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Ideas Are Free: How The Idea Revolution Is Liberating People And Transforming Organizations
By Alan G. Robinson & Dean M. Schroeder
Ideas Are Free: How The Idea Revolution Is Liberating People And Transforming Organizations by Robinson and Schroeder is written for entrepreneurs and managers who want to encourage their employees to contribute ideas and insight to increase profitability and organizational efficiency.
The authors argue that managing employee ideas is a crucial area for companies in today's rapidly changing business world. Companies which utilize employee ideas gain competitive advantages in efficiency, product development, understanding customers, and improving the company's culture.
Yet, today, when asked, many company managers say they take a "family" approach and use an "informal" method of managing employee ideas.
Robinson and Schroeder write: "Tellingly, however, these same managers are not as casual about other things. Take travel expenses, for example. Would these managers leave a big barrel of cash in the corner and tell employees who are travelling to take whatever they need, spend it wisely, and put back whatever they don't use? No need for receipts or a report, because they just get in the way, and 'we're just one big happy family?' … No organization manages its money this way, because it would soon be out of business. It has to ensure that what is supposed to be happening is actually happening. And, of course, managers who claim—in the absence of any measurement or control mechanism—that large numbers of ideas in their organizations are naturally flowing to welcoming supervisors and being quickly implemented, are deluding themselves."
Robinson and Schroeder tell us that many companies which want to encourage employee ideas do so badly, often discouraging employee idea contribution, but creating employee resentment, internal company sabotage, and manager resentment to the ideas.
Robinson and Schroeder explain why traditional reward schemes for idea contribution often fail, but do succeed in generating animosity. For example, we learn that an employee of a large wireless company discovered an annual $26 million billing error due to a significant number of international phone calls that the company failed to record properly. The employee dutifully placed his idea for a simple fix in the company suggestion box.
Robinson and Schroeder write: "Under the rules of the company's idea system, once the idea was implemented, the suggester would be owed 50 percent of the first year's revenue from it—in this case some $13 million. At the time we visited the company, top management had been 'evaluating' the idea for several years. The idea system manager was furious. The CEO would rather continue losing $26 million per year, he told us, than risk the embarrassment that might ensue from having to pay such a large reward. The sheer size of the oversight would make any manager reluctant to admit that it had happened on his or her watch. A $13 million reward … would have come to the attention of his board. …Think of the negative publicity: Not only had management failed to bill customers to the tune of $26 million per year, but it had to pay millions more to discover its blunder. It is easy to see why the CEO wanted the idea buried."
Robinson and Schroeder argue that employees want to see their ideas used, so that traditional reward schemes for idea generation aren't even necessary. But, the authors argue that an effective idea system must have several key components, such as quickness in evaluating ideas and providing feedback. Further, the best success is achieved when the company is able to focus employee ideas in key areas.
Robinson and Schroeder write: "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. … The challenge is to identify the right issue, and to define it in a way that is meaningful to employees."
Perhaps surprisingly, Robinson and Schroeder argue that going after small ideas is often the most productive, because not only are small ideas the best source of big ideas, but small ideas are often situation-specific which means they often remain proprietary to the company adopting them. And, adopting even small changes can lead to new understanding to help the business or can lead to unanticipated, positive results.
For example, Ideas Are Free tells us about a machinist who noticed that it took considerable time to change the oil barrels which were used to hold cooling oil which was sprayed on parts as they were machined. He suggested installing an overhead system of pipes to pipe in the oil from a large tank.
After adopting the change, the company noticed several results. First, the forklift operator whose job was to replace the barrels of oil could be redeployed to a more profitable job. Second, floor space was freed up. Third, oil could now be purchased in bulk, reducing its cost. Fourth, machine downtime was reduced. Fifth, oil spills were reduced, and because each oil spill required certain governmental paperwork, the cost in processing this paperwork was greatly reduced. Sixth, the new hoses that sprayed the oil had gauges showing how much oil was consumed. Despite recycling much of the cooling oil, they noticed that considerable oil was still lost. They discovered that the loss was due to the oil that remained on the metal shavings spewed away as the parts were machined. After a bit of engineering, the company also found a way to recycle more of this oil, further reducing its oil costs.
Robinson and Schroeder write: "People think of ideas because they see a better way of doing something, or an opportunity to exploit. To have a good idea requires a combination of perspective, knowledge, and alertness."
To help employees become better at generating ideas, Robinson and Schroeder suggest adopting "Idea Activators" such as 1) Employee Job Rotation; 2) Adopting the Customer's Perspective; 3) Ongoing Learning; and 4) Reading Groups.
Robinson and Schroeder write: "Learning is a cumulative incremental process—it naturally involves small steps of inquiry, information gathering, testing, and feedback. This is why an idea system capable of encouraging and acting on small ideas is really a gigantic learning and development tool. Every idea, even a bad one, incorporates some form of discovery."
I highly recommend Ideas Are Free: How The Idea Revolution Is Liberating People And Transforming Organizations to all managers and entrepreneurs who wish to tap into the benefits of employee ideas.