How Companies Can Cultivate Ideas
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Lots of companies hope they have a culture of ideas. But for many of them, it’s more like a culture of bacteria.

Egos get in the way, or the ideas get buried in bureaucracy, making workers think that offering a suggestion will be more frustrating than rewarding. And even when companies do reward ideas, the system often backfires, said Alan Robinson, co-author of “Ideas Are Free: How the Idea Revolution is Liberating People and Transforming Organizations’’ (Berrett-Kohler, 250 pages).

In their book, based on their work with more than 300 companies, Robinson and Dean Schroeder explain how companies can thrive if they welcome employee ideas and implement them efficiently. Connecticut publisher Boardroom Inc. averaged 104 ideas per employee during 2002, and its sales per employee were more than seven times greater than the average publisher. The United Kingdom’s Richer Sounds, also known for cultivating employee ideas, has been listed repeatedly in the “Guinness Book of World Records” for having the highest sales per square foot of any retailer in the world.

“Organizations that are successful at getting ideas monitor which employees are turning them in, which managers are getting them, and how rapidly they are acted on,” Robinson and Schroeder write. “Employees and managers are given appropriate training and support, and then held accountable for their roles in the idea process. Coming up with ideas is made a central part of the employees’ work.”

But many companies aren’t like that. The authors write about a 1997 visit they made to a Canadian subsidiary of a U.S. company, when a student asked the general manager how many ideas the company was getting from its roughly 2,000 employees.

He said that in the previous year, the company received three. Not three per employee. Just three. Period.

“And then, quite unabashedly,” the authors write, “the manager turned to his management team and remarked, ‘Come to think of it, I still have some ideas on my desk from the late 1980s that I probably should do something about.’”

Robinson said in an interview that although rewarding good ideas has the potential to encourage workers, there are several pitfalls for companies that base rewards on how much the idea will earn or save:

— The amount of savings or gain is hard to determine. Robinson recalls how one employee argued that an idea was worth $6 million, but the company set the figure at $600,000. Discrepancies like that are liable to create bad feelings instead of good ones.

“It’s just very time-consuming to calculate what an idea is worth,” Robinson said. “You create a need for a bureaucracy.”

— Smaller ideas are automatically rejected. When a company creates such a bureaucracy, small ideas simply aren’t worth the hassle. So ideas that might save small increments of time and money, as well as improving morale, get discarded because they don’t have the obvious cash-saving potential.

— Good ideas are rarely implemented through the efforts of just one person. Many others have to help along the way, but they get ignored by the rewards system. And people are reluctant to collaborate because they’re afraid colleagues will steal the idea.

— Executives may be unwilling to provide huge rewards because they’re embarrassed that the idea didn’t come from management.

The authors describe how the chief executive of an unnamed European wireless communications company sat on an idea from an employee for years — even though the idea pointed out how the system was not billing customers for at least $26 million a year in international calls.

That’s because the worker’s reward of $13 million — half the first year’s savings — would have embarrassed the CEO, drawing attention from the company’s board of directors and the news media.

Robinson said it’s better for companies to set up a bonus pool for people who contribute to ideas during a certain period, such as monthly or quarterly. The collective impact of all the ideas, big and small, would be measured and all members of the pool share the bonus.

“As long as you did something to move the company forward, you share in the reward.”