Guest Article by David Frood, author “The Thinking Corporation”
“The term Thinking Corporation applies to any organisation that accepts the basic truth that all people have the ability to create their own futures. In accepting this, they provide for everyone to be successful in the realisation of their own vision through culture, systems and processes that facilitate the implementation of employee generated ideas.” – From the book, “The Thinking Corporation” by David Frood
Why Make the Change?
Many of the developed economies are struggling with low growth and unemployment. Countries that used to lead the world are ranking between 130 to 160 in GDP growth and many of their citizens are trying to adapt to a lifestyle to suit their new income, or lack of it. So we see from these two examples that the current system is no longer working and needs to be adjusted.
There are many academics, politicians, business leaders and members of the public that view innovation as a way to move forward, start clearing the debt and generate a better life for all. The issue to date has been to answer the question, how. How do you successfully generate, capture, process and implement innovations?
The benefit of becoming an organization that is capable of answering this question is not only helping with the big economic picture, but also accrues its own benefits. Such as:
Growth through innovation/ creativity
Rather than be constrained by the ideas for new products, services and new markets coming from just a few people, A Thinking Corporation can tap into the creativity of all employees. This means that it has a never-ending flow of ideas from which to select those that best fit the strategic plan.
Having the ability to harvest new ideas, the corporation will experience an increase in profits following sales from new ventures. Naturally, the organization must allow for the lead-time for new ideas to make the transformation from cost to profit. Given a continuous flow of ideas, the issue of managing the lead-time is only an issue in the early stages as momentum takes care of the longer-term.
Higher entity values
The hard link between profits and entity values means that the moment a corporation creates a new sustainable level of profit, the entity value follows. This provides a real opportunity for public companies to provide long-term shareholder value and private companies to create wealth for owners and employees.
Lower staff turnover
A Thinking Corporation will provide employees with fair and reasonable remuneration for their implemented ideas. This combined with the culture that must exist for innovation and creativity to flourish, means that employees will be both attracted to the organization and stay longer.
Staffing costs can be reduced because many employees will be far more productive than they were previously. They will be more productive because of the increased motivation and enthusiasm that comes from planning and implementing their own ideas. Of course, this does not apply to every employee, only those that chose to be part of the opportunity that this new generation of corporate culture and behaviour presents to them.
Steps to Becoming A Thinking Corporation
The management of any corporation that is considering making this transition must genuinely value employees and the contributions that they are capable of making. Senior management must also be open to the view that the organization is not receiving the full value of what employees have to offer because the work environment is not one that encourages innovation and creativity.
One of the first steps is to understand exactly where the organization currently fits along a continuum for each of seventeen criteria that need to be present for organizations to successfully generate and process innovation. This diagnosis provides the data to customize the transformation for each corporation.
The very next step is one of education. That is ensuring that all people within the organization have the same understanding of what the new way of working will be, including the reasons for the change and how it will be executed. Along with this education program comes the changes in culture that will create the working environment within which people will be happy to part with their precious ideas.
Some structural changes may also be necessary to ensure that the right people are in the right jobs and that work groups are effective. According to the results of the diagnostics phase, it may also be necessary to close some departments if they are not directly producing results, or supporting those that are.
Finally, the corporation will install methods to capture, process and implement new ideas and carry out the training that goes along with this phase.
Transformation of the current form of corporations into A Thinking Corporation requires senior managers, Directors and owners of businesses to question the validity of some long standing business paradigms. These are the reasons for resistance.
Management is better at thinking than employees
As ridiculous as it sounds, most corporations are still structured around this paradigm. This is despite the fact that employees are entering the work-force with high levels of tertiary training and therefore have minds that are geared to investigating, interpreting and recommending. Also, the relationship between thought, action and results is becoming much better understood within the majority of the population.
All Intellectual Property (I.P.) is the property of the Corporation
This is a real sticking point to employees parting with their ideas and corporations being prepared to acknowledge some degree of ownership. Corporations will generally consider that all ideas that come from employees are the property of the organization. No wonder they do not receive too many ideas. Only a small percentage of people would part with an idea that is capable of producing significant results under these circumstances.
Only the most senior people can earn large incomes
Although it is not uncommon to find executives who earn in excess of $1 million, it would be extremely rare to find a person in a normal functional role with anywhere near this level of income. This is fine providing that the executives are producing the results for the organization. What about the case where a warehouse employee saves the company $25 million per annum in costs through new ideas on material handling? What about the Account Manager that creates a whole new product line that added $40 million in gross margin from one year to the next? Could there be more cases like this if people received fair and reasonable remuneration for implemented ideas?
The case for corporations to change is quite strong. Apart from the economic reasons, we hear cries for corporate responsibility in relation to large-scale accidents and their attitude towards our environment. The population is growing tired of seeing huge salaries, payouts and profits when so many people are struggling.
Corporations have the infrastructure, resources, access to capital and global presence to really make a difference. Within their ranks they have people who are busting with ideas and are contained within an environment that is pro conformity, rather than encouraging brave, entrepreneurial innovations. Yet, we hear managers openly stating that innovation is the answer.
If the changes that are required to assist individuals, economies and our environment also produce increased profits and entity values, why not make those changes. For some it will be the issue of mentally overcoming the key resistance factors. For others it is realizing how to go about it with minimal risk and disruption to the organization. One thing though is definite and well stated by Albert Einstein when he said “We can’t solve problems by using the same kind of thinking we used when we created them”.
David Frood has 16 years experience consulting to medium and large organizations.
During this time he made a study of the talent within the ranks and the reasons why people rarely tell their employers about their ideas. He found that the reasons fell into 3 possible categories:
1. They would probably receive very little, if any compensation for their ideas when implemented
2. The idea could be stolen by another employee
3. Job security could be at risk through the employee becoming involved in areas outside of their position description
David's book "The Thinking Corporation" provides a solution to these issues.
A corporate change program is also available to transform organizations into "A Thinking Corporation".
The program is available to be delivered by all change consultants following accreditation.