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Innovation & Growth

Innovation & Growth. Prof. Isaac Getz ESCP-EAP European School of Management Paris-London-Berlin-Madrid-Torino getz@escp-eap.net. 2006: $1,9 billion 10000 employees. 30th consecutive year of 2-digit organic growth and of profitability.

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Innovation & Growth

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  1. Innovation & Growth Prof. Isaac Getz ESCP-EAP European School of Management Paris-London-Berlin-Madrid-Torino getz@escp-eap.net

  2. 2006: $1,9 billion 10000 employees 30th consecutive year of 2-digit organic growthand of profitability 10,000 customers in over 100 countries; 97% of Fortune 100 — customers 98% of customersrenew licenses A 1 million € idea from an assistant who created Academic Relations & Sales in France A lot of frontline ideas in SAS Institute. For what benefits ?

  3. Why is the front-line employee’s spot so unique for producing ideas for rapid innovation? Because it is on the organization’s boundaries —the regions where it interacts with its clients, users, suppliers, partners, andcompetitors — where the change and problems first happen and are first felt. Getz & Robinson, Vos idées changent tous!, 2007 Study:Some80% of innovationscome frompeopleat least three levels below the top management teamDauphinais & Price, Straight from the CEO

  4. Innovating in the way we do existingthings Finding a lost man in A service representative’s idea A lot of customer care frontlineideas. For what benefits ? • the US financial institutions’ N°1inCustomers advocacy rate: 87% • the USN°1 in BusinessWeek's ranking of Customer Service last two years • the US N°1 in respondents definitely recommending the company: 79% • 400-foldincrease in managed+owned assets in three decades with only a 7-fold increase of headcount • All that while limiting itself : • to 2-3% of the U.S. population for the sale of its principal financial products • refusing to sell through independent insurance agents • doing littlenational advertising

  5. Study : 68 % of customers are lost due to an indifferent attitude by employeesChartered Insitute of Marketing How did USAA change its employee attitudes from fear and inactivity to action and innovation? By engaging its frontline people to find solutions to customer needs — immediately.

  6. Are employees engaged in companies? Study : On the average, 27% of employees areengaged, 59% are not and 14% are actively disengaged Gallup, 2006 How to change employee attitudes from fear and disengagement to innovation?

  7. Build a system that enables all employees to produce and act on their useful ideas • Idea = Problem/opportunity + Solution/action plan • Simple and rapid process handled by the direct supervisor • Document every idea once it is implemented or its implementation started • Track every manager’s/department’s idea performance with a few key measures : • number of ideas • participation rate • implementation rate

  8. Performance of the world-class idea systems according to the key measures • # ideas/employee • % of participation • % of implementation Boardroom 104 ideas per employee per year 100 percent participation Milliken France 54 ideas per person per year 88 percent participation 98 percent implemented DanaCorporation26 ideas per employee per year (including DCC) 95 percent implemented ToyotaKentucky 21 ideas per employee per year 99 percent implemented $4500 in cost reduction per employee/year Best practices = > 20 ideas per employee per year > 4000€ of savings per employee/year Average EUPractices ± 300€ > 90% of savings are wasted

  9. Some « How » questions: • How many hundreds of “bureaucrats” run such a system? • How huge are the rewards a company has to pay in order to motivate its employees to produce so many ideas? • How do frontline ideas contribute to breakthrough innovation? • How can my company or organization obtain so many ideas? …

  10. How many raw ideas are needed to develop one product/service that sells ? Development costs Study: 83% of innovationsoriginate with aclient or a user. E. von Hippel, The sources of innovation

  11. RecognitionFor every idea in Japan Airlines : ABeer Voucher

  12. Conclusion: It’s not really about freeing people’s ideas — It’s about freeing people’s talents and their action for innovation and performance I couldn’t sit on top and make all those decisions. I didn’t know how to handle them, even the typewriter. All services are delivered at the frontline so I would approve anything that made it easier for frontlinepeople to deal with the customer. Automate, use technology to make it easier for people. Give frontlinepeople the opportunities to use their god given talents. Top-down isn’t gonna get the right thing. Robert McDermott†, USAA, CEO 1969-1993

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