Monday, December 14, 2009

William Denny and world’s first and pioneering idea management system

We looked at the evolution of a 50+ years old idea management system at Toyota. We also looked at benchmark data from idea management systems in India for the last few years. We observed that this benchmark data suggests that these suggestion systems are geared towards efficiency improvement only. Has efficiency improvement the only objective of idea management systems in the past? What were some of the oldest idea management systems like? What were the rules? What were the rewards? Let’s explore these questions with an example of a pioneering system introduced by William Denny of Scotland in his shipyard in 1880.

In Corporate Creativity, Alan Robinson and Sam Stern trace the history of idea management systems. About William Denny and his system, they write:

In 1864, at the age of sixteen, William Denny began a five-year apprenticeship in his father’s shipyard in Dumbarton, Scotland. He worked in the yard for twelve hours each day and upon returning home, studied for two more. In this way, he not only learned about shipbuilding but came to know well the workforce and the working conditions in the company.

On his twenty-first birthday, Denny was made a partner in the firm, and he soon set about overhauling the shipyard’s management practices, a project that would occupy him for twelve years. The systems he devised were described in a set of rules, a copy of which was distributed to every employee in the shipyard. These comprehensive rules were divided into five categories, one of which was “Rules for the awards committee to guide them in rewarding the workmen for inventions and improvements”.

This system was started in 1880 and quickly proved to be a success. To run it, he set up a two-people awards committee consisting of a member of engineering department and one person from outside the company, who also acted as a chairman. The rules were as follows:

An employee (exclusive of head foremen, officials of Awards Committee, and heads of departments) may claim an award from the committee on the following grounds:

1. That he has either invented or introduced a new machine or hand tool into their works

2. That he has improved any existing machine or hand tool

3. That he has applied any existing machine or hand tool to a new class of work

4. That he has discovered or introduced any new method of carrying on or arranging work

5. That he has invented or introduced any appliance for the prevention of accidents

6. That he has suggested some means by which waste of material may be avoiced

7. Or generally, that he has made any change by which work is rendered either superior in quality or more economical in cost.

Cash award from £2 to £15 were paid for each accepted idea, according to the committee’s estimate of its worth. If an idea was patentable, the rules stated that the company would give the inventor £15 and pay all expenses necessary to obtain a patent in inventor’s name. Other than the stipulation that the company should have free use of the idea, the inventor was free to pursue any other opportunities that might result from his patent. In 1884, a further incentive was added: award money would be doubled for any employee submitting five or more ideas.

By 1887, more than 600 ideas had been received, 196 of which had been accepted and award monies of £933 had been paid out. The company also built world’s first commercial ship model experiment tank in 1882. Dumbarton has a museum showcasing this tank and hosting exhibitions such as “Denny: innovation and experimentation”.

1 comment:

  1. William Denny had a great idea, will it work today? Is monetary incentives the most important motivator for most of our young employees? What our knowledge workers and members of the Y generation are expected? Even in India where monetary incentives play a more important role, money could be an help but not a motivator factor. Without saying that innovation is in the DNA of organization, one of the most motivating factor is recognition at various levels. I will stress here specially the recognition at middle manager level which is often missing often due to the fact that the organization management system does not include the components of innovation. Today organizations should go further that the well known ideas' box, they have to integrate all components to sustain ideas genration and their implementations in their management system, a more difficult task that at the end of the 19th century.