While the importance of innovation is fairly well understood, organizations need to better understand the sources of innovation. One key but often overlooked source is a company’s employee base. As organizations search for new avenues for growth, it becomes necessary for it to look within its ranks in order to fuel an idea-led growth. These authors describe a framework for companies seeking to implement a formal approach for mining and managing ideas from employees at all levels.
“Who in your organization do you believe is responsible for fundamental shifts in strategy? There is only one right answer, and that is ‘Everybody’.”
Gary Hamel on Intrapreneurship
The demand for talent today stems from one well-acknowledged fact – that employees are a company’s significant competitive advantage. This is especially true for service-sector companies, more so for those in the knowledge economy. This, along with the limited supply of talent, explains the widespread war for talent today. The next logical question is whether the war for talent is being waged only for the ability to take on fresh assignments and expand operations or to enable these resources to contribute directly to growth?
If we examine the typical talent profile in knowledge-economy companies, there will not be much disparity among the skill levels. During recruitment, it is ensured that every employee has a basic level of education, maturity and intelligence quotient. Extensive client interaction and problem solving experience gives everyone a set of experiences and a better point of view on most of the business areas. Hence, companies in this industry tend to have a flat, non-hierarchical organization structure.
This equal footing means that a top-down approach to strategic decision-making – where the top management dictates direction for growth – is irrelevant. Often, the person at the grass-roots level of a project is more attuned to business realities and hence able to devise pragmatic solutions.
The reality today is that a good idea can come from anywhere in the organization. The potentially path-breaking million dollar idea is out there, germinating in the minds of one or more of the employees. But how can the decision maker find out where it lies? Ideas tend to get lost because a lone individual cannot stand out in a large organization, middle management loses the bigger picture in its struggle to meet predefined targets, and no one has the bandwidth to prevent these scenarios from developing.
“The operative assumption today is that someone, somewhere, has a better idea; and the operative compulsion is to find out who has that better idea, learn it, and put it into action – FAST!” – Jack Welch
While it is true that a good idea can come from anywhere, it also true that a company cannot afford to give equal importance to each and every idea. Thus, the challenge lies in filtering out relevant ideas in terms of their viability. Such a validation requires to questions such as:
- Is there a valid business case?
- What are the various risks associated with a particular idea?
- What sort of investments does it require – in terms of resources, capital, etc?
- Is the idea practical?
- Is it in line with the organization’s broader goals?
The process should be decentralized and those proposing the idea should be enabled to do this validation themselves. Besides validation, an idea should be mentored. Also, a good idea must become larger than the person and continue to be relevant even when the initiators have moved on or are otherwise engaged.
According to a study by InMomentum Inc, “Companies that have soft and fuzzy behaviors — making all employees feel like owners and feel connected to the company’s vision and values — were growing at 141%. The companies without these behaviors were growing at 10%. Those ‘nice things’ ultimately produce dramatically different economic impacts. These very strong cultures also enable employees to take their ideas to execution. In some companies there are internal-funding mechanisms that allow employees to act on innovative ideas.”2 (iCulture Research Study, Technical Report, September 2000, InMomentum Inc)
In addition to this, employees may have ideas that need to be actualized and nurtured. Therefore, for the purpose of capturing ideas, validating them and for their management, companies need to follow a formal process.
“A good idea needs landing gear in addition to wings” – Anon
This process should be institutionalized in such a way that it harnesses the collective power of ideas in an efficient, transparent manner, which encourages employees to generate new ideas for growth and development. This would be more effective than looking drivers of growth externally.
There are many ways of implementing such a process. This would depend on the organization’s prevailing culture and the extent of change management required.
This paper proposes a framework for implementing such an Idea Management System which would help the organization identify the most suitable system.
An organization can make its strategic decisions in any of the five ways of the Idea Management Framework, represented as Stages.
First Stage: Leader
The Decision Making Unit (DMU) is the head of the organization.
Second Stage: Management Team
The DMU is the top management or the board of directors.
Third Stage: Consultants
The DMU consists of consultants in addition to the top management.
Fourth Stage: Employees
The DMU comprises the organization’s entire employee base.
Fifth Stage: Stakeholders
The DMU comprises the organization’s employees and its strategic stakeholders.
These stages are elaborated on below:
Stage I: Leader:
The head of the organization makes all the decisions, which are then implemented by the employees. These decisions are normally taken in isolation and follow a top-down approach. There is likely to be no visibility into the ideas by the rest of the organization. This stage is best suited for small organizations and start-ups, where quick decisions are required.
Stage II: Management Team
Decisions here are made by the management team, which represents a small percentage of the entire organization. The team discusses the strategic issues, making decisions by consensus that are then implemented top-down. There is a limited visibility of ideas, which is localized within immediate sub-units. This means that each member of the management team would have visibility of the ideas of his immediate subordinates. This stage is best suited for organizations in their early growth phase, where the business is relatively small.
Stage III: Consultants
The management team takes the final decisions, but it invites inputs from consultants. Such consultants, who are experts in the field, could be either internal or external. The ideas suggested would require some level of validation to ascertain their relevance to the goals of the organization. This stage is best suited for organizations in their growth phase, where the company would require a new perspective to achieve a paradigm shift.
Stage IV: Employees
Here, inputs required for decision making are invited from the entire employee base of the organization. Further, the ideas are filtered, validated and then the final decision is taken by the management team. Thus, the management would have full visibility about the ideas that exist within the company, and by a formal process can capture and nurture them. This stage is best suited for large organizations heading towards their maturity phase and there is a compelling need for a paradigm shift.
Stage V: Stakeholders
In this stage, inputs are invited not only from the employee base, but also from other strategic stakeholders. All of them can contribute to the growth and direction of the organization. In addition to filtering and validating the ideas, the organization also needs to align or alter the suggestions to fit to its vision. This stage is suited for fully mature global organizations with stable processes, which have the capacity to channel ideas from such a large population.
As a company progresses from one stage to another, the reach of the idea-management system increases. More people are involved in the decision-making process. As the number of ideas to scan and filter increases, the need for a proper process in place also increases. Thus, the robustness of the process needs to increase from one stage to another.
|I Leader||II Management Team||III Consultants||IV Employees||V Stakeholders|
|Who||One Person||Small Percentage||Small % with Consultants||Entire employee base||All strategic stakeholders|
|How||Leader’s ideas and whims||Team’s consensus in silo||Consultants expertise relied upon||Suggestions and ideas from within the company||Suggestions and ideas from one and all|
|Process||None required||Required only for approval||Required for validation||Robust process required for collecting, filtering and validationg||Robust process required for collecting, filtering, aligning and validationg|
|Steps||Decide – Implement||Discuss – Approve – Implement||Suggest – Validate – Approve – Implement||Collect ideas – Filter – Validate – Approve – Implement||Collect ideas – Filter – Align – Validate – Approve – Implement|
|Responsibility for the process||Leader||Team, collectively||Team, collectively||Program Management Office||Program Management Office|
|Effort||Not Conscious||Not Conscious||Partially Conscious||Conscious & Focused||Conscious & Focused|
|Time to Decision||Fastest||Fast||Medium||Slow||Slowest|
The first three stages are dependant on a person or a team – the focus being on certain people who are pre-identified either for their expertise or rank. However, the last two stages are process dependant. Here, the focus is on ensuring the robustness of processes to dig out good ideas. The responsibility for ensuring that the process runs smoothly lies with the Program Management Office. Also, in the first two stages, there is no conscious effort being made by the decision makers to seek out new perspectives. On the other hand, an increased number of processes increases time to decision. However, not all companies can be at stages four or five, unless it is at a certain stage of decision-making process. For instance, in case of crisis, stage one or two would be most relevant.
Thus, companies seeking the right fit for its idea management system should follow an ‘Assess-Enable-Transform’ approach. First, it should try to identify where it stands in terms of organizational maturity. Then it needs to identify which of the stages is most suitable for it.
Not all companies can or need to transition from one stage to another. Each organization has its ideal stage. This would depend on the following factors:
Number of people in the organization: Start-ups usually have a small team in place that the founder/entrepreneur knows are aware entrepreneurs. Hence, they are able to take independent decisions. As the company grows larger, and the number of levels in the organizational structure increases, the management may not be so attuned to grass-root realities and would require inputs from employees across other levels and from stakeholders.
Time available to take decisions: When a large number of people are involved in the decision-making process, precautions need to be put in place to ensure that the objective is met. If there is an immediate problem that requires fast resolution, then it needs the Leader’s or the Management Team’s quick decision. On the other hand, if a decision is expected to provide a new direction to the company, all stakeholders should be involved in the process.
Life Cycle Stage: A lot would depend on the company’s life cycle stage. An organization needs to be mature in order to manage stable and robust processes that are required for implementing a formal idea management process.
Figure: Mapped to Organization’s Life Cycle: Stages I & II are best suited in the early growth phase, Stage III during Growth phase, Stages IV & V in the Maturity phase.
Introduction of the stages at the right times can provide new growth spurts. The above diagram indicates that due to Stages II & III, the incremental growth over the ‘Typical Organizational Life Cycle’ is not as high as is the case in Stages IV & V. This is because the latter two stages are normally adopted during the maturity phase and the new growth spurt helps elongate the maturity phase and postpone the decline.
Key success factors:
There are some prerequisites for the formal idea management process to take off and show results.
Sponsorship: There needs to be buy-in by the top management, who must believe in the effectiveness of this process. Sponsorship may be by a single person, or be distributed, whenever required. The Sponsor needs to drive the program and encourage participation. The Program Management Office (PMO) should also maintain a constant communication with the Sponsor for any changes and feedback.
Strong ownership: PMO can be comprised of either part-time or full-time members. They should understand the objective and importance of the program and take ownership of this. This gives the program a strong foundation and also helps the process to evolve with the needs of the organization.
Culture of openness: There should be a strong culture in the company that enables and motivates employees to actively participate in the growth of the company. It should foster innovation and encourage diversity of opinions. There should be an attitude of ‘tolerance of failure’, which helps promote creativity without mind-blocks.
Defined Process: The processes should be defined and planned for execution, well in advance. This would focus on the domain or boundary of ideas sought, the criteria to be used in the filtering mechanism, the levels of elimination, the approximate timelines involved and the like. This gives the organization a bird’s eye view of what to expect over the year and what forums are available for what kinds of ideas.
Objectivity & Transparency: All processes and criteria must be well-defined and published. It is vital to have an objective and transparent system for evaluation. This provides an assurance to the participants that they are all treated equally. The process should also provide for an audit trail.
Inbuilt Flexibility: While timelines and templates are important and help define a process, some flexibility is required.
Constant Communication: PMO must act as the liaison between the sponsors and the participants and ensure a smooth and constant flow of communications. The objectives, requirements, deadlines, templates should be explained to all participants. There needs to be a closed loop so as to provide and receive feedback. Progress updates and success stories should be communicated to the larger, non-participating audience, as this serves as an important brand-building exercise, and enhances mindshare.
Employee Enablement: At any time, there would be a sizeable number of first-time participants. Therefore, the PMO needs to enable them and teach them the ropes. Such enablers can be in the form of workshops, sharing knowledge base, providing FAQ-sets and a helpdesk. Mentors can be assigned to the participants.
Rewards & Recognition: In order to encourage employee participation, it is necessary to reward the contribution and creativity. Such rewards can be either a prize, monetary or in kind, or as a factor in performance appraisals or enhanced visibility. For instance, those proposing the winning ideas can be given the opportunity to lead or at least participate in taking the initiative forward.
A unit within Infosys, in the field of enterprise application services, wanted to gain fresh perspective in making strategic decisions related to future direction. It launched an initiative to invite and manage ideas from its 7200+ strong team. The initial idea was to build the spirit of intrapreneurship amongst the team, so that they can look at opportunities more from a business perspective rather than just the technology perspective. It originated simply as a Business Plan competition, asking for ideas for new areas of growth for the unit. The initiative evolved over the years and now has multiple tracks that invite ideas in different categories – patentable innovations, business solutions for clients, growth ideas for the unit and thought papers to demonstrate thought leadership.
At a broad level, the objective of the initiative was to have a process in place to get all the good ideas that may originate anywhere in the Unit. More specifically, it aims to provide a platform to involve members at all levels in its strategic decision making process, and identify thought leaders from amongst its members.
- Identify a streamlined set of processes to take the ideas through various stages of evaluation.
- Define and publish the process, timelines and filtering criteria.
- Connect the winning ideas to the strategic decision making process.
- Recognize and reward ‘winners.’
- Repeat at regular intervals in order to reach a wider audience.
The initial challenge was to encourage participation and make the employees believe in the initiative. Another challenge was to make the process transparent so that employees are assured of a fair process. Other challenges include how to filter the ideas efficiently and ensure that good ideas were not lost because of improper articulation.
Employee participation provides strategy makers with a view of grass-root realities. It contributes to improved motivation levels as employees know their ideas are being welcomed. It also reduces dissatisfaction, as everyone has a platform to voice and justify their opinions. Also, people become aware of the constraints that decision makers face, the parameters that impact the senior level decisions and the processes thereof. It provides a formal mechanism to identify people with entrepreneurial mindset and drive. It fosters knowledge creation and builds intellectual property.
Promoting / Nurturing the Initiative
The program is promoted in every communication by the top management. Sub-unit groups are pitted against each other and healthy competition is induced by highlighting the sub-group-wise participation. There are flexible processes and timelines to ensure that the initiative is run by spirit rather than by numbers.
Creating the environment
There is sponsorship for the program from the highest levels of the management. The buy-in of the management is reflected not only in the communication, but also in the creation of a healthy work environment. The winning ideas flow into the strategic plans and the unit business plans. Sponsorship also ensures that the participants get the best of the subject-matter-experts to evaluate their ideas. The feedback loops offer constructive criticism which propels the participants to create sustainable ideas.
Rewards & Recognition
Apart from the announced rewards at the periodic awards functions, visibility is provided to winning teams in communications to the entire division. Opportunity is given for the teams to voice their views in front of senior management. Teams also get external recognition when the thought leaders present their papers. There is a healthy competitive environment, where everyone is playing on a level field and people have the independence to innovate.
Besides its intended objective of being an important input in the strategic planning exercise, there are many intangible benefits that the organization can gain from the implementation of a formal Idea Management Process. Some of them are:
- Identification of strategic thinkers who have high potential.
- Improved motivation levels as everyone gets a platform to contribute to the growth of their company and feel a sense of co-ownership.
- Teams get acquainted with the constraints and challenges faced by the management.
- A way to measure creativity levels in the organization and quantify its returns.
For any organization looking for constant innovations to keep itself on a growth path, it is imperative to have an effective Idea Management System that encourages strategic thought. If the system is properly implemented, it can help elongate the life of the organization and provide it a paradigm shift. And if it is managed properly as part of the organizational strategy, it can help both the organization and the employees in creating an exciting work environment.
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