book.chapter Harnessing employee innovation

It's quite remarkable to observe the frequency with which organizations overlook the innovative suggestions that their front-line workers offer on a daily basis. If a company can shift to being driven by ideas, it can secure a significant edge over its competitors. Regrettably, the vast majority of companies fail to fully utilize the collective intelligence, creativity, practical knowledge, and insights of their entire staff. Instead, they tend to rely predominantly on the ideas that emerge from a select group of executives or, in some cases, the owners themselves. This is a missed opportunity because there's no doubt that those working on the front lines are capable of generating excellent ideas. Consider the case of Coca-Cola's operation in Stockholm, which faced a recurring issue on its 500ml bottle production line. A sensor was causing frequent jams, disrupting the line two or three times daily. Despite numerous attempts by experts to resolve the issue, it persisted until a suggestion from a line worker provided a simple yet effective solution. By adding a steel washer to the sensor's mounting bracket, the friction causing the jams was reduced. This low-cost solution not only saved the company thousands of dollars annually by reducing product damage but also decreased the downtime of the production line significantly. Coca-Cola's global headquarters had previously mandated that all company-owned bottling plants train a group of Six Sigma black belts and green belts to identify and implement cost-saving projects. This initiative proved to be a success for the Stockholm plant, as it saw a considerable decrease in costs from 2007 to 2010. However, upon analyzing the data, management discovered that less than a quarter of the cost savings were attributable to the Six Sigma experts. A staggering seventy-six percent of the savings in 2007 were the result of ideas from front-line employees, a figure that increased to eighty-three percent in subsequent years. Alan Robinson and Dean Schroeder have termed this phenomenon the 80/20 Principle of Improvement, which posits that approximately 80 percent of an organization's potential for improvement is rooted in the ideas of front-line staff, with only 20 percent coming from management-driven initiatives. Many managers struggle to accept that ideas from front-line employees could provide four times the improvement potential compared to their own. Yet, this dynamic has been observed across a diverse array of organizations in various industries. Robinson and Schroeder note that when leaders acknowledge the validity of the 80/20 principle, they often realize what they've been missing and express a desire to implement a high-performing idea system within their organizations. However, they caution that establishing such a system involves more than just creating a process for idea submission; it requires careful integration into the organization's operational and management practices. The rarity of genuine idea-driven organizations can be attributed to two main factors. Firstly, the establishment of such an organization cannot be decreed; it demands considerable effort to weave an idea system into the fabric of how a business is run and managed. Secondly, many organizations are still entrenched in a command-and-control mindset, which is hierarchical and directive. The notion of turning to front-line employees for solutions and empowering them to implement these solutions is often inconceivable. Managers possess a broad understanding of the organization as a whole, while front-line workers have detailed, hands-on knowledge of specific situations. If managers persist in dictating orders, front-line employees are compelled to comply, even when it's evident that the directives are flawed. The ideal approach is to steer the organization from the top while driving it from the bottom, allowing for the best possible outcomes. The ultimate goal is to foster an environment where front-line employees are encouraged to advance good ideas from the grassroots level, while managers facilitate and support these ideas from above. Achieving this balance ensures that the organization benefits from the strengths of both perspectives. Every day, front-line employees encounter numerous problems and opportunities that their managers do not see. They have a wealth of ideas to improve productivity, customer service, and to innovate products or services, or to otherwise enhance their organization. Unfortunately, these organizations often excel more at stifling these ideas than at fostering them, as noted by Robinson and Schroeder.