Engaging Employees: The Economics of Micro Ingenuity
BY JOHN M. BERNARD
Wouldn’t it be a dream if every employee could add $13,000 to the bottom line of your business each and every year? No need to dream because research shows that’s exactly what happens when an employee shifts from being disengaged to engaged.
Every employee has ideas for taking waste out of their routine work. Some frontline workers see simple things that can be done to improve the customer experience and others have easy-to-implement ideas that can grow revenue.
In Business at the Speedof Now I demonstrate the economics of small ideas. A simple example is that if an employee has an idea, and that idea removes a small amount of waste from a repetitive process, it doesn’t take much of an idea to save $1,000 annually. So, using simple math, if you have 100 employees and each saves $1,000 by implementing one equivalent improvement idea each, your business adds $100,000 to its bottom line.
Now, keeping the same math in mind, if each of your 100 employees implements 10 ideas annually and each saves $1,000 then your business will enjoy $1 million more on the bottom line every year. This is how the economics of micro ingenuity pays off.
This may seem like a wild dream, but not when you realize that Toyota’s employees on average have been implementing 70 ideas annually for more than 30 years, according to Toyota expert and author Norm Bodek. At the same time General Motors implemented one idea per employee every seven years. Yes, you read that right. And this fact reveals why Toyota has grown at a much faster rate than GM, which was once the most powerful company in the world.
Toyota is a NOW company, General Motors lives in the THEN world.
Micro ingenuity is a powerful reality, and in my experience is the one true sustainable competitive advantage a company can build. But how does Toyota do it?
Next week I’ll share how Toyota focuses employee ideas on the practical reality of their daily work – the work employees can and should control.
Management Redefined: The Path to Economic Leadership
While our way of life is challenged by today’s economic realities, the solution lies not in some breakthrough political strategy, but instead with those who manage our organizations day-to-day. This applies to most organizations be they large and small, private and public.
The reason I believe this is where the solution lies, is because the way we currently manage our organizations has failed to engage the hearts, minds and passions of our employees. THAT is where the solution lies because that is our largest untapped resource and therefore the biggest opportunity to regain our competitive advantage.
Gallup research shows 67 percent of our people make no extra effort to help our organizations – other than what they are told to do by their bosses. They show up and shut up. Think about it. If you go to work and share ideas and express concern about how poorly things are done, and nothing comes of it, after awhile you check out. And if you are viewed as a troublemaker who asks too many questions, you really check out.
Many managers I meet believe that most employees don’t care, that the average Joe is lazy and unless closely supervised, would really rather screw off than work hard. But this is not human nature and what they observe is a very human response to an unhealthy work environment and management system.
Today we still operate by a management philosophy and system passed down from the era of mass production (when humans were viewed as extensions of machines). So the human behavior we often see is actually in response to those management methods, and is not an indication of human nature.
Therefore, the best path to economic leadership starts by realizing that the human resources we have long called our “most valuable asset,” actually are our most valuable asset AND our most underutilized, untapped, and wasted asset.
This is not a “let’s love our people” message. It’s a practical, realistic business call to action. Management must redefine its job and the system it uses to manage employees’ performance. The NOW Management System creates a shift from managers making the vast majority of decisions (a relic of the past) to enabling its people to make their own decisions. Plus, the system aligns those decisions with business goals to improve customer experience, drive growth and cut costs.
There remains a big gap between how we have managed traditionally, and what management must do in the modern, mass customization economy. Closing that gap will tap into massive levels of innovation, small and large innovations, that will fine-tune everything we as managers must do to thrill customers and delight shareholders.
The path to economic leadership travels through the hearts, minds and souls of our most valuable asset, our employees. To get there, we have to redefine management.
Next: Enabling Innovation: Discovering the Unseen Source
Big Growth On A Tiny Budget!
When the going gets tough, the tough get…creative. With the economy still gasping to catch its breath, survival is top priority for many business and organizational leaders or those looking to start up. Struggling to just keep your head above water in turbulent economic waters can be terrifying, but it pays to heed the age-old advice of “Don’t panic!” People still need products and services, and my guess is you’ve got a great one. How do we get it into the hands of the right people?
Increased sales, more customers or a new business altogether… sounds good, right? It is good and the even better news is that salvation is in reach of those with even the most modest of resources and it’s not difficult.
How do you grow your business during trying times? By using a method of thinking called effectuation. Scrappy entrepreneurs are often credited with being sharp effectual thinkers, but this nimble, bob-and-weave approach to growth can also benefit established companies, especially under tough circumstances. Float like a butterfly, sting like a bee.
“OK, but what is effectuation? This sounds like something I need, stat.” you implore.
Effectuation involves using available resources in creative ways to reach a goal, iterating on strategy (and sometimes the goal itself) as the landscape and competition changes and doing all this with minimal risk (think car sharing via Zipcar instead of buying a new BMW). In contrast, causal thinkers make plans and struggle to stick to them for better or worse, which means they may be missing out on unforeseen opportunities.
Seems simple enough. For some people, this is a natural way of thinking, but for others (you control freaks out there might be nodding your heads), this is a major shift.
How about an inspiring example of effectuation? A great professor of mine used the story of U-Haul—a company you are likely familiar with—to illustrate effectual thinking in action. In 1945, Leonard and Anna Shoen scraped together U-Haul using the resources they had around them. With barely $5,000 they collected from relatives, the young couple began buying used trailers and painting them bright orange in the family garage. To maximize their purchasing power, the pair then had the brilliant idea to sell the trailers to family and friends who in turn leased the trailers back to U-Haul. This dispersing of investment (and risk) freed up capital that was then applied toward the purchase of more trailers.
Newlyweds Leonard and Anna certainly didn’t have the resources to run their own nation-wide network of dealerships, so they arranged for gas station owners to keep and rent out trailers instead. Now there’s a clever partnership. Ten years later, there were over 10,000 trailers and today the bright orange U-Haul trucks are a common sight on roads across America. Not bad with $5,000, even in 1945 dollars.
“OK,” you say, “but I’m not in the one-way trailer rental business and I don’t have $5,000. What can I do today, on a shoestring budget, to yield great results like that?”
No matter what your goal, the Internet is littered with software-as-a-service tools (that are available for little to no cost) that you can use to build and grow a business. And the big mother of them all is social media. Maybe you are happily using social media or maybe you’ve heard of it but avoid it like the plague (many people are). Regardless, with social media marketing, you get the world-wide, lightning fast reach of the internet coupled with personal recommendations made from friend to friend (also known as word of mouth marketing, which as any student of marketing will tell you, is the crème de la crème of all recommendations).
How about another, more current, example of a group using effectual thinking and social media? In May 2009, the California State Parks Foundation used a social media centered campaign to raise almost $1,000,000. Facing crippling budget cuts as the economy withered, the foundation had a goal of leveraging its tepid Facebook page with just 517 fans into a robust PR and fundraising machine with over 5,000 fans in just two weeks. To their surprise and delight, they leapt to over 33,000 fans! That’s an almost 64x increase in engagement and it paid off handsomely for both the foundation and those people that treasure our state parks. It was a win-win.
“Oh! Oh!” you say, “I NEED that!” But then you pause. Maybe you are too busy treading water right now to take on a whole new social media marketing campaign, or perhaps you don’t know a lot about social media (or even how to turn on a computer), or maybe creative thinking isn’t your strong point (sometimes it’s hard to see the forest for the trees, especially if the wolves are nipping at your feet).
Well, here is your first chance to overcome this obstacle using effectual thinking (and you haven’t even finished the article yet!): leverage your networks and ask someone for help. Maybe you have a niece or nephew who is doing a business project for school or a tech-savvy friend or relative who can pitch in or recommend someone you can talk to. Maybe you want to take the plunge and start your own social media marketing campaign (there are lots of great how-to books on the subject).
Or maybe there’s a creative, tech-savvy author whose article you just read that seems like a nice person to have on your side when the going gets rough. Or maybe you’ll pass on social media marketing, thank you very much. Either way, you can use effectual thinking to help you navigate stormy waters to calm, sunny seas.
Get scrappy. Get creative. Get going.
Have you used effectual thinking or social media marketing to grow your business or organization? If so, tell everyone about it in the comments!
Look Up! Way Up!
Ok … sometimes we need to take the larger view of things. That includes our planet. As the Space Shuttle era comes to an end, there are many new projects that will come to be. Some will look way out into the past (as in looking at the light from almost the time of the big bang) in order to understand the universe. Others will look at earth to better understand how we should manage our lives. Take a look at this first in a series of NASA features. It truly is about growth.
Beyond the Media – National Home Values
Every once in awhile we need a little reminder to fight off the bad news on housing. Here’s a quick one.
The housing market continues to do battle with strong headwinds. Unemployment hovering at the double digit levels, disruptive appraisal requirements, more challenging loan underwriting and in many areas, foreclosure or distress sales exerting their negative influence. On the bright side, for buyers, lower prices combined with historically low interest rates has pushed true affordability to record levels. Here are a few other points to consider:
1. While falling values predominate across the country, there are only six states where values fell by more than 10% over the last year.
2. Unlike other investments, housing puts a roof over your head. That has always been its primary function. Yet, along with that benefit it is still an investment and in comparison to most others, it has compared favorably. Over the last 5 years, the vast majority of states still show positive appreciation with half even showing double digits. The same can not be said for the stock markets.
3. Over time, home prices across all states have risen at average annual appreciation rates ranging from the high 3′s to over 7.5%.
Why We Need A System of Management
To grow revenue, improve profits and be competitive, leaders need to continually improve how they manage their organizations. Leaders must be very strong at communicating, connecting and guiding people. However, the challenges facing most leaders and their employees are often daunting. These challenges include uncertainty and misalignment about the most important strategies, goals and processes. In addition, ineffective planning and communication impede the ability to execute initiatives as employees are unsure of their roles and key responsibilities. Compounding these challenges is the lack of systems and tools to ensure accountability and precise execution. (more…)
Leading From the Front
Organizations need leaders who can get great things done. There is a secret on how to be a great leader–lead from the front.
Leading from the front is especially important in the face of significant change where the status quo is deadly to an organization’s ability to survive and grow. Here’s what it looks like to lead from the front: (more…)
Who Cares About Work?
If you believe that most human beings actually care about their work and want to make positive contributions, then it’s easy to see how frustration can get displaced in unproductive ways. If you work inside an organization where it doesn’t matter how much you care because nothing comes of it, what would you do. I have to admit to some actions in my early career that clearly caused trouble when I once worked for a boss who was a jerk. (more…)
Is Growth In Your Future?
Growth? How about good old fashioned stability. Most of us would gladly have some of that these days. Indeed, both individuals and businesses are desperate for some stability and positive story for their respective “balance sheets.”
Personally going through something like this has really made me think about financial security. How do I protect and grow my assets in today’s economy? How do I grow my business and build a customer experience that will last for years? What things can I do moving forward to achieve financial security, personally and professionally? (more…)
Looking for Growth?
Growth. This seems to be a very difficult topic for many companies right now. We are at a critical time when many organizations need to make a decision- do I want to experiment with growth or continue down the traditional paths. There is an emergence taking place out in the markets, a place where brands no longer wait for consumers to come to them, but just the opposite- Brands go to the consumers, where they are!