Ways CEOs Can Get More and Better Ideas
Research shows that 80 percent of an organization’s improvement potential lies in front-line ideas – a potential that most organizations fail to tap. How to stimulate ideas? Here’s how.
March 24 2014 by Alan Robinson and Dean Schroeder
In its most basic form, creativity can be divided into two parts: problem-finding and problem-solving. Most organizations of any size are already fairly good at problem-solving, so if they want to come up with significantly more and better ideas they have to get better at problem-finding. There are two simple approaches that idea-driven organizations use to do this.
Problem-finding is often a matter of perspective. A quick and easy way to expose employees to fresh perspectives is through idea activators – short targeted training modules designed to give them new perspectives on their work. Subaru Indiana Automotive (SIA) made extensive use of idea activators in its quest to become the first North American automobile manufacturing plant to be “zero landfill.”
One of these activators, for example, was “the 3Rs” – reduce, reuse, recycle. The 3Rs framework is easy to remember and gets people to think of ideas beyond simple recycling. While recycling waste is helpful, reusing it provides greater environmental and financial benefits, and reducing it is even better. Looking at their work from this perspective, workers could see all kinds of problems and opportunities they didn’t see before.
Take, for example, what happened in the engine assembly area. Engine components come from a Japanese supplier in large steel shipping containers, packed tightly in specially contoured protective Styrofoam blocks. Formerly, as employees unpacked these parts, they would put the bulky blocks into recycling bins. But after 3R training, an employee team began to wonder if it wouldn’t be feasible to reuse this packaging. Since the empty shipping containers were already being sent back to the supplier, why not repack them with the Styrofoam blocks so they could be reused?
After analyzing the idea, the team discovered that it would actually be profitable. This led to other ideas and eventually some eighty different kinds of plastic caps, metal clips, cardboard spacers, and various other packing materials were being returned to the supplier for an annual savings of more than $3 million.
Another idea activator was “dumpster-diving.” If nothing was to be thrown away, everything put into the dumpsters had to be eliminated – either recycled, reused, or not generated in the first place. Even the dumpsters themselves had to go. Dumpster-diving teams overturned the dumpsters in their areas, spilling their contents onto the floor where they were sifted and sorted by source and type. Then the teams came up with ideas to deal with each type of waste using the 3Rs.
The effectiveness of this tactic is illustrated in the case of the dumpster that was located near the robotic welders used to assemble the car bodies. The dive team quickly realized that the “dirt” in the dumpster was actually the remnants of sparks generated during the welding process. These sparks are small particles of welding slag, which include copper oxide blown off the copper welding tips by the arcing of the high amperage electric current used to fuse the steel together. If zero landfill was the goal, sending the floor sweepings to the landfill was no longer an option. After some searching, SIA found a company in Spain that could process the slag to recover the copper.
While processing the welding slag kept it out of the landfill, it was expensive to ship it to Spain (and the shipping added to the company’s carbon footprint). So employees set out to reduce the amount of sparks created in the welding process. Because sparks are caused by arcing between the copper welding tips and the steel, the better the fit between the tip and the steel, the fewer the sparks that are generated. A new tip of the proper shape sparks very little. But with use, the hot copper welding tips soften and deform, degrading the fit and creating more sparks. Because it is expensive and disruptive to replace the copper tips as they start to deform, standard practice is to increase the amperage on the welder every two hours in order to assure a good weld. The extra power produces even more sparks and heat, creating more tip deformation, which requires even more amperage, and so on. Now, instead of turning up the electricity as the tips deform, a special device mounted on each welder quickly machines them back to the optimal shape. The result – fewer sparks, less electricity used, and a 73% reduction in the number of welding tips consumed.
The “3Rs” and Dumpster Diving modules were two of many idea activators that SIA used to stimulate green improvement ideas from its front-line workers. Today, SIA’s 3,500 employees make 6,000 cars per week, and generate less trash in a year than the average family of four does every day!
Another approach to help employees come up with more and better ideas is to create organizational mechanisms that highlight problems so they can no longer be ignored. Bruce Woolpert, CEO of Graniterock, a supplier of materials to the California construction industry introduced his “short-pay” policy for this purpose. Short-pay states that “If you [the customer] are not satisfied … don’t pay us.” The customer simply deletes the relevant charge from his invoice and pays the rest. The only requirement is that the customer explain the issue in a telephone call from Graniterock. In the first year, some 600 short-pays cost the company 2.3 percent of sales.
An example of how short-pay has stimulated ideas is the case of colored concrete. Shortly after the policy was introduced, a number of contractors short-paid because the color of the concrete they ordered was too light or it was blotchy. At the time, poor color control was the norm in the industry, so customer complaints were not taken seriously. Standard practice was to add color after the concrete had been loaded in the delivery mixer trucks. The driver would climb up on a loading platform, cut open the heavy bags of coloring powder, and pour the powder into the concrete. The powder then mixed into the concrete on the way to the customer’s site. Before, color problems were assumed to be caused by dosage errors, and whenever there was a complaint, the driver would be reminded to be more careful with his measurements. But with short-pay, poor color control quickly became very expensive, and a Graniterock team was set up to fix it. It turned out that the problem wasn’t the dosages, but clumping. Even when the driver added the correct amount, the dry powder would often clump as it entered the wet concrete, and not get blended in thoroughly. So Graniterock found suppliers who could provide the color in liquid form, and the problem was solved.
Another recurring short-pay problem arose from late deliveries to construction sites in new areas whose roads were not yet on the maps. Drivers often spent significant amounts of time driving around looking for the sites. The solution was to use fire-department maps, which by regulation have to have all information up-to-date. A collage of fire-department maps was put up on a large wall in the dispatching area so drivers could study it and visualize where their construction sites were.
Today, with a lot of problem-solving under its belt, the cost of Graniterock’s policy is under 0.2 percent of sales, and at the same time the open dialog that short-pay has created with customers is leading the company into developing innovative new products, such as increasingly environmentally friendly concrete.
To encourage and exploit large numbers of front-line ideas, an organization must have a system that can quickly process and implement them. Best practice in idea management combines such a system with ongoing and well-thought-through approaches to improving employees’ problem sensitivity. This combination is explosive. Our research has shown that some 80 percent of an organization’s improvement potential lies in front-line ideas – a potential that most organizations fail to tap. When managers gain the ability to implement 20, 50, or even a hundred ideas per person per year, everything changes.
Alan Robinson and Dean Schroeder are the co-authors of Ideas Are Free. Their latest book, The Idea-Driven Organization: Unlocking the Power in Bottom-up Ideas, was published in the spring of 2014. Robinson teaches at the Isenberg School of Management at the University of Massachusetts at Amherst. Schroeder is the Herbert and Agnes Schulz Professor of Management at Valparaiso University.