Wednesday, May 27, 2009

The Best Engineers

It is sometimes said that your best engineers are the workers running your production lines every day. Most of these engineers don’t have engineering degrees or for that matter college degrees, but they can probably solve some of the biggest problems facing your organization.

If not asked, the knowledge of these ‘engineers’ will be invisible and they will do their required work as directed, but at the very moment they are challenged, the ingenuity of these ‘engineers’ could surprise even Einstein.

Their ability to eliminate waste and make processes more effective, as well as think-up new product ideas and improvements, is mostly due to the amount of time they spend at their given tasks. They literally earn PhDs in those tasks and products, and thus have the ability to identify every possible improvement opportunity.

Unfortunately, many organizations fail to place the challenge squarely on their employees’ shoulders. Their fear of Employee Suggestion Programs, due to the well known and documented problems arising from poorly managed ones, is one of the main reasons they do not formally solicit employee input and thus shut out their greatest asset… their brain trust.

Employee Suggestion Programs don’t have to be difficult-to-manage resource hogs. In fact, today's web technology has given birth to a new breed of software designed for Innovation and Idea Management. The tools contained in these systems place ‘controls’ on the pitfalls and problems associated with the traditional employee suggestion program:

· Web-based suggestion forms which can be routed electronically and thus eliminate the manual transportation of paper based ideas.
· Ideas are stored in a central repository (database) thus making them accessible and searchable by the entire team.
· Live reporting functions make program status transparent to all the stake holders.
· Automated email follow-up of stake holders with open tasks.

Furthermore, these tools have made it possible to bring all members in the organization into the innovation loop – an area previously reserved to marketing, engineering, and management teams. The ability for all members to bring forth their ideas and collaborate with each other is a benefit that no organization wishing to remain competitive can afford to ignore.

Harnessing the knowledge of the ‘best engineers’ is key to making your organization’s current processes as efficient as possible and allowing it to continue inventing its future.

Friday, May 15, 2009

Innovation and Cost Cutting in Healthcare.

It’s about time! For years now the healthcare industry in the US has been suffering form a sub-competitive market. Demand for services, medicine, doctors, cures… and the list goes on… has far outpaced the availability of these, and in consequence has led to yearly price increases which double or triple the rate of inflation.

Now, I’m not saying that I agree with the new administration’s ‘socialization’ approach, however, the fact that over regulation has made it nearly impossible for new players to enter the market, and forcing family doctors, who will spend most of their lives prescribing Tylenol and antibiotics, to spend 8 years in school just to do that, it’s about time government take a new approach to make these services, not only more affordable, but more abundant.

Needless to say, whether government starts regulating costs or they open the gates to allow greater competition, the current players will have to find new ways to keep their bottom lines healthy. Not only at the research level, but at the operational level these companies and service providers will have to get better in light of the new rules that will likely impact the industry.

The ‘medicine’ that these players will need heavy doses of will be “innovation”. However, this innovation will have to come with different rules governing the market. The lack of competition has allowed these players to forget what the words ‘frugal’ and ‘efficient’ mean. The entire system will be under cost pressure to meet the new reality, and they will no longer be able to throw unlimited amounts of money and resources to “find the cure”.

All processes in this supply chain will need scrutiny and most providers will come to realize that not only the ideas from their scientists and doctors will have to be taken into account, but the ideas from the nurses, bill collectors, shop floor operators, call centers, ER staff, insurance companies, orderlies, and perhaps even the customers will need to be considered and addressed.

Tuesday, May 5, 2009

How do you manage 120,000 ideas?

Occasionally when talking to prospective clients about our idea management software we are asked how many ideas a healthy CI Process should generate. Our answer to them is that a healthy CI process can generate one idea per employee per month.

This normally comes as a surprise to organizations accustomed to receiving one tenth as many. In the mid-1990’s, while working at a major automotive supplier with 10,000 employees distributed across 3 plants, their Employee Suggestion Program (which they inherited from one of the BIG-3) generated a whole 2000 ideas… well short of the 120,000 a healthy CI process should have yielded. (To be fair, most of these ideas were submitted by teams of 5 employees).

These 2000 ideas consumed an enormous amount of resources in non-value added activities. Ideas were being recorded on paper. They were then transcribed by an administrator into a database and an “Idea Folder” was created. This folder was then passed around to the stake-holders (decision makers, evaluators and implementers). Many times these folders would sit on desks for weeks until an administrator came by looking for it because the person who submitted the idea wanted to know the status. Not a pretty picture and one that would spell total chaos if challenged with 120,000 ideas.

Further compounding the problem was that less than 20% of the ideas were implemented. A good reason for this was that the organization didn’t have a good CI culture. All ideas, regardless of how big or small had to be approved prior to implementation. The approval was done by committee… endless meeting hours spent by a team of engineers and managers deciding which ideas had merit and who they needed to be delegated to. Nobody was happy with the system except the few lucky ones who were able to drum-up a few $50,000+ ideas and benefit from several thousand dollars worth of gifts.

The overall program bred mediocrity and little excitement. The clumsiness of the business process associated with this continuous improvement scheme was self-sustaining. The good ideas took too long to implement and often they were rejected with little explanation to the submitters as to why. This all led to low participation and even lower idea quality. It was difficult for this team to effectively process 2000 ideas let alone 120,000.

However, managing your CI process need not be this complicated given modern day technologies. A good, web-based idea management solution will do away with most of the pit-falls and problems found in a manual system. The system is accessible by all, idea routing is automated, and stake-holders are kept informed of the progress of all ideas they are associated with. Should stake-holders take too long on their assigned tasks, they are promptly reminded by the system.

Employees are able to record their ideas via a simple web-form and the system administrator no longer has to transcribe them into the database. Idea delegation is semi-automated. Upon submission, the system automatically routes the idea to the idea champion. In ‘Lean’ parlance this is the idea coach, or mentor. The champion checks the idea for merit and is able to delegate it to others should it require support. No longer are ideas passed around in a folder since relevant attachments can be uploaded to the system. The virtual folder can be delegated and reviewed from any place in the world!

So back to the 120,000 ideas: The reason why companies like Toyota can claim implementation rates greater than 80% is because most ideas are implemented before they are documented in any system. In a truly lean organization, having a committee to evaluate and rule on 120,000 ideas is not necessary. The CI process, when implemented correctly, targets the simple improvements that can be made by individuals in their own areas with little supervisory approval. The process alone distributes the workload of evaluating ideas and confirming their implementation to the idea champions or direct-line supervisors. The more complex ideas are routed by the champions to the necessary resources, and the system ensures the virtual folder does not sit on anyone’s in-box collecting dust.

The greatest winner in the implementation of a web-based idea management solution is not only the whole organization but more importantly the management team. No longer is an employee suggestion program a burden to the management team, but rather an asset. The metrics associated with such solutions give organization leaders easy to get to and valuable live instant statistics regarding the health of their programs. These metrics take the guesswork out and allow managers to quickly identify where the business process can be improved. Ultimately, the benefit of such a system is reflected in the bottom line and most likely in manager bonuses.