8
Front-Line Ideas and Innovation
ALL OVER THE WORLD, leaders are struggling with the question of how to make their organizations more innovative. For the majority of them, their first step should be to set up a high-performing idea system. This approach will allow them to take advantage of the powerful multi-faceted synergies between front-line ideas and innovations. Without these synergies in play, their organizations are far less innovative than they could be.
In this chapter, we explain why the ability to get large numbers of bottom-up ideas significantly increases an organization’s ability to produce breakthrough innovations on a consistent basis. First, the synergies between front-line ideas and innovations lead to more and bigger breakthroughs. Second, putting a high-performance idea system in place requires the organization to be realigned, which eliminates many of the same barriers that also make the innovation process so difficult—barriers that would otherwise be ignored.
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, 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 solvent, 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, ironically, 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 innovative 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 capabilities 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 Insurance 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 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 insurance 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 system. The ideas this system brought in, he told us, had over time made the company extraordinarily flexible, which is what enabled it to both create 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 equipment maker discussed in Chapter 3, came up with an interesting new product idea at a firefighting equipment trade show. During the show, several 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 cannon 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.
The problem with monitors was that, while they were very effective at fighting larger fires, they were also heavy (typically requiring two firefighters 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 president—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 workers 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 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) instructions and safety warnings; a special design to shoot the water from a central point much closer to the ground in order to provide greater stability; lightweight aluminum cast construction; cranks for adjusting the direction 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 pressure 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 technologies 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 customers. For example, a few years ago, when gasoline prices jumped during the 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 stations 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 stations visited.
TFT’s active integration of front-line knowledge into its product development 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.
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 little 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 innovator 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 position 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 consumer 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, engineering, or product development. But when the embedding effort reached the front lines, the workers, too, came up with some very innovative ideas. For 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 rubber 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 platforms the company sold to elevate front-loading washers and dryers. Raising 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 innovations. 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 capacity 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 “champions battling barriers” model. First, the ideas involved are generally 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 Houston-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 Companies 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 troublesome 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 critically important for retaining existing customers and attracting new ones. Departments that were in regular contact with customers—such as technical 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 release, and there was no clear process for capturing, evaluating, and prioritizing them.
When HCSS was smaller, people in the different roles talked regularly, and any differences in opinions about potential improvements were addressed informally. But with growth, work became increasingly segmented 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, making it increasingly difficult for groups to work together informally.
The lack of clear processes to capture and prioritize product improvement 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 programming teams and other groups in the company. Before any real traction 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 improvement 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 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 disruptive 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 meeting, 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 features and functions that had been built, modified, and added to by many programmers over several decades. Sometimes, even a minor “improvement” in one module created new problems elsewhere in the software. Previously, 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 testing 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 upon by several other programmers on her team, and with the help of several 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 individual 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. Technological 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.
ThedaCare began experimenting with the application of lean principles 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 avoidable 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 hospital 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 benchmarking 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.
Traditional ways of thinking about how patient care should be provided had to be overturned. In 2007, for example, ThedaCare began testing a “Collaborative Care” approach to delivering patient care in one of its hospitals. 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 dramatic. 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 improvement opportunities—which it used to dramatically improve its performance 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 celebrates 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 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’ perspective. 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 number 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 conference 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, differentiate 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 audience. Every presenting team is publicly thanked and roundly applauded. 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 outcomes 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, fundamental 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 dramatically increase the rate at which they innovate and improve.
At the same time, the number of idea-driven organizations is increasing 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 companies with high-performing idea systems could be found in North America, Europe, and various countries in Asia. There was a considerable 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 government, 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 acceptance 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 relative advantage. On the other hand, it is fairly complex and difficult to try precisely because it is so highly incompatible with the way that organizations have traditionally been run. This explains the relatively slow adoption of idea-driven principles to date.
But more and more leaders are realizing that they simply cannot produce 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 observability and the population of managers who understand the advantages 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!
KEY POINTS
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 capabilities 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 innovations 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.
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 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 dramatically increase the rate at which they innovate and improve.