Innovation as a Competitive Advantage: Part 2

Dave’s company was experiencing competitive and pricing pressures and he wanted to get all employees pulling in the same direction. As a way of creating focus he developed the motto; “Unmatched service in all we do.” He knew in order to deliver on that motto, he would have to develop employees who were innovative, who would initiate change in the established way of doing things. His only concern was that the business might spin out of control as everyone changed “the way we have always done it.”

Dave called me and asked for help solving his problem. I provided the experience and research and together we built a model we could use to develop an innovative workforce.

First, we examined the workplace cultures of companies known for their innovation. We found their employees had four things in common. They had:
1. Understanding
2. Ability
3. Authority
4. A Reason

We assumed, rightly so as it turned out, we could encourage an innovative environment if we introduced these elements into the workplace. Here is how we did it.

Understanding: The research showed that in order for employees to become innovative they must understand the objectives of the company. We found it was important to educate them about the industry, the company’s target market, products, business plan and competitive pressures that affect the plan. We learned that innovative employees need to know about the customers, their needs, and what expectations were developed by the company’s marketing promise. Only then could they begin to think about how they contribute to company success. We also found that it was important to share performance information on a timely basis, to communicate about the ongoing business situation and how well the company was performing against business plan.

We concluded that information and understanding are the raw material from which new ideas are created. As part of our research we found support for this conclusion as far back as the 1880s. Reme de Gourmont, a turn-of-the-century writer and philosopher observed “You can’t possibly get ideas if your mind is bound up by associations. One needs to become disassociated from current circumstances in order to get ideas.” For us as managers this meant “distracting” employees from the micro focus of the daily details of their jobs by providing them with new information about other, bigger picture aspects of the company and the customers.

So we developed an education and information sharing campaign. It wasn’t difficult. We didn’t open the books and expose the financial statements. Instead we conducted a communications audit to identify the information each group needed. We stopped providing unneeded information and started providing information that would enable each group to expand their thinking.

Ability. We also learned it was necessary to establish a system within the workplace that enabled the employees to participate in the business. Most companies are organized to control the workforce. This management style inhibits employees from making changes and discourages innovative thinking. In order to stimulate innovation it would be necessary to develop a system that provides employees with the ability to make changes, to turn ideas into action.

Dave was understandably reluctant to turn loose the reins of control until the employees demonstrated they understood the effect of their actions on the bottom line. So we started with a small step. We developed “Idea Teams.”

These teams were voluntary groups of employees who agreed on the need to change and had an idea how to improve a process or procedure or for a new product or service. We provided them with initial training on how to conduct a productive meeting and the criteria required for successful implementation of change. Initially, the criteria was focused on revenue, cost and customer satisfaction. Armed with this knowledge and information the teams would meet to discuss their ideas. Once they defined the benefits of the idea and documented the cost of change they would present it to the senior management team for final review and approval.

Authority. Dave first announced the concept of innovation in an all-hands meeting. He provided a compelling reason for change and described the Idea Teams program. We were aware that, initially, employees may be reluctant to engage in this new behavior. So during the meeting he clearly stated his desire for an innovative workforce. In doing so, he provided them with the authority to participate, request information, gather as a group, and question the status-quo.

A Reason. Having considerable experience with the development and implementation of employee involvement plans, I knew the importance of providing a reason for employees to participate. As part of the plan we included an opportunity to earn incentive pay. Team members would receive 50% of the first year’s net savings for every approved idea. This not only encouraged participation but also ensured that profit-building ideas were implemented first.

Dave’s company now has over 50% of the workforce participating on Idea Teams. The company has grown in revenues and profitability. Employee turnover has declined and market share has increased. The company has become more responsive to the marketplace and the customer. According to Dave, “My employees are beginning to embrace change because it makes their work more interesting and they have a process they can use to manage and control it.”

Is Dave’s company like 3M when it comes to innovation? Not yet. But they are on their way. They have taken the first step toward building a culture of partnership, where each employee thinks and acts like a business partner. You can do it too. Getting started is as simple as 1, 2, 3, 4.