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CHAPTER 2
THE POWER OF SMALL IDEAS

Several years ago, one of us was invited to give a talk about managing ideas to a group of CEOs. Early on, when talking about small ideas, he was brusquely interrupted by one of them, the head of one of the largest producers of computer equipment in the United States.

“I think I speak for all of us when I ask you to please move on to talk about what we should do to get the blockbuster innovations, the ones that change the terms of competition in our industries. That’s what we’re really interested in.”

Everyone is attracted by big and dramatic ideas. The more novel they are or the more far-reaching their implications, the more we are drawn to them. It is not surprising that managers (like that CEO), when thinking about employee ideas, envision the “home runs”—the suggestions generating hundreds of thousands or even millions of dollars or the breakthrough innovations that will propel their organizations to industry dominance. To them, the currency of managing ideas—that is, the unit to keep score with—is the big idea. In this chapter, we explain why managers should be paying more attention to the small ideas.30

Most problems and opportunities that employees spot will be relatively small, so most of their ideas will be small, too. Managers who see little value in these ideas cut themselves off from most of the potential benefits of employee ideas. The irony is that in many ways small ideas are more valuable than big ones. Also, going after small ideas is the best way to get big ideas.

EXCELLENCE DEPENDS ON SMALL IDEAS

In the last chapter, we explained why managers do not see all the problems and opportunities that their employees do. This being the case, there is a limit to the results that can be obtained through top-down management. It is simply impossible to achieve excellence in many aspects of performance without the ability to pay attention to detail, an ability that comes only from large numbers of small ideas.

Customer Service

Grapevine Canyon Ranch is a resort in the high desert of southeastern Arizona, an area full of history. Tombstone is less than thirty miles away, and the ranch itself looks out over the former homelands of the great Apache chiefs Cochise and Geronimo. Guests come to Grapevine to enjoy the unspoiled beauty of this historic desert. The resort attracts discriminating customers from all over the world who want an authentic experience but who also expect relaxed, unobtrusive, and high-quality service. And this they get, because Grapevine has cultivated an extraordinary level of attention to detail through employee ideas.31

Every two weeks, owner Eve Searle has a meeting with her employees, each of whom is expected to come with an idea that will improve some aspect of the ranch’s operations. Table 2.1 shows a sampling of them. Notice the level of detail in these ideas, how they make the ranch more relaxed and efficient, and how they allow it to pick up on fine points and add nice touches.

Many of the ideas not only improve the guest experience but also make it easier for employees to get their jobs done. Take Sylvia’s suggestion: “In the accommodations with showers, have maintenance glue a block on top of the shower head so the soap caddy stops falling to the floor.” When this was implemented, not only did falling soap caddies no longer inconvenience the guests, but Sylvia no longer had to contend with the resulting messes. Rob’s idea—”Put a cigarette butt receptacle by the swing”—is another instance. Not only does he no longer have to pick up the butts, allowing him time to do more value-adding things, but this change makes the swing area nicer for children and parents.

Or take Maria’s idea: “Change the directions we give in our brochures to guests arriving from Ironwood.” Many resorts would not pick up on poor directions so easily. Complaints from weary and frustrated travelers about bad standard-issue directions are typically made to front-desk clerks who can do little about them. But at Grapevine, as soon as one guest complained, it triggered an idea to change the directions, and this was done the following week.

Table 2.1. Examples of ideas from Grapevine Canyon Ranch33

With practice, employees develop sharp observational skills. Take, for example, an idea that came from a housekeeper. From faint imprints left on the stacks of stationery in the rooms, she had realized that many guests were using full sheets of it—the only writing paper provided—to swap names and addresses with other guests. Using stationery for such a purpose was both inconvenient for the guests and costly, the housekeeper thought. Why not create special business-card-size pieces of paper with spaces for names, addresses, telephone numbers, and e-mail addresses? Today, each room has a small holder with these wallet-sized cards in it. They are convenient and remind guests of their stay at the ranch. How many hotels would have housekeeping staff this alert for improvement opportunities?

All of the small ideas Grapevine Canyon Ranch gets from its employees accumulate over time and allow it to attain exceptionally high levels of productivity and customer satisfaction. The extraordinary attention to detail makes the service relaxed, courteous, and efficient. And the high levels of customer satisfaction mean that Grapevine can depend on a large percentage of repeat business and strong word-of-mouth advertising, allowing it to keep its marketing budget low and to attract customers whose expectations closely match the rustic experience it offers.

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Responsiveness and Cycle Time

Responsiveness is another aspect of performance in which it is impossible to attain excellence without large numbers of small ideas. Perhaps the fact that most organizations do not actively seek small ideas explains the startling statistic that George Stalk and Thomas Hout document in their book Competing against Time: “Most products and many services are actually receiving value for only .05% to 5% of the time they are in the value delivery system of their companies.”¹ In other words, 95 percent or more of the time, a product or service is simply waiting. Nothing is happening to it.

Over the last decade, interest in reducing cycle times has grown considerably. The ability to move faster than competitors is a powerful advantage. Again according to the authors of Competing against Time:

Many organizations have greatly improved their responsiveness through reengineering, six-sigma programs, and other techniques. But there is a limit to the streamlining a company can do through such top-down methods. Most time-saving opportunities are relatively small. Spotting them requires the detailed understanding of how work is done that comes only from actually doing it. It is hard for managers to identify all the unnecessary work that employees do, particularly in a white-collar environment. To the employees, however, their wasted time is obvious and irritating.35

To understand this, consider the idea submitted by Jennie Rogers, an administrative assistant in the finance department at the MacMillin Corporation, a medium-size construction company in New Hampshire. Every month, frustrated colleagues in the accounting department would come to her for help when trying to reconcile gasoline credit card receipts to customer statements. Fifty different workers and site managers purchased fuel for their vehicles all around New England, using credit cards from seven different companies. Each fuel charge had to be matched with the appropriate construction project. Out of three hundred or so fuel purchases made each month, people would remember to turn in perhaps half the receipts. The accountants needed Rogers’s help because her payroll duties gave her access to records of which jobs each driver had been working on. On average, Jennie spent ten to thirteen hours each month tracking down information needed to match up fuel purchases with jobs.

One day, during lunch, she noticed a trade magazine on a table. The cover article was about corporate fueling systems based on a single credit card that was valid at most gasoline stations. To activate the pump, the driver had to enter certain information, including a personal identification number (PIN), a vehicle identification number, and the odometer reading. She realized that this credit card could take care of most of her company’s consolidating work automatically. Her boss approved the idea, and once it was implemented, the time she and her accounting colleagues spent reconciling fuel purchases dropped from a total of twenty hours per month to less than two.

It is easy to see why this problem was obvious to Rogers, but not to her bosses. They weren’t the ones wasting their time every month, and reconciling fuel slips was not part of her job—she was chipping in to help her accounting colleagues.36

In general, managers see only a fraction of the opportunities to improve cycle time. This may be why the cumulative impact of employee ideas often comes as such a surprise to them. Consider what happened at a large European-based global high-technology company when in 1999 it embarked on an ambitious drive to improve responsiveness. The CEO gave more than one hundred thousand people in one hundred countries eighteen months to cut the time it took them to do everything in half. From his perspective, this was an ambitious Jack Welch-like goal. But a year later, the managing director of one of the company’s divisions in Scandinavia—a thousand kilometers away from headquarters—confided to us that with all the time-saving ideas that his employees had submitted, his division had been able to meet the goal in only three months.

Managing Complexity

In 1985, at the height of Western interest in Japanese management techniques, James Abegglen and George Stalk made an interesting observation in their book Kaisha: The Japanese Corporation.³ They pointed out that U.S. manufacturers were generally more productive than their Japanese counterparts when making products that required relatively few steps. But for products that required large numbers of steps, U.S. companies were far less productive than their Japanese competitors. The authors offered a number of explanations for this phenomenon, but here is one they did not—the one we think most likely.37

A large number of steps means increased complexity. More details must be taken care of, more variables are interrelated, more trade-offs have to be made, and more systems and practices have to be meshed smoothly—there are simply more things to go wrong. Managers see only a fraction of all the problems and opportunities that need to be addressed. The more complex the products and processes, the more managers have to rely on their employees to get all the little things right. According to the National Association of Suggestion Systems, in 1985, the average U.S. company got about one idea from every eight employees, of which less than a third were actually used. In that same year, the average Japanese worker gave in more than thirty ideas, of which 72 percent were implemented.⁴ This disparity gave Japanese companies a huge advantage as far as attention to detail was concerned. We believe the vastly superior ability of Japanese companies in the mid-1980s to get and implement small ideas from their employees explained their generally superior attention to detail, which gave them such a marked advantage in productivity for complex processes.

A superior ability to handle complexity can also enable an organization to do things its competitors simply cannot. Dana’s leasing operation, a 1996 winner of the Malcolm Baldrige National Quality Award, provides a good example. Like every other division of the Dana Corporation, it expects at least two ideas from every employee each month. In the late 1990s, one of its clients was being overwhelmed by the complex process of invoicing its customers. This company leased one-hour photo-processing machines to stores across the country. Invoices, broken down by machine, included the lease fee, the number of rolls of film processed, and the amount of chemicals and paper used that month. The process became extremely complicated when billing a nationwide retailer with more than two thousand such machines in its stores. The customer did not have the ability to handle all the details involved and soon lost control of the process. It asked Dana to take it over. Now, each month, each one-hour photo machine across the country telephones into the company’s computers to report the previous month’s processing activities. Dana then generates all the invoices and sends them out. While the customer couldn’t handle the complexity of this job, Dana could. In fact, it had little problem with it—it even became a new value-adding service it offered to its other customers. As an executive in the leasing operation pointed out to us, “The reason we are capable of doing things like this is the thousands of little employee ideas over time that make the system better, grow it, and change it.”38

Small ideas also help deal with another type of complexity: all the ramifications, foreseen and unforeseen, of big ideas. As we shall discuss in the next section, big ideas often need many small ideas to make them work. The faster an organization identifies and resolves these smaller issues, the faster it can exploit the full potential of its bigger ideas.

SMALL IDEAS AND RAPID ORGANIZATIONAL LEARNING

In the mid-1990s, the concept of the “learning organization” became popular with managers and business leaders. It held out the promise of making companies significantly more nimble and adaptable. Books such as Peter Senge’s The Fifth Discipline⁵ hit the business best-seller lists, and consulting companies jumped on the new business opportunity. But, in the end, the excitement over the learning organization proved to be surprisingly short-lived.

In our view, the main reason for this falloff in interest was not that it was a flawed concept—it was a very good one—but that its proponents failed to offer much that was practical. Many managers returned from seminars and presentations on organizational learning fired up by this vision but unable to do anything about it. They had not been given much in the way of practical tools.39

The concept that organizations, not just people, can learn had been discussed in academe for some time. Almost twenty years earlier, Chris Argyris and Donald Schön, in their 1978 book Organizational Learning,⁶ had argued that an organization’s policies, procedures, systems, and structures, along with its people’s “mental maps” of how it works, constitute its “institutional memory.” To the extent that problems or opportunities are identified and acted on, and the resulting changes are then captured in this institutional memory, the organization can be said to “learn.” This is why getting employee ideas is a key component of managing organizational learning.

Conceptually, Argyris and Schön’s treatise can be thought of as deepening the concept of the learning curve—a phenomenon that was first documented in the aircraft industry in World War II. Engineers noticed that for every doubling of the total number of a particular airplane that was produced, the manufacturing cost of each dropped by a predictable amount. If the drop was 20 percent, for example, the second airplane would cost 20 percent less than the first; the fourth, 20 percent of the second; the eighth, 20 percent of the fourth; and so on. The more planes a company built, the better it learned how to do so.

Since that time, similar patterns have been observed in fields ranging from mining and construction to software engineering and writing. In many industries, the learning curve is now routinely factored into cost estimates and budgets. Interestingly, it is not generally recognized that while a certain amount of learning happens naturally, most does not. Far from being a universal law with the particular learning rate a “given,” the rate at which a company learns depends on how well it manages the learning process.40

Every new product or service represents a form of change, often big change. And big change always creates new problems and opportunities that, taken together, define a large part of what the company has to learn. The faster a company can address these, the faster it learns. Take Winnebago Industries, for example. Even though members of the engineering staff spend considerable time on the manufacturing line before, during, and immediately after introducing a new model, they cannot spot every problem. However, many minor design issues and other improvement opportunities are readily apparent to the front-line employees who assemble the vehicles. Following are some employee ideas after one model change, for example:

• A customized steel plate made by a supplier did not fit properly.
• The length of the screws used to attach particular paneling was nearly the thickness of the internal wall, so that when they were tightened down, sometimes indentations were visible in the next room.41
• The windows and doors cut out of the walls of the vehicles could be used as substrates for benches or shelves elsewhere in the motor homes.
• Special map pockets, cut out of brand-new dielectric panels, could be cut instead from scrap pieces of this same material from another operation.

But organizational learning covers much more than new product introductions. Any large change creates a myriad of smaller learning opportunities. Consider, for example, what happened at ABB Infosystems, a Scandinavian subsidiary of the Swiss company ABB.

ABB frequently reorganizes to stay close to its customers, and it has become very good at it. During one reorganization of ABB Infosystems, the only person in its Huskvarna, Sweden, main office who had been able to troubleshoot a highly specialized printer for finished customer output was transferred hundreds of kilometers away. No one realized the problem—perhaps not even the employee himself—until the printer acted up several weeks later. Immediately, a suggestion came in to the idea system: Fly the reassigned employee back to the facility to train others. The managing director told us this story to illustrate how much his company had come to depend on its idea system to help handle rapid change. No matter how skilled or careful his managers were, they were bound to miss some details. Without the capability to identify and fix the resulting problems quickly, the fast pace of change at his company would only cause chaos.

Many ideas are learning opportunities. Consider what ABB Infosystems learned by realizing it had transferred away a minor, but nonetheless necessary, skill. Now, it can plan better for such issues in the future. When the company incorporated a more detailed skills assessment into its procedures for restructuring—that is, into its institutional memory—it learned a bit more about how to reorganize smoothly and effectively.42

Learning is a cumulative incremental process—it naturally involves small steps of inquiry, information gathering, testing, and feedback. This is why an idea system capable of encouraging and acting on small ideas is really a gigantic learning and development tool. Every idea, even a bad one, incorporates some form of discovery.

SUSTAINABLE COMPETITIVE ADVANTAGE

In the last chapter, we briefly described how small ideas tend to stay proprietary, because there are no mechanisms for competitors to find out about them, and even if they do, the ideas are often situation-specific and so cannot be copied. Because of their proprietary nature, they accumulate into a considerable cushion of sustainable competitive advantage. For companies in fiercely competitive industries, this cushion can mean the difference between struggling to survive and being highly successful. The case of Milliken and Company illustrates this point well.

Milliken competes against textile manufacturers operating in some of the poorest countries in the world, which pay their employees less than one-twentieth of what Milliken pays its people. The textile industry is mature, and every competitor has access to the same equipment. Consequently, Milliken has to compete by outmanaging its rivals, which it has been doing for several decades, in large part with its OFI (“Opportunity for Improvement”) system. The system brought in some seven thousand employee ideas every working day in 2002. Because most of these OFIs are small, they are impossible or difficult for competitors to copy.43

At one Milliken facility in Denmark, for example, the director showed us a number of machines, each of which had literally hundreds of minor improvements made to it through worker ideas. Cumulatively these had doubled or tripled the machines’ speeds and made them capable of doing things their designers had not even thought of. While competitors can easily purchase the same equipment, it will be much harder for them to duplicate the effect of all these improvements. Until its low-wage competitors find ways to promote as many good ideas from their workers, Milliken’s OFI system guarantees it significant competitive advantage.

Small ideas are also the key to creating sustainable competitive advantage from big ideas. While big ideas may be readily copied or countered by competitors, the small ideas that exploit them are part of the organization’s learning, and remain largely proprietary. The sustainable competitive advantage created by these smaller follow-up ideas may well be greater than that of the big idea itself. To understand this more fully, consider what happened at a Dana facility in Cape Girardeau, Missouri.

This facility manufactures axles and gears for light and medium trucks. Its many metal-cutting machines consume tens of thousands of gallons of cutting oil each year. As each cutting tool bites into a part, a continuous spray of oil lubricates and cools it.

For years, a forklift truck had brought cutting oil to each machine in a large plastic tote (a collapsible, thick, fifty-gallon barrel). Each operator would insert a hose into this barrel and pump the oil into his or her machine. With more than a hundred thirsty machines, the company had to dedicate a forklift truck and driver full-time to distributing oil within the facility.

But in the summer of 1997, an employee suggested that rather than working with totes, why not install a large tank and a system of overhead pipes and pipe the oil directly to each machine? The idea had some obvious benefits. First, the operators’ work would no longer be disrupted with each forklift delivery, and they could draw oil as needed. Second, the forklift truck could be eliminated and its driver freed up for more value-adding work. The proposal was carefully studied before it was approved. Once the pipes were installed, however, it soon became clear that no one had even begun to anticipate the myriad of opportunities they would create throughout the company.

The first thing that was noticed—obvious in hindsight—was that since the company now bought its oil in bulk, the price went down significantly. Moreover, the new tank occupied only half the space that the totes had, so a significant amount of space was freed up. The problem of disposing of empty totes—which because of the residual oil in them were classified as hazardous waste—also disappeared. And when the forklift truck finally stopped making deliveries, another advantage of the new system became apparent. Previously, every few months or so, the forklift would accidentally spear one of the totes and cause a spill. While the cost of the cleanup and the lost oil was minimal, each spill had to be reported to the state environmental authorities, which required considerable paperwork and time.

The idea clearly saved a lot of money. But suppose a competitor had somehow learned—from the oil supplier, for example—that Dana was now buying its oil in bulk. As soon as it installed an oil tank, the competitor would have realized all the direct consequences of the oil tank idea. But it wouldn’t necessarily have come up with all the associated small ideas that turned out to be even more valuable.

In the new system, the oil was dispensed through hoses that dropped down from the overhead pipes. Just like fueling a car, the machine operator would squeeze a lever on the nozzle to pump the oil. The nozzles happened to have gauges on their handles. Now, for the first time, the machine operators began to notice how much oil their machines were using.

After the cutting oil is sprayed on the tool, the oil runs down into a sump from which it is recirculated. One employee began wondering why, if the oil was being recycled, his machine was consuming so much of it. He realized that the loss was due to the oil-drenched metal shavings that came out of a chute on the side of the machine into a scrap bin. If a two-foot-long sieve was attached to the end of this chute, he proposed, oil would have time to drip through it as the shavings were pushed slowly over it. His idea saved ten gallons per day on his machine. With fourteen other machines in his department, the total savings worked out to 150 gallons per day. The idea quickly got around to people in other departments, who began to submit all kinds of oil-saving ideas for their own equipment, too.46

Why did the relatively simple idea for an oil tank have such far-reaching implications? Before it came along, the high cost of cutting oil was an accepted cost of doing business. No one saw it as a problem. But when the nozzles on the oil hoses happened to come with meters, people were alerted to this previously invisible source of waste. In a facility that was averaging thirty-six ideas from each employee every year, this was like throwing a leg of meat to piranhas. And because the waste was eliminated through a series of small ideas, the resulting cost advantage was essentially proprietary.

HOW SMALL IDEAS LEAD TO BIG ONES

In this section, we look at another aspect of the relationship between small and big ideas. Many small ideas are the germs of bigger ideas, although the connections are not always obvious. A big problem or opportunity frequently manifests itself through a host of smaller signs or symptoms, each of which might be seen individually by different people in different places at different times. What might seem to be a small idea could in fact be addressing a single facet of this larger issue. To understand this point more fully, let us look at an example.

Monrovia is one of the largest wholesale nurseries in the United States. Its potted plants and trees are sold in stores throughout the country. Shortly after it started its idea system, it got a big idea from a worker at its Azusa, California, location. Yet for several months after it was implemented, neither he nor anyone else realized what its real impact was.

Much of Monrovia’s work involves transplanting plants into increasingly larger pots as they grow—a process referred to in the industry as “canning.” Some plants may be transplanted four or five times. The soil used is specially formulated for each kind of plant and kept in huge piles outside the canning shed.

Before the worker submitted his idea, the canning job quickly got very unpleasant when it rained. The soil included a healthy dose of “organic fertilizer” (manure), which turned acidic and noxious when wet. It got under peoples’ fingernails, irritated their skin, and smelled awful. Moreover, the soil itself became difficult to work with, and after only a few hours, the workers’ hands would start to hurt. The employee’s idea? Buy tarpaulins to cover the piles of soil whenever it begins to rain. Easy enough. The idea was approved, and the worker was recognized for his “morale-boosting” suggestion.

But nobody anticipated the consequences of his idea for the plants. When canning in dry soil, almost 100 percent of plants grow and thrive. No one had realized that with wet soil, the yield drops dramatically, sometimes down to 60 percent. Because the soil cakes when it dries, it becomes harder for growing roots to penetrate. It also clumps and leaves pockets of air under the surface, exposing the roots, which then cannot properly absorb water and nutrients.

In other words, whenever it rained, the company would unknowingly enter a low-yield phase. Because the plants died gradually and at different rates, Monrovia never realized what was happening. And since the canning lines can transplant up to 2,700 plants per hour, and after a heavy rainfall might be working for many hours with wet soil, this idea saved an immense amount of money.48

A major problem or opportunity often cuts across organizational lines and manifests itself through multiple symptoms, many of which can be quite subtle. One can never tell who is going to spot which symptom first or how that person will propose to address it. Consequently, the smallest idea might well be a partial reaction to something much bigger. At Monrovia, a manager might have noticed a drop in yield during a particularly wet season, or spotted unexpected variances in labor productivity, and somehow connected this with the weather. Or a company horticulturist might have noticed a patch of sickly plants, examined them, and seen that their soils were lumpy. But chances are that the response would not have been as quick or decisive as that worker’s was.

Understanding how wet soil on the canning lines affects yield was a huge discovery for the company, and it was no accident that it was made by a worker. The immediacy and intensity of the stimulus he got to do something about the offending soil were especially powerful because he was working directly with it. Others in the company might have smelled the manure, but he had it on his clothes, under his fingernails, and in his shoes. And not only did he stink when he went home, his hands hurt. Luckily, although the company’s managers were not going home at night in the same state, they understood the value in small ideas from their workforce. And with Monrovia’s ability to react to minor symptoms came the ability to address far bigger and deeper issues.

Small ideas are the best sources of big ideas. Even the biggest ideas often begin as a sequence of relatively small ones. (Despite the heroic lore of invention, a big idea almost never comes to someone in a single “aha” flash-of-brilliance moment.⁷) The tiniest idea may be the key to something huge. To unlock this potential, managers should get into the habit of asking themselves the following questions.49

Question 1. Can this idea be used elsewhere in the organization? Sometimes a single small improvement idea can be used in many other places, vastly multiplying its initial impact. Unless somebody asks, “Where else can this idea be used?” the opportunity will be missed.

In the late 1990s, for example, an appliance salesperson in a Chicago branch of one of the largest retailers in the United States figured out a simple way to avoid a problem that often came up after he sold a refrigerator. When it was delivered to the customer’s home, it wouldn’t always fit through all the necessary doorways. The delivery crew would struggle with it for a while, often damaging it (and the doorways) in the process, before giving up and retreating to the truck, reboxing the refrigerator, and taking it back to the warehouse. Nationwide, the problem was costing the company millions of dollars. In addition to having to pay the delivery crews for failed deliveries, the appliances they damaged had to be marked down. For the salespeople, it meant extra paperwork, angry customers, and perhaps the loss of a sale.50

The salesman’s solution: Whenever someone bought a refrigerator, he cut a piece of string to the length of its critical dimension and stapled it to the receipt. He told the customer, “When you get home, use this string to check every doorway that your new refrigerator will have to go through. Call me immediately if there is a problem.” Other salespeople in his department soon adopted the idea, as did seven or eight of the company’s other stores in the region. But consider this: Had the company had a fluid process for communicating good ideas like this between its stores, it could have used this one at more than two thousand locations. Because it did not, more than 99 percent of this idea’s potential was squandered.

Question 2. What other ideas does this one suggest? Every small idea should be eyed as a possible clue to a bigger one. Using the small idea as a stepping stone, a larger problem or opportunity can sometimes be unmasked. Take, for example, Harald’s idea at Grapevine Canyon Ranch (table 2.1): “I can translate ride and brochure information into German.” Suppose the question had been asked, “What else does this idea make one think of?” Harald stepped forward because German was the language he happened to know. But what about Spanish, French, Japanese, and other languages? Perhaps other employees knew these languages? If not, someone in the community probably did—a local high school teacher, a professional, or perhaps a native speaker who lived locally. And what about Grapevine Canyon’s Web site? Couldn’t it be set up with different languages, too? Fully explored, Harald’s idea could have triggered a general reexamination of the ranch’s posture toward international guests. For example, does it offer their favorite foods or drinks? What about providing foreign language classes for employees? Could the ranch provide extra value-adding services for its foreign guests, such as currency exchange, foreign-language DVDs, or cable channels? What about posting critical safety notices in foreign languages, too? Grapevine Canyon already gets a number of foreign visitors, and high growth could come from increasing the resort’s attractiveness to them even further.51

Harald’s small idea was his response to a facet of a much larger opportunity. One can never tell when a small idea might be pointing at a large opportunity in this way. It is good practice to always be alert to the possibility.

Question 3. Are there any patterns in the ideas that have come in? Often a significant problem or opportunity gives rise to multiple small ideas. The connection between them may be seen in patterns in the ideas that have come in.

In 1999, we attended an idea meeting at a national marketing company. Each employee was expected to come to this meeting with an idea to present.

One person pointed out that the company was paying too much for office supplies. Prices were significantly lower at Staples, he told the group. A local supplier had been giving the company a 50 percent discount for years, “But my question is, 50 percent discount from what?”

“Thanks for bringing this up,” his manager responded. “I’ll call purchasing and let them know.”52

A few minutes later, another employee told of how she had recently attended a computer conference in Denver, traveling with someone from another department. Because they each had different schedules, they had rented separate cars. Interestingly, she had noticed, he had paid twice as much as she did for the same car, from the same rental company. The reason? He used the corporate discount, but she had AAA. “I suggest that the company buy a corporate AAA membership. This would not only save a lot of money but would be a nice employee benefit.”

“Cool! I’ll pass that one along to purchasing, too,” the manager responded.

Each of these two ideas taken separately was useful enough. But taken together, they point to a potentially big problem—this company’s purchasing department might need a wake-up call. Had only one of the ideas come up, this might not have been obvious, and it would have been an overreaction to rush members of the purchasing department off for more negotiation training. But suppose poor purchasing practices did in fact underlie the two price discrepancies the employees identified. It is easy to see how only two ideas, coming within a few minutes of each other, might nudge a thoughtful person into looking for the larger issue underlying them. If the management of this company had been actively looking for patterns in the ideas that came in, it might easily have flagged the problem before it cost the company a lot of money.

It is important for both managers and employees to make a conscious effort to look for connections between the ideas that come in over time. While larger opportunities can be identified by looking for deeper issues in individual ideas, chances are they will be a lot easier to spot from patterns in ideas. Building from multiple related ideas also minimizes the danger of generalizing too much from a single idea.

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The Cumulative Impact of a Single “Small” Idea

Small ideas have another important characteristic. Over time, even a seemingly tiny idea—one that saves only a few steps, seconds, cents, or perhaps just a sheet of paper—can have an enormous cumulative impact. When miniscule savings are generated hundreds, thousands, or even millions of times over years, they can add up to a substantial sum. One of our favorite examples of this phenomenon comes from the early days of Standard Oil.

In the early 1870s, when Standard Oil was still relatively small, John D. Rockefeller, the chairman and founder of the company, visited one of its refineries on Long Island. At one point, he inspected a production line where containers were being filled with kerosene for export. Stopping by the machine where the lids were sealed on with solder, he asked a worker how many drops of solder he used.

“Forty,” the worker told him. Rockefeller asked him if he could do it with two fewer drops. That didn’t work, but it did with thirty-nine drops.

Even in retirement, Rockefeller remembered this tiny improvement:

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If Rockefeller hadn’t had an eye for detail and had overlooked the idea, or thought of it but self-censored it as being too small to bother with, he would have ultimately missed a huge opportunity. As the company grew, the idea continued contributing quietly for decades, drop by drop.

THE TRUE CURRENCY OF MANAGING IDEAS

The final reason to go after small ideas is that they allow an organization to create the right conditions and culture for all ideas. Big ideas come along so rarely and unpredictably that they offer little to measure and manage. There are few opportunities for managers to gain experience in managing ideas and for employees to get accustomed to coming up with them and working with them. The prevalent zeal for big ideas explains why many organizations do such a poor job at getting ideas from their people. Without the data and the experience that come from handling lots of ideas, managers have little meaningful feedback on the actions they take. They operate in a haze of half-facts, speculation, and wishful thinking. The decouple from reality that comes with operating without facts can lead managers and organizations to do some embarrassingly flaky things in the name of promoting ideas.55

But everyone can be expected to come up with small ideas on a regular basis. The number of ideas provides something to measure and therefore to manage. Simple indicators of performance highlight trouble spots and identify areas where improvements can be made. For example, the number of ideas each manager gets is a good indicator of his or her ability to encourage and act on ideas. In a large Mexican company we worked with, one manager was getting an average of twelve ideas per employee, while his peers were getting only three. The obvious question was, What was he doing that his colleagues were not? Another important thing to know is who is giving in ideas and who is not. When an employee is not offering many ideas, it may be that he or she lacks confidence, doesn’t get along with his or her manager, or doesn’t feel his or her idea will get a fair hearing. Or perhaps he or she is angry or resentful about something. Whatever the problem, it is rare that the employee doesn’t have any ideas about how to make his or her own job easier or how to improve the company in some way.

Sometimes entire categories of employees submit relatively few ideas, indicating a deeper, more systemic problem. For example, in the late 1990s, data from the Swedish Institute for Suggestion Systems showed that women in that country, perhaps the most egalitarian in the world, were giving in ideas at only 10 percent of the rate of men. Sweden is heavily unionized, and the unions have national labor contracts that govern how employee ideas should be handled. Obviously, something in these rules was discriminatory. How could Swedish companies have become aware of the problem without tracking who came up with ideas? Once they were aware of it, they could address it, and the data would then tell them about the progress of their efforts.56

A constant flow of small ideas gets everyone accustomed to dealing with them as a regular part of their work. People grow accustomed to experiencing change and to seeing the benefits of it. Consequently, when someone does have a big idea, he or she is far more likely to step forward with it, and his or her manager is far more likely to welcome it and handle it well. And when employees see managers responding to changes they initiate, the whole organization becomes much less resistant to management-initiated change as well. In short, the ability to listen to small ideas creates a more flexible, responsive, and adaptive company, while improving trust, respect, communication, and involvement.

Once an organization creates an environment in which small ideas are valued, few people want to go back to what they had previously. Employees can address problems and opportunities they could not have before, and their work lives become less frustrating and more interesting. Managers discover that employee ideas can help them to get the results they need. And instead of being preoccupied with firefighting, managers have time to focus on their real jobs—longer-term improvement and planning for the future. As Julian Richer puts it:

KEY POINTS

• Managers are often primarily interested in “home run” ideas—those worth millions of dollars or leading to breakthrough innovations. But in many respects, small ideas are more valuable than big ones.
• Large numbers of small ideas allow an organization to reach levels of performance that are otherwise unachievable. Without them, it is impossible to attain excellence.
• Small ideas are the primary tool for organizational learning. The ability to tap them moves an organization onto a faster learning curve.
• Small ideas provide far more sustainable competitive advantage than big ones, because unlike big ideas, they tend to remain proprietary.
• Often the only lasting competitive advantage from a big idea comes from all the small ideas that exploit the further opportunities it creates.
• Small ideas are the best source of big ideas, if one knows how to ask the right questions about them.
• Big ideas come along so rarely and unpredictably that they offer little to measure and manage. But because employees can be expected to come up with small ideas on a regular and consistent basis, these provide organizations with something measurable that allows them to truly manage their employees’ ideas, and so create profound change.

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GUERRILLA TACTICS

Five actions you can take today (without the boss’s permission)

1. Just ask. Ask your people to come to their regular department meetings with one small idea that will make their work easier or improve the company in some way and that will not require permission from above or significant resources to implement. Have each person present his or her idea, and ask the group to discuss it and build on it. If an idea is worthwhile, agree on who will implement it.
2. Offer lunch. Bring in pizza (or whatever food is appropriate), and collect and discuss your employees’ ideas over an extended lunch. Hold the lunch off-site, if more appropriate. Such a lunch can become a regular activity.
3. When change occurs, ask for ideas. Whenever major change occurs or is anticipated, encourage your group to be on the lookout for the new problems and opportunities created by this change, and to offer ideas to address them.
4. Look for that bigger problem or opportunity in a small idea. When an idea comes in that might have broader implications, explore them. Together with your people, identify the larger issues involved, and decide what can be done to address them.
5. Work on reluctant participants. When a person is not offering any ideas, talk to him or her and find out why. Encourage and help this person until he or she feels comfortable and confident about giving in ideas.