta-
tions visited.
TFT’s active integration of front-line knowledge into its product devel-
opment processes has given it a major advantage over its competitors. Even
though it is still only a relatively small organization of 150 people, over
the last two decades, the company has moved from being a minor player
in the firefighting industry to a global provider of firefighting equipment
recognized in the industry for its extraordinary innovativeness.
FROnT-LInE IdEAS CAn OPEn UP nEW
OPPORTUnITIES FOR InnOvATIOn
In 2011 Fast Company magazine ranked Whirlpool Corporation sixth on its
list of the world’s most innovative consumer products companies. A decade
earlier, the company would have never been considered for such a list.
164 | THE IdEA-dRIvEn ORGAnIzATIOn
In the late 1990s, Whirlpool CEO David Whitwam became concerned
that the home appliances industry was rapidly becoming a commodity
business. Prices for appliances were dropping and Whirlpool’s margins
were declining every year. As Whitwam put it at the time, when a customer
walked into any large appliance store, he would be confronted with a “sea
of white”—rows of white appliances with little difference between brands.
The machines were all the same color, and all had the same basic features.
With such little differentiation, whenever a washer or dryer needed to be
replaced, customers would simply buy the single unit they needed with lit-
tle thought to matching their brand to their current machine. As a result,
in 2000 Whirlpool’s average washer/dryer match rate was only 15 percent,
and its average sale per customer purchase was $698.
Whitwam was convinced that Whirlpool had to become an innova-
tor if it was to avoid a commodity trap, and he embarked on a mission to
transform the company. He promoted Nancy Tennant Snyder to the posi-
tion of vice president of core competencies and leadership development,
charging her with “embedding innovation” into everything Whirlpool
did. The company hired an outside consulting company to develop a broad
range of new systems to promote innovation and new training programs
designed to change the mental models of its managers. Transforming a
large, sleepy midwestern manufacturer into an innovative global con-
sumer products company was not easy and took more than a decade, but
Whirlpool’s global market share rose dramatically as a result.
New Whirlpool appliances were introduced to the market in many
different colors and with new high-tech features that greatly enhanced
performance. Customers could buy washers that used much less water and
detergent, cleaned clothes better and extended clothing life, extracted more
water in the spin cycles to make drying faster and more energy-efficient,
and had a wide variety of cleaning cycles. New dryers could steam the
wrinkles out of clothes and even dry-clean them. By 2006, Whirlpool had
moved its washer/dryer match rate to an impressive 96 percent and had
increased the average customer sale more than threefold, to $2,398.
In the old Whirlpool, all of the innovation came from R&D, engineer-
ing, or product development. But when the embedding effort reached the
front lines, the workers, too, came up with some very innovative ideas. For
FROnT-LInE IdEAS And InnOvATIOn | 165
example, one worker pointed out that most people put laundry, detergent,
and other things on the tops of their washers and dryers. But when the
machines run, they vibrate and these objects fall off, often slipping into
tight spaces around and between the machines where they are difficult to
recover. The worker’s idea was for the company to sell custom-fitted rub-
ber tops with lips around the edges for each of its machine pairs. A second
new product idea came from a worker in the area that fabricated the plat-
forms the company sold to elevate front-loading washers and dryers. Rais-
ing front-loading washers and dryers by twelve to fifteen inches reduces
the need for as much bending and makes the machines more accessible.
The worker’s idea: incorporate drawers into these platforms to turn them
into convenient storage spaces. These and other ideas have led to a line of
ancillary products called Laundry 1-2-3, which includes storage cabinets
that match the various appliance color options and fit snugly alongside
the washer and dryer, laundry carts, adjustable clothing racks, and other
products to organize the laundry room. The margins on these items are
much higher than those for the appliances themselves, and they helped to
increase the average customer sale to over $3,000.
SETTInG UP An IdEA SYSTEM REMOvES
MAnY OF THE BARRIERS TO InnOvATIOn
As we have discussed, most organizations are poorly aligned for ideas,
whether these ideas are for modest improvements or breakthrough inno-
vations. Consequently, innovations require a great deal of championing, in
the form of managers exercising clout to override misalignments or using
their guile, influence, and connections to circumvent them. All this effort
is simply accepted as part of what is needed to innovate, so the underlying
misalignments are rarely corrected. This means that the same high level
of effort will be required for the next innovation, and every one after that.
This huge hidden cost cuts deeply into an organization’s innovative capac-
ity without management ever realizing it.
But when an organization launches a high-performing idea system,
those same misalignments rise up and smack management in the face.
It is impossible to handle large numbers of bottom-up ideas with the
166 | THE IdEA-dRIvEn ORGAnIzATIOn
“champions battling barriers” model. First, the ideas involved are gener-
ally small, and their individual impacts do not justify the effort required
to fight the system to implement each one. Second, their sheer quantity
would overwhelm any ad hoc approach relying on work-arounds. So when
organizations set up high-performing idea systems, they are forced to
identify and address where they are misaligned for ideas.
Consider how the implementation of an idea system at HCSS, a Hous-
ton-based developer of software for the construction industry, forced the
company to deal with some major alignment issues. This fast-growing
company had a lot going for it. It already provided the leading software for
bidding on medium-to-large horizontal construction projects (i.e., roads
and related infrastructure), was known for outstanding customer service
(its Net Promoter Score [NPS] consistently averaged in the 80s range), had
been recognized by the Wall Street Journal as a “Top Small Workplace,”
and had been named by Best Companies Group as “One of the Best Com-
panies to Work for in Texas” for each of the previous six years. Despite
HCSS’s success, owner and president Michael Rydin was concerned that
as it had grown rapidly to a 140-person company, it had lost some of its
innovativeness. He thought that a high-performance idea system would
reenergize his company.
The development team responsible for HeavyBid, the company’s most
popular software product, was chosen as a pilot area for the idea system.
In the team’s first discussion about the new system, a particularly trou-
blesome blockage in the flow of ideas came up. Each of the company’s
software products was updated two or three times a year, and the new
features, functions, and other improvements in these releases were criti-
cally important for retaining existing customers and attracting new ones.
Departments that were in regular contact with customers—such as tech-
nical support, customer training, and product implementation—always
had many ideas for improvements. In addition, top managers had changes
they wanted to see based on strategic concerns and conversations with
major customers, the sales department had ideas about features based on
inquiries from current and potential customers, and the programmers
themselves had their own ideas on how to improve each version. But the
company could only focus on a limited number of enhancements for each
FROnT-LInE IdEAS And InnOvATIOn | 167
release, and there was no clear process for capturing, evaluating, and pri-
oritizing them.
When HCSS was smaller, people in the different roles talked regu-
larly, and any differences in opinions about potential improvements were
addressed informally. But with growth, work became increasingly seg-
mented and departmentalized. Each department continued to refine its
own procedures and processes in order to coordinate and improve its own
work. Incrementally, barriers were raised between the departments, mak-
ing it increasingly difficult for groups to work together informally.
The lack of clear processes to capture and prioritize product improve-
ment ideas resulted in an ad hoc approach to determining which ones to
move ahead with. Sometimes various middle managers would champion
specific ideas, and sometimes top managers would step in to “encourage”
consideration of their ideas. But the primary responsibility for selecting
what to include fell to the programming teams and their managers. This
led to a lot of problems. When a new version was demonstrated internally
before its release, the various constituencies typically insisted on a great
many “corrections,” and often top management would add some critical
new feature at the last minute or catch one that somehow had been left out.
The result was a great deal of rework, delays, and tension between the pro-
gramming teams and other groups in the company. Before any real trac-
tion could be expected with the idea system in the pilot area, this problem
had to be addressed.
Consequently, much of the early work of the pilot team went into
developing effective processes for capturing and prioritizing product im-
provement ideas. The process included regimes to (1) capture product
improvement ideas from the various areas of the company, (2) estimate
the programming time that each would take, (3) project the impact of
each idea, (4) prioritize the list of ideas, and (5) select which were to be
included in the new release. Furthermore, great care went into how and
when changes that were identified once the development cycle had started
would be considered for incorporation into the new release.
The impact of the new process to capture product improvement ideas
was apparent in the very next development cycle. Technical support staff
and other high-customer-contact teams reported that many more of their
168 | THE IdEA-dRIvEn ORGAnIzATIOn
ideas—both big and small—were considered and included. Because top
managers were engaged earlier in the process, they added fewer of their
ideas late in the development process, when they would be more disruptive
and cause significant delays. In short, the new process allowed more and
better ideas to be included in new releases.
While many people in HCSS knew there were problems in how the
company identified what went into new releases, it was only when HCSS
chose to implement a high-performing idea system that the issue could no
longer be avoided. Removing this misalignment led directly to some major
innovations.
For example, the lack of a process to prioritize changes was so dis-
ruptive to the HeavyBid development team’s work processes that they had
difficulty thinking about how to improve them. Once the new process to
capture product improvement ideas was in place, however, the team could
think seriously about how its own processes worked. During an idea meet-
ing, a part-time programmer proposed a novel idea for how to automate
the testing of the team’s programming work. If the idea worked, it would
cut more than two weeks and hundreds of hours out of each development
cycle. HeavyBid was highly complex software with many interrelated fea-
tures and functions that had been built, modified, and added to by many
programmers over several decades. Sometimes, even a minor “improve-
ment” in one module created new problems elsewhere in the software. Pre-
viously, the full testing to find these problems was done at the end of the
development cycle, taking several weeks or more to ensure the elimination
of all critical bugs. The idea made it possible to develop software that could
automatically test the impact of modifications on a daily basis. The test-
ing routine would run overnight to check the effect of any changes made
during the day, and problems could then be quickly identified and fixed.
Although automated testing of software was hardly new, a number
of unique aspects of the HeavyBid product and its structure meant that
the amount of skilled programming time that it would normally take to
develop an automated testing regime would be astronomical. What the
part-time programmer suggested was a highly creative way to relatively
quickly develop an automated testing program that could check Heavy-
Bid’s more than a hundred thousand lines of code. Her idea was improved
FROnT-LInE IdEAS And InnOvATIOn | 169
upon by several other programmers on her team, and with the help of sev-
eral summer interns, the project was completed with only a few hundred
hours of regular HCSS employee time. This was less time than the new
testing regime would save in every development cycle from then on.
BRInGInG IT ALL TOGETHER
To this point, we have been discussing how front-line ideas help individ-
ual aspects of innovativeness. But because the interplay between front-line
ideas and innovation takes place on so many different dimensions and
levels at the same time, it cannot really be understood without stepping
back and taking a holistic view.
A good example of how being idea driven enables an organization to
innovate across the board is illustrated by ThedaCare, a Wisconsin-based,
not-for-profit health care organization with some six thousand employees
in its network of hospitals, primary care and specialty clinics, and facilities
for assisted living, long-term care, and hospice.
In many ways, the medical field has been a model of innovation. Tech-
nological breakthroughs allow doctors today to treat conditions that were
once considered to be life-threatening as routine outpatient procedures
and to address problems that would have been beyond their capabilities
just a few years ago. But while the U.S. health care system may have some
of the best technology in the world, overall it is costly and inefficient, and
delivers poor clinical results. Soon, the United States will be spending
some 20 percent of its gross domestic product (GDP) on health care, far
more than any other country, yet the quality of health care was ranked
thirty-seventh by the World Health Organization, below countries such as
Costa Rica and Colombia.1 Approximately one hundred thousand people
die each year in the United States due to medical errors. According to Dr.
Lucian Leape, a noted patient safety expert, people would have to ride in
motorized hang gliders or parachute off bridges to face similar risks to
being a patient in a U.S. hospital.2 This poor performance has resulted
from a stark lack of innovation, not in the technology available, but in the
way health care is delivered. The delivery process is exactly where Theda-
Care focused its innovation efforts.
170 | THE IdEA-dRIvEn ORGAnIzATIOn
ThedaCare began experimenting with the application of lean prin-
ciples in 2002. At the time, the organization was already recognized for
its clinical results. In both 2000 and 2001, it had received the highest
scores in the United States on the Health Employers Data Information
Sets (HEDIS)—a body of quality-of-care measures used by the National
Committee for Quality Assurance, the U.S. accrediting body for health
plans. But John Toussaint, ThedaCare’s CEO at the time, believed that
the organization could—and had to—do much better. Too many avoid-
able mistakes were being made that could cause harm to patients. Prior to
becoming CEO, Toussaint had led a number of improvement initiatives as
ThedaCare’s chief medical officer. Performance would jump up after each
one, only to slip back gradually to previous levels as staff members slowly
reverted to old habits and new staff members, untrained in the improved
methods, were hired. He believed that the reason for this pattern was the
lack of a systematic approach for assuring that improvements went deep,
took hold permanently, and could be cumulatively built upon.
At that time, ThedaCare operated like most health care operations in
the United States. Doctors told nurses and staff what to do, and the nurses
and staff did what they were told. Everyone wanted to do what was best for
their patients, of course, but the myriad of rules put in place by the hospi-
tal administration, industry accrediting bodies, insurance companies, and
state and federal governments meant the patients’ interests were often lost
in the resulting bureaucratic rules and inefficiencies.
Toussaint believed a new way of working was needed—one that actively
involved employees on the front lines in creating better processes. While
he wasn’t aware of any health care organization in the United States that
worked this way, he did know of a local snow-blower manufacturer, Ariens,
Inc., that did. So he led a small team of ThedaCare managers on a bench-
marking trip to Brillion, Wisconsin. There the managers had an epiphany.
The manufacturer, by following the lean philosophy of employee-driven
continuous improvement, had developed better systems to assure the
error-free production of snow blowers than the systems ThedaCare used
to avoid mistakes when dealing with its patients. This convinced Toussaint
and his team to try using lean principles in their health care context.
FROnT-LInE IdEAS And InnOvATIOn | 171
Traditional ways of thinking about how patient care should be pro-
vided had to be overturned. In 2007, for example, ThedaCare began testing
a “Collaborative Care” approach to delivering patient care in one of its hos-
pitals. Instead of the traditional siloed and hierarchical approach, doctors,
nurses, and pharmacists worked with patients as integrated teams. The
teams made morning rounds together, and together developed the best
care plan for each patient. The improvements in clinical results were dra-
matic. For example: medication defects per chart dropped from 1.05 (low
by industry standards at the time) to 0.01, patient satisfaction rose from 68
to 90 percent, the average length of a hospital stay dropped 20 percent, and
the average cost per case was reduced by 21 percent. The cost savings from
Collaborative Care alone paid for an entirely new hospital tower designed
specifically for that model of care.
ThedaCare also started extensive use of value stream mapping—a type
of detailed flowcharting that helps identify problems, delays, and improve-
ment opportunities—which it used to dramatically improve its perfor-
mance in key areas. For example, as a result of a series of projects in the
cardiac surgery area over a seven-year period, the number of deaths as a
result of bypass surgery dropped from 4 percent of cases to almost zero,
the cost of surgery was cut by 22 percent, and the average patient hospital
stay dropped from 6.3 days to 4.9. These improvements also saved Theda-
Care more than $27 million per year.
Although the major improvement projects did deliver significant
results, Toussaint estimated that they accounted for only about 20 percent
of ThedaCare’s overall performance gains. The other 80 percent came from
front-line ideas. Every front-line team holds a daily “huddle” in front of its
idea board. The team discusses any new ideas and any issues with patients
that arose during the morning rounds, reviews progress on existing ideas
and improvement projects, assigns new actions to its members, and cel-
ebrates implemented ideas.
ThedaCare uses a hierarchy of problem-solving methods and tools.
Problems that can be resolved with simple-to-implement ideas are moved
from the raw ideas area of the board to the “just-do-it” area, assigned to
a team member, and quickly implemented. More complex problems are
172 | THE IdEA-dRIvEn ORGAnIzATIOn
moved to a different area of the board and managed as larger projects
using the lean A3 improvement process. The progress of these projects is
monitored as a regular part of the huddle process.
For even bigger problems, ThedaCare uses four-and-a-half day “rapid
improvement events” (RIEs), another lean improvement methodology,
sometimes referred to as kaizen events or kaizen blitzes. The typical RIE
team consists of a mixture of front-line and management staff in the area
being improved, a couple of members from other areas in order to bring
different perspectives, and someone who represents the patients’ perspec-
tive. This last member is often an actual patient.
Becoming idea driven was not easy for ThedaCare. Performance in
several key areas actually declined before it began to improve, and a num-
ber of doctors and managers quit or had to be replaced along the way. A
great deal of care was taken to instill an idea-driven culture; and to assure
it would be sustained. Twice weekly, ThedaCare’s senior managers meet in
the “war room” to review performance. Unlike typical executive confer-
ence rooms, which are luxuriously furnished and formal, the war room is
functionally furnished and its walls are festooned with tracking charts,
data, and projects. One wall displays metrics that are reviewed at each
meeting, a second wall has metrics that are reviewed weekly, a third is for
monthly metrics, and the last is for quarterly and annual results.
This regular review of aggregated data does not, in and of itself, dif-
ferentiate ThedaCare from other well-managed organizations. What is
different is that every ThedaCare senior executive is required to spend
time every week on the front lines checking into what is driving all of
these numbers, assuring that the improvement processes at lower levels
are working smoothly, and providing any needed coaching and support.
As we mentioned in Chapter 2, even the CEO spends two hours each week
on the front lines.
On a rotating basis, members of the senior leadership team also attend
the weekly report-out sessions for the RIE teams. On Friday mornings,
all teams that completed their RIE projects in the previous week come
together to share their results at a large off-site gathering. Typically four or
five RIE teams report on their projects and answer questions from the audi-
ence. Every presenting team is publicly thanked and roundly applauded.
FROnT-LInE IdEAS And InnOvATIOn | 173
While anyone in the company can attend these gatherings (and many do),
new employees are required to attend.
To support all the front-line team improvement projects, ThedaCare
has created a dedicated group of twenty “facilitators” trained in process
improvement and lean tools. Employees volunteer for these two-year full-
time positions both to gain valuable process improvement skills and to
increase their chances of promotion. Roughly a third of ThedaCare’s 150
highest-ranking managers are former facilitators.
With everyone in the organization involved with improvement ideas,
ThedaCare has been able to innovate in the overall delivery of health
care—an area where most health care organizations continue to struggle.
It has been able to reduce costs substantially while improving clinical out-
comes and patient satisfaction significantly.
COnCLUSIOn
Building an idea-driven organization is not easy, and it does not happen
overnight. Time is needed to excise command-and-control thinking, to
develop new habits and skills, and to create the management systems that
promote rapid ongoing improvement and innovation.
Idea-driven organizations are relatively rare today, but we believe that
twenty years from now they will be commonplace. All over the world, fun-
damental macroeconomic forces—such as globalization, rapid economic
growth in developing nations, and the rise of the Internet—are forcing
organizations of all kinds to do much more with much less, and to dra-
matically increase the rate at which they innovate and improve.
At the same time, the number of idea-driven organizations is increas-
ing rapidly, and they are thriving in this new reality. Their broad-based
success proves the superiority of the new management model and provides
role models for others to learn from that did not exist just a few years ago.
In 1991, we published an article in Sloan Management Review, in which
we pointed out that it was almost impossible to find effective idea systems
in the United States. The ones we wrote about in that article were all in
Japan, and all followed essentially the same kaizen teian process described
in Chapter 5. By 2004, when we published Ideas Are Free, a handful of
174 | THE IdEA-dRIvEn ORGAnIzATIOn
companies with high-performing idea systems could be found in North
America, Europe, and various countries in Asia. There was a consider-
able variety in the approaches being used, and some of the systems were
becoming quite sophisticated.
Today, there are quite a few organizations with mature high-performing
idea systems, and they are capable of innovating at extraordinary rates.
And we observe a rising interest in high-performing idea systems in gov-
ernment, health care, and education, sectors that are coming under great
pressure to do more with less.
The adoption of high-performance idea systems by organizations over
the last quarter century follows Gabriel Tarde’s classic S-curve pattern of
how an innovation or idea diffuses through a social system.3 The accep-
tance of a new idea starts out slowly as it captures the interest of early
adopters. As the new idea is refined and enhanced with ancillary ideas,
and people learn more about how to use it to its best advantage, the rate of
diffusion increases. Eventually, as the idea matures its diffusion gradually
tapers off. Charted over time this adoption pattern looks like an S.
In his classic book Diffusion of Innovations, Everett Rogers identified
five factors that determine the speed at which this pattern unfolds:4
� The relative advantage the new idea offers over existing thinking
� The idea’s compatibility with current systems used by potential adopters
� How complex the new idea is to use
� How easy it is to try the new idea (trialability)
� The observability of the new idea and its advantages
On the one hand, a high-performance idea system confers a huge rela-
tive advantage. On the other hand, it is fairly complex and difficult to try
precisely because it is so highly incompatible with the way that organiza-
tions have traditionally been run. This explains the relatively slow adop-
tion of idea-driven principles to date.
But more and more leaders are realizing that they simply cannot pro-
duce the results they now need with the organizations they currently have.
They are searching for solutions. At the same time, the growing number of
high-performing systems around the world is increasing both their observ-
ability and the population of managers who understand the advantages
FROnT-LInE IdEAS And InnOvATIOn | 175
of operating in an idea-driven manner. This growing base of experience
and knowledge is making it ever easier for organizations to make the
transformation.
We believe the evidence is clear. The idea-driven organization is an
idea whose time has come!
| K E Y P O I N T S
✓✓ For the majority of leaders seeking to make their organizations more
innovative, the first step should be to set up a high-performing idea
system. There is a multifaceted interplay between innovation and front-
line ideas, an interplay that most managers are not aware of. As a
result, their organizations are far less innovative than they could be.
✓✓ 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.
✓✓ Large numbers of small ideas create substantial new strategic capabili-
ties that allow an organization to innovate in ways that would otherwise
be impossible.
✓✓ Front-line ideas can transform routine innovations into major
breakthroughs.
✓✓ Front-line ideas can directly open up new opportunities for innovation.
✓✓ Because most organizations are poorly aligned for ideas, their inno-
vations require a great deal of championing. All this effort is usually
accepted as the cost of innovating, and the underlying misalignments
are never corrected, requiring future innovations to fight the same
battles. But when organizations set up high-performing idea systems,
they are forced to address their alignment problems, and this makes
innovation much easier, too.
176 | THE IdEA-dRIvEn ORGAnIzATIOn
✓✓ Idea-driven organizations are relatively rare today, but we believe that
twenty years from now they will be commonplace. All over the world,
fundamental macroeconomic forces—such as globalization, rapid eco-
nomic growth in developing nations, and the rise of the Internet—are
forcing organizations of all kinds to do much more with much less, and
to dramatically increase the rate at which they innovate and improve.
177 177
The Idea-Driven Organization
Notes
NOTES
CHAPTER 1
1. Six Sigma is a structured process improvement methodology, developed by
Motorola and popularized by Jack Welch at GE, in which ad hoc improvement
teams are overseen by specially trained individuals certified as “black belts,”
“green belts,” and “yellow belts,” who are responsible for assuring the problem-
solving process follows prescribed protocols.
2. The story of Milliken’s idea system is told in Ideas Are Free.
3. See F. A. Hayek, “The Use of Knowledge in Society,” American Economic Re-
view 35, no. 4 (September 1945): 519–530.
CHAPTER 2
1. Fred Luthans, “Successful vs. Effective Real Managers,” Academy of Manage-
ment Executive 2, no. 22 (1988): 127–132.
2. Peter Drucker shared this story with us during a series of personal discus-
sions in 1990.
3. “Riverside County Debates Who Gets the Best Toilet Paper,” Los Angeles
Times, May 7, 2009.
4. A complete account of the experiment can be found in Philip Zimbardo, The
Lucifer Effect (New York: Random House, 2008).
5. Ibid.
6. Adam Galinsky, Deborah Gruenfeld, and Joe Magee, “From Power to Ac-
tion,” Journal of Personality and Social Psychology 8, no. 3 (2003): 454.
7. “Military’s Top Officers Face Review of Their Character,” New York Times,
April 13, 2013.
178 | THE IdEA-dRIvEN ORgANIzATION
8. Jim Collins, Good to Great: Why Some Companies Make the Leap and Others
Don’t (New York: HarperCollins, 2001).
9. K. Benne and R. Chin, “Strategies of Change,” in The Planning of Change, ed.
W. Bennis, K. Benne, and R. Chin (New York: International Thompson Publish-
ing, 1985).
10. We first encountered guided executive reading courses in Japan in the late
1980s, where they were being used by a number of leading companies to drive
major transformational changes.
11. Understanding Risk: Informing Decisions in a Democratic Society (Washing-
ton, D.C.: National Research Council, 1996).
12. J. Dupuit, “De la mesure de l’utilité des travaux publics,” Annales des Pont et
Chaussées 2, no. 8 (1844): 332–375; an English translation was republished in In-
ternational Economic Papers 2 (1952): 83–110.
CHAPTER 4
1. Frank B. Gilbreth, Primer of Scientific Management (New York: Van Nos-
trand, 1912), 68–69.
CHAPTER 8
1. World Health Organization, The World Health Report (Geneva: Author,
2000). This was the only year that WHO produced this report, as it was criti-
cized for its methods and usefulness, particularly in the United States. Subse-
quent independent research largely confirmed its findings, at least with regard to
the United States.
2. Cited in Steven Spears, Chasing the Rabbit (New York: McGraw-Hill, 2008).
3. Gabriel D. Tarde, The Laws of Imitation (New York: Holt, 1903).
4. Everett M. Rogers, Diffusion of Innovations (New York: Free Press, 1962).
179 179
The Idea-Driven Organization
Acknowledgments
ACK NOWLEd gMENTS
THIS BOOK WOULd NOT have come about without the help of a great
many people.
First and foremost, we would like to thank the many front-line
employees, managers, and senior leaders in the organizations we studied
who gave so generously of their time and shared their information and sto-
ries so openly with us. A number of them deserve special mention: at Alli-
anz China and Ayudhya Allianz, Wilf Blackburn (former CEO of both);
at Alpha Natural Resources, Kevin Crutchfield (CEO), Rick McAlister
(manager of Engineering Methods and Standards), and Randy McMillion
(executive vice president of Business Excellence); at Brasilata, Antonio
Texeira (CEO); at Big Y Foods, Donald D’Amour (CEO), Jack Henry (vice
president of Employee Services), and Pat Shewchuk (manager of Employ-
ment Strategies and Inclusion); at the Clarion-Stockholm, Ulrika Berg-
strom (Operations manager); at Coca-Cola Stockholm, Klas Bandmann
(director of Continuous Improvement), Henrik Bennet (Strategic Plan-
ning manager), and Staffan Olsson (Operations Excellence manager); at
Continental VDO, Gerhard Schadt (senior specialist, Coaching); at Gran-
iterock, Bruce Woolpert (CEO); at HCSS, Mike Ryder (president) and
Tom Webb (vice president); at Health New England, Peter Straley (CEO),
Kim Kenney-Rockwal (director of HR), Jim Kessler (general counsel), and
Joanne Walton-Bicknell (Business Improvement manager); at Hickory
Chair, Jay Reardon (CEO); at the Maine Center for Disease Control, Dr.
Sheila Pinette (director); at Pyromation, Pete Wilson (president) and Dan
Atkinson (Operations manager); at Subaru Indiana Automotive, Tom
180 | THE IdEA-dRIvEN ORgANIzATION
Easterday (executive vice president), Denise Coogan (manager of Safety
and Environmental Compliance), and Matt Green (manager of Integrated
Services for Heritage Integrative Services on-site at SIA); at Task Force
Tips, Stewart McMillan (president); at ThedaCare, John Toussaint (former
CEO); at the University of Southern Maine, Brynn Riley (project director);
at Whirlpool, Nancy Tennant-Snyder (vice president of Core Competen-
cies and Leadership) and Moises Norena (global director of Innovation).
Both our home institutions, the Isenberg School of Management at
the University of Massachusetts and the College of Business at Valparaiso
University, gave us strong support to write this book and have always been
wonderful places to work.
Special thanks go to Louise Östberg, a Swedish friend and colleague,
who helped us identify and work with a number of excellent companies.
We are also indebted to Lars Nilsson at C2 Management for his openness
and many introductions into leading Swedish companies.
The hardest part of our journey was writing the manuscript, which
went through many drafts as we struggled to articulate our message. Gwen
and J. Alan Robinson helped us immeasurably in this process, always chal-
lenging us to simplify and sharpen. We are also grateful to Michael Long,
Scott Schenone, and J. D. Ward for their critical feedback on an early draft
of the manuscript; to Lexie Schroeder for her counsel and creative work on
our exhibits; and to Laura Larson, our highly talented copy editor.
We would never have been able to produce this book without the
invaluable support of the incomparable team at Berrett-Koehler. Special
thanks go to Neal Maillet, editorial director, for his steady encouragement,
keen insights, and patient mentoring; to the Berrett-Koehler manuscript
reviewers Wally Bock, Danielle Goodman, Jeffrey Kulick, and Lucie New-
comb; and to Michael Bass of Michael Bass Associates for his kind and
rigorous shepherding of the manuscript through to final publication.
Finally, and most important, we will never be able to express the debt
we owe our families, who were with us every step of the way and cheerfully
endured our lengthy and numerous absences, and our camping in each
other’s houses for extended working visits. To our children Phoebe, Mar-
got, Lexie, Liz, and Tori, and particularly our wives Margaret and Kate, we
can only say: We could not have done it without you.
181 181
The Idea-Driven Organization
Index
INdE X
Abu Ghraib prison, 27
Accountability of managers, 39, 43–45,
46
Acquarulo, Larry, 104
Air France, 43
Alignment of organization for ideas,
17–18, 47–88
assessment of, 115–118, 132
in budgeting and resources, 70–76
correction of problems in, 120–121,
133
in evaluation and reward systems,
86–87, 88
framework for, 49, 50f, 87
in funding and purchasing process,
72–74, 83, 88
horizontal, 57–64, 66
in implementation of new idea system,
120–121
and innovations, 165–169, 175
of management systems, 69–88
in policies and rules, 18, 76–83, 88
in processes and procedures, 84–86, 88
in strategy, structure, and goals, 18,
47–67
in support functions, 74–76, 88
in time and work schedules, 71–72, 88
vertical, 51–57
Allianz, 33–34, 61–62, 131
in China, 61, 75, 159–160
in Slovakia, 131
Alpha Natural Resources, 111–113
Ariens, Inc., 170
Assessment. See Evaluation
Autoliv, 131
Ayudhya Allianz, 33–34, 61
The Balanced Scorecard: Translating
Strategy into Action (Kaplan and
Norton), 52
Barriers to front-line ideas, 12–14
and innovations, 165–169, 175
managers as, 17–18, 24–29, 36, 90
tight controls as, 47–49
Benne, Kenneth, 34
“Big Hairy Audacious Goals,” 62
Big Y World Class Market, 35, 105,
135–136
BitDefender antivirus program, 71
Blackburn, Wilf, 33–34, 61–62, 75, 160
Boardman, John, 40
Boardroom Inc., 89–90, 95
Bonus system
aligned for ideas, 87, 88
current profits as basis of, 70
horizontal linkages in, 63
in pay-for-performance, 60–61
Brasilata, 2, 21, 75, 91–92
Budgeting of resources, 49, 70–76
of funding, 72–74, 83, 88
of support functions, 74–76, 88
of time, 71–72, 88
182 | INdEX
Built to Last: Successful Habits of
Visionary Companies (Collins and
Porras), 62
Bumrungrad Hospital, 142
Capital expenditures
escalation process required for, 104
facilitator role in, 100
in funding of ideas. See Funding of
ideas
vertical alignment of goals on, 53
Certification
in idea management, 37, 125
in quality management, ISO 9001
standard in, 84, 85
Changing management mindsets and
behaviors, 33–45
accountability and transparency in, 34,
43–45
engagement with front line workers in,
39–43
rational approach to, 34–36
reeducation in, 34, 36–39
Chin, Robert, 34
Clarion-Stockholm hotel, 3–6, 4t–5t,
144–149, 145t–147t, 153–154
Coaching
on facilitation skills, 102
on front-line ideas, 37
in pilot tests, 123–124, 126, 128
Coca-Cola Stockholm, 7–9, 8f, 9f
Collaborative Care approach at
ThedaCare, 171
Collins, Jim, 32, 38, 62
Command-and-control approach, 16
Commitment of leadership to idea system,
109–110, 111–113, 132
assessment of, 116
Completed staff work, 104
Continuous improvement of idea system,
131–132, 133
Cost allocation system, job code for
improvement time in, 72
Cost-benefit analysis, role in decision
making, 42–43, 46, 128–129
Cost savings, 7, 9
as layoff threat, 56–57
unintended consequences of policies
on, 76–77
vertical alignment of goals on, 54–55,
56–57
Crane & Co., 42
Crutchfield, Kevin, 111, 112
Culture, organizational
assessment of, 116, 117
in kaizen teian systems, 92–93
leadership commitment to idea system
and, 112
value of front-line ideas in, 49
Customer service, 4, 35
horizontal alignment of goals on,
57–58
idea mining on, 142–149
internal and external customers in, 63
organizational problem sensitivity in,
149–154, 155
policies affecting, 78
vertical alignment of goals on, 53
D’Amour, Donald, 35
Dana Corporation, 10, 83
Decision-making
limitations of cost-benefit analysis in,
42–43, 46, 128–129
pilot tests of, 127, 128–129
Delivery performance of Graniterock, 150,
151–152
Dempsey, Martin, 29, 33
Design process for new idea system,
119–120, 124, 125, 132
Diffusion of Innovations (Rogers), 174
Domino’s Pizza, 152
Downcycling, 141
Drucker, Peter, 89
Dubal (Dubai Aluminum), 40
Dupuit, Jean, 43
INdEX | 183
Echevarria, Jesus, 30
Edelston, Martin, 89–90
Effective idea processes, 18–19, 89–108
80/20 principle of improvement, 9–11
Electronic flat-screen displays as idea
boards, 99
Escalation process, 92, 103–105, 108
for idea boards, 97
in idea meetings, 95
pilot test of, 127–128
replication of ideas in, 105
staff work required in, 104
Evaluation
current profits as basis of, 70
of organization from idea management
perspective, 115–118, 132
of pilot test, 125–126, 127, 133
and rewards aligned for ideas, 86–87,
88
by subordinates, 32–33
360-degree system, 29, 33
Executive Leadership Team (ELT) in
Health New England, 113–115
Facilitators in idea processes, 94, 95,
99–102, 173
Fast Company magazine, 163
Flat-screen displays as idea boards, 99
Ford, Henry, 63
Foster Corporation, 104
Fresh Ventilation, 55, 83
Front-line ideas, 1–21
accountability of managers for, 39,
43–45, 46
alignment of organization for, 17–18,
47–88. See also Alignment of
organization for ideas
at Brasilata, 2, 21, 75, 91–92
changing management mindsets and
behaviors for, 33–45
at Clarion-Stockholm hotel, 3–6,
144–149, 153–154
at Coca-Cola Stockholm, 7–9
effective processes for, 18–19, 89–108
80/20 principle of improvement in,
9–11
escalation process in, 103–105. See also
Escalation process
facilitation of, 94, 95, 99–102, 173
at Hickory Chair, 11–14, 15, 16, 30, 32
implementation of high-performing
system for, 109–133
and innovations, 20–21, 157–176
in kaizen teian process, 91–93
managers as barrier to, 17–18, 24–29,
36, 90
organizational strategy, structure, and
goals for, 18, 47–67
problem sensitivity required for, 20,
149–154, 155
sources of new and better ideas, 135–155
team-based processes in, 93–99. See also
Team-based processes
Fuji Heavy Industries, 137
Fujimura, Key, 42
Funding of ideas, 72–74, 83, 88, 92
assessment of, 116, 117
during pilot tests, 126, 128–129
escalation process required for, 104
facilitator role in, 100, 102
Galinsky, Adam, 27
Gemba, 40, 41, 83
Gilbreth, Frank, 84
Goals, organizational, 18, 51–64
“Big Hairy Audacious Goals,” 62
horizontal alignment and linkages in,
57–64, 66
in idea board process, 97–98
key performance indicators and, 52
vertical alignment of, 51–57
Good to Great (Collins), 32, 38–39
Graniterock, 149–153, 155
Gruenfeld, Deborah, 27
Guided reading course for managers,
38–39, 178n
184 | INdEX
Hayek, Friedrich, 16
HCSS Construction Software, 166–169
Health New England (HNE), 113–115
HeavyBid program of HCSS, 166–169
Hedgehog concept, 39
Hickory Chair, 11–14, 15, 16, 30, 32
Hiring process, characteristics considered
in, 30–33, 38, 39, 46
Holmes, Oliver Wendell, 119
Horizontal alignment and linkages, 51,
57–64, 66
Humility of managers, 30–32, 46
Idea activators, 20, 137–142, 154
Idea boards, 93, 94, 96f, 96–99, 108, 171
Idea meetings, 93–95, 97, 108
facilitators in, 94, 95, 99–102
Idea mining, 20, 142–149, 155
Ideas Are Free (Robinson & Schroeder),
49, 86, 90, 173
Implementation of high-performing idea
system, 109–133
assessment of organization in, 115–118,
132
commitment of leadership to, 109–110,
111–113, 116, 132
continuous improvement in, 131–132,
133
correction of misalignments in,
120–121, 133
design process in, 119–120, 132
integration into existing practices in,
117–118, 132
minimal intervention in, 117–118
organization-wide roll out in, 129–131,
133
pilot test in, 121–127, 133
preparation for launch in, 127–129, 133
summary of steps in, 110
teams in, 109–110, 113–115
training in, 109, 112, 113–115, 121–122,
130–131, 132
Inditex, 30–31
Innovations, 20–21, 157–176
at Allianz, 33, 159–160
assessment of, 117
barriers to, 165–169, 175
at Brasilata, 2, 21
diffusion of, 174
at HCSS, 166–169
at Subaru Indiana Automotive, 158–159
at Task Force Tips, 160–163
at ThedaCare, 169–173
time required for, 70
at Whirlpool Corporation, 163–165
Integration of new idea system into
existing practices, 117–118, 132
Internal customers, 63
Interviews in organizational assessment,
115–118
ISO 9001 certification, 84, 85
J. P. Morgan, 24
Jidoka, 131
Juran, Joseph, 63
Kaizen events or blitzes, 172
Kaizen teian process, 91–93, 108, 173
Kaplan, Robert, 52
Key performance indicators (KPIs), 52
“Kill Stupid Rules,” 18, 77–80
Knowledge
aggregate, 16
of particular circumstances of time and
place, 16
of processes and procedures, 84–86
Leadership, 23–46
alignment of strategies and goals, 49,
51–57, 67
as barrier to front-line ideas, 24–29, 36
of Clarion-Stockholm, 6
commitment to new idea system,
109–110, 111–113, 116, 132
INdEX | 185
in escalation process, 103–105
in Executive Leadership Team (ELT) of
Health New England, 113–115
at Hickory Chair, 12–14
hiring and promotion of, 30–33
of level 5 leaders, 32
power of, 26–29, 39–40, 45
360-degree evaluation of, 29
Lean principles, 118, 142
in escalation process, 105
in jidoka concept, 131
in Six Sigma program, 10
at ThedaCare, 40, 170, 172
Leape, Lucian, 169
Level 5 leaders, 32
Life insurance policies of Allianz China,
159–160
Listening
power affecting, 27, 45
problem-finding in, 148
Luthans, Fred, 23
Magee, Joe, 27
Management systems, 69–88
Managers, 23–46
accountability of, 39, 43–45, 46
aggregate knowledge of, 16
as barrier to front-line ideas, 17–18,
24–29, 36, 90
changing mindsets and behaviors of,
33–45
command-and-control approach of, 16
engagement with front line workers,
39–43, 46, 172
in Executive Leadership Team of Health
New England, 113–115
at Hickory Chair, 12–14
hiring and promotion of, 23, 30–33, 38,
39, 46
humility of, 30–32, 46
pay and perk benefits of, compared to
workers, 24–26
in pilot test of new idea system, 124–125
policymaking of, 80, 88
power of, 26–29, 39–40, 45
reeducation and training of, 34, 36–39
in rollout of idea system, 130–131
subordinate evaluation of, 32–33
successful and effective, comparison of,
23
in suggestion systems, 90
superiority feelings of, 24–26
Massey Energy Company, 111–113
McMillan, Stewart, 59–60, 161–163
Milliken, Roger, 12, 83
Milliken Corporation, 12, 83
Minimal intervention approach to
implementation of idea system,
117–118
Misalignment of organization for ideas.
See Alignment of organization for
ideas
Monitor product of Task Force Tips,
160–162
Motivation
and alignment of evaluation and reward
systems, 86
policies affecting, 80–81
Norton, David, 52
Nucor Steel, 63
Objectification in power, 27
Observation, problem-finding in, 148–149
Ohba, Hajime, 13–14
Opportunities for improvement (OFIs), 93
facilitation of, 100
in idea board process, 96, 97, 98, 99
in idea meeting process, 95, 108
Organizational alignment for ideas. See
Alignment of organization for ideas
Organization-wide rollout of idea system,
129–131, 133
Ortega, Amancio, 30–32, 65, 66
186 | INdEX
Pay
gap between workers and managers in,
24–26
horizontal linkages in, 63
in pay-for-performance system, 60–61
Perk benefits of managers, compared to
workers, 24–26
Pilot test of new idea system, 121–127, 133
organization of, 124–125
performance review and changes made
during, 125–126, 127
Poka-yoke principles, 142
Policies and rules, 49
alignment for ideas, 18, 76–83, 88
beneficial for ideas, 83
on inventory, 15–16, 53, 58–60
“Kill Stupid Rules” program, 18, 77–80
manager training on, 80, 88
matrix for analysis of, 81–82, 82t
on purchasing process, 72–74
unintended consequences of, 18, 76–83
on work schedule, 80–82
Policy Analysis Matrix, 81–82, 82t
Porras, Jerry, 62
Porter, Theodore, 42
Power
and accountability for idea
performance, 34, 43–45
and behavior of leadership, 26–29,
39–40, 45
Problems
exploration of alternative approaches
to, 101–102, 108
facilitator role in, 101–102
finding or recognition of, 136–149, 154
idea activators for, 137–142
idea board process for, 98–99
idea mining of, 142–149
in jidoka concept, 131
as opportunities for improvement, 93, 101
sensitivity to, 20, 149–154, 155
solving of, 136, 154
team-based processes for solving, 93,
94–95
ThedaCare approach to, 171–172
Processes and procedures
alignment for ideas, 84–86, 88
existing, integration of new idea system
into, 117–118, 132
in pilot tests, 126
Productivity, 4, 35
funding of ideas for, 72–74
manager engagement with front-line
workers affecting, 42
tight controls affecting, 48
time-saving ideas for, 71
vertical alignment of goals on, 53, 54,
56–57
Promotions, 23, 30–33, 38, 39, 46
aligned for ideas, 87, 88
Purchasing process for ideas, 72–74
pilot tests of, 126
Pyromation, 32, 75, 131–132
Quality management
alignment of processes and procedures
in, 84–85
ISO 9001 certification in, 84, 85
Rapid improvement events at ThedaCare, 172
Rational approach to change, 34–36
Reading course for managers on front-line
ideas, 38–39, 178n
Realignment of organization for ideas. See
Alignment of organization for ideas
Reardon, Jay, 11–14, 16, 30, 32
Recycling at Subaru Indiana Automotive,
62, 137–141, 158–159
Reeducation of managers, 34, 36–39
Rejection of ideas
facilitator role in, 101
in suggestion systems, 107
Resource use, 49, 70–76
in escalation of idea, 103–105
INdEX | 187
of funding, 72–74, 83, 88
of support functions, 74–76, 88
of time, 71–72, 88
Rewards in organization, 49
aligned for ideas, 86–87, 88
in pay-for-performance, 60–61
Riverside County “bathroom tissue gate,”
25–26
Rogers, Everett, 174
Rollout of idea system, organization-wide,
129–131, 133
Rules. See Policies and rules
Running Right idea system, 111, 112
Rydin, Michael, 166
Scania, 8, 43, 72, 103–104
Sensitivity to problems, 20, 149–154, 155
Shingo, Shigeo, 64
Short-pay policy of Graniterock, 149–153,
155
Siemens VDO, 44
Six Sigma, 103, 105, 118, 177n
at Coca-Cola Stockholm, 7, 8, 9
at U. S. Navy base, 10
Sloan Management Review, 173
Snyder, Nancy Tennant, 164
Softwin, 71
Springfield Technical Community
College, 93–95, 123
Staff work, completed, 104
Stanford Prison Experiment, 26–27
Stevie awards, 33
Straley, Peter, 114
Strategy, organizational, 18, 49, 51–64
Structure, organizational, 49, 51–67
horizontal alignment and linkages in,
51, 57–64
vertical alignment in, 51–57
Subaru Indiana Automotive, 62, 137–142,
158–159
Suggestion systems, 90
compared to kaizen teian process, 91, 92
limitations of, 105–107, 108
Sumitomo Electric, 45
Super Fit life insurance policy, 159–160
Superiority feelings of managers, 24–26
Support functions
alignment for ideas, 74–76, 88
assessment of, 116
at Brasilata, 92
in escalation process, 104
pilot tests of, 129
Systems and procedures, organizational,
49
Take Family Traveling program of Task
Force Tips, 163
Tarde, Gabriel, 174
Task Force Tips (TFT), 59–60, 160–163
Monitor product of, 160–162
Take Family Traveling program of, 163
Taylor, Frederick, 84
Team-based processes, 93–99
in design of idea system, 119–120
facilitation of, 99–103
in idea boards, 93, 94, 96–99
in idea meetings, 93–95, 97
in implementation of idea system,
109–110, 113–115
Texeira, Antonio, 2, 91
ThedaCare, 40–42, 83, 169–173
360-degree evaluation system, 29, 33
Time needed in idea process, 70, 71–72, 88
at Brasilata, 92
supervisor training on, 114
Top-directed and bottom-driven
approach, 16, 50
Top-directed and top-driven approach, 16,
48
Toussaint, John, 41–42, 170, 171
Toyota, 13, 40, 63–64
Training
and certification on idea management,
37, 125
188 | INdEX
Training, continued
on facilitation skills, 102
guided reading course in, 38–39, 178n
idea activators in, 137–142, 154
in implementation of idea system, 109,
112, 113–115, 130–131, 132
in organization-wide rollout of idea
system, 130–131
in pilot test of new idea system,
121–122, 123–124, 125, 126
and reeducation of managers, 34, 36–39
Transparency, accountability of managers
in, 43–44
Trust
of employees, implementation of ideas
affecting, 103
of managers in employees, in suggestion
systems, 90
Trust in Numbers (Porter), 42
U.S. Army, 360-degree evaluation system
in, 29, 33
U.S. Navy, 10
Value of idea system shown in pilot test,
123
Value stream mapping, 63–64, 171
Vega de la Falla, Jesus, 31–32
Vertical alignment, 51–57
Wall Street Journal, 166
Waste management at Subaru Indiana
Automotive, 62, 137–141, 138f,
158–159
Welch, Jack, 177n
Whirlpool Corporation, 163–165
Whitwam, David, 164
Wilson, Pete, 32, 75
Woolpert, Bruce, 149–150, 152
Work environment, 4
manager engagement with front-line
workers affecting, 42
processes and procedures in, 84–86, 88
support functions in, 74–76
time for idea process in, 71–72, 88
unintended consequences of policies
on, 80–82
Zara stores, 30, 31–32, 64–66
Zero landfill goal of Subaru Indiana
Automotive, 62, 137–141, 158–159
Zimbardo, Philip, 26–27
189 189
ABOUT THE AUTHORS
Alan G. Robinson and Dean M. Schroeder are award-winning authors,
consultants, and educators. They are the coauthors of the bestseller Ideas
Are Free: How the Idea Revolution Is Liberating People and Transforming
Organizations. Between them, they have advised hundreds of organiza-
tions in more than twenty-five countries around the world on how to
improve their creativity, innovativeness, and overall performance.
Alan Robinson has authored or coauthored seven
books and more than sixty articles. His book Cor-
porate Creativity, coauthored with Sam Stern, was a
finalist for the Financial Times/Booz Allen & Ham-
ilton Global Best Business Book Award, and it was
named “Book of the Year” by the Academy of Human
Resource Management. He has a PhD from the Whit-
ing School of Engineering at the Johns Hopkins University and a BA/MA
in mathematics from the University of Cambridge. He teaches at the Isen-
berg School of Management at the University of Massachusetts at Amherst.
Dean M. Schroeder has authored or coauthored
three books and more than eighty articles. He is the
Herbert and Agnes Schulz Professor of Management
at Valparaiso University in Indiana. He is a two-time
Shingo Prize winner, and for five years he served on
the board of the U.S. Malcolm Baldrige National Qual-
ity Award. He earned a PhD in strategic management
The Idea-Driven Organization
About the Authors
K
ar
in
W
oo
ds
id
e
190 | THE IdEA-dRIvEN ORgANIzATION
from the Carlson School of Management at the University of Minnesota,
and he has a BS in engineering from Minnesota and an MBA from the
University of Montana.
For more about how to unlock the power in bottom-up ideas in your
organization, visit the authors’ website at www.idea-driven.com.
www.idea-driven.com
This page intentionally left blank
Also by Alan G. Robinson and Dean M. Schroeder
Ideas Are Free
How the Idea Revolution Is Liberating People and
Transforming Organizations
A worker in one of Europe’s largest wireless communication companies fi xed
an error in his company’s billing software and saved some $26 million per
year. A secretary at Grapevine Canyon Ranch proposed a simple change to
the company’s website that brought it to the top of search engine listings.
A guard at the Massachusetts Department of Correction saved $56,000 a
year by suggesting the use of digital cameras instead of fi lm to process new
inmates.
This was the fi rst book in which Alan Robinson and Dean Schroeder de-
scribed the power and promise of employee ideas. They draw on extensive
research with more than 300 organizations around the world to show how
managers can elicit and encourage groundbreaking ideas from frontline
employees.
“This empowering book is a refreshingly simple examination of how corpo-
rate creativity can happen.” ––Fast Company
“Recommended for all business collections.” ––Library Journal
Paperback, 264 pages, ISBN 978-1-57675-374-3
PDF ebook, ISBN 978-1-60509-017-7
800.929.2929
This page intentionally left blank
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Cover
Contents
Preface
1 THE POWER IN FRONT-LINE IDEAS
The Clarion-Stockholm Hotel
The Impact of Front-Line Ideas: The 80/20 Principle
Creating an Idea-Driven Organization
Why Are Idea-Driven Organizations So Rare?
Realigning the Organization for Ideas
Effective Idea Processes
Getting More and Better Ideas
Idea Systems and Innovativeness
2 A DIFFERENT KIND OF LEADERSHIP
Why Leaders Are Often Blind to Front-line Ideas
Fighting Back
Key Points
3 ALIGNING THE ORGANIZATION TO BE IDEA DRIVEN: Strategy, Structure, and Goals
Strategy and Goal Alignment
Structuring for Ideas
Key Points
4 ALIGNING THE ORGANIZATION TO BE IDEA DRIVEN: Management Systems
Budgeting and Resourcing the Idea Process
Aligning Policies and Rules
Aligning Processes and Procedures
Aligning Evaluation and Reward Systems
Conclusion
Key Points
5 HOW EFFECTIVE IDEA PROCESSES WORK
The Kaizen Teian Process
Team-Based Processes
Facilitation
Escalation
The Electronic Suggestion Box Trap
Key Points
6 IMPLEMENTING A HIGH-PERFORMING IDEA SYSTEM
Step 1 Ensure the leadership’s long-term commitment to the new idea system
Step 2 Form and train the team that will design and implement the system
Step 3 Assess the organization from an idea management perspective
Step 4 Design the idea system
Step 5 Start correcting misalignments
Step 6 Conduct a pilot test
Step 7 Assess the pilot results, make adjustments, and prepare for the launch
Step 8 Roll out the system organization-wide
Step 9 Continue to improve the system
Key Points
7 WAYS TO GET MORE AND BETTER IDEAS
Problem Finding
Creating a Problem-Sensitive Organization
Key Points
8 FRONT-LINE IDEAS AND INNOVATION
Innovations Often Need Front-Line Ideas to Work
Front-Line Ideas Create Capabilities That Enable Innovations
Front-Line Ideas Can Transform Routine Innovations into Major Breakthroughs
Front-Line Ideas Can Open Up New Opportunities for Innovation
Setting Up an Idea System Removes Many of the Barriers to Innovation
Bringing It All Together
Conclusion
Key Points
Notes
Acknowledgments
Index
A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S
T
U
V
W
Z
About the Authors
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