It is ironic that many leaders, scrambling to respond to shifting market environments and the ramifications of the latest technologies, overlook one of their most significant sources of sustainable advantage. Our research shows that nearly 80 per cent of an organisation’s potential for performance improvement lies in the ideas of regular front-line employees. From ideas to improving productivity and customer service. To generate ideas for new or better products or services. Any company not soliciting and implementing these ideas is using, at best, one-fifth of its available improvement potential. Ideas-driven organisations, which today routinely implement 20, 50, or even 100 ideas per person per year, register improvement at much faster rates. They execute strategies more rapidly and possess capabilities their competitors cannot match.
Take, for example, Brasilata, an innovative Brazilian company in the steel can industry. It is part of a mature industry. Yet 75 per cent of Brasilata’s products are either protected by patents or were developed within the last five years. Every year, Brasilata’s nearly 1,000 “inventors” (the job titles of its front-line employees) generate approximately 150,000 ideas. 90 per cent of which are implemented. The result? Brasilata dominates the domestic non-food can business with a market share of more than 50 per cent!
In this article, we will briefly touch on four aspects of difference found in an ideas-driven organisation.
1. Humility
Humility is one of the key traits that leaders possess—from front-line supervisors to the CEO, valued by ideas-driven organisations. The business model of the Spanish company Inditex, the world’s largest clothing retailer and parent of Zara fashion stores, is based on the rapid flow of ideas. It develops and delivers products to more than 6,000 stores worldwide within 14 days.
Jesus Echevarria, Chief Communications Officer, says humility is a key characteristic the company requires. “A manager has to have the humility to listen to and respect other people’s ideas if he expects to rise in Inditex.”
2. A well-designed process
A well-designed process for capturing, discussing, and following through on ideas is a must. Nothing shuts down the flow of front-line ideas faster than employees believing their ideas are not taken seriously. At the same time, management cannot deal with large numbers of ideas in an ad hoc manner. Today’s high-performance idea processes are designed to handle a large number of employee ideas quickly and efficiently.
It is important not to confuse today’s processes with those of the traditional nineteenth-century suggestion box. A suggestion box – even with an automated online system – usually yields only one-half an idea per employee per year. Many leaders launch their idea initiatives without realising that best practices have moved well beyond suggestion boxes. Condemning their initiatives to mediocre performance, or even failure, from the outset.
3. Aligned systems
The systems and processes of idea-driven organisations are deliberately and carefully aligned to foster ideas. When we ask managers in our executive programs to identify a bottom-up improvement or innovation in their organisations, invariably, a litany of horror stories emerges. These include managerial indifference or opposition, as well as burdensome policies. Key players are unwilling to change, and other ridiculous or petty behavioural and institutional barriers.
While listening to these stories, someone always asks, “Why are these organisations and managers making it so difficult for their people to implement good ideas?” Bingo!
Perhaps the most challenging part of building an ideas-driven organisation is realigning it to focus on ideas. Then, it involves rooting out and eliminating all the misalignments that are impeding the flow of ideas.
4. Regular Training
Regular training is necessary to help people generate more and better ideas. Idea-driven organisations help their people continually create more and better ideas. One relatively easy approach is the use of idea activators. Short, targeted training modules are designed to give people new perspectives on their work, resulting in more improvement ideas.
Subaru Indiana Automotive (SIA) was on a quest to become the first North American automobile manufacturing plant to be “zero landfills.” One idea activator was “the 3Rs,” based on the framework of reducing, reusing, and recycling.
At SIA, engine components arrive in large shipping containers. Packed tightly with Styrofoam blocks that were always recycled. However, after 3R training, an employee team proposed a new idea: since empty shipping containers were returned to the supplier, why not repack them with Styrofoam for reuse?
This idea was not only feasible but profitable! Eventually, some eighty different kinds of packing materials were being returned to suppliers, resulting in an annual savings of more than $3 million.
More and more leaders are realising that they cannot produce the results they now need with the organisations they currently have. They are searching for solutions. At the same time, the growing number of high-performing systems around the world is increasing the population of managers who understand the advantages of operating in an ideas-driven manner. This growing base of experience and knowledge is making it even easier for organisations to transform.
We believe the ideas-driven organisation is an idea whose time has come!
