CHAPTER 6
FOCUSING ON WHAT MATTERS MOST

Once a good process to handle ideas has been set up, the next step is to think about how to focus employees on problems or opportunities of real importance. One might expect a narrower focus for ideas to lead to fewer of them. But the opposite is true. Alerting employees to problems or opportunities they may not have been paying attention to actually helps them come up with more ideas. When managers learn how to aim ideas at specific targets, they gain a powerful weapon.

When ideas are needed on a specific topic, the most straightforward thing to do is to ask for them. This conceptually simple tactic can be extremely powerful. The challenge is to identify the right issue, and to define it in a way that is meaningful to employees. The following example from one of LaSalle Bank’s early idea campaigns illustrates this point well.150

The first morning Juliette Sneed started working at the bank as an administrative assistant in the Automated Teller Machine (ATM) Services Department, five heavy boxes of documents were deposited next to her desk. They blocked part of the hallway and made it inconvenient for her to get in and out of her work area. The boxes sat untouched until the evening cleaning crew took them away for trash recycling. Sneed thought little of it. But the same thing happened the next day, and every day after that. None of the boxes were ever opened. Sneed asked a colleague about them and was told that the boxes contained printouts of the bank’s daily ATM transactions nationwide. But no one needed them anymore, since the information was now available online.

Sneed called the printing department to tell it to stop producing the printouts, but it responded that it was only following procedures. She asked around about how to get the procedure changed, got nowhere, and eventually gave up. For four years the boxes were faithfully delivered every morning and taken away each night, unopened.

Then one day in 1999, she opened her paycheck envelope and found a note from Harry Tempest, the bank’s chairman, announcing that the bank’s new “IdeaCenter” was having its first idea campaign. The theme was “output management”—the elimination of unnecessary paper-based reports, memos and forms. A company-wide voicemail broadcast from Tempest followed soon afterward, reiterating how much the bank needed ideas in this area. She realized that the boxes of ATM printouts were exactly the kind of waste Tempest was talking about and immediately submitted a suggestion to stop producing them. The IdeaCenter responded quickly, thanking her for her idea, and within a matter of days the boxes stopped coming.151

Consider what had been changed by Tempest’s request. Before he articulated the need to reduce excess paperwork, ideas on this topic were not generally seen as important. They were not really legitimate. Front-line employees were not looking for opportunities to save paper, and even if they did notice some unnecessary paperwork, they would not have thought of sending in a suggestion to eliminate it. With his letter and voice mail, Tempest changed this.

But Tempest’s request also legitimized such ideas for managers. It made them sensitive to paper-saving ideas as well. In effect, Tempest’s call to action created a fast track for the type of ideas he was looking for—now the organization would welcome them and act quickly on them.

Legitimizing new categories of ideas can be a powerful way to enhance performance. Recall that in chapter 1, we described how John Hanson, Winnebago’s founder, articulated the need for weight-saving ideas for one of the company’s vehicle models. An entire topic of inquiry that had previously been overlooked by front-line employees immediately became the center of attention for them. Before, they had not considered weight to be a problem and so did not think about how to reduce it. Nor did their managers.152

When Hanson asked for weight-saving suggestions, it gave his organization a small shock. Winnebago had always been careful about weight when designing its vehicles, but line employees had never been concerned about it. Tempest’s initiative at LaSalle, on the other hand, was a major shock to his bank. It challenged the industry mind-set. The industry, both by habit and necessity, has always been highly conservative and proceduralized. Extensive documentation—which traditionally means paperwork—is the hallmark of the business. The last thing bankers would think of questioning was the need for record keeping, backup copies, and reports. It is safer to err on the side of having too much paper, rather than too little. This centuries-old and deeply ingrained bias was what Juliette Sneed initially encountered. But Tempest had now separated the issues of documentation and paperwork. Before, a manager might have legitimately worried about eliminating a report or dropping a name or two from a distribution list. Today, when an employee points out some unnecessary paperwork, the same manager might get in trouble for not taking action on it.

Although focused idea campaigns, like those of Winnebago or LaSalle Bank, have finite lives, their impact is enduring. Once a previously overlooked aspect of performance has been articulated and legitimized, and people have come up with large numbers of ideas for improvement in that area, the organization remains sensitive to it for quite some time. At LaSalle Bank, general awareness of the cost of unnecessary paperwork will encourage people to keep paperwork to a minimum as they develop procedures or design new products and services. Every time someone thinks about creating a new form or report, he or she is much more likely to question whether a paper version of it is really needed. In the long run, the most significant impact of the output management campaign will be a permanent shift in the way people think about the need for hard copy. In this way, a good idea campaign can subtly shift the operating assumptions of an entire organization.

It is worth noting that identifying critical areas for improvement and focusing people’s attention on them can be done by any manager at any level and even by the employees themselves. We came across a good example of employees choosing focus areas at a Cummins Engine facility near Columbus, Indiana. The facility’s primary improvement focus was on reducing the time taken to assemble the turbo-charged diesel engines that the company was building for the Dodge Ram series of trucks. While the overall goal was set at the top, the specifics were left up to the people actually assembling the engines. Each self-directed work team, consisting of six to eight people, was expected to identify and focus on the areas of greatest opportunity for reducing cycle time in its work cell.

When managers let employees know what the critical issues are, make certain they understand why these issues are important, establish clear metrics, and invite their ideas, it increases alignment between the employees’ concerns and the company’s needs. But one should take note that this “Ask, and ideas shall be given you” approach works only when employees respect their managers. Once respect is established, employees are very willing to help out. Herb Kelleher, CEO of Southwest Airlines, found this out in early 2000, when his company was reeling from a huge increase in fuel prices. He sent a letter to the employees asking them for help. He wrote that if everyone could save just $5 per day, this would translate into company-wide savings of $140,000 a day. To emphasize his point, he ended his letter in this easygoing way: “Please accept this in place of your Year 2000 Valentine [an annual tradition at Southwest] which we are not sending because of high fuel prices. You are my Valentine.” Within six weeks, employees had sent in ideas worth some $2 million. And that was simply because Kelleher and his management team had genuine credibility with employees, owing to their long history of listening to and acting on their concerns.

At roughly the time that Kelleher was asking employees at Southwest for ideas, a major steelmaker in the midwestern United States was trying to do the same thing. The company was in financial trouble because of its high production costs and fierce foreign competition. Management launched a company-wide initiative asking for cost-saving suggestions and offered substantial prizes, including new automobiles, for the best ideas. In the end, however, despite all its efforts and all the money dangled in front of workers, very few ideas came in. Management was surprised at the poor response, but the steelworkers we talked to were not. They had a uniformly low opinion of management—in fact, they were furious with it—because in their view, its long history of ignoring their suggestions for improvement was what had gotten the company into trouble in the first place. We were told story after story of almost scandalous neglect.

For example, one problem had plagued the continuous casting area for years. After the molten steel was poured into the caster, the solidifying white-hot steel slabs would emerge beneath it onto rollers that supported and guided them away as they cooled. Every so often, one of the rollers would lock up, either because it was jammed by debris or simply because a bushing seized up in the hot and dirty environment. The bad roller would drag on the soft slab of white-hot steel and gouge its surface. If not repaired, these defects would be magnified when the slab was rolled into thinner sheet steel, the form in which it was sold to customers. Before aggressive foreign competitors forced the steelmaker to pay more attention to quality, it was standard practice to ship this damaged product to customers anyway. But once customers had other options, they no longer had to put up with these blemishes, so that the company was forced to repair the damage before processing the slabs further. This repair work was both costly and disruptive, because the twenty-five-ton slabs had to be pulled off the conveyor lines and taken to a special area for refurbishing.

The frustrating thing for the workers in the casting area was that they spotted a defective roller almost immediately. Nevertheless, when they brought it to the attention of management, they would be told that instead of repairing it at once, it should wait until the next scheduled repair cycle, sometimes several days away. Meanwhile, the workers in this round-the-clock operation could only watch helplessly as the company lost money on every slab it produced. The recurring problem of the bad rollers—which they knew would be quickly fixed at many of their foreign competitors—was caused by exactly the kind of poor management that had caused repeated layoffs and pay cuts and that one day might well end up costing them their jobs.

A few years before the mill had launched its idea campaign, it had set up “Joint Improvement Teams,” consisting of both managers and workers, to improve quality, productivity, maintenance, and safety. Although the meetings had generated many good ideas, managers rarely followed through on them. In time, they began skipping the meetings entirely. One worker told us that he and his colleagues believed the teams had been put in place only to placate major customers concerned about the company’s quality improvement activities.

Given such a history, it is not surprising that so many employees viewed the idea campaign with disdain. What is more, one person told us, the steelworkers found the rewards insulting:

Another worker, who operated diesel locomotives to transfer billets, molten pig iron, and finished steel, echoed his co-worker’s frustration and mistrust:

Managers at this company had some work to do before they could get the ideas they wanted.

CHOOSING WHAT TO FOCUS ON

It is both a science and an art to select the right theme for employee ideas. In chapter 1, we discussed how the economist Friedrich Hayek classified knowledge into two types: knowledge of particular circumstances of time and place and aggregate knowledge. Generally speaking, front-line employees possess more of the first type of knowledge. But managers possess more aggregate knowledge—exactly the type of knowledge that is needed to identify where ideas will have the greatest impact on overall performance.

A lot of thought went into Tempest’s selection of paperwork reduction as the theme for one of LaSalle Bank’s early idea campaigns. The bank had made a series of acquisitions and was just completing a major strategic initiative to integrate purchasing across all of its North American operations. Using its size, the bank had negotiated good prices for office supplies but would save even more by consuming less of them. The idea of focusing on reducing paperwork arose in part because paper and printing costs were two of the items the company spent the most money on. As an internal study at the time put it:

In addition to the direct savings from eliminating unnecessary paper and reports, every piece of paper that is produced creates ancillary costs. Someone must print and copy it, and forward it to the right people. The people who receive it have to review it, decide what to do with it, and possibly file it (requiring file folders, file cabinets, and space) or forward it to other people (requiring their time). Eventually, it must be archived (incurring further storage and handling costs) or purged from the files and thrown away (creating more costs in handling and disposal). One hundred thirty million pages of paperwork create a huge overhead. Another reason that Tempest selected paper reduction as a theme was the bank’s strategic goal of moving toward more electronic storage and retrieval. But what was especially clever about focusing on paper was that it was a topic that every employee in the bank could relate to and do something about. In other words, the theme of his campaign was broad-based and strategic in nature, and it included everyone.

The LaSalle Bank campaign theme incorporated all the characteristics of an effective choice of focus for employee ideas. From management’s perspective, paper reduction was a high-leverage way not only to reduce costs, but to meet several important strategic goals. The only way to root out excessive paper usage was to get everyone involved. Most of the opportunities to eliminate paperwork were relatively small and situation-specific, meaning employees, not managers, were in the best position to see them. It was a theme they could connect with—they were after all dealing with unnecessary paperwork every day—but most employees and managers had considered it a fact of life for anyone who worked in a bank. With good insight, both into what was important and what would resonate with employees, Tempest had turned the spotlight on a significant opportunity for improvement that the organization might otherwise not have been able to pursue.159

Choosing a worthy theme for employee ideas begins with identifying the primary drivers of the department’s, group’s, or organization’s performance. Generic high-level issues such as cost, quality, or customer service may be places to start but are usually too broad. To be effective, a theme should concentrate everyone’s efforts on a specific actionable leverage point, perhaps a narrower dimension of the larger issue. Identifying leverage points usually requires thought, research, observation, and analysis. For an example of how this works, consider what happened at Coolman and Coolman, an Indiana home builder we worked with. Since this company depended heavily on advertising to sell its homes, managers began with the question “How do we make our advertising more effective?” After some investigation, however, the company found that people who responded to advertisements required a great deal more “selling” time and effort than those who were referred by previous customers, and they were much less likely to end up buying a new home. The question then became “How do we get more referrals?” The answer? Delight existing customers. But this was still too broad a concept. So more research was done.

The three most important factors to customers turned out to be quality, delivery, and the buying/building experience. “Quality” meant a home delivered as specified and defect-free. “Delivery” meant the house was completely finished by the promised completion date. And a good “buying/building experience” meant helpfulness at each stage of the process and supplying customers with full, timely, and accurate information. By focusing improvement ideas on these three items, referrals were increased more than sevenfold over three years, and advertising and selling costs were reduced. Before this idea initiative began, the company had delivered only one home in twenty years that was completely free of minor defects that had to be fixed after the customer moved in. After concentrating on such defects, Coolman and Coolman was able to deliver 70 percent of its homes without any additional work needed—a standout performance in the residential construction industry in which “callbacks” are the norm. What began as an effort to figure out how to improve advertising had ended up, after investigation and analysis, identifying three points of high leverage for employee ideas.160

Focusing ideas can be done at any level of an organization. For example, the accounts receivable group in one division of a leading office furniture company we worked with was struggling with an average collection time of more than seventy-five days. Particularly puzzling was that most customers were large, credit-worthy companies. When managers in the department investigated the delinquent payments more closely, they discovered that most customers were perfectly willing to pay within the prescribed time but held up payment because of outstanding problems with the products. Such problems ranged from the wrong model of chairs being delivered to a mistake in the color of fabric. In hunting down the reasons for all these errors, the department found that over 90 percent of them could be traced to mistakes made when the original orders were entered. With all the options available for styles, dimensions, colors, and fabrics, it is understandable how sales staff, customers, and order entry personnel could easily make mistakes.161

And so the accounts receivable department, together with the sales and order entry departments, asked employees for ideas on how to reduce errors in order entry. The results were impressive—collection time was reduced from seventy-five days to forty-five days, which injected tens of millions of dollars into the company’s cash flow. And this was only the most directly measurable impact. Correct order entry cascaded into a host of additional savings systemwide and greatly increased customer satisfaction. It was by far the best and least costly place to catch mistakes. In other words, the group had chosen a point of high leverage for the entire company’s performance as well.

Idea campaigns can be used to address a wide range of issues. We came across a unique theme at the Danish sugar company Danisco. When new European Union agricultural policies changed the competitive rules within its industry, this company was forced to close its sugar refinery on the island of Oland in the Baltic Sea. It asked its employees for ideas for new businesses they could start and that the company could invest in, so that they would have jobs when the refinery closed. In the end, the company got thirty-six ideas and gave the go-ahead to eight. Collectively, these created twenty jobs. And the fact that Danisco had already vetted the proposals and agreed to invest in the new businesses made it much easier for them to raise money from other sources, such as banks and local government. Moreover, the ideas came from employees, who, as longtime residents on the island, knew the area well. As a result, the start-ups fit local needs exceptionally well and turned out to be excellent investments for Danisco. When the company closed two other refineries a few years later, it ran similar campaigns.162

MAKING FOCUS A WAY OF LIFE

Focusing ideas need not be a one-time or even an occasional activity. It can be incorporated more permanently and routinely into the way an organization operates. Recall from chapter 3 that Kacey Fine Furniture, the retailer in the Denver, Colorado, area, integrates ongoing targeted idea campaigns with its open-book management and quarterly performance bonuses. Once a year the management team identifies areas of focus where employee ideas will make a significant difference to the company’s bottom line. Levels of performance improvement in these areas are tied to corresponding bonus pool amounts that everyone shares.

One year, for example, reducing customer returns was identified as a theme. Returned furniture is extremely costly for any furniture retailer. Not only is the customer unhappy and the sale possibly lost, but the company has to pay for the extra handling and transportation costs and often has to mark the furniture down in order to resell it. In the company-wide quarterly meeting that introduced the metric, Kacey’s CFO explained to everyone that although the company’s return rate was already better than the industry average of 10 percent of sales, if it could be lowered further, the impact on the bottom line would be significant. In this way, the return rate was put high on everyone’s agenda, and with the idea system ready for employee ideas, the company got a lot of them.

One of the more novel suggestions was from an assistant truck driver. He had noticed a pattern in the way customers rejected furniture. Often, right after the piece had been delivered, they commented about how the same pieces that had looked so wonderful in the showroom seemed strangely out of place in their homes. Within a few minutes, he would watch them begin to think their purchase had been a mistake. Because Kacey’s policy was to accept returns without question, he and his driver would then have to repackage the furniture and drive it back to the warehouse.

The assistant truck driver realized that the reason the furniture looked more attractive in the showroom was that it was arranged by professionals. His idea was to give the company’s nineteen truck drivers and their assistants some of the same training in interior decorating that was given to the salespeople. If the truck drivers and assistants understood more about the subject, he reasoned, they could help customers integrate the new pieces of furniture better into their homes. The idea was given the go-ahead, and the truck drivers and their assistants were given the training.

A primary part of the training was about how to properly “accessorize” a new piece of furniture—that is, arrange other items around it, such as lamps, potted plants, side tables, and pictures—to personalize it and create the desired effect. Now, when delivering a sofa, for example, the delivery crew does not simply ask, “Where do you want it, lady?” Instead, before bringing it in, they find out why the customer bought the new furniture, visit the room it will go in, and look for appropriate accessories.164

Together with the customer, they develop a plan. When the crew retrieves the sofa from the truck, they are able to position it nicely and accessorize it stylishly. With their decorating help and willingness to please, these truck drivers greatly improve the chances that customers will like their new furniture and generate considerable word-of-mouth advertising. Their new professionalism has given Kacey considerable competitive advantage. The other furniture companies in the area contract out the delivery process. Their delivery people still knock on the door and ask, “Lady, where do you want it?” It is worth noting that the idea of giving drivers training in interior decorating could only have been successful if it had come from a driver. Imagine the response from the drivers if the idea had come from management.

A well-thought-out policy can be just as effective as a bonus program in inspiring ideas on specific topics. When Grapevine Canyon Ranch launched its idea system, some of the early ideas dealt with inequities in tipping. The wranglers got a preponderance of the tips because they had the most personal contact with customers. The rest of the employees, who were working just as hard for the guests behind the scenes, received relatively few. After the problem was brought up in several idea meetings, it was decided to change the tipping policy. From then on, guests were asked to tip only when checking out and were told that their tips would be shared equally among the employees. The wranglers’ resistance to this change quickly subsided when they discovered themselves earning more in tips than they did before. Because guests were now tipping as a percentage of their total bill, there was a lot more money in the pool. Customers also liked the new policy. They no longer had to worry about when it was appropriate to tip or about carrying cash while engaged in activities around the ranch.165

While the Grapevine policy change did resolve concerns about tipping inequity, it also focused employee ideas on high-leverage opportunities for improvement. Every employee now had a vested interest in making each guest’s stay as enjoyable as possible. The ideas that came up in the weekly meetings quickly reflected this. Many were simple comfort suggestions such as “Make sure there is a cooler with cold drinks in the van that goes across the desert to pick up and deliver guests to the Tucson airport,” or “Improve ‘way-finding’ signs so guests can find their cabins more easily—especially in the dark.” As so often happens, many ideas both improved the customer experience and made people’s jobs easier. For example, one of the cooks suggested that breakfast be served buffet style, rather than à la carte, so guests could have faster service, and those who were running late for a morning activity could still get something to eat. Not only was the new buffet very popular with guests, but fewer waiters were needed in the dining room, and the stress of running a short-order breakfast service was eliminated.

Another idea was to start the morning rides earlier during the summer, so the guests could enjoy the desert before it got too hot. This suggestion posed a challenge. The wranglers who were out with the previous evening’s ride would have to get up extra early to prepare the horses—a process that took several hours. A series of employee ideas cut this time by more than 60 percent. Even the horses benefited. They no longer had to stand around for long periods of time before and after being saddled, and they were back in the barn before the temperature became unbearable.166

Another example of a company that has used policies to focus ideas is Wainwright. The company had articulated a hierarchy of values—in descending order, these were safety, people, quality, customers, and profit—and the reasoning for it was this: Safety was primary because it affected the company’s people. People delivered high quality. High quality satisfied customers, and customers generated profits. Everything stems from safety. This company value was reinforced constantly through the company’s weekly and monthly idea lottery drawings, in which every employee got lottery tickets for each idea he or she submitted. Safety-related ideas, however, had a separate drawing for prizes, which dramatically increased the odds of winning. This was a clever way to highlight the importance Wainwright placed on worker safety and to keep people sensitive to it. At the time we last visited the company, there had not been a lost-time accident in over three years, and the company had workers’ compensation costs significantly lower than its competitors.

KEY POINTS

• If management needs ideas on a specific topic, the most straightforward thing to do is to ask for them. This conceptually simple tactic can be very powerful.
• A good theme for employee ideas is simple to understand and measure, takes advantage of critical interrelationships that drive bottom-line results, and resonates with employees.
• Focusing ideas need not be a one-time, or even an occasional, activity. It can be incorporated permanently into the way an organization operates. Bonus programs or well-designed policies can be effective tools in this regard.

GUERRILLA TACTICS

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

1. Select your targets. Look for areas where employee ideas can help improve performance. To do this, think about the following:
   
   • The major problems or opportunities facing your group
   • The aspects of performance that have the greatest impact on the organization’s overall performance
   • The non-value-adding things that your group does
   • Which key corporate goals and values, when translated into your area, might yield appropriate targets for ideas
   
   

   Once you have come up with an appropriate topic, ask your people for ideas related to it.

2. Focus on your customers. Which aspects of your group’s work are most important to your internal and external customers? What are they complaining about? What changes would they like you to make? Would they appreciate faster response time? Have your people talk to customers directly. Discuss what they find out, and develop appropriate themes for ideas from it.
   

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3. Poll your people. Ask your employees where they think improvements are most needed. Get them involved in identifying appropriate areas to target that they can attack with their ideas.
4. Use metrics. Identify your group’s key performance metrics, post performance statistics on them for everyone to see, and keep them up-to-date. Set targets, and review them regularly at group meetings.
5. Look for ideas that reinforce core values. What are the values you want to instill in your group? Teamwork? Responsiveness? Seamless integration? Exceptional service? Uncompromising quality? Find creative ways to focus ideas on topics that reinforce these values.