Forget about finding the killer app. New research shows that smaller ideas pack a bigger payoff.
Leslie Fishbein, president of Kacey Fine Furniture, was idly watching a T-Mobile commercial when inspiration struck. What if we replace our drivers' cell phones with camera phones, she wondered. That way, she figured, delivery personnel at the Denver retailer could take photographs at their destinations to show that they had not damaged a customer's walls or floors -- or, if they did, document the problem instantly.
Not especially revolutionary or groundbreaking, Fishbein knew, but clearly a step forward. In fact, that's exactly the kind of modest brainstorm for which Fishbein constantly is hunting. Her six-show-room chain thrives on new ideas. Fishbein collects them in three-ring binders. Since 1995, she's filled four such binders -- at 10 to 20 ideas per page and 200-plus pages per binder, that's more than 10,000 ideas. And the best ones, she says, often turn out to be those that at first appeared simple, even mundane. "The point," she says, "is not the big hit but incremental improvements all the time."
What about the killer app, the bold, outside-the-box brainstorm that is supposed to transform organizations? If you really care about making ideas work for you, forget such ambitious notions, say Alan G. Robinson and Dean M. Schroeder in their new book Ideas Are Free: How the Idea Revolution Is Liberating People and Transforming Organizations. Rather than big, competition-leapfrogging advances, the authors argue that one of the keys to business success is the constant implementation of small ideas -- just like the steady stream of employee suggestions Fishbein collects in her binders. Why singles instead of home runs? The competition inevitably copies or counters your home runs, rendering those gains ephemeral. But after studying idea-generation tactics at 150 companies in 17 countries, Robinson and Schroeder concluded that small ideas, especially those particular to processes or systems, improve companies in almost Darwinian fashion with ongoing small adaptations that are often impossible to copy.
What's more, the best small ideas often take on a life of their own, generating a torrent of related suggestions. Consider Fishbein's experience with the camera phones. The new devices had barely been distributed before the company's 205 employees began chiming in with all sorts of additional suggestions. Indeed, documenting delivery damage is now only one of the phones' many uses. Faced with a tight stairwell or narrow hallways, delivery crews now show the bottleneck to Kacey's director of transportation, who can often advise them over the phone instead of rushing to the scene. Loading dock workers document merchandise damaged in shipment and instantly e-mail the photos to the manufacturer, speeding up both claims and replacement. And upon delivery, after positioning, say, a sofa, a worker can take pictures of the entire living room -- capturing, perhaps, the lack of end tables and lamps. Guess what the salesperson mentions in his follow-up call?
Encouraging a steady stream of small ideas helps prime the pump for big ones.
The authors found something similar at a small Danish subsidiary of the U.S. textile manufacturer Milliken & Co. The Danish company's looms -- the same machines in place at countless other factories around the world -- were running three to four times faster than the manufacturer believed possible. The looms were also making products that the manufacturer's own engineers said were not possible. How? "Thanks to hundreds of little ideas from their frontline employees," says Schroeder, a professor at the College of Business Administration at Valparaiso University. "Add a knob here so you can change the tension, a simple procedure for moving materials in and out faster -- all kinds of ideas, so many that the loom no longer resembles what the manufacturer delivered." Thus the key advantage of small ideas over big ideas: Because they're much more likely to remain proprietary, small ideas more often result in a sustainable competitive advantage.
Moreover, encouraging a constant stream of small ideas helps prime the pump for big ones. "Where you don't see an environment where people step forward with ideas on a daily basis, you're much less likely to get the big ideas," says Robinson, a professor at the Isenberg School of Management at the University of Massachusetts. Robinson points to Boardroom Inc., a newsletter and book publisher based in Stamford, Conn. Boardroom's employees have been presenting their company-bettering notions in weekly department meetings since 1992, when founder Marty Edelston initiated what quickly turned into a company-defining system he calls I-Power. Boardroom doesn't just hope its 70-some employees will come up with ideas to save money, enter new markets, streamline production processes, or boost teamwork. The idea-focused company insists they do so. Employees must average two ideas per week to qualify for quarterly profit-sharing bonuses. No one's missed yet.
Granted, "countable" ideas at Boardroom need not be earthshaking. In fact, they can be as small as "the person who sends a fax should make sure the fax goes through." But sometimes, even small suggestions generate significant savings. One employee suggested the company cut the dimensions of its books by a quarter inch. The smaller size led to lower postal rates and annual savings of more than $500,000, Edelston says. What seemed a small idea was, in fact, a very big one.
Eager to encourage such windfalls, many managers reward idea generators with as much as 5% to 25% of the first-year savings. Bad idea, Robinson and Schroeder discovered. For one thing, their research found a negative correlation between increased rewards and the number of employee ideas. What's more, you don't need rewards to elicit lots of ideas from employees. People like to make suggestions at work -- especially when such ideas are likely to be acted upon. Plus, if you tie bonuses to a percentage of the savings attributed to an employee idea, you must then somehow pinpoint the savings -- which often can be difficult to calculate. And, no surprise, employers and employees often disagree on the estimated savings -- "up to a factor of 10," says Robinson. Lawsuits? You bet.
Ideas Are Free includes another suggestion that managers would be advised to heed, and it has to do with one of the most venerable of institutions -- the employee suggestion box. Created by the National Cash Register Co. in 1892, the suggestion box remains a fixture at 50% of U.S. companies, according to Robinson. "It really seems like suggestion boxes make sense," says Robinson. "Everybody knows workers have good ideas and like to hand them in." So what's the problem? Employee suggestion boxes invite raw ideas, Robinson says. Even more problematic, managers wind up reviewing them out of context and typically far from their point of origin. In many cases, somebody in HR empties the suggestion box and traffic-cops the ideas -- in between other tasks. And then there's the relative anonymity associated with submitting ideas to a box. The best ideas, Robinson says, arise in group situations, "where the person who thinks of it has to defend it, and it's immediately critiqued by people close to the problem and often improved." His suggestion for the suggestion box: Scrap it.
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