Importance of Big and Little Innovation

Since innovation became a sexy word for big business, companies have been tripping over themselves to become more innovative. Some merely take a marketing approach and add a slogan that emphasizes innovation without bothering to actually become more innovative. Others struggle without succeeding.

One reason is that most of these companies are looking for a big innovation: that earth shattering new product that will leave the competition in the dust. Such companies overlook small innovations which bring incremental additional income or – more likely – result in relatively small but nevertheless significant cost savings.

Fortunately, the solution is simple: recognize the value of little ideas. Consider what is probably the world’s most innovative car manufacturer. It is not BMW or Porsche (although they make wonderfully engineered cars). Rather it is Toyota.

Toyota’s innovations are generally small and are often about improving the efficiency of their just-in-time logistics (that is getting parts delivered to factories just before they are needed, thus reducing storage costs). But the results have been very big: Toyota is consistently one of the most – if not the most – profitable car companies in the world year after year.

Toyota also boasts one the longest established and most effective idea management systems around. Every year since the 1970s, the company has received over a million ideas from its employees. Over 80% of those ideas have been implemented. Toyota has not only created a culture which actively encourages everyone in the organization to contribute ideas, but also has got people thinking about the right kind of ideas for the company.

DaimlerChrysler is another company that has come to appreciate the value of many small ideas. In 2001, their web-based idea management system received some 69,000 suggestions – which resulted in a total savings of 62 million Euro.

Clearly, the lesson to be learned here is that you should not put all your innovative effort in finding that next earth shattering idea. Even if you find it, you may not recognize it (see article below). Rather focus on maximizing the overall innovative environment of your company.

There are three steps to achieve this.

Firstly, you must actively encourage and promote innovation across your entire organization. Everyone from the mailroom clerk to the vice president of innovation has ideas about improving processes in the company. Encourage them to share those ideas. This is not easy and requires total commitment from top management.

Secondly, you need to implement an idea management system that captures employees’ ideas and provides tools for evaluation, implementation and, ideally, collaboration. There are lots of great tools on the market that serve exactly this purpose.

Thirdly, you need to implement publicly the ideas that come in. Amazingly, we have seen companies implement suggestion box schemes and idea management solutions; but who either never implement suggestions or are so secretive about the implementation that no one knows about it. As you can imagine, if employees do not believe you will implement their ideas, they will soon learn not to share those ideas with you any more.

(This article was inspired, in part, by an excellent article: Don’t laugh at gilded butterflies in the Economist magazine; April 24-30, 2004 issue)

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Jeffrey Baumgartner is the founder of jpb.com, makers of Jenni innovation process management software. He also edits Report 103, a popular eJournal on business innovation. Contact Jeffrey at jeffreyb@jpb.com or visit https://www.jpb.com/