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How to Build The Idea-Driven Organization

How to Build The Idea-Driven Organization


♪ [Opening music] ♪ ♪ ♪ ♪ ♪>>Cindy Clark: Welcome today to
the Family Business Forum. It is wonderful to
have you here today! Our speaker is Dr. Alan
Robinson. He has to leave promptly today
at the conclusion of his presentation because he
has to catch a flight to England tonight. He is no stranger to
international travel, in fact, just two weeks ago, he was
in Australia for two weeks consulting with a company. He will have many stories to
tell you of his experience in consulting with his three
different books and let me tell you what those books are – award
winning books, by the way: Corporate Creativity: How
Innovation and Improvement Actually Happens,
Ideas are Free, and The Idea-Driven Organization. Today at lunch I realized that
Dr. Robinson is actually sort of one of the founders, if I
can say that, of “lean”. He certainly knows a lot about
it, so if you are operating under the lean principle, he’ll
have lots – if you have any questions on that he’ll be happy
to answer those as well. He has also been featured on ABC
World News, CNN Headline News, several NPR programs, and now
for a two-hour engagement he’s with the UNC-Asheville
Family Business Forum. So please let’s welcome
Dr. Alan Robinson! [applause]>>Dr. Robinson: Now,
how does the mic ->>Cindy Clark: You’re hooked. So, you’re not
bound, like I was.>>Dr. Robinson: You told me
this was not for amplification though, correct? Alright, so can you all hear me
with just my normal voice? Okay, so I’m really
happy to be here. I’m very sorry I have to run. After this was booked my family
member died in England and her memorial service is tomorrow
6 AM our time here, so I’m just making it work. [laughs] So, please
don’t take it amiss. I’m going to just jump right in
here and please feel free to ask questions – any
questions you have. I have quite a bit of
material to cover. I was sitting at my hotel this
morning and realizing that I probably wouldn’t even get
through it all but my advantage is that you have a copy
-everybody’s getting a copy of the book. Correct?>>[Audience member]:
All of the members ->>Dr. Robinson: All the members
are getting a copy of the book.>>[Audience member]: – are
getting a copy of the book. A benefit of membership,
if I might just add! [laughter] of marketing, okay? And we can talk later about
getting your copy of the book.>>Dr. Robinson: Okay, so
today’s topic – I’ll just I’ll explain what an idea-driven
organization is in just a minute, but for now – does this
have a laser pointer on it? Yes. I’ll alternate between
these two screens. For now our topic
is bottom-up ideas. Bottom-up being of course
the opposite of top-down. How do you as family business
leaders, as managers, get lots of ideas from the people who
work for you and what’s it going to do for you? So let me just jump right in. One way to frame what we’re
going to talk about is – I’ll just have to point here – you
can – for the last hundred and 50 years the average US company
has improved between 1 and 2% productivity
improvement per year. That’s our kind of
national average. There was an MIT study about
seven weeks ago that said for the first time in history US
manufacturing had burst through the 3% barrier and was now
improving at 3 – last year improved at 3.0175% and I hope
these numbers you find rather pathetic and disappointing
because they are! What those numbers are
really saying is that most organizations -and we’re
actually the fastest improving country in the world right now –
we’re the world leaders – most organizations have very weak
cycles of improvement and innovation and what I’m going
to talk to you about today is instead of scrabbling around at
1 or 2% per year like everybody else – how the companies I’m
going to be talking to you about because of what they did – which
I will tell you about – how they’ve jacked up their
improvement rate to between 12 and 17% per year on a
sustained basis, okay, over time. So I also – last
weekend I was speaking to a conference of financial advisers
and it occurred to me to mention that this is
compounded over time. If I said to you, “I’ve got this
great savings account. I’m the local bank – pays 1½%
and you put your money in for 20 years and look how much
you’ll have at the end.” And I said to you, “I’m another
bank and I can do 12 to 17% over the next 20 years”, it’s – at
the end of that period you have a totally different proposition,
not just – it’s just a completely different space. So, my next assertion to you
is that if you can do what I’m about to show you, your
company is just in a totally different space. It operates at a completely
different level and can do completely different things from
what it used to be able to do. Here’s the central premise that
underlies everything that we’re going talk about: and it’s that
your front-line workers, and I mean by that the people who do
the work of the organization that you work for, that can be –
and I was just – I heard there was a hospital here just as I
was coming in – I worked at the Cleveland Clinic and I gave a
talk to their management team and I said, “Front-line people
like the doctors and nurses and the CNA’s in your clinics and
there was immediately this well-coiffed, bow-tied doctor at
the back said, “Excuse me! Excuse me! Excuse me! Do you really mean to say that
doctors are front-line people? Doctors?” And I said, “Yeah, it’s not a
reflection on your status in society; it’s a reflection on
the type of work that you do and if some doctors run hospitals,
other doctors are out dealing with patients, dealing with
processes, dealing with, you know, the real work that’s done
in your hospital, that makes them front-line people.” It’s nothing good or bad. But your front-line people see
a lot of things that you as managers and leaders don’t see
and the number that I’d like you to work with – well, it’s a
settled issue in improvement and innovation this number, but I’m
going to try and give you just enough data to make the
case for it – is 80/20. Here’s the split: you are
sitting with your team, with your small company, with your
large company, or your unit at position A, and you have a plan
to get to position B, something over the next, you know, year
or two – strategic move and my assertion to you is that of the
ideas you need to get from A to B, 80% are in the heads of, or
potentially in the heads of, your front-line people; only 20%
will come from management. So, people often – given that
we – most organizations again, speaking globally – work in a
top-down manner, it’s kind of surprising that I’m telling
you most of the action is in bottom-up. So let me give you some
data to back that up. This comes – well actually I
should preface this by saying in the history of management
there are very few controlled experiments, meaning, you know,
that you can take 100 people and give them this pill and 100
people and not give them this pill and you can see what the
effect of the pill is, you can’t really do that with management
because there’s so many moving parts and if you change – you
find one company doing one thing, another company doing
another thing, you can’t say that the difference is just that
one thing because they have different management teams,
they’re in different industries, etc. etc. So I can count on the
fingers of one hand how many controlled experiments there
have been, that I’m aware of, and luckily for me and us
there’s one right in the space that we’re talking about. So this one happened at
Coca-Cola, which in 2007 mandated Six Sigma from all of
its operating units and all the company-owned bits of it,
which is still pretty big around the world. Does anybody need a little
primer as to what Six Sigma is? Anybody want me to say
a few words about that? Yeah, okay. Six Sigma is a problem-solving
methodology that was developed in the early 1950s by a man
called Joseph Juran and it lay buried in his quality control
handbook with just specialists using it, until the CEO of
Motorola found out about it, named it Six Sigma by the way,
and applied it in his company and saved billions of dollars
and then Jack Welsh of General Electric found out about what
Motorola had done and urged and made his company use
the same methodology. So, it’s a – it’s a
problem-solving – team-based problem-solving methodology. It involves experts such as
Green Belts and Black Belts who lead a team through a
well-defined set of steps to solve big problems that are
big dollar problems that our management’s aware of. For our purposes here, Six Sigma
is a top-down methodology. It’s usually, you know, because
of the amount of resources and time you have to put into it,
it’s usually for just the problems management is aware of. So, this had been mandated in –
around the world, and they unwittingly created this
experiment in Coca-Cola Stockholm and Coca-Cola
Stockholm sounds really small, but it is a thousand person unit
that supplies seven countries with Coke: Sweden, Finland,
Denmark, Norway, Latvia, Lithuania, and Estonia, so it’s
a pretty large operation. Within months of that edict
coming down from American headquarters, this Swedish
operation got a new managing director. She had previously
worked at Scania. Now, Scania, some of you may
recognize the name, was named two years ago as the most
innovative company in Sweden. Sweden last year was named the
most innovative country in the EC. So, this is a pretty
innovative company. She’s coming from – into this,
no offense, but rather traditionally-managed, you know,
straightforward company. So, in she comes and with the
same management team, with the same business conditions, same
workforce, you can now compare the difference between the
impact of these two, one top-down programming
and bottom-up program. So, if you look over here – this
data – she took it for three years, mostly to fend off
inquiries from headquarters as to what was she doing listening
to the little people? They were very concerned about
what she was doing with the idea of – please just focus
on Six Sigma. So, she took this data, this
is her slide printed with her permission and here’s what
happened: this is remarkably stable, the book has the full
data, but I’m just giving you 2010 data. In 2010, I think there are the
correct numbers in the book, but I think there were 4 Black Belt
Projects and you can see they collectively saved 1 million. There were, I think it was 7
Green Belt Projects, which saved another million euros. That’s pretty good! Nobody – no problem there. We’re saving money, but you can
see that the 2 million that was saved by the stuff management
could see was totally overwhelmed in extent by the 9
million that came in the thousands and thousands of ideas
from the frontline workforce. So, the message here is, two
messages: take your pencil if you have the slides with you –
just draw a line across there, right there. This is what management sees
this is what your workers see and I’m not saying you still
shouldn’t as managers initiate improvements and innovations. What I’m telling you is that
just to do that, as I told this to the leadership team at
General Electric, they did great at this but they’ve completely
ignored that. Out of the 20% that they can see
and act on, they were squeezing the last .01% out of that 20%. Great! Keep doing
it! No problem! But why would you do just
that and ignore all that? Just leave it on the table. Here’s some data from some other
companies just to let you see that this is – every time I’ve
seen this measured it always comes up around 80/20 or above
and, by the way, this is a big-company thing to do to
be silly enough to want to measure this. I think once you know the
statistic, why would you – you have to be in some sense – and
I’m not speaking just about these companies – but I’m
telling you don’t measure it yourself, just accept the fact
that you have a lot of ideas out there and the frontlines has way
more impact on your performance than what you and your team
will directly think of. Don’t bother measuring this,
this – these measurements all occur because factions within
these large companies say, “Oh, I’m not clear we should be
spending money on that!” So they put a lot of money into
measuring the relative impacts. Don’t you bother
to get into that. You all know Technicolor. They have been around
for a long time. They now do all the
infrastructure work behind cinemas around the world. They measured this for years. 81% bottom-up cost savings, new
revenue ideas, 19% top-down. And I can’t name that company
until December 31 of this year, but it’s a very large chemical
company and you’re all touching its products as we speak. They measured it at 85/15. Hickory Chair, I was just
reminded, we’re not very far from Hickory are we? Y’all know the story
of Hickory Chair? Okay, so Hickory Chair got into
some trouble, it must have been about 14 years ago, well don’t
bother to correct me, there’s somebody who actually knows
and knows this story, right? Personally. I’ll probably get it not quite
right, but we write about them in our book. Their CEO died suddenly and
their COO was several weeks away from retirement and the board
turned to a brand-new, young vice-president of marketing who
had just been hired and had no experience in the furniture
industry and his name was Jay Reardon, and they said,
“Got to take over! You’re CEO!” Now, as he put it, Jay said –
this is one of the great turnaround success stories in
the last decade in the United States as far as I’m concerned. He said, “I know nothing about
how to make furniture. The only thing I can do is
go out and ask the people who make it.” So he spent several weeks
wandering around inside his factories asking people, “What
can I do to help you make furniture better?” Now, just as a marker, when he
took over, Hickory Chair really was in its death throes I would
say – these are my words. It was outsourcing 73% of all
of its product to Malaysia, Vietnam and China. Okay? That’s pretty much near the end
and we all know how hard hit furniture has been in the United
States, probably the hardest hit of all American industries. So he started doing that. At the same time – he is a very
entrepreneurial man – he called Toyota Supplier Services
Corporation – TSSC – in Lexington, Kentucky, and he
said, “I don’t sell anything to Toyota, but would you – could I
possibly get – we’re one of the last furniture manufacturers,
we’re struggling to stay alive – could you send one of your
Toyota gurus down? Because I think we can be
a lot more efficient.” And he happened by chance
to be given Hajime Oba. Mr. Oba who’s the legendary –
he’s like Mr. Miyagi, in Karate Kid? [laughter] – legendary
Toyota consultant. He doesn’t speak very good
English, by the way, which is part of the fun of this story –
came down to Hickory and he came down twice, I think. The first day, the management
team and some of the Board of Directors were waiting for this
great man in the board room, and he came in and said,
“Oh, nice to meet you! I must go to factory!” And he left all the cookies and,
you know, goodies on the table. Just walked out to the factory –
spent most of his day there. At the end of the day – this is
– I wasn’t there – I just heard this from Jay – he said he came
back in and they were anxious, what did he say? He said, “You not
listen your people!” Translation: you’re not
listening to your people. So Jay said, “What
does he mean? Oh!” So he went off on this extended
jag of which a large part of what he did is what I’m going to
talk to you about – well, you know, with other companies doing
the same thing – today, and when you were at the TWI
Summit, sir, right? He spoke – I didn’t
know he was coming – he spoke right after me. I got to hear his talk. And when he told – he said to
the audience, “Look, I just asked the people who did the
work: how do we do it better?” Put in place a lot of
improvements and today 95% of Hickory’s product is
made in Hickory. They brought it all back! And then I think the other eye
popper about his company is, as he said, his ROI last year was
greater than both Google’s and Apple’s, and he’s a
furniture company. He’s not even supposed
to be in business! So this is the kind of thing,
when I said you’re in a totally different space, that you see
when you activate the majority of your improvement and
innovative potential that you never touched before. Other companies here: that’s
probably the leader in the United States in
healthcare delivery. They measured a hospital
chain in Wisconsin. Below this line, right there
where it says NAVSEA, Price Waterhouse, and JMA, I’m
going to very briefly carry the same thesis. I’m going to tell you that that
picture, if you remember nothing else after you’ve drunk all the
wine at the end of the session today, remember that picture. That’s really what you’re – if
you just never lose sight of that you’ll be alright
in the long run. I’m going to tell you, while
that picture’s for improvement, it’s also true for innovation as
well, which also -which explains why there so very little
relativistic innovation going on in our companies. Those bottom three: NAVSEA
is the research arm of the United States Navy. They do all of the new weapon
systems, missile systems, radar systems, communication systems
and they engineer them and put them on board the ships. They’re just all over the world. They tracked this bottom-up
versus top-down at 83 bottom-up, 17 top-down. You can imagine how that goes
over in the Navy, by the way. Price Waterhouse Coopers, don’t
hold me to this, although I know I’m on video! [laughs] I think it was the 120
biggest innovations between 1995 and 2005 – they did this big
study of – 80% of them originated on the front lines. So, if you just go and say, as
Price Waterhouse Coopers did, what are the biggest things that
happened in America, you know, in the last 120 years?
Sorry – in the last 10 years you find that
most of it originated on the front lines. This I will talk about in a
minute, was the largest study of innovation done in Asia,
probably still is as well, and look at what it found. So when you examine the data and
I hope you’re all data-driven people, the world of improvement
and innovation is hugely, overwhelmingly bottom-up and
most organizations, back to that picture – are doing this. The reason they’re at such low
rates of innovation and improvement – and jeopardizing
their survival by the way, by being that way is because
they’re not tapping the bottom of that pyramid. Okay, so summary: I’ve
said this in kind of Demi language up here. You are running your
family business. You need to raise your game or
do something to survive or you want to get into the new – most
of what you need to do to get to where you want to go
is invisible to you. You can never know
it in advance. Here’s the data. The data says in organizations
that have effective idea systems and I will defined those in a
minute – 80% of improvement when it’s measured comes
through the idea system. In other words, if you are not
set up to do what I’m about to show you, which is a
state-of-the-art practice around the world, you’re using,
at best a fifth of your improvement engine. So, you think about, people have
been writing recently and I’m sure a lot of you feel it
judging from some of the companies that I know are here –
on the pace of improvement and innovation around the world
hasn’t been just a constant steady percentage improvement
per year, it’s actually been accelerating over the
last 5 to 10 years. There’s a London business school
professor, Gary Hamel who wrote an article about why this is. This maybe a little simplistic,
but I think he has the main points. The world is becoming
a much more global place so anybody in China who invents a
new one of these -if this wasn’t already Chinese – can have a
containership load of these here in nine weeks. So you are now, for the first
time – we are all – facing competition from anywhere in the
world, very quickly. Put on top of that – repair that – with the
fact that the Internet gives us the ability to compare vendors
to locate new vendors to know, have a lot more information
about what we’re buying and you have a world where as this
continues to come together, the rate at which you need
to improve and innovate is just accelerating. So here’s my question to you,
why would you leave 80% of your innovation and improvement
potential – I don’t mean you personally, but just
philosophically – why would you leave 80% of your power to
combat and thrive in that situation completely on the
table as most organizations do. Here’s a set of world class idea
systems, going to be the main topic of what I cover
with you today. Actually most of these
are family businesses including Toyota. I read various estimates of
whether the Toyota family owns 70% of Toyota or 6% and the
reason nobody can really figure it out is because there’s
hundreds of companies that all own stock in each other and
Toyota members pop up all over the place. I’m not sure they know how much
they own, but technically it’s a family run business. I’ll just talk about
two of these. Boardroom is a family-owned
business. It’s actually the only company that’s in both this
book and its prequel which was calledIdeas are Free. And when Boardroom had 30
employees, this would have been in the early 90s, Martin
Edelston who at the end of his saga – by the way, he is going
to sound a little naïve so I’m going to tell you the outcome –
he was named one of the greatest CEOs of the 1990s by Forbes
magazine in the early 2000s. Martin Edelston said I was
at a loss for what to do. My company was struggling. I knew I needed to do something
to make some changes. I had no – I had run out of
ideas, I didn’t know what to do. So he’s very entrepreneurial,
he contacted Peter Drucker. I hope that name means something
to you, greatest management guru of the last century – and he
managed to persuade this great man to come out and you know, he
hired him for a day to come out to Connecticut and spend a day
at his company, books open, talk to anybody you want, but at the
end of the day please tell me what I need to do to
get to the next level. Peter Drucker came, wandered
around, did his homework and at the end of the day – and if you
know Peter Drucker you know he likes simplicity, so I believe
this part of it – he gave only one piece of advice
to Martin Edelston. This is what I’ve had Martin
Edelston say this to me personally, it’s also in
his autobiography. And it was to do this: if you
work at Boardroom today, the average person gives in two
implemented ideas per week, which times 52
translates to 104. Okay, Wainwright is another
family-owned business out of St. Louis. It’s said that any time you fly
commercially, your life depends on Wainwright parts. They’re very high-end metallurgy
– metallurgic, you know, things inside your engine – and
that is what they do. They won the Baldrige award for
small business back in the – one of the first winners and that’s
when they pop onto my radar screen, I think it was 1992. 87 ideas per-person, 90% of
which were implemented. Now since none of you are
looking very impressed let me give you the current US average. If you work at the average, one
of those 1 and 2 percenters, companies, the average in the
US last year was – the average employee gave half an idea
per-person of which a third were used. That’s how well we do at
tapping this resource, right now as a country. So you can see these
numbers are pretty wild. Gulfstream won the Shingo award
for Melina’s company in North America two years ago, 33
implemented ideas per-person. This is a company of about 70
people, family-owned right outside of Indianapolis. Brasilata, another family-owned
company, is the most innovative – I should talk about this
company – it is the most innovative company in
Brazil, right now. Brazil – Brazilian government
publishes a list of the top 50 most innovative companies. Brasilata is always in the top
five – at least since I’ve been tracking that -and this last
year they were number one. Now I made the mistake of –
truth in advertising I work with this company, I help them. They – I went down, I was in São
Paulo the day before the World Cup started and if you saw some
of the TV images, I don’t know if you saw how scary it was. The day I left, six hours before
my departure the police went on strike. Now Brazil already has issues
with crime when the police say publicly “we’re just not even
going to be there, don’t bother calling” I was pretty nervous
on the way to the airport. [laughs] I made it. So this year the Brazilian
government instituted a new award. It was to do what some people
refer to – to counter what’s called the Steve Jobs effect,
which is that you can always have a charismatic leader, good
to grade called them level four leaders – who through shear
force of personality and genius build their companies up, but
then you got to worry about what happens when they
leave the scene or get hit by a
truck or whatever. So the Brazilian government did
not want to be encouraging the Steve Jobs effect, just have one
single genius, you know whipping a whole company into line –
doesn’t really help the world. So – in the long run – so they
instituted another award which came out and was given in April
of this year for the first time, for the best managed
for innovation. So now they have one for
innovation and then best managed for innovation – best
innovation management. And guess who won that?
Brasilata – two-time winner and look at their – they won both
prizes this year, which basically means the CEO and the
entire management team could get run over by a truck and
the company would keep being innovative. To me that’s a much more
profound type of success. Do I have, Cindy, a copy of the
ideas sheet and do they? Do you all have – you should
find somewhere in your packet a sheet of ideas do you see it? Front? No, it’s an actual sheet
of the Clarion ideas. Alright, so let me riff for a
second while we find the sheet. The Clarion Hotel is the
two-time winner of the Swedish national prize for
best idea system, which is quite competitive. This particular hotel if you
want bottom-line results – by the way Boardroom when they
track its productivity, relative to the rest of the industry,
Boardroom’s sales per employee, which are it’s chosen method
of measuring productivity, is 7 times the industry average. Not 7% more, seven times. They’re in a totally
different space. Clarion Hotel, this hotel has
the highest revenue per square foot of any hotel
in Scandinavia. It also has one of the
best idea systems. Milliken you’ve probably all
heard of from South Carolina. Whenever I find – well not
whenever – but often when I find good idea systems around the
United States somebody from Milliken was involved, because a
lot of the best managers in US industry got their training
under this amazing man Roger Milliken who was a huge
proponent of these ideas systems. How we doing on the idea sheets?>>Cindy Clark:
They’re on the way.>>Dr. Robinson: Okay,
so I will move on. I was going to show you an
example of some ideas. Let’s talk about
lean for a second. Just as a point of information:
how many of you in your companies or in your hospital or
wherever you are doing lean? A few of you. Where do you work? Yeah.>>[Audience member]:
[indistinct]>>Dr. Robinson: Okay and
so you’re a manufacturer.>>[Audience member]:
Yes we are.>>Dr. Robinson: Okay,
there’s another hand over here. Yes?>>[Audience member]:
[indistinct]>>Dr. Robinson: Okay, okay so
we have a few manufactures here doing it. Lean is a – let me talk about
lean just for a second, because now it’s I’d say, the primary
place it’s being used is in healthcare in the United States. Starting in education as well
and people say “but I thought it was just about
making things.” This is Toyota’s current
definition of lean. Lean in its modern form
was pioneered at Toyota. The modern form of lean
is basically in-out. It’s a slight abstraction of the
Toyota production system. So if you go to Toyota right
now, this is how they define lean: you’re doing lean –
when your employees are problem-solving and generating
and implementing ideas that further the organization’s
strategic goals, on a daily basis, and as a matter of the
organization’s culture and the way it operates. I don’t see cars in there, I
don’t see manufacturing in there. What Toyota is saying to you and
it’s actually if you put it – if I was to tele-transport us to
Toyota or bring the CEO here he would say that bottom-up idea
is what – is the essence of the Toyota management system. So I go, I say to a – I help a
lot of organizations with lean. I was years ago – I was what she
was referring to was, I was one of the first Americans to go to
Japan – mid 1980s – and I studied about 40 Japanese
companies at the time and there were like six of us there
and now there is only two of us left. So I remember those early days
and I hooked up with a man called Shigeo Shingo, who I just
mentioned to you, who was the brains behind Toyota production
system at Toyota, and I can tell you this is changed a little bit
over time, but when I was there the consistent slogan at Toyota
– they used to talk about industrial engineering to mean
improvement out on the manufacturing floor. So it’s a pun: “IE, UE,
Everybody E”. That’s the slogan. And what Toyota is really trying
to say with this is that it – lean really means that – I work,
I go in, I’m asked to help a lot of companies with lean – I used
to work for the Shingo prizes. First thing I’d ask for: let’s
see how you’re doing with your bottom-up ideas. If you’re not doing that,
you’re not doing lean. Period. Here’s what happened at Toyota:
in 1951, Toyota executives took a trip, a famous trip to Detroit
and they went to Ford and the one takeaway they got from Ford
in 1951 was that Ford had a good idea system and
they thought, “Wow! This is great! We never thought of that.” So in 1951 they founded their
idea system at Toyota and it wasn’t for another 10 years
almost before all the lean tools which is what I find companies
in this country focusing on a lot – you know, are you doing
Five S and Set Up Reduction and PDCA’s and A3’s – that
all came along later. This is the hard part and
it’s the essence of it. So the definition of continuous
improvement is not that you have a department of a few people
working on improvement projects, it’s that everybody’s doing
it all the time, and here is something very important:
tied to your organization’s strategic goals. Let me just spend as short
a time I can – as I can on innovation, cause I just want
to show you that this is really true of innovation as well, but
than get out quickly and continue with the
improvement side. So, when people are creative in
companies or organizations, this applies to not-for-profits,
government as well, they – the creative acts are either
improvements or innovations. So we haven’t really had any
examples of improvement yet. I’ll give you one from NASA. Does anybody know why the first
space shuttle that flew was white and – no I’m sorry,
the tanks were white? The big liquid fuel tanks were
white and the next – all the ones after that, they were red? Do you know the answer to that? Easier to find? Could be! Yes sir.>>Man: [indistinct]>>Dr. Robinson: You got it!
Front-line idea weight savings. So NASA – not surprisingly
because they’re a high-performance organization –
has an idea system. They actually have
a pretty good one. One of the best ones in the
federal government that I’m aware of, and what happened was,
after that first space shuttle – they – if you remember when
it was landing, it was a big national moment, they realized
that the space shuttle didn’t have as much payload, they could
pretty much take two astronauts, carry-on bag,
toothbrush, that was it. They needed to reduce the weight
of the equipment so they could increase the payload and the
call went out to the NASA idea system among other improvement
sources – find – give us any ideas you have to save weight. The two people whose job it was
to paint those two red tanks with 600 gallons – 3,600 pounds
– of white paint just so they would look cool on TV,
said, “Why don’t we not paint them white?” The red is their
nature metal color. So it was for weight savings. Classic improvement. They were still blasting
this thing off. They still had the fuel tanks,
but they changed the way they did something. Innovation, on the other hand,
is when you do something totally different than anything
you’ve ever done before. So I – years ago I worked for
the Federal Reserve Bank and they wanted some help with their
Innovations Program and I asked to receive a list of the years’
previous innovations that had come through this program, and I
kid you not, the very first one it said – this was an approved
innovation: “buy paperclips from Office Depot instead
of Staples.” And the reason it was in an
innovation was because the group had defined innovation as
anything that saved more than $400,000 or generated
$400,000 in revenue. So, the Federal Reserve Bank is
full of lots of people who push paper, they need a
lot of paperclips. When you add up how many
paperclips they use in a year and you switch to get them
cheaper, that’s an innovation by their definition but that’s
pretty unsatisfactory isn’t it? It’s not what we mean
by an innovation. So an innovation means doing
something totally different than you ever did before. So now let me jump – I’ve been
talking about improvement – I’m going to jump right to big
earth-shattering innovations and the assertion is that most
creative acts – improvement and innovation – are a complete
surprise to management. I’m hoping that idea sheet come
so I can actually – that was going to be my illustration to
you, but let me just tell you a study that was done by my friend
Sam Stern, a number of years ago in Japan. He was sitting in his office in
Oregon state and he got a call from the Japanese government and
they said you know we always thought of the Japanese as
copycats the Japanese themselves thought of themselves as
copycats, could you please come over to Japan and spend three
years on a well-funded study to tell us – to understand how
creativity occurs in Japanese companies and tell us what
we can do to make more of it happen? So Sam said sure. He uprooted his family. They all went over there, and he
had a staff of like 15 people in a budget of $3 to 5 million. Don’t remember the exact
amount, but it was a big study. He had access to any Japanese
company he wanted except for some reclusive,
privately held ones. So he asked – he didn’t know how
creativity occurred in Japanese companies, but he’s – you’ll see
– he’s a very smart researcher. He asks the right questions. He said, “Are there any filters
in your country for new products and services that assess their
creativity and innovativeness?” Like in this country, we have
the Medal of Technology; we have the Fortune Christmas List; we
have the Economist Technology Quarterly; we have the
Inventor’s Hall of Fame. If you want to know what’s cool
this year you can go look at those places. In Japan, there were four
organizations, I have put 2 here: one was part of the
government, one was a quasi- governmental organization, that
every year gave awards to new business products and services
for their innovativeness and their creativity. Sam asked for a list of
the previous five years’ award-winners. He wanted a database of these
innovations and these occurred in everything from mining and
railways through to finance. He got 250 award-winning
innovations. Just so you see the size of
these things, one of them for example was the Tamagotchi doll,
anyone know Tamagotchi? What is Tamagotchi? Yes. What is it? Yes.>>[Audience member]:
[indistinct]>>Dr. Robinson: Feed it! You got it. I had – it’s a – yes it’s a pet,
and I had 2 – basically it preys upon the maternal instincts of
preteenage girls, as far as I can figure out, [laughter] and I
had 2 girls at that age when it came out – wrecked my life – I’m
actually a Tamagotchi hacker because the early ones died
after eight hours and it’s like having a pet and my daughters
would put it to bed, change it’s diapers, feed it vitamins, Big
Macs; they had pedometers in them so you had to walk them 5
km or they could get obese. They were amazingly – you know,
it’s like a little kid, but they would die while the kids were
asleep, so the parents all had to stay up and feed them Big
Macs [laughter] or you’d have distress the next day. So that was one of these
multibillion-dollar innovations, Sam it was – his job was to
study how these happen. He went – he sent his team out
and for the first time that I’m aware of he got – in history –
he got great data on a broad-based selection
of innovations. So, his people went out and
interviewed not just the person who thought of Tamagotchi but
his colleagues, his family, his boss, the product development
department, engineering, marketing, R&D, and they really
put together an exact timeline, with details of how these
innovations occurred. Now, Sam wasn’t looking for this
but when the answer to that question – find out how these
happen – came back, as it says here, the majority of them he
noticed had originated on the front lines, most of
these were bottom-up. This is what made
his study famous. It gets more subversive
as it goes along. He put together a panel of
six vice presidents of large Japanese companies, the head of
R&D for Toshiba, the head of operations for Cannon were on
this panel – I forget the other four – and he said – we got
to notice he’s asking the questions, they produce the
answers – would you please spend – I think he paid them $5000
for two weeks work. They sat together in a room, and
they assessed the novelty and the impact of each of these
innovations and when they came back, according to a schedule
Sam had – the novelty and impact of the bottom-up projects was
far bigger than the novelty and impact of the top-down projects. The really new stuff
was bottom-up. This is the really subversive
part [laughs] and it kind of gets almost hard to accept after
a while, but Sam had – remember he had this list of 250
award-winning projects – he went back to the companies where each
of those occurred and he asked them for another new product or
service that they’ve introduced into the market around the same
time as the highly-innovative one, but – and that
was successful or what did he call it? commercially successful, yeah,
but that the company wouldn’t consider to be
particularly creative. Most new products are
just line extensions. I’ve worked for quite a few
consumer-products companies and they’ll say, “Crest toothpaste”,
they’ll put a little more red in the “t” on the Crest and
that’s an innovation, right? Because it just changes
it enough to counter to something new. That’s not what we’re talking
about here – I mean, that’s what we’re talking about here. So, highly innovative ones, and
then new products and services which came around the
same time but weren’t particularly creative. He’s trying to control for
everything but the creativity in those two lists. So, he got this list and when he
compared them, here’s the sort of gut-wrenching finding, that
the highly creative projects were much more likely to have
been bottom-up – come from the front lines – the boring, safe
ones were much more likely to come from management. So that’s the pyramid picture
across-the-board. Now I want to just spend two
minutes explaining why this is the case, because at the moment
I’ve just come out and said, “there’s this big pyramid and
pay attention to your people,” but I want to tell you why and
there’s actually a number of reasons why, they’re sort of all
spelled out in the book, let me just pick one for now. Who can define for me
the meaning of the word “serendipity”? Anybody want to pop off? What does serendipity mean? Yes.>>[Audience member]:
[indistinct]>>Dr. Robinson: “Finding
something by mistake or falling upon it.” I will give you
30% for that answer. You said what? A “positive mistake”
actually could be bad. Hitler had some serendipity. So I’m sticking at 30%. Go ahead. I’m going to go up to
40 for that. Maybe 45 – I’ll give you 45,
I’m in a good mood. Yes. Sticking at 45. Now let me up the ante for you. Serendipity is actually a
technical term in creativity. It was coined by a historian of
science in the mid-1800s to try to create a word, which did not
exist before, for how humans discovered things. So in the creativity community
it is axiomatic that every time you are creative – a hundred
percent of the time whether you know it or not, it began
with serendipity. So look where we are. I’ve asked you to define the
essence of your own personal creativity and you
couldn’t do it. Right? So it’s very interesting I’m
not trying to be nasty. I’m trying to show you
what potential there is in this stuff. So here’s what serendipity
means: it’s when a fortunate accident, and that does not mean
cutting off your hands like an accident would mean in the real
world – it means a chance happening – happens to a person
who appreciates the meaning of that accident and – I should’ve
started with something else – parentheses, you are creative –
the fundamental definition of creativity is – you’re creative
when you make a connection between something that nobody
saw a connection between before – that’s the fundamental
definition, so bear that in mind. Chance happening, accident
happens to somebody who appreciates the meaning of it,
puts two and two together, takes action and something creative
happens as a result, that’s the full definition of serendipity. I was just in Australia,
actually last week, and I wanted – I’ll show you an example
that’s probably the – one of the best-known in Australian
business. It has to do with a man called
Lang Hancock, don’t know if any of you have heard of this guy,
but he was the second-richest man in the world when he died 10
or 12 years ago and every time I go down there I check the
tabloids because when he died, just like the founder of DHL,
the German express company, something like 70+ women came
forward and said he’s my husband and he had not been telling the
other 69 about them, you know? So he had left this trail of
destruction around the world, and he was worth an
incredible amount of money. Lang Hancock was a mailman. He drove one of these little
trucks like what we saw now just coming in – flashing – in
Australia, he delivered mail, [laughs] except in Australia
things are on a bit bigger scale, so actually if I could
just pretend over here. I’m going to pretend this blue
part here is a map of Australia. He lived down here in Perth. He ran a little single-engine
plane for the Postal Service up and down the coast and he would
pick up and drop off mail at these remote stations and towns. This area is known for flash
storms and one day when he was – he took off, flash storm
enveloped him and he was pushed into this part of Australia
here, which is known as the Pilbara, and the Pilbara, as
you’ve all seen it because it’s where a lot of the world’s
Westerns are now filmed. It turns out you can’t really
film Westerns in Arizona anymore because it’s hard to like, you
know, frame a shot without McDonald’s in it somewhere, so
it’s just rugged, mountainous, hostile terrain, great for
cowboy movies and – but very remote, and very hostile. He knew that if he crashed he
would not get out alive because there’s no water, lots of
venomous snakes and aborigines there that really didn’t like
-appreciate him being there. So he was getting nervous. He was getting down in the
mountain passes, circling, trying to stay up and all of a
sudden, as he put it, “the Sun came out over my left shoulder”
and he looked and there was a glint on the mountaintop when he
looked and – if I go to the same map – as a kid, he grew up
in Brisbane on the side of Australia – the blue part is
Australia – he worked two summers in an iron mine and
as he put it, “I recognized instantly that mountain
was almost pure iron.” He went back to Perth on this
copy of the map, back there, he went into the state of Western
Australia’s offices and he said, “Who owns that land?” ignoring the fact that the
Aborigines had been there for 30,000 years, they said,
“nobody,” and he bought it – somebody counted the number once
– like two cents an acre and within three years he controlled
50% of the world’s iron reserves. That’s classic serendipity
something from the environment that you recognize the meaning
of it, you put two and two together and you make it happen. That’s a word and there’s
actually an extremist at the University of Chicago who just
wrote a book, which I disagree with, that says the reason why
the Anglo-cultures have led the world – been the innovation
engine for the world – is because we had a word
for it and they didn’t. That word does not exist in
other languages, but my experience is that most people
who speak English don’t know the word, witness what
we just did, right? So, how’s that really helped? I don’t know. But here’s the insight for us
here: in order to have that accident like he did, he had to
be out delivering the mail. It was not his boss sitting back
on his 10th story office looking at whiteboards charts of
aggregate numbers that was going to have that accident, right? So as the head of 3M put it: in
order to stumble you have to be moving, meaning that your
front-line people are the ones out doing the work. They’re going to have the
accidents, which – since those are what lead to creative
outcomes, you just put them – they’re in a position of
advantage over you. Okay, so that’s one reason why
but no matter what slice you take, you as managers are not
the people who are going to be thinking of most of the ideas to
move your organization forward. It’s kind of hard to accept, but
then I’m going to show you where you really – in a second. Curtis Carlson runs the SRI
International which is a large Silicon Valley research and
development company, has more Nobel Prize winners working for
it than any other institution on earth and he wrote this, it’s
called Carlson’s Law: top-down innovation is orderly but dumb,
bottom-up innovation is chaotic but smart. So are those idea
sheets headed our way? Can you start handing them out? I want to give you
this feel in a second. So at some level you let control
go, but at another level you get much tighter control. So as soon as those sheets are
out, we’ll go through them. Here’s my goal for you: that
from today – what are we at? November 20, 2014? So you have until November 20,
2015 to – if you – and the keyword on this slide, by the
way, is “learn” – you have to understand people have been
studying creativity for 2500 years – for the little attention
it’s paid to it in MBA programs and business programs and even
in companies, it’s the oldest business discipline there is. It was around way before
accounting, way before marketing, way before finance. Plato wrote about it. Leonardo da Vinci
wrote gobs about it. So there’s a lot to know. So you need to – with your
people – say “I want to learn this stuff, because it can make
an enormous difference to our future,” and learn how to set up
and run one of those idea systems and within a year from
now, no reason why any of you – thank you – cannot be at 12
implemented ideas per person per year, one per month. Now I should say something else,
those systems, these are not suggestion box systems. They are a totally
different process. I’m going to try to get to
it by the end of today. It’s in the book, so I don’t
have to worry too much, but these are not
suggestion box systems. Now, most companies today
do not use actual boxes on the wall anymore. They use online boxes, meaning
that you have a website, click on it – if you’re big enough –
click on it and enter your idea and problem and what it solves
and how much it will cost and make your case and click submit. That’s an online suggestion box
and as my teacher Shingo used to say: if you take a bad process
and automate it, you just generate a lot more
grief more quickly. So – a small aside: how old
are suggestion boxes? When were they first
used in business? Any of you who gets
this gets a buck. Anybody want to take a guess? I give you three guesses. What makes you say 1780? What was going on then? Okay, Industrial Revolution
and world revolution? Okay, French Revolution,
American Revolution – a lot of stuff changing, could’ve
been but wasn’t. Any other guesses? If you don’t know it,
it will surprise you. The first industrial suggestion
box was used in 1331 in medieval Venice in the
shipbuilding industry. So when your person comes to
you and says can we set up this online suggestion box, just bear
in mind you’re – I don’t know how often you do this in
business, you say, “I don’t want to do what people do today. I want to reach back seven
centuries like Da Vinci Code and use what they used to do in
medieval Venice because that’s what’s going to work for us.” So these are not suggestion
boxes – my point – totally different process. Okay, in the interest of time,
when – do any of you have any questions about anything
that I’ve said? This is a chance for you to kind
of discuss things but since our time is a little constrained. Just – do any of you have any
questions based on what you’ve seen or not seen? Yes?>>[Audience member]: How do you
get over the kind of limitation that everybody thinks that these
kind of tools: the lean or the Six Sigma or this idea thing, is
only for manufacturers, it’s not for any industry?>>{Audience member]: Can you
repeat the question?>>Dr. Robinson: Oh, how do I
get over the perception – the question was – that these
kinds of tools are only for manufacturing and not for – ? I just tend to show people
companies that are service companies – hotels – you’re
about to look at a hotel that apply these principles and make
more money than anybody else could dream of in that industry. So lean is and I don’t even
think many manufactures do lean that well. It has in this country just
sort of degenerated into a bureaucratic, you know, events,
form – you fill out the form my way or it’s not right. Lean in its original form and
the way it’s practiced at leading companies
is bottom up ideas. Just: I’ll tell you where we’re
going as managers and I set in place the systems and policies,
which we’ll talk about, so that I can hear your ideas to move
us towards those goals. I don’t see that anything is
unique about manufacturing. I mean hospitals need it, the
post office, airlines do it: Singapore Airlines has one
of the best idea systems in the world. Let’s talk about Singapore
Airlines [laughs] not flying them – sadly tonight –
anyone ever flown on Singapore Airlines? Did you hate it? Terrible! He’s saying terrible –
I’m just kidding. He loves it! So, just tell you a quick fact
about Singapore Airlines: there – Singapore Airlines has
never lost money. It’s a very – it’s a
profit machine. Because of all the ideas they
get from their people they are very innovative. They have – they define luxury
in the air and they’re amazing, but you may not know that their
seat mile costs are lower than Southwest Airlines – huh! – and I talk to executives from,
you know, US Airways and United and I say, “Look at
Singapore Airlines!” “Oh, it could never
happen here!” They just accept that mediocrity
and all Singapore Airlines is doing is applying this! Their flight attendants can tell
them stuff that gets them ahead of the other airlines but
collectively not all in one big chunk. So do we have our Clarion? Yes?>>[Audience member]:
[indistinct]>>Dr. Robinson: Okay I was
almost going to say that’s a suggestion box – anytime you use
words like: evaluate, submit, suggest, reject, you’re in the
suggestion box world and this is not that world. Can I come back to that when
I talk about the process? I will not forget you but
yes there is some training involved in this. Let’s quickly look at
one of these sheets, this is from the Clarion. Did y’all get this sheet? Still missing some sheets. On this side. So we’ll carry on until
we get the sheets. Okay the first thing that the
– I think it’s up this side. Can you hold up your hand
if you don’t have a sheet? 4 people, 5 people, 6
people, 7 people. So, the first thing is that
-actually now that we’ve got – you have enough for them? Okay let’s just start. So,
this is just one sample. I actually went to the Clarion. I’m going to be there
again in four weeks. It’s one of the places I check
in on from time to time, and in 2011, I asked which area in this
hotel and, by the way, or do any of you run Clarion Hotels? Are involved here? With Clarion? Okay good so I can say
what I’m going to say. In this country the Clarion
Hotel is kind of a low-end brand, right? You say should I go to Super 8
or the airport hotel or, you know, Motel 6 or sleep
on a park bench? I’m going to go to
Clarion with my family. I’m a cheapskate, so I’m in
Clarions a lot over here. Over there Nordic Choice – this
hotel is owned by the richest man in Scandinavia and that was
one of the themes we never wrote this in the book but I found
myself, as I did all the research for this book, meeting
some of the richest people in the world. This is their business model! So, this – Clarion Hotels –
it’s a self-made guy, started out with nothing. He now owns 180 luxury
hotels in Scandinavia. This is a $400-$500 a night type
hotel and we asked to meet the – in this particular hotel out of
180, is about 37 stories. It has 2 conference centers and
4 restaurants, and 2 bars – big operation. We asked to – we picked one area
– the bar – and we asked to review all their ideas from a
particular month as a kind of an audit and so for two days we
were talking to bartenders and following them around,
watching, their ideas. What you have in front of you
is 1 month’s production. I think it was from
October of 2011. They actually implemented
four sheets of ideas. I electronically snipped this
off and that’s what you have in front of you, just as it
was handed to me. So let’s just look at
a couple of these. Marco said, you know, every hour
we build up – it’s a very busy bar, from 8 in the morning till
2 in the morning, we build up all these recyclables, these
bottles and cans and tetra paks and once an hour one of us has –
one of the three bartenders on duty has to pick up this hamper,
go out the side doors, down into the basement and sort them into
the three streams, into the dumpsters, and he said it’s
miserable work and it takes a lot of our time and one day I
was down there and I realize, “Oh my goodness! I’m right underneath the bar! Why not have maintenance drill
three holes in the floor of the bar so we can just pour
the drink and drop it in the right pipeline?” Now you might say, “Oh,
that’s a small idea.” And on one level it was, but it
saved 7 minutes every hour, 16 hours a day or 18 hours
a day, 7 days a week, 52 weeks a year forever. If you present value that you’re
going to get a rather big number, but as this group of
bartenders told us when you take a bartender out of the bar as
busy as ours is, you can actually watch sales going down. So, this is a big idea but
who’s going to think of it? Do you really think the managing
director on the 34th floor, which is where his office was,
is going to say, “Oh we should drill holes in the
floor of the bar”? You have to actually
be there, right? My favorite one is Marin, three
up from the bottom on this sheet: “Put an extra beer tap
in the bar so that we can sell more beer”! I’m the managing director of the
hotel, reviewing my numbers from the bar the night before. Do I have any idea that I
haven’t given these people the right tools so they can pull
beer at the rate customers want to buy it? Now, please do not be
impressed with this one sheet. This would happen at one of
those 1-percenter companies, I’m using it in the other
sense, over time. They would slowly improve, but
if I had – this all happened in one month, this was about a
week’s production – I should’ve left the column in that showed
the date when it was proposed and done, and it usually
is between 7 to 10 days. Okay? So this is just very
rapidfire improvement. They’re just headed up
this improvement curve. Don’t be impressed with this
sheet, be impressed with a company that has across 180
hotels got every department meeting every week to make
these kinds of improvements. Okay and notice another thing:
this is a litany, the other side is from a supermarket chain. This is a litany of things that
management sees – management doesn’t see – but that
the workers do see. That’s what I was trying
to communicate to you. They just ask, “How on earth
is a manager going to see that stuff?” Right? And the answer is: this is where
most of your action is, in all this little stuff – fixing. So I want to, now sort of give
you the principles of the system then I’ll quickly get to the
process as far as I can. First point is: you explicitly
as business owners say to your people we’re not trying to do
the next Apollo moonshot or come up with, Tamagotchi, we want
you on a daily basis to notice things in your work area and to
think of all the small ideas. We value small ideas and, in
fact, I’m going to make a case to you that small ideas are
actually more valuable to you than big ideas, which
is kind of strange. So why do – if we put the CEO
of Toyota here or the CEO of Singapore Airlines – why would
they say, “I want my people thinking small ideas?” First, you cannot get that good
at whatever it is you do unless you’re capable of paying
attention to detail. Hotels – I can tell – I just
wrote a blog entry on this – within 15 minutes whether or not
the hotel I’m staying at has an idea system, because if it
doesn’t, there’s just a lot of stuff missing and this – if you
think about a hotel which misses this stuff, this is what
management doesn’t see, and if it’s a top-down organization all
this stuff is still going to be missing in all departments. So you’re just to hit a wall and
you’re always going to be, you know, much less than you could
be if you’re not capable of paying attention to
small daily ideas. That’s sort of obvious. Second point: these small ideas
– if you can tap people’s expectations in both management
and employees, the small ideas are much easier to implement. You can implement these
in a week, right? Milliken, right down the road
here, used to have a 24/72 policy. We would acknowledge any idea
within 24 hours, act on it within 72 hours. We were very, very fast. A lot of people around the world
copied that particular policy. So they’re much easier to do. They’re much lower risk if these
ideas – if you put an extra beer tap in the bar and
it’s a bad idea? Just take the beer tap out with
the next idea meeting, [laughs] right? They’re easy to fix. You’re not taking big risks but
the big reason here is on the bottom and this is one that I
hope you take to heart: every company that runs one of these
ideas systems – by the way, Big Y is a family run business,
both of these are. They’re just bigger. The – unlike major innovations –
which your competitors can see those – they will copy them or
counter them in some way – these small ideas are just not
visible to your competition. There’s no way that the Ritz
Carlton is going to find out about these ideas unless they
send people in to physically steal them, right? Because, you know, if the
Clarion puts a new infinity swimming pool on the roof the
Ritz-Carlton will hear about it – but the Ritz-Carlton, by the
way, also has a good idea system – but if it’s just this little
stuff, you know, “put an extra beer tap in the bar”, who
is going to notice that? And even if they did come and
steal these ideas, right? – “get maintenance to drill
three holes in the floor behind the bar” – Ritz-Carlton finds
out about this, so the bar is on the roof in the
Ritz-Carlton in Boston. So are they supposed to
drill three holes in our bar on the roof? How can we apply that idea here? Most of these ideas are so deep
down in your processes in your building, in your equipment,
your culture that even if you did just hand them
to your competitors they couldn’t copy them. So this is an old innovation,
but you need big ideas to stay in the game, but it’s the little
ideas that put you ahead. Right? So in many ways this is what’s
giving you your sustainable competitive event. This is what’s making the
Clarion so profitable because anything it does that’s visible
the other hotels can do it too. So that’s the first point:
go after small ideas. Another point: maybe I don’t –
how many of your companies have more than say 60 people in them? Few of you. Okay. Let me make this point quickly
then: once you get past a certain size, 50-60 people, you
run into a problem that an idea that happened in one place might
be useful someplace else, right? and yet you’re too big so
it doesn’t naturally get from here to there. Jack Welsh used to say that
he spent half of his time at General Electric moving ideas
from one unit or department to another until they had
a replication system. So let me tell you this story: I
only did this experiment once. I’ll never be able to do it
again in my life, probably! [laughs] But this one happened
at a company called Idemitsu, which is Japan’s largest
energy services company. It’s like a Exxon/Mobil and
maybe an ethical version of Enron combined and last year –
for many years – they were top again – Japan ranks its ideas
systems – they had 200 implemented ideas per person. This is a fantastically
profitable company. So one of the ideas about 8
years ago was this one and I’ll just sort of work it with you. It was a secretary in the
headquarters building. Her office actually – I was in
it – looks down on the Imperial Palace, so she can look and see
what the royals are doing, and she had been tasked every
month – these kaizen reports, continuous improvement reports
would come in – and she was supposed to fax them
to various branches. So before, as it says here,
she had just been doing this whenever these branches got to
her – I’m sorry, whenever these reports got to her. She realized that in Japan
the rates go down between midnight and 6. So why not program her machine
to scan them and then send them at 12:01 AM and she calculated,
as you can see, the cost savings was $320 per year. At American Airlines, they
have an official $500 cut off for ideas. I come up with an idea for $499
savings or something that’ll bring in $499 in revenue. The “submit” button on their
online suggestion box will say, you know, “It’s grade up. It won’t work. They don’t want to hear it.” As my daughters used to say,
“Talk to the hand Dad, because the face does not
want to hear it!” I worked for the Utility in the
New York area which had a – a $10,000 cut off for ideas. I come up with – I’m a linesman. I come up with something,
save my company $9000. Talk to the hand. Why is that just stupid? Because let me tell you what
happened to this idea after she put it in. Idemitsu’s form has another
column in it and it says, “Can this idea be used
elsewhere in the company?” and she thought, “Oh, faxing
stuff – nonurgent – people aren’t holding their
breath for these things. Sure. I – and she put “yes”. It can be used elsewhere. So it went into what’s called a
replication process where it was – somebody looked at it and
said, “Who needs to know this?” and about 9 months after that I
came across this idea – picked it randomly – and I asked
Idemitsu’s Kaizin Department could they go out and find out
how many times that idea had been used and what it’s actual
overall cost savings were to the company and when they came back
to me it turned out it had been used in hundreds of places
and it had saved $85,000. So never take an
idea at face value. You might think that this one
with the drilling the three holes in the floor – it might
appear small, but if you use it everywhere it can be used and
you really appropriately cost it out it can have enormous
impact on your organization. So if you – once you get past a
certain size your people need help to find out ideas that
have happened elsewhere. Next point: in every one of
those companies, in some way, they’ve changed the fundamental
value proposition of traditional companies. Traditionally – and this goes
back – there’s a long history to this – goes back to before
Fredrick Taylor although he was the voice of it – workers –
“Managers Think, Workers Do,” the old top-down and so in that
world you want – how you valued an employee was: did
they show up at 9? Did they leave at 5? Did they do a good job? If so we love you. Now we love people like that,
but we love you even more if you’ve actively participate in
giving in ideas and implementing ideas and talking about ideas. We’ll talk about
evaluation in a second. So we don’t just
look at your 9-to-5. We look at your 9-to-5 plus
the ideas you’ve given us to improve, that’s the new space. I’ve never – I’ve worked with
hundreds of companies in putting these systems into place and
I’ve never had any real trouble from front-line workers. Your front-line workers, if you
don’t already do this, they’ll be nervous for a month or two
until they realize it’s a sincere effort and that
it’s a win-win but they’re never the problem. I’ve been hired by unions to
help persuade management that if management listened to the
unions they would actually make more money. They’re not the problem. The real difficulty and the
reason why you don’t see these systems a lot of companies doing
very serious bottom-up work, is – yet – is that it’s
really about a management transformation. The hard part of this is on
management and I can’t tell you the number of companies I get
asked to help who say, “Oh, our workers aren’t very creative! Go and beat up on them and
make them have more ideas!” and they’re not the problem. It’s a management issue. So this being a management
transformation – when I talked with Jay Reardon, at Hickory
Chair, he said, now, he didn’t do this very well, but he just
told his managers, as in a very top-down industry – furniture’s
very top-down – he said, “You must start listening to
your people as of now. Mr. Oba says you have to do it. As of now, if I find out any of
you not doing, you know, you’re in trouble.” He lost 78% of his – all his
management ranks between supervisor and upper management. 78% of them left or had to be
asked to leave, because they couldn’t handle the change. So that doesn’t mean 78% of your
managers will leave in your case, because what Jay Reardon
missed was what you were alluding to: that
they need training. They need coaching. Most managers can make this
transition, but they need time and they need to be shown that
this is a much better way to manage, much more effective and
when they go get a job someplace else these skills are highly
valued, but you don’t just slam it into place as Jay had
to do in his emergency. So in this new world, and I’m
choosing these words very carefully, you evaluate your
managers – your managers – their value to you is primarily how
good are they at getting ideas from the people
who work for them? That’s where – that’s the
first thing you look at. After that, you look at
a manager’s 9-to-5. Are you meeting your budget? Are you making production? All that routine stuff which
should be a given today. So the first thing is: how
good are you at getting ideas? This is a graph from Siemens,
the German engineering company. Hope you can read
– says 15 there. They have a corporate goal of 15
ideas per person per year and every month the CEO gets this
graph and the only thing I’ve done is beneath each of these
bars there’s a name of a person like a – these are – Siemens
has 98 operating units, 380,000 people. So these are like
3-4,000 people. These are vice presidents, each
one has a bar and it might say this bar would be Siemens
Ultrasound in California, Siemens Korea, blah, blah, blah,
and instantly, in a kind of Pareto chart, the CEO can see,
“Wow, you know, these guys are all doing their job!” and as his assistant stage
whispered to us as we left this man’s office he said, “By the
way, you really don’t want to be one of those vice presidents
it seems anymore!” [laughs] Why? Because as they’ll tell you,
this is their language not mine, ideas are the way you get
competitive advantage and competitive advantage, if I – my
managers should be – their job should be to create that, if
they create it, that’s what’s going show up in my
results tomorrow. So short version, the height of
that bar is the best leading indicator I know of, of the
future performance of that unit. So if you’re managing by leading
indicators these people are making the numbers now but
they’re not going to be doing as well as they could
a year from now. These people are really
building something for you. So let me quickly in 12 minutes,
because I want to make sure I get to some other stuff,
describe to you one process, the most popular, high-performance
idea process in the world right now. It’s an idea board process and
for those members who got books, this is explained in detail
in Chapter 5 of your book. There are 3 archetypal idea
processes that you see if you go out around the world. This is one of them. The reason it’s the most popular
one in my opinion – I’d say 85% of companies use this – is that
it – with the other two, you really need to have a great
culture, a great innovative and creative culture before you can
make these processes work. This one you can start with a
horrible culture and use it to build an innovative culture. So most organizations
start that way. Here’s the way it works: every –
let’s imagine a company, just for definiteness, that
has 10 departments. Okay, with 5 or 6
people in each. Each department has a whiteboard
and actually the way it’s blown up on that screen, the
whiteboard’s about that size! And the whiteboard is
divided into two parts. Now, this is essentially
Toyota’s process, but if I was to take you to any of those
companies, you’d see slightly different boards but after
watching it for 2 or 3 minutes, listening to people interact
with it, you’d know exactly what’s going on. So this is generified,
but not that much. Usually – so there’s – there’s a
top-half and a bottom-half to this board, and different
things happen in both. In the top part of the board,
usually Peter Drucker said three boxes, I see some companies with
four boxes but each department has a set of areas that
management would like to see an improve in. So let me now jump to a slide –
I’m going to come back to that one. Here’s – remember I said to you
as managers you’re not going – you’re only 20% of the engine
for getting from A to B. Your job is to say – to
determine, with your unique knowledge of the environment
of your company, of all of its capabilities, you know,
where do we want to go? and then to translate that into:
okay, security department – okay, production department –
okay, you know, receptionist – okay, call center – in your
space – everybody’s going to have each – if this was a call
center it would have a different set of three goals
or three areas. I put some generic
placeholders here. If this was the IT department
they might have three other goals, but whatever it is that
we need from you to support those performance metrics,
sounds very like KPI but it’s – key performance indicators – but
it’s implemented a little bit more differently because the
keyword here is actionable – actionable, that you take your
high-level goals and you say to people in this department,
“Here’s what I need from you in the next, you know, year,
to – I want you to improve in this area.” So management sets these goals. During the week – I’ll just use
– I’m going to generify it again because people
do different things. I’ll tell you how I did
it with my MBA office. I used to run – I had a staff of
15 people and I was Associate Dean for our MBA program at
UMass – every week any – what goes in these boxes is: during
the week, your people see problems – and I have to get a –
I’m going to use a Milliken term here – have you heard
of the term OFI before? Coined by Roger Milliken? Anybody know what OFI means? What?>>[Audience member]:
Opportunity for improvement.>>Dr. Robinson: Very good. Opportunity for improvement. Roger Milliken needed a word for
– he didn’t want to use “ideas” and my message to you may
surprise you here and this is a starred message. If you miss this one you will
shoot your idea system in the foot right out of the box, so
make sure you write this down. OFI stands for “opportunity
for improvement.” It’s different from an idea
because an OFI is a problem. It’s a kind of opportunity
for improvement. It’s an opportunity
or it’s an idea. Idea is a particular
kind of OFI. It’s a package. I have a problem. I have a solution. Put those two together,
that’s an idea. You do not want to deal
primarily in ideas at this stage. You want people – whoops –
you want people putting up – so my staff would put up
Post-its during the week. There’d be a problem, an
opportunity, somebody would say something on the phone. Individually they would put
Post-it notes up with things that they’d notice that they
wanted the team to talk about at its weekly meeting. Once a week, we would meet. We would vote. I gave each – different people
do this different ways but – I would give – I had some magic
markers and I would say to each staffer, “Come early to the
meeting, 5-10 minutes early, read all the OFIs and ideas and
pick the two, with two on your honor system, you know, tick box
marks, tick marks, pick the two that you think we
should talk about.” So by the time the meeting
started, we had all these Post-it notes with all these
markers – these marks – and we’d say, “Oh this one got 10 votes,
this one got three votes, this one got no votes.” Pick the one that got the most
votes and then discuss them and figure out what you’re going to
do about them and each person in your team typically has – when
you start out – I recommend one hour of homework time per week
on company time – you now say, instead of working 40 hours a
week, we’re going to work 38 ½ hours a week and half an hour is
going to be for the meeting, one hour’s going to be for the
homework that we do individually and each – during the week, you
probably all run systems like this before – but it would
say, “Alan: go talk to IT about doing this. John: go to facilities. See if we can do that, you know,
research this,” and it would have my name and then the due
date, which would typically be next week. So once you’ve decided what
to work on, it becomes like a project management tool. Now here is the OFI problem:
the OFI – an OFI is a problem opportunity or an idea. If this graph here is meant to
represent – and here is your problem: the same person who
sees a problem, is usually not the person who has the answer to
it, that’s the difficulty with the suggestion box
system, or one of them. So you say to people – if this
is one person’s brain – you would say, “There’s the set of
problems, I Al Robinson see.” There’s the set of
solutions I have. If you say, “Alan, you need to
come with two ideas to next meeting” – not recommended. Then you’re asking me to
strain in this narrow space. I can’t think of two things, but
if you say, “Alan, record problems, opportunities anytime
something is not quite right.” Just put it on the board. Then we come to the board. We have tons of, you know,
people see different kinds of problems, lots of different
circles and then we have lots of different sets of solutions as
well – ideas just pour out. So there was an INSEAD – it’s a
French business school – study a few months ago that said – and I
hadn’t thought of it this way – but the characteristic of the
best idea processes in the world is that individually, people
spot OFIs, problems or opportunities, and then they
bring them to the team and the team, with a well-trained
facilitated, you know, facilitator, works on these
ideas very quickly and quickly comes up with implementation
actions – repeat. That’s a very quick overview
of that idea board process. There’s a lot of
something to it. It took Toyota 50 years to come
up with this [laughs] and they started with the suggestion box
but that’s what you get – that’s how you get – if you just take
that board and work it the way I’ve suggested, you’ll be
through 20 ideas per person per year before you know it and,
here’s the other thing, the reason why 12 is the industry,
sort of, cut off is that once you get past one implemented
idea per-person per month, there’s all kinds of documented
effects, such as your customers will start to feel it, you will
feel it, you’ll see it in your bottom line numbers. If you’re just getting one or
two ideas per person it’s like the corporate picnic, you know,
it’s a nice thing to do but doesn’t really mean
much for business. Once you get your idea rate
up enough and you get your improvement line up to 4-5% from
1 or 2%, that’s when people start to really say, “Oh,
that’s a great company! Singapore Airlines. Great place to fly, you know,
etc.” Now let me do a couple more things before I – I want to
now talk about the bottom three things on here, which
are about escalation. If you have more than 30 people
in your company, you’ll need to think about escalation and
here’s what escalation is: you have all these front-line teams
working with their idea boards, but every so often, sometime,
you know, couple times a month, three times a month, they’ll
have an idea that’s too big for them to implement on their own
authority, so they have to escalate it up and you need to
be explicit what will happen with that idea. So I was just with a medical
products company two days ago in Rhode Island and
they have 40 people. Their escalation process is: we
have five idea boards and then we have the management team. If the idea is too big for any
of these idea boards or they need more authority, more
spending, more cross-function, then it goes up to this weekly
management meeting and they have two weeks to report back on
whether they approve it or disapprove it or need
more information. Very simple escalation process. This is one for a health
insurance company of about 400 people and as you – I just
stole it from them with their permission, stuck
it on this slide. They have 37 idea boards strewn
all over this company of call centers and claims
processing and all this. If an idea is too big for them,
up it goes to the next level of escalation. I’m showing you a 2-level one
here and if it’s too big for them – and they still think it’s
worth paying attention to – up it goes to the next level. I want to make two points about
escalation processes: one of the most brilliant ideas in
escalation, which is typically a very hard area to get if you
have a larger company to get right – it takes a lot of
iterations – was in the U.S. Army. U.S. Army has a low-performing
ideas system I would say. They don’t do terribly well at
listening to regular soldiers – used to do a lot better than
they do today – but they have a policy to counter that, that
says any officer – as it’s escalated up the chain of
command – can approve an idea if it’s within their power to do
so, but only a general officer can reject it. You see what that does? If I’m a captain and I
get an idea and I go, “Nah, I don’t like it!” You know, I know that my major
is going to review my reason for not accepting it. So I better be careful not to be
arbitrary and to be thoughtful when I am addressing a problem
that is brought to me from the frontlines. So that’s one thing you can have
and I found a lot of companies doing that recently, saying,
“Nobody can – nobody except the CEO can reject an idea.” Anybody can decline to approve
it but they have to put their reasons in writing. That’s one thing you see. The next thing is this term:
“completed staff work.” This is key. This is another starred thing
that will make your system sane if you get it right. Completed staff work is a
British Army concept and it means that if I’m the sergeant
and I have an idea to say we need to get a different type of
overhead projector there and I want to go to my captain with
that idea, I don’t just say, “Hey Cap, we need
a new projector.” That’s not completed staff work. Completed Staff Work means I
really laid everything out so that my captain can just get all
information he needs from what I’ve said and just
rubberstamp it and do it. So completed staff work – if we
needed a new LCD projector, would be: here’s why we need it. Here’s the problems we’re having
and I’ve looked at Staples. I’ve looked at three different
places, here’s one that has better light than
the one did before. It’s half the price. It’s $400 plus
shipping, plus tax. Here’s the bottom line. I can have it here by next week
in time for the meeting you’re worried about. That’s completed staff work ,
because then the captain can go, “Oh yeah, sure.” So, the philosophy is: there’s
a lot more people on the front lines than there are officers
in your company, that means managers. So have all of the completed –
all the staff work done down here so the managers
can just rubberstamp. Does that make sense? Okay, are there any
questions to date? I know I’m speeding along here. Do you all think you can do
this in your companies? I hope you see also – it’s a –
it’s a game changer. It really is. Okay so if there’s no more
questions, then next point: you start this beautiful
idea system. You’re really listening
to your frontline people. This is a surprise to most
people [laughs]: after 6 to 9 months at the outside a year –
I’ve never seen it go longer than a year – your people will
start to run out of ideas. They’ll say, “I just can’t
think of anything more. I just, you know, – sorry!” and that’s when you get into
constant continual training in small doses for the rest of your
corporate lives to make them see more things than they
otherwise would see. Chapter 7 in the book
is a primer on that. We had to make some
editorial decisions. We wrote the stuff we would
teach companies – generally finding ourselves teaching
companies – for the first year after they realize they’re
running out of ideas. So there’s a lot of – as I said
– people have been studying creativity for a
long, long time. There’s a lot of things that you
can learn – specific, general ways of thinking, a lot of great
stuff that if you learn it, it will help you see a lot more
problems than you otherwise would see. It’s called problem finding. So you think about, you know,
Sherlock Holmes just as a metaphorical example, you know. He trained himself in how to
smell the difference between 144 types of tobacco, that was a
famous Sherlock Holmes thing. So while all the other
detectives were, you know, watching football games on TV,
he was learning how to smell the difference between 144
different types of tobacco. So now he arrives at a crime
scene and he can smell and he can say, “Oh! That’s a particular type of
tobacco, which is sold only in this store in south London.” Right? He has more information, more
grist for his mill of things to connect. So those types of things are
called idea activators and there are hundreds and hundreds of
those out there where you train your employees in something and
they can see things they never saw before. Some of these just
take one minute to do. I’ll give you one. I was at a insurance company not
so long ago and we trained them for two minutes in some
simple customer service idea activators. This is a la Singapore Airlines. So anytime a customer calls you
and is confused, write it down. That goes on the board because
when your customers are confused, they’re taking
your time to clear it up. They’re also wasting their time
getting frustrated with you. The company I showed you
earlier, which has one of the best idea systems in the
financial services industry in the US, they took that
one step further. This is an insurance
company, remember. Any time somebody calls the
company for any reason they write it down and talk about
it at their idea meetings! [laughs] See how that’s getting
very high-performing, because guess what? Insurance company customers
don’t call them to wish them Merry Christmas and
Happy Thanksgiving! They’re calling them because
the insurance company made them do it, right? So you tell people – whenever
somebody is confused ask why. Whenever somebody
contacts you, ask why. I’ll give you one more: these
are short 30-second things, but you mix it up with longer
training as well. One of the big no-no’s in
innovation is the frequently asked question: FAQ. I hope you have – none of you
have any of those on your websites because think
about what an FAQ is. We know that lots of people are
confused by this thing that we messed up in our systems, but
we’re not going to be bothered to change it. We’re just going to give you a
quick workaround and we’ll maybe get around to it when we do
the next system upgrade. That’s what you’re
saying with an FAQ. Singapore Airlines would not
tolerate that for a second: why are they needing to have
that question answered? Let’s eliminate it, right? So, I think you got the idea. There’s a lot of small things
and big things you can do. Toyota’s – one of Toyota’s
famous ones was: any time it takes you more than 15 seconds
to find something ask why and write it down! [laughs] See I just get better
and better and better! Okay, why are these
systems so rare? I’m going to give you
one take on this. Again this is – for those you
who are getting books – chapter 2, I’m going to talk about and
chapter 3, there’s more detail and more tips and tricks and
tactics than what I’m going to cover now, but here’s the
fundamental insight: you don’t just take an existing company,
that isn’t getting a lot of ideas from its people and just
slap this process on top of it and assume that ideas are
going to start pouring in. The process – you have to get
it right but you don’t have to reinvent the wheel, those are
out there, people know how to run these processes,
that’s 25% of the battle. The rest of it is you’ve got to
change the way – I’m talking about to really get lots of
ideas from your people – you’ve got to change the
way you lead them. You’ve got to change
your leadership style. You’ve got to change the way you
hire managers, the way you select them for promotion, when
you train them and I’ll get into what you hold them accountable
for, just like Siemens did. Now, I’m going to get into that
and a little bit of detail just to show you one facet of things
that idea-driven companies look for that other companies really
don’t pay any attention to. It’s actually extremely
important for this and then I’m just going to skip over that one
but I’ll just tell you – when we teach this in our MBA programs
at UMass, we typically start off with – when we do innovation,
with an exercise. Say this was a MBA class. I would say I want each of you,
by next week, you need to identify somebody who you know
or can get in touch with – might be a brother or sister, mother,
father, aunt, uncle, former colleague, friend, neighbor –
who was responsible for a bottom-up act. They had an idea. They wanted a change in their
organization and they went after it and they got the change
through somehow. Could be small and I want you to
call that person and interview them for half an hour and find
out what their story was. So we come back next week and
we just go around the room. Everybody has two minutes
to tell their story. So she would say, “Oh I
interviewed my brother-in-law and here’s what happened to
him,” and what you get – it’s one of those – from a teacher’s
point of view – it always works, this exercise – by about the
fourth person – what you get is a litany of horror stories! All these people, you know,
managers don’t care, they’re getting rejection, IT department
has no time for them, they go to another person who
says, “Just drop it. You don’t understand.” By about the fifth or sixth
person somebody says, “Why are these companies making
it so difficult? With one hand they say they
want, you know, more ideas from their people, with the other
hand they make it really, really hard with all the policies and
the systems and, you know, the way they do business.” So you’ve got to find out,
ruthlessly, what – and a lot of companies pay a lot of attention
to this – what is getting in the way of people getting ideas done
when they have no power in your organization and you’ve got to
start knocking those out one by one, that’s called realignment. But let’s talk about leadership
just for a second. My favorite management study
of all time was done by a man called Fred Luthans who, now
that Peter Drucker has died I think I would call him the grand
old man of American management. He’s a professor at U of
Nebraska right now. He did this amazing study in
1978, which I think just, holds true today. What he did was – and you could
never do a study like this today anymore [laughs] – he wanted to
study the difference between successful and
effective managers. These are his terms. A successful manager
was somebody who was personally successful. They got promoted quickly. They got big pay raises. They got the company car. They were regarded as,
you know, highfliers. Effective managers were the ones
who ran great units and he said there’s a difference. We sort of all know that from
having – the difference between who gets promoted and who’s
actually effective sometimes. What’s that difference? So he put together – he got
400 managers to be part of this study. They didn’t know what they were
being studied for but he got them in and he divided them into
successful and effective and he put – he got hundreds of
observers to follow these people around for, I think it was, six
weeks and they were just following people
around and tracking how they spent their time. So she for two hours sat at this
lecture and then had four wines afterwards and hit a telephone
pole – whatever she did, right? So we – and now you had 400
diaries for six weeks of how these people spent their time
and it was astonishing that there was an almost – there was
– can you guess what was the difference – I’ll tell you the
fact and then tell me what the difference was – the successful
managers spent on average 90% of their time doing what? If you’ve read the study
please keep quiet. No. Close but – I’m going to rise up
in the organization where am I going to spend 90% of my time? Managing up! Exactly. Networking and managing up,
brown nosing would be the slang for it and the effective
managers – and 10% of their time on their own units – the
effective managers spent – it was almost like 85% of their
time managing their units, 15% managing up, right? So what that study in the
history of management kind of came to symbolize is that we’re
hiring all the wrong people as managers in our
organizations, right? Jim Collins in his bookGood to
Great
, which if you haven’t read it I hope you do, he
basically – he was asked, “Where do you find these magical
selfless level 5 leaders?” and he said way down in the
organization because most organizations aren’t selecting
for those attributes in truth if you look at how
they select people. So I told you I – I want to talk
about Zara for a second because it’s an example – do any
of you know what Zara is? Clothing company, any
particular attributes to it? Fast is what they’re known for. So Zara – I work a fair amount
in the fashion industry – the average – if they say we need a
new jacket, you know, conceive one, design it, have it go
through prototyping and all that – it would be maybe 15 months
before these jackets would be on the stores in the average
fashion operation. Zara is the largest clothing
retailer in the world, 6000 stores around the globe and
they’re a Spanish company. If that’s a map of Spain,
they’re up here in A Coruna and they are a mecca for idea driven
groupies like myself because it’s a – the world’s probably
best idea driven organization right now. Toyota goes there to benchmark. [laughs] Zara can, from the time
they say, “We’d like a new men’s jacket,” They do men’s as well –
to the time it’s in 6000 stores in Australia, Africa, Latin
America, Asia, Russia, everywhere, China – 13
days and you go “wow!” Lady Gaga just did a tour of
Spain this last summer and she opened in Madrid and she had a –
I was just at Zara’s last summer so I heard this story – she
opened in Madrid in this outrageous – she’s always in an
outrageous costume – outrageous costume – within five days Zara
was selling those costumes in its stores. They managed to design them,
copy them, get them into production, into all the stores
in Spain in five days. So it’s a very good company. The man who owns Zara – or now
it’s public so he owns like 60% of it – his name is
Amancio Ortega. He’s the second richest
man in the world. His ex-wife is the ninth richest
woman in the world – ninth richest person in the world I’m
sorry – does prove divorce is expensive and I should tell you
Amancio Ortega is illiterate. He can’t read. His story is amazing. There’s only one – if you wander
inside Zara you see him all the time but – if outside there
is only one known photograph of him. He’s a very secretive guy
outside the company but he was the son of a bus conductor in A
Coruna, who had six other kids and at age 12 they pulled – he
had to be pulled out of school to support the family. He went to work in a women’s
clothing store, which still exists primarily because he
bought it himself later but this – his job was to deliver clothes
for women around A Coruna and to help them trying stuff on and
getting things inside the store. He would talk with them and they
would tell him all kinds of ideas for things they needed
that were different and could he do this or could they do that? He would take these ideas to
the store owner and the guy shot him down. At age 14 – and this is the
famous Amancio Ortega quote – at age 14 he said, “I never wanted
to be an entrepreneur but I just could not imagine working
for the rest my life in an environment where they wouldn’t
listen to people who wanted to improve things and who
knew how to do it.” So he at age 14 started Zara in
his garage with his girlfriend, now his ex-wife, who’s the ninth
richest person in the world! And the business model, if you
talk to him – the business model is: we are going to listen more
closely to the market and to our customers than any other
retailer in the world. So if you think about that, that
depends on – front-line people are the ones in the stores. They’re the ones talking
to the customers. So now the managers had better
listen to the front-line people or they won’t get
that information up. So when we asked – just last
summer – we were writing this chapter 2 in the book – we asked
the COO of Zara what are the characteristics you look
for in your managers? And he said without hesitation
he said the number one thing is humility. Now how many times have you been
at a job interview where the purpose was to find somebody
with humility first and if they weren’t humble you just –
that’s a deal breaker for you. So he said our business
model depends on humility. If I’m a manager and I have
somebody who reports to me, trying to tell me something and
I’m the opposite of humble, which is arrogant – he actually
said when the next dictionary of what is it called,
mental diseases? comes out – this was this guy
saying this – in nine years, one came out last year – arrogance
is going to be listed formally as a mental illness. It’s a type of mental illness. It’s like autism or something. Think about what an
arrogant person is. I cannot hear anything you say
even though it makes perfect sense, because I think I’m
better than you, so I got my hands in my ears. That’s not normal, right? Unfortunately it’s common
but it’s not normal. So Zara looks for people
intentionally who are humble people and this doesn’t mean
Mahatma Gandhi, sleeping on a bed of nails, eating
nothing but bread and rice. It means I am humble in the face
of all the knowledge that you have and my job as a manager is
to tell you where we need to go but then help – you know, you’re
going to come back to the specific ideas to get it done –
it’s the humbleness that says I set the direction but 80% of the
action is going to be from you and my job is to enable that. Hickory Chair – our mutual
friend Jay Reardon – we asked him that question last summer
and he said the most important characteristic I look
for is humility. Arrogance is a deal breaker when
it comes to bottom-up ideas. So after you found your humble
people, then you start to look for management talents and other
things but if they’re arrogant forget it. Southwest used to have that
philosophy when they started up as well so there’s a
lot more in the book. Am I running out of time? No, okay. Usually when the organizer
starts creeping up front ->>Cindy Clark: This
was amazing Alan! We really appreciate it! [applause] ♪ [Closing music] ♪ ♪ ♪ ♪ ♪

Comments (1)

  1. I've participated in several trainings with Dr. Robinson.  This is an excellent presentation of his ideas and rationale for initiating an Idea System.  Highly recommended.

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