President's Column
Controlling Innovation:
The Union of Soviet American Executives
I often ask CEOs, "Who in your company is responsible for process innovation?" Nine times out of 10, the answer comes back, "It's me" or "It's our VP of _____ (fill in the blank with any combination of terms: Lean, Six Sigma, Quality, Engineering, Process Excellence)." But in my experience, the bottleneck that throttles innovation and excellence is almost always located at the top of the bottle.
Even in today's post cold-war world, most companies are still organized like the old Soviet Union: There's a central hierarchy that is cleverly disguised as a perfectly sensible "review" process. An idea fights its way up through various levels of skepticism until someone near the top decides whether or not to invest in it. (For a cold-war era case study of this process, see Karen Wilhelm’s accompanying article.)
During this multi-level review, an idea must pass rigorous financial hurdles by promising an almost certain chance of quickly creating a minimum amount of savings ($2,000 - $5,000 within a year with little risk is typical). The problem is, having a centralized review process with rigorous acceptance tests discourages both small and large, "game changing" ideas - a sure fire way of preventing any sustainable competitive advantage. (See Robinson and Schroeder’s accompanying article, “Big Results from Small Ideas” for their non-intuitive observations about this.)
An organization that is trained to look to the top for innovation is an organization where the vast majority of people have abdicated responsibility for improving their company, their job, and their professional life. When the power to implement ideas is narrowly held, organizational renewal inevitably falters.
The Soviet Union’s Politburo learned the hard way 15 years ago that centralized control doesn’t work. Unfortunately, most American companies still don’t get it.
The question is: Do you?
-- Mark Edmondson Mark@LEANaffiliates.com
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Our theme for this issue: Organizational Innovation. We explore systematic approaches for enrolling everyone, everyday with the spirit and responsibility for continuous improvement.
As always, your comments and suggestions are welcome - please follow the links at the bottom to send a note to the editor, or to forward this eNewsletter to a colleague.
Yours in success,
The LEAN Affiliates Team
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The Value of Engaging Your People
Big Results from Small Ideas
By Alan G. Robinson and Dean M. Schroeder |
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Several years ago, we gave a talk to a group of business leaders about managing ideas. As we began to discuss the importance of small ideas, the CEO of a well-known computer equipment maker bluntly interrupted us.
"I think I speak for all of us when I ask you to talk about what we can do to get big ideas--the kind of blockbuster innovations that transform the terms of competition. That's what we're really interested in," he said.
Who doesn't love big, dramatic ideas? In fact, the bigger and sexier the ideas, the more we're drawn to them. So it's not surprising that when business leaders such as that well-meaning CEO think about promoting ideas, they envision going after the home runs--the super-sized breakthroughs that promise fame and fortune. Yet in their eagerness to strike gold, they aim for the wrong thing and overlook what will help them most--the small idea gems.
We recently completed one of the most extensive studies ever undertaken of best practice in managing employee ideas. We visited more than 150 companies in 17 countries. These organizations ranged in size from small family businesses to large multinational corporations. We compared the best idea systems in the world--those implementing 20, 50 and even 100 ideas per employee per year--with medium- and low- performing systems. The purpose was to document what works to promote idea generation, what doesn't, and why. One of the most surprising findings of the Ideas Are Free study was how high-performing companies focused on small ideas while low- performing companies tended to go after big ones.
Read Robinson and Schroeder's Article
Learn how Alan Robinson and LEAN Affiliates can help you design and implement an effective Idea Generation System
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A Real Example
Idea Discouragement System
By Karen Wilhelm |
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Here’s a real example of how NOT to manage an idea generation system. This exchange of letters took place at a Chrysler assembly plant in 1961. They were submitted by my granddad, a toolmaker, and proud member of ASTE, the original name of SME.
Read the suggestion submitted by Karen's grandfather, and the response by Chrysler's Suggestion Committee.
How is the reply from Chrysler’s “Suggestion Committee” blocking innovation by employees? How does their suggestion system differ from Robinson and Schroeder's model for an effective Idea Generation System (see above article)?
Is your company profiting by these kinds of employee ideas, or effectively discouraging them with a cumbersome approval process?
Learn more about implementing an Idea Generation Process that creates problem solvers from employees and engages "everyone, everyday" in continuous improvement.
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Lean but Heavy Thinking
Talking Points from
The LEAN Executive Blog
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L-E-G-O: Danish for ‘Waste’
June 23rd, 2006 - by Bill Waddell
It will be palletized and un-palletized three or four times, at least. It will move in and out of three massive, automated distribution centers, tracked by two different RFID systems, roll down miles of conveyor, shrink wrapped, un-shrink wrapped and re-shrink wrapped, scanned into and out of two ERP systems and one MRP system. By the time the ‘Global Supply Chain in the Information Age’ folks get done with it, that toy with value measured in pennies has a cost measured in dollars.
The Union of Soviet American Executives
June 22nd, 2006 - by Mark Edmondson
Most companies are still organized like the old Soviet Union: There’s a central hierarchy that is cleverly disguised as a perfectly sensible “review” process. An idea fights its way up through various levels of skepticism until someone near the top decides whether or not to invest in it.
The Innovator’s Folly 2 - Playing The Long Shot
June 17th, 2006 - by Bill Waddell
“Innovation” the current big time management fad. CEO’s should be building innovative organizations, and every one will compete on the basis of innovation. Thinkers of great thoughts are agonizing over individual innovation versus organizational innovation. IBM has remade their entire carnival spiel around innovation. They are now the “Innovator’s Innovator“. Pretty innovative slogan, don’t ya’ think?
The Innovator’s Folly 3 - Darwin Style
June 17th, 2006 - by Bill Waddell
I learned innovation’s proper perspective when I had the privilege of translating Hiroyuki Hirano’s book, JIT Is Flow, from the crude Jangalese in which it was written to the King’s English (or at least the twisted version of English I know). Hirano is a brilliant guy and he wrote a section comparing manufacturing survival to the Theory of Evolution. Hirano’s analogy is perfect: Every industry has its ventures and startups around the fringes driven by innovative people with wild ideas - most of them unworkable or impractical. But once in awhile, there’s the rare gem like Bill Gates.
Lean Management Systems
June 16th, 2006 - by Mark Edmondson
Just as your product value streams require brilliant processes to deliver value, your leadership team also requires a brilliant management process to lead effectively. Here are some questions to ask about your management processes:
• Quick, where does your team stand with your three most important business objectives?
• Does every individual on your team know what’s required of them today, this week, this month, this quarter and this year to achieve these objectives?
The mission of The LEAN Executive blog is to discuss management issues in lean transformation. Topics include:
- How do you plan and organize an enterprise-wide lean initiative?
- The role of lean accounting and management systems
- Overcoming resistence to change
- What resources are needed?
- Planning for Rapid Improvement
- What are other companies doing?
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Recommended Reading
Ideas Are Free:
How the Idea Revolution is Liberating People and Transforming Organizations
By Alan G. Robinson and Dean M. Schroeder
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Ever since Frederick Taylor advocated that it was management's job to "think" and the worker's job to "do," this perspective has been the basis for the policies, structures, and operating practices of most business organizations.
Although this division between thinking and doing may have worked 100 years ago, it is severely limiting in today's environment, where it is the front-line worker who is in the best position to notice problems and suggest ideas.
In example after example, the authors show how companies that encourage and implement the ideas of the entire workforce are the ones that come up with the most innovative and successful strategies. Contrary to past thinking on the subject, they make it clear that monetary rewards are not the best way to elicit ideas, and that emphasis on small ideas can be a more effective strategy than shooting for a "home run."
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