Why your innovation strategy needs employee ideas and how you can get them
Innovation remains a key focus and stated priority for many organizations, and for good reason. The world is enamoured with the Uber, Airbnb and other disruptive company success stories. For leadership it creates both a desire to create their own equally disruptive offerings and a fear of becoming obsolete. But with disruption leading the conversations around innovation, have we lost sight of the value of continuous improvement? Research indicates that much of the time, it’s these small, incremental changes that yield much better results.
Employees can and should be an important part of an organization’s innovation strategy. If everyone at an organization consciously looks for ways to improve, great things happen. The role of the organization is to develop and provide the right processes, habits, and culture that fosters creativity and innovation.
Can the average employee come up with great ideas?
Let’s start with the pink elephant in the “employees have great ideas” room. Does the average employee actually have great, useful ideas? The answer is not as simple as yes or no. It’s true that it’s rare to generate breakthrough, disruptive ideas using an employee idea program, however, research continually shows that there’s still significant potential in employee ideas.
Consider the power not of big, breakthrough disruptive ideas, but of a bias towards action. Of implementing small, incremental improvements consistently as problems are identified. Organizations that have compared returns from ‘big idea projects’ to returns from ‘continuous, incremental innovation’, have consistently found that a bias toward action for implementing known solutions to known problems has a bigger impact than identifying the biggest opportunities for improvement and launching projects to realize those opportunities. This is true across many use cases like improving patient care, realizing savings, improving productivity and increasing employee engagement. In fact, according to The Idea-Driven Organization, up to 80% of an organization’s performance improvement potential lies in employee ideas.
Why is this? The reason is that small teams or leadership will never know what the employee base knows collectively. The “iceberg of ignorance” was a term coined by Sidney Yoshida to reflect the findings of a study completed in 1989 that’s still relevant today. In the study, he found that leadership could only list 4% of the problems known to front-line employees. While the biggest opportunities and issues are very likely known to leadership, it’s really only the tip of the iceberg for potential innovations. Individually, they do not add up to much, but as a whole, there’s tremendous value in all these ideas. By continually improving, it’s also possible to leapfrog much of what gets labelled as disruptive innovation.
So while we don’t advocate giving up on other innovation efforts, we do strongly believe that an organization needs a strong, healthy employee idea program as part of their innovation strategy.
OK, so employee ideas are good – how hard is it to do well?
Not all employee idea programs are equal and many are in fact unsuccessful. Through my company’s research, we found that there’s a clear and significant difference between an average and well-run program:
- The average suggestion system has just under 10% adoption vs. more than 50% for well- run programs
- The average suggestion system gets fewer than .5 ideas per employee per year vs. multiple ideas per employee per year for well-run programs
- The average program often increases employee disengagement vs. having a significant positive impact on motivation and productivity
- Top performing idea programs have contributed hundreds of thousands, even millions of dollars to the bottom line in the form of efficiency, productivity, savings, decreasing turnover and maximizing revenue streams
- Well-run idea programs have more than 20x the participation and 8x the number of ideas implemented
There’s a lot at stake in putting together an employee idea program well. What does it take? It’s not rocket science, but it’s also not a walk in the park. It takes some commitment to build a successful program and embed it into the way an organization operates.
The main factors that go into a successful idea program
Timely and consistent feedback
In our experience, which is validated consistently by research, timely and consistent feedback on ideas is the most critical element of a successful idea program. Even if ideas are not approved, feedback and transparency on the part of decision makers are imperative. Nothing destroys a program like the perception that ideas are going into a black hole. That doesn’t mean that ideas need to be approved and implemented however. But feedback is key. In one study it was shown that it takes more than 20 failed submissions before employees starts to disengage in a program only if feedback is provided for their turned-down ideas.
The big challenge for organizations is scaling the program so that they can manage a tight feedback loop across dozens, hundreds or thousands of employees.
There are several ways leaders can accomplish this, but there are two key things that we learned that are most important to a successful idea program:
Decentralizing and empowering more people to get value from ideas
Where we’ve seen the best success is with business unit leaders taking charge for their own departments and driving the focus for ideas and seeing through implementation. Put another way, the more targeted the types of ideas are to the specific units that employees and leaders are part of, the greater the success.
Leveraging the idea program as a vehicle for employee engagement
Place an increased importance on using your idea program as a method to drive employee engagement, with an output being good ideas, not vice versa. Here’s what the research says:
- Comparisons between suggestion systems in North America, Europe and Japan demonstrate the importance of putting engagement first. On average, Japanese programs are driving better results. We believe the reason is their focus on engagement and the process of sharing and acting on ideas versus the ideas themselves.
- Within our Net Promoter Scores (NPS) and through numerous conversations with customers, we know that giving employees a voice is motivating and increases productivity. Customers that started with a focus on finding “diamond in the rough” ideas have gradually put more and more focus on the process of just listening and acting on employee input and using SoapBox as a way to get work done. Invariably, this focus translates into more input, better input, and more input translating to an impact on the bottom line.
- Research shows us not only that programs perform better when you focus on engagement first, but that there is an important halo effect on overall employee engagement. Providing employees choices on things as simple as their uniform, when they take breaks and where a barista can place a blender have lead to decreased absenteeism and increases in productivity of as much as 50%.