By Chris DeRose and Noel Tichy
If a button falls off your suit while staying at the Ritz Carlton, you likely won’t need to ask for help in getting it repaired. At the Ritz, employees are taught to be observant, which includes noticing any unarticulated needs guests may have and taking care of them. Just leave the button (and jacket) in a conspicuous place and you’re likely to return to your room that evening to find the button has been sewn back on. Why is it that some organizations are so responsive to customer needs, while employees in other companies seem to have difficulty fulfilling even the most basic service requests?
It all ties back to effective leadership. The mantra that “people are our most important asset” has become so commonplace in business circles that it has nearly lost all of its original meaning. While many companies make this claim, it’s not unusual to find studies in which employees frequently admit to giving 50% or less of their potential contribution to their employers. It’s hard to imagine an organization knowingly operating at 50% capacity, and yet many leaders allow their “most important assets” to do so daily.
Our research into more than 20 companies for our book, Judgment on the Frontline: How Smart Companies Win by Trusting Their People, reinforced our conviction that leaders don’t intentionally squander their people’s capabilities. While imposing control systems to mitigate the operational risk of putting decision power in the hands of rank-and-file employees, most leaders recognize they succeed most spectacularly when they unleash the imagination and energy of their people. Our research led us to conclude that no single organization has cracked the code on how to maximize employees’ contributions, but we identified five steps for tapping into the creativity and problem-solving capability of hundreds or thousands of people, particularly those at the frontline customer interface.
1. Change the Organizational Context. Only senior leaders are in a position to challenge the organization’s accepted values, behaviors, and decision routines. For example, at the Mayo Clinic of Scottsdale, it took Dr. Richard Zimmerman, then the medical director, to probe the prestigious hospital’s track record to see if there was some way it could improve further on its patient care. Zimmerman and Eileen Oswald, the hospital’s risk manager and patient safety coordinator, sensed that even Mayo’s open and cooperative culture was still a “hierarchy predicated on physicians being in the lead role with administrators supporting them.” This meant that if a nurse disagreed with a doctor’s diagnosis – even if the nurse had many more years of experience – questioning a doctor’s assessment or offering alternative solutions was perceived as challenging the doctor’s authority. To overcome this barrier and encourage nurses’ dissent, Mayo instituted a protocol called “Plus One” that allows nurses or clinical staff to add one person to the patient-doctor-nurse relationship at any time. The program has contributed to Mayo Clinic of Arizona being named by Consumers Reports as the safest teaching hospital in the United States.
2. Eliminate Unnecessary Work. One of the biggest challenges to employees at all levels – particularly those on the front line of the customer interface – is the proliferation of seemingly mindless controls, policies and procedures. The more malicious effect occurs when employees look to their direct managers for help or an explanation only to hear stories about the “idiots at corporate” or, worse still, when employees become trained to keep their heads down and not question policy. One of the most powerful tools for simultaneously freeing capacity and signaling the importance of customer-facing work was created during General Electric’s Work-Out process. Abbreviated as RAMMP (pronounced “ramp”), it is a simple tool for employees to identify unnecessary reports, approvals, meetings, measurements, and policies. RAMMP discussions are typically two-hour, high-energy sessions in which employees go through each category to identify time-wasting activities the manager can kill. As a general rule, if the right people are in the room, the manager should be able to make decisions on at least 80% of the suggestions.
3. Let Technology Do the Work. Too often technology investment is seen as a cost-savings replacement for workers. A simple way for leadership to demonstrate its seriousness about engaging employees in more meaningful work is to employ technology to simplify their jobs and seek their input. In 2006, Eric Foss, then CEO of Pepsi Bottling Group, spent most of his first hundred days on the job visiting with customers and salespeople in the field. Although a veteran of the organization, he described what he found as chaos. During a routine trip to a retail outlet with a distribution general manager, Foss couldn’t carry on a conversation because the manager’s phone rang continuously. Back at the warehouse, Foss couldn’t get answers to simple questions about how many out-of-stocks the team had or how many trucks had been loaded without complete customer orders. Recognizing that poor forecasting and outdated technology were impacting the customer representatives’ ability to do their job for customers, Foss mobilized a cross-functional effort to fix the problems. As a result, each of the company’s twelve thousand customer service representatives were given handheld PDAs that downloaded customer information, route schedules, service notes, and sales training videos. While in the stores, they were able to upload information so headquarters could refine its forecasting and production to ensure inventory and on-time delivery. Although the technology could have been used to trim head count, Foss instead insisted that the employees’ newfound time – hours once wasted managing the awful inventory process – be used to build customer relationships. Employee satisfaction hit an all-time high and the company’s methods have been critical to building better customer retention.
4. Get Intelligence Directly from the Front Line. Rather than wait for problems to develop, some companies actively solicit employee input in all aspects of the decision-making process. At Spanish fast-fashion retailer Zara, for example, every manager globally sends daily reports with both quantitative cash register data and qualitative insights about customers. If an item isn’t selling as well as expected, it’s not unusual for product specialists to spend a day working side-by-side with store personnel to diagnose the problem. The company has also adopted policies to make salespeople’s lives easier, such as keeping all stock on the floor and entrusting store managers to select among nearly three hundred thousand items so their inventory matches the preferences of local clientele. By one estimate, this cooperation has helped the company produce ten times more products than its competitors while limiting failed product introductions to just 1.0% when the industry average runs at 10%.
5. Promote Collaboration at All Levels. Ultimately one of the greatest signals to an organization that ideas matter more than hierarchy is welcoming everyone’s voice in the decision-making process. IBM was a pioneer at using crowdsourcing efforts internally (before they were even dubbed "crowdsourcing") through what it refers to as “Idea Jams.” IBM’s first Idea Jam in 2001 was a deliberate way to tap into the company’s three hundred thousand-plus employees’ collective smarts to improve how the company operated. Leveraging the company’s network, employees used online forums to share ideas and respond to questions such as How do you work in an increasingly mobile organization? In its first year, there were more than 52,000 posts. Since then, Idea Jams have been used actively to help the company redefine its corporate values and redefine strategy by asking employees to help brainstorm ideas and build business plans. More than half of IBM’s employees have participated in single Idea Jams with contributions coming from over 104 countries. In addition to generating valuable ideas, the Jams gave people a sense of participation and being listened to in critical decisions that would help shape their organization’s future – regardless of where they might be in the hierarchy.
Breaking down hierarchy is hard work that can’t be a one-shot effort. It requires relentless focus by the CEO and senior executives to encourage the free flow of ideas across hierarchical levels and eliminate the unproductive bureaucracy that limits employee contribution. The reward for this hard work is quite literally a hidden factory of ideas. Too often we hear CEOs and senior executives lament that they don’t hear creative thinking from the hundreds or thousands of employees who work for them. Surely, they complain, there must be some great ideas buried in their organization.
We couldn’t agree more. Freeing employees to offer more of their potential contribution – hopefully moving them well beyond the 50% level that they self-report in so many companies – can release a flood of innovation for companies willing to break down the hierarchy.
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