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Aligning the Organization to Be Idea Driven: Management Systems
AN ORGANIZATION’S MANAGEMENT systems consist of all the processes and procedures used to govern the way it works, from the budgeting process and how people are rewarded, to the procedures used to make products and deliver services. Typically, management systems evolve incrementally over time in response to shifting needs for coordination and control, with little thought for their impact on the flow of ideas. Consequently, the management systems in most organizations are seriously misaligned for bottom-up ideas.
While many aspects of goal misalignment discussed in the last chapter can be corrected in a single planning cycle, fixing the elements discussed in this chapter is more of an ongoing effort. Management systems generally consist of many moving parts, all interacting with one another. The resulting complexity makes it impossible to ever resolve all misalignments completely, and new ones are created all the time. Even the best idea-driven organizations still find subtle misalignments after years of constant vigilance and ongoing effort to root them out.
In this chapter, we continue the march down the framework for alignment given in Figure 3.1, discussing how to realign each of the management 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 managers 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 undermining its people’s ability to explore for new ones that would increase margins and drive the organization’s future profits, its members were rattled. After considerable debate about the ramifications of this practice, the leadership team decided that margins were still good enough, and the company 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.
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 commitment of front-line time we have ever encountered was at Softwin, a Romanian 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 available. 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 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 production 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 organizations, 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 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 purchasing process make it bureaucratic and frustrating for employees. We encountered one such situation while piloting an idea system at a mediumsized specialty manufacturer in New England. One of the first ideas to come in was from a machine operator who wanted to eliminate an irritating 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 flashlight 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 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 streamlined 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 discussed 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 maintenance 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.”
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 functions 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, Blackburn’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, special 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, managers must stand ready to react quickly as stress points emerge. Until the new levels of support resource needs become clearer, managers can temporarily 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 men did was to reallocate resources to where they were needed in a measured 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 treatment 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 policies 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 appropriate middle manager’s budget.
This policy devastated the idea initiative. Middle managers told us privately that, because the savings projected by the suggestion system office 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 studying 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 policymakers never become aware of. As far as we know, that utility company 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 organization, each of whom is trying to deal with problems from his or her perspective. 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 significant 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 employees 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 bank needed to know whether a policy to solve one problem had inadvertently 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 reason 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 survivor. An employee pointed out that this was time-consuming, insensitive 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 individuals. 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 resubmit 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 one of several full-time KSR analysts for initial review. The analyst first called the submitter to get more information about the policy in question—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 analyst 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., compliance, audit, legal, operations, product, staff support, and training), typically 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 additional 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 hundred entries, such as “Talk to X,” “Sent e-mail to Y asking for clarification,” “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 marketing 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.)
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 sometimes 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 managers with some basic knowledge in this area, together with an appreciation of how policies directly and indirectly affect the flow of ideas, will dramatically 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. official 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 professionals 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 people 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. 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 milestones 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 hardworking 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 created no advantages for him (Quadrant 4), other than his feeling of being in control and that his people were not slacking off.
TABLE 4.1The Policy Analysis Matrix
Had he gathered more data and thoughtfully considered this aspect of the issue, he would more likely have chosen to accept a few people occasionally 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 problems. 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 eliminate 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 without thoughtful analysis and great care to identify as many of its ramifications as possible. The Policy Analysis Matrix can help the decision maker 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 number 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 established two important policies. First, every idea would be acknowledged 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 supplier) 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 decisions related to this budget.
ThedaCare, the health care provider discussed in Chapter 2, has a policy that 8 a.m. to 10 a.m. is a “meeting-free zone,” so managers can do their gemba walks and support improvement efforts.
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 certified (ISO 9001 is the International Standards Organization’s standard for an organization’s quality management system). During our initial conversation, the vice president explained his problem.
“We [the quality department] have already written all of the procedures, 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 longstanding 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 movement’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 qualified, he is in a position to know whether or not his new suggestion is a real improvement.1
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 continue 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 discover 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 process 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 organizations 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 improvement 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 then dumping the responsibility on them. It requires careful goal alignment, well-defined responsibilities and authorities, systematic accountability, and systems to assure that front-line people have the proper skills and information. To us, the common lack of consideration for these elements 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 service,” “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 recommend 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.)
Ideas should be treated just like any other important aspect of performance. 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 mechanisms, 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 “Improvement orientation” that can be easily adapted to include idea performance. And many idea-driven organizations have linked bonuses to idea performance as well.
CONCLUSION
Three elements remain to be covered in the Framework for Alignment (Figure 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 cannot 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.
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 organizations 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 organizations 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 organization, each of whom is dealing with problems from his or her perspective, 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 managers 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 processes and procedures being owned by the people using them. Processes and procedures should reflect the organization’s accumulated 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 performance and integrated into an organization’s existing performance reviews, bonuses, merit increases, and promotions. This is usually quite straightforward to do.