A recent article in the Booze Allen Hamilton strategy magazine Strategy+Business provided the following anecdote:
In 1999, the appliance maker Whirlpool announced an initiative to generate innovation “from everywhere and everyone” in the company. Faced with a stagnant market, Whirlpool managers wanted fresh ideas from the company’s 68,000 employees. They got them. Before long there were a host of pilot projects covering innovations as diverse as a line of exercise devices, a household maid service, and modular equipment for tailgate parties. Few employees came up with anything related to the company’s core business. Before long, the company’s executive committee started to rein in the more far-fetched ideas. Later, the CEO restricted projects even further, to existing brands.
The Strategy+Business article raises a key issue in relation to Idea Management Systems: how focused should the scope for ideas and innovations be? Should the Idea Management System have a very clear and focused scope, or should it be open to any and all ideas by any and all employees?
Clearly, if the scope for ideas and suggestions is broad (as in the case of Whirlpool) then a wide range of ideas and innovations will be suggested, many of which will be beyond the scope of the companies’ activities. But is this necessarily a problem for an Idea Management System?
A well designed Idea Management System will have an idea funnel, where ideas are generated from a number of sources, and various levels of filtering are applied before selecting appropriate ideas to invest seriously in. In the case of Whirlpool, is the problem simply that employees made a rather broad range of ideas and suggestions? Arguably, no. That is precisely what idea generation and gathering is intended to do. The problem in Whirpool’s case may rather have been the lack of a properly designed innovation infrastructure (such as an idea funnel or stage-gate system) for the Idea Management System to filter employee ideas and focus management attention on the most viable and relevant suggestions.
If clear organisational objectives for ideas generation in an Idea Management System are given, then ideas generated will tend to be focused around those organisational objectives. The risk, however, is that after a while (particularly if an incentive system reinforces the generation of those ideas) perhaps only those ideas corrsponding to those clear goals continue to get generated.
For example, American Airlines introduced an Idea Management System, IdeAAs in Action. The system was endorsed and driven by top management (i.e. from the CEO down) with the clear goal of finding and implementing efficiency improvements which improved the bottom line by reducing costs – with employees being rewarded for suggestions that made a measurable savings in financial terms. However this combination of clear goals around cost savings coupled with incentives based on the financial difference an idea may make had limitations. For example, in 1996 IdeAAs in Action saved American Airlines some $43M – but only 9% of employees participated in the system. Of those that did, the overwhelming majority of contributions came from employees in positions or roles such as maintenance positions that made it easy to come up with ideas that generated cost savings – over $20M of that $43M came from ideas submitted by maintenance staff. The issue is that the more American Airlines becomes aligned for cost savings, the more difficult it is for employees to identify and be motivated to submit ideas not closely aligned with costs savings. But many important ideas – particularly ideas related to business model innovation in a changing marketplace – might lead to revenue growth or increased marketshare but not be submitted if the focus is clearly and exclusively about saving costs.
There is no single right answer – as always there is a trade-off between two valid points of view. There is value in having a focus of interest, and there is value in encouraging employees to participate and encourage all ideas that employees believe are useful, interesting, or may make a difference. It is the role of employees to contribute any and all suggestions, and for the Idea Management System to filter and assess them and invest energy in resources in carefully selected ideas aligned with the evolving business strategy.
My recommendation is to set reasonably clear goals (e.g. ‘we are looking for product and service ideas that will lead to revenue and market growth in the markets of X, Y and Z and to business model and operation improvements in delivering those products and services’), but at the same time communicate clearly that this is a guideline – participation is valued, and all ideas are appreciated.