Tuesday, January 26, 2010

8 characteristics of an effective idea mananagent system

If “40 years, 20 million ideas” is an in-depth narration of how one of the best idea systems in the world (Toyota) evolved over close to half a century, then “Ideas are free” by Alan Robinson and Dean Schroeder is an in-breadth study of over 150 idea systems across 13 sectors in 17 countries. What do Alan and Dean believe to be the characteristics of a good idea management system? Let’s see it with an example articulated in the book, that of Boardroom, Inc.

Boardroom, Inc is a Connecticut publisher and it averaged 104 ideas per employee in 2002. Its sales per employee were seven times greater than the average publisher. Idea management process as Boardroom works as follows:

Each week every employee is expected to come up with two ideas – no matter how small – and bring them to the department meeting. During the meeting, everyone (including the manager) presents his or her ideas in turn. After each one is explained, the group discusses it and, if possible, improves on it. If members of the group decide that the idea can be used, they decide who will be responsible for implementation (usually the person who came up with it). If the proposal needs further consideration or review at the higher level, someone will be assigned to follow through. The average meeting involves 8 to 10 people, lasts 45 minutes and in addition to taking care of normal departmental business, processes some 20 ideas. Quarterly bonus, which may be on average several thousand dollars based on corporate performance, is given to only those employees who have offered at least 26 ideas in that quarter.

According to Alan and Dean, this simple process has most of the characteristics of an effective idea system. Let’s summarize them below:

  1. Ideas are part of everyone’s normal work
  2. It is easy to submit ideas
  3. Ideas are reviewed and discussed by people who have direct knowledge of the situation at hand and who can build on or help modify it so that it will work better
  4. Decision making is rapid, effective and efficient
  5. Feedback to the suggestor is quick and complete
  6. Whenever possible, ideas are implemented almost immediately, often before higher-level managers even become aware of them
  7. People are recognized and success is celebrated
  8. The system is actively managed and constantly improved.

Alan & Dean identify three core metrics to track how the system is working and where it can be improved further.

  • Quantity of ideas: measured typically in ideas per person per year (sometimes, per week, month, quarter etc)

  • Source of ideas: participation rate is one metric which tells how many employees across different functions – production, sales, customer support are giving ideas. Source may involve external parties like customers or partners.

  • Velocity of ideas: This metric tracks company’s responsiveness to ideas. It tells us about questions like: How long does it take to make decisions about them? How fast are people getting feedback about their suggestions? How quickly are ideas implemented?

4 comments:

  1. Abhijit TongaonkarJanuary 28, 2010 at 3:40 PM

    "...ideas are implemented almost immediately..." - this is really critical. It implies that the system has a provision made - budgets and engineering bandwidth - to pursue at least some of the ideas quickly and have well established criteria laid out so that system does not 'bleed'! Even big product focused houses find this a daunting task. Probably this is the weakest link in the system.

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  2. When a significant sized organisation embarks on putting in place such a practice of soliciting ideas and then seeing to it that these ideas get evaluated and then implemented, then it immediately runs into the problem of administrative overload and communication bottleneck.

    A process performance support software could work like an efficient secretary taking up the administrative grunt work and create a transparent platform for communication and collaboration.

    Newer offerings in market like from Brightidea (www.brightidea.com) combine Web2.0 features with intelligent workflow configurator to enable such processes.

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  3. Abhijit,

    Let's go into your implication a little further. You feel "The system has a provision made - budgets and engineering bandwidth - to pursue at least some of the ideas quickly and the system does not bleed". This assumes that the total engineering capacity remains constant (i.e. total time an engineer spends). Data shows that this assumption is incorrect. When people believe that their idea could, in fact, make a difference and also appreciated, they are willing to work beyond their normal work hours. Right from James Watt in 1764 to Paul Buchheit (Google) in 2002 there are so many examples where initial experimentation happened outside the regular work. In fact, Paul's work happened in spite of his boss's disapproval for the experiment. You can check Paul's story here:

    http://cataligninnovation.blogspot.com/2008/09/story-of-how-googles-adsense-almost-got.html

    Vinay

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  4. Deepak,

    IT has always played a role in making processes more efficient. But to say that it is the root cause why idea processes don't succeed needs supporting data. Neither Toyota's "40 years, 20 million ideas" nor "Ideas are free" talk about IT as a bottleneck. And these studies include large systems. If at all there is one mother of all root causes then it may be related to what Dr. Joseph Juran observed during Quality movement - resistance to change.

    Vinay

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