María helped to save one million Euro
María was almost 50. She had been working as accountant for over 20 years in the same company, doing almost the same job in the invoicing department all those years. For the new management she was a clear example of the “old culture”. Not able to adapt to new technologies, resistant to change, distrustful towards organizational innovations like shared services, as the new CFO was proposing. And she made too many coffee breaks and phoned all the time, God knows with whom, but she were not posting quick enough!
18 months later María was leading SAP customization of the SD module (invoicing), co-ordinating a team composed by young and prepared Accenture consultants and corporate techies. More, that team and others were inventing new ways to bill on line, to manage stock and to avoid cash payments.
What happened in between? What happened in between was a participatory action research approach in human resources. Today we would call it an employee co-creation program or a collaborative project.
Through action research, management understood that old employees were resistant and wanted to keep privileges from their past, but also that they had enormous knowledge on how billing happened in the company with far more complexity than process descriptions had. They had also a way of rapid problem solving, because in 20 years they had built up a huge network from 100 to 300 contacts all over the company, from the last store in the farest village, to the headquarters in Central Europe and key positions in every Western European country. How can you build up such a network without moving from your table? Making coffee breaks and phoning around.
Once management was aware of that knowledge’s value, it was easy to make a try in a billing customization group. But as soon as María started to work with people of other departments and consultants, the group started to find very creative solutions thanks to all her invisible knowledge on billing and she herself became also creative and innovative through the collaboration with new inputs.
María’s work, together with 50 other colleagues, many aged over 45 and considered initially “resistant” saved a lot of money. Not all of them, but a very large group, participated in innovation projects and saved one million Euro, one third of the total savings the Shared Service Center she helped to set up saved in three years. Ten years later María and most of her “old” colleagues still work in a now larger and more innovative shared service center and still are the knowledge reference of the company.
Innovation culture is created by sharing
So, employee driven innovation or employee co-creation is not about idea generation –only. It is about creating an innovation culture. And as María’s case in a big automotive corporation proves, even people that are not considered able to innovate, can be innovation leaders. An innovation culture is something very tangible. As every culture –in the anthropological sense- it is composed by:
- Formal and informal Knowledge
- Knowledge codes (symbols). For example, long phone calls code informal support networks among employees
- Artifacts, that can be material or social (for instance, the way accounting work is organized in uncreative departments)
- Shared believes, like “as accountant I am not to innovate”
- Shared goals
- Patterns of behavior reflecting the former
An innovation culture is about sharing as knowledge and knowledge codes in the right social artifact (innovation or at least collaborative improvement projects) in the shared believes and shared goals that by these means better results can be achieved and the shared experience that this is true and is rewarded. In one word, innovation culture is about sharing.
How can you build an innovation culture? By systematically set up innovation projects that are not only cross department, but also open projects. Open means, involving customers, as IBM does, suppliers, like Toyota does or even other stakeholders, for instance environmental activists if you develop green technology. You build an innovation culture by sharing.
Social media and collaborative platforms, key for an innovation culture…but not enough
The case described above happened in the era of e-mail, but not in the era of collaborative platforms and social media. Collaborative platforms or internal crowdsourcing allow idea generation in an unprecedented volume, not only because of the connection of hundreds or thousands of employees in a single point: this would be only a very huge suggestion box…and we all know what happened to suggestions. The power of platforms is that ideas can be debated, improved, corrected, developed in teams… in one (composed) word: co-created.
Yet, idea generation and platforms are not enough. Actually what you really need are two things:
- Innovation teams
A couple of years ago we had to work in Venezuela. Due to Hugo Chavez’s nationalization of the Energy sector, most top and middle managers left the country and got new and very well paid jobs in US, Norwegian, Spanish and Dutch oil and energy companies. The former proud Venezuelan energy companies stood there with a heavy know how loss and without leadership. The government tried to train engineers for management and we were subcontracted by a provider of such a program. But instead of simply teaching the engineers business school principles, we started an action research program (initially not in scope) and organized six project teams. Why? Engineers are not used to manage finance, marketing, human resources from a corporate perspective, but they can do this entire very well when managing projects. So what we created was a bridge between their traditional mindset and their new task.
Implementation is the key
As a result of project work, engineers were able to innovate in the way the company had been doing traditionally purchase (savings of 800.000 dollars, but most important, complete new cross department collaboration approach), training policies (substantial diminishing of work accidents by including operations workers in the training design) and Corporate Social Responsibility (stop funding, start supporting with energy solutions projects co-designed with communities).
The key here were not the ideas, probably not very “creative” in the sense of being disruptive. The key was implementation. For instance, at Daimler Shared Service Center in Madrid they have a very good idea generation and idea feasibility sorting process, we helped to co-create with them. Employees have generated hundreds of good ideas using a simple and non expensive tool such as Microsoft Sharepoint.
The strength of the system is a process were every relevant actor is involved and support guaranteed. At the same time, this makes the process slow and implementation of ideas difficult, so that it is esteemed that although important savings have been reached, there is still potential for further savings. Again here is where culture plays a role. The more familiar a company is with innovation culture and sharing, the less you have to invest in legitimation. Daimler SSC collaborative improvement is at its very beginning and comes from a very standardization driven culture, where many actors in and outside the company are involved. In a sense it is a mindset typical for classical tayloristic industry. Innovation is often interpreted as an attack against standardization and employee driven implementation as steeling resources for “productive” work. It will take probably one year until successes help to lower barriers.
Savings are good, but the real value of employee co-creation is in sales
It is important for a company to be efficient, but market development is the sourcve of income. Value creation by employees is also well oriented if they develop products and services for and by customers. The champion here is probably IBM. Already in the nineties, some divisions at IBM that started employee driven product development increased their profitability by 40% and their productivity by 13% (see link). The most famous example of employee driven innovation is Google, with 20% of their employee’s time devoted to their own projects. But IBM and Google are innovation companies and therefore have a human capital fully oriented to innovation. What about more classical industries? We have already shown Daimler’s Car2Go, case, developed in a crowdsourcing platform by employees.
Also very traditional industries like construction and manufacturing can benefit from employee co-creation In Denmark the Danish Technological Institute has facilitated employee driven innovation at the construction sector and the companies could commercialize the employee’s ideas (see link). Norway has done pioneer work using academic action research and companies like Teenes are world leaders in their segment, silent tools because of employee driven innovation.
My favorite co-creation cases are not in the developed world but in India and Africa, because where there is lack of material resources, human creativity provides very simple, but powerful solution. In India I love Ideaken as very creative company (watch this interesting video), while in Africa the Nigeria co-creation hub provides plenty of cases for local small businesses.
Your employee, you best brand ambassador
When I was responsible for organizational development at Mercedes-Benz, I remember all employees –and me too- were very proud of working fir Mercedes. We were active ambassadors because we always spoke best about the products and whenever anybody asked us for advice about buying medium high to premium cars we would always recommend Mercedes cars. Imagine if you have proud employees motivated by brand co-creation or employee driven innovation projects, as María was. Connected how they are via social networks, they would make branding among other corporate colleagues and also their ca. 150 online friends. 60 employees working in innovation and co-creation, as in our Venezuela project, mean 9.000 direct impacts outside the company. With the proper corporate PR, you can motivate more than 60 employees to be ambassador of your employee co-creation projects.
Co-creation and human resources
It is widely known, that the 2.0 world is radically transforming the HR function and management in general. It goes a bit out of the scope of this blog to deepen in 2.0 for human resources. Yet there are co-creation tendencies, like crowd sourced peer to peer performance reviews and open innovation and crowdsourcing as new labor paradigms, or such bold initiatives such as Kraft food’s co-created mission and vision statement, that deserve a post for themselves. As good co-creators we will try to find an interesting author.