Tuesday, July 16, 2013

The Problem of Empowerment

To get employees to give you their discretionary thinking and deliver ideas that boost margin, you must empower them to implement their ideas.   Empowerment is about giving employees the ‘power’ to deliver changes.  Empowered employees are authorized and enabled to do what they determine is needed to achieve company goals.  

For a CEO this can be scary stuff.  What happens if an employee gets an idea to build a perpetual motion machine which violates the laws of physics!  Do you let that employee pursue an obviously flawed idea?  The answer to that question is the marketing answer: “It depends!”  Sometimes the by-product of a crazy idea is a great idea.  As you’ll see in a moment, we do put a governor on ideas, which makes it less likely that truly stupid ideas will be pursued. 

Explicit empowerment is key. At Gore “teams organize around opportunities and leaders emerge.” We’ve seen that 3M pioneered the idea of giving employees the ability to set aside time to work on special projects. Google gives its engineers 20 percent time, so that they’re free to work on what they’re really passionate about.  Likewise, Toyota did this with the employees in the famous NUMMI assembly plant.  And today, Morning Star employees clearly enjoy this level of empowerment. 

Unfortunately, lots of large companies use stage-gate processes to control ideas. Stage-gate processes are about reducing risk, but they can kill innovation.  Many of the most interesting innovations of the past century would never have made it through the stage-gate decision process.  

A key to allowing people to pursue ideas is to establish a flexible Risk-gate™ process. This process facilitates the least expensive, but best use of resources to pass an idea through primary risks. The basic purpose of the flexible Risk-gate™ process is to vet the idea in terms of what knowledge is missing.  Select the next easiest, cheapest, but meaningful risk to resolve and come up with a strategy to remove that risk. Such risks could be about what form factor a product should have,  or will customers accept the product,—or perhaps a prototype is needed; or perhaps a manufacturing step is needed that’s never been done before—find a way to test the step or develop alternatives; or perhaps you don’t know if the technology will work when it’s put together with other parts—test building a working model. 

This leaves the issue of deciding which ideas to pursue.  The best way to do this is to implement a method that removes management from the decision altogether.  Asking management for permission is equivalent to asking for a ‘no’.  Managers often have no motivation for taking on the risk and employees often will get an answer like “We already tried that and it didn’t work.”    

Chris Galvin, the former CEO of Motorola, described how he and his father would deal with this kind of question.  If someone came to him with an idea that had already been tried, the Motorola CEO wouldn’t say, “We already tried that.”  Instead, he would encourage the innovator to pursue the idea and give some guidance where to look first.  If the reason the idea didn’t work the first time was valid, the innovator would see the problem fairly soon, report the issue back to Galvin, and then go off to pursue some other idea.   

If you just shoot an idea down with “we already tried that,” then you make it very difficult for that person to move off that idea and onto a new one.  They will keep thinking about it, believing the people that went before them just didn’t see the problem right, or perhaps made some error.   They will waste a lot more time thinking about this problem than they would have if they’d been allowed to work on it.  A side problem is that you also diminish their level of engagement. 

 You can take out the need for management decisions by establishing a flexible Risk-gate™ funding pool.  We provide a simple computer program to manage this activity (eMail THNK@thnk2grow.com).

The governor here is that no-one can get funding without getting at least one other employee to sign onto the idea.   You limit the number of ideas any individual can sign onto in a six month period.  Employees will only sign onto projects which they deem worthy, thus you build in a certain level of control.  Will you have ideas that fail? Of course you will.  But just letting the employee pursue the idea is a far better factor of engagement than paying an annual bonus, and far cheaper.   

The amount of funding available depends on the nature of the business.  For some businesses it might be $5,000 for others $500.  If more money is needed as risks are eliminated, then more people must join the project.   If you got $500 when two people joined perhaps you fund an additional $500 when a third signs on and an additional 1,000 when a fourth joins, and so on.   

A flexible risk gate process enables you to establish project-specific milestones while remaining flexible about what those milestones are and who needs to be involved. The employees involved identify what the next critical risk factor is, and determine what they must overcome and which approach has the smallest possible investment. Some ideas need a couple of hundred dollars to move to the next stage, but others may need thousands. The mantra for all employees is to preserve cash and look for creative ways to move an idea along without creating an unnecessary financial risk. 

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