Employee-led innovation
24 Jul 2013
Julian Birkinshaw
How can employees take the lead in innovation? Julian Birkinshaw and Lisa Duke went in search of
employee-led innovation and found some inspiring examples.
Most chief executives view innovation as a key imperative. And increasingly, they also recognise
that innovation doesn’t just happen through top-down investment in Research and Development —
it involves people across the company identifying and acting on opportunities, and it manifests
itself in a wide variety of outcomes, from new products and services to new business models and
new ways of working.
But employee-led innovation, while alluring in principle, is difficult to manage in practice. Sure,
everyone has ideas about ways their company’s products and internal processes could be
improved. But the reality is that most of these ideas never even get out of the starting gate; and
those that do often get bogged down in formal procedures, or held up by short-term oriented and
narrow-minded bureaucrats.
We set out to find some companies that had made progress in employee-led innovation. Our study
was motivated by Engage for Success, a UK government-backed initiative led by David MacLeod and
Nita Clarke (www.engageforsuccess.org) that is seeking to help companies increase the
engagement of their employees. Our part in this initiative was to ask, how does employee
engagement help companies to innovate? Clearly, engaged employees tend to put in more hours,
and they bring more of their creative juices to work every day. But we were interested in the bigger
prize: evidence of employees going out of their way to develop entirely new products, services or
ways of working that made a real impact on their company’s long-term success.
Our research found some great examples of companies that have made employee-led innovation
part of their modus operandi. But it hasn’t come easy to them: it requires systematic programmes
and activities to reinforce the desired behaviours, and it needs constant monitoring and
championing from the top.
Four enablers
Why is employee-led innovation such a challenge? For the simple reason that we give employees
clearly-defined jobs to do, then we put managers in place whose job is to oversee the performance
of those employees in those jobs. Everyone’s first priority is to make a success of their official jobs.
And the bigger a company grows, the more systems and processes we build around them.
Innovation, as a bottom-up activity, is about trying to do things that go beyond our job description.
By definition, it is about taking time away from what we are officially being paid to do, in order to
try something that offers uncertain pay-offs, at some time in the future, to someone else. Even if
we convince ourselves that we can find the time and resources to do it, we also have to persuade
those around us, and we have to push against all manner of formal procedures and systems that
were designed to maintain the status quo. All of this is well known. But companies still struggle
with how to overcome these obstacles without compromising today’s business. The companies we
studied didn’t have all the answers. Rather they had put in place an array of interventions or
enablers, often used in combination, to provide the necessary resources — time, money,
permission — for employees to take their new business ideas forward. We grouped these enablers
into four categories:
Time Out — to give employees the space in their working day for creative thought
Expansive Roles — to help employees move beyond the confines of their assigned job
Competitions — to stimulate action and to get the creative juices flowing
Open Forums — to give employees a sense of direction and to foster collaboration.
Let’s look at each of these enablers in turn, and discuss some examples of how they were used in
the companies we studied.
Time Out
Even the simplest innovation projects need a bit of “slack” time and some additional resources. So
over the years, many companies have experimented with the idea of formalising this sort of
arrangement — 3M, the Post-it Notes to medical products company, popularised the notion of 15
per cent innovation time, and Google rebranded it as ‘Innovation Time Off’, whereby its software
engineers are allowed to spend up to 20 per cent of their time on pet projects. There is nothing
wrong with this model, but it is hard to implement. People we know at Google, for example, say the
20 per cent ‘Innovation Time Off’ is applied very inconsistently across the company — it depends, in
essence, on how good your relationship is with your boss. So to overcome this problem, we saw
several companies in our study applying the principle of Time Out in a more creative way.
Consider Red Gate, the Cambridge software company founded by Neil Davidson and Simon
Galbraith in 1999. The company produces simple but effective database tools for technology
professionals worldwide.
Aware that they needed to be proactive to change their employees’ habits, Davidson and Galbraith
came up with an initiative called ‘Coding by the Sea.’ A volunteer team of coders were sent off to
the Suffolk coast for a week on an expenses-paid trip with the challenge to develop a product that
could quickly be shipped to customers. The result was SQL Search, a new plug-in tool that became
available to customers just three months later. Four months after its launch, customers had
downloaded over 10,000 copies of the tool.
With the success of ‘Coding By the Sea,’ the two founders decided to expand the idea to the entire
company. They came up with ‘Down Tools Week’ — a designated week when all employees would
put their regular jobs on hold, and work with any colleagues they wanted to on a project of their
choosing. They could generate new commercial products, fix problems, learn new technologies and
skills, or just try new things out. Expectations were kept low, but a number of innovative products
resulted from the week: one was a new tool for testers to track their software tests; there was also
an app for simple talk called “simplepod” that worked on different mobile platforms, and an
Exchange-Space Analyser Tool, which helped administrators understand their space utilisation to
maximise space on exchange servers.
‘Down Tools Week’ was a big success, and became an annual event. Davidson and Galbraith used
the same principle for an initiative called ‘Sweat the Small Stuff Day,’ where employees were
encouraged to set aside their daily work for 24 hours to fix annoying bugs and physical defects in
their offices or just tidy up accumulated mess. Some of the fixes that were put in place included
optimising Search on the Red Gate website, changes to the end-user licence agreement, changing
all the clocks in the building to display the same time, and erasing out-of-date information on the
project whiteboards.
A company in a very different sector is Ella’s Kitchen, a producer of organic baby and toddler food.
Founded in 2006, it has achieved revenues of ￡31 million across eight international markets. One
of its signature practices is called ‘Give it a Go’ — an initiative to give employees the time and the
freedom to think beyond the confines of their own role, and to consider the company holistically.
For example, in 2011, employees watched kid’s swimming classes, visited nurseries, talked to
parents at shopping centres about their attitudes to feeding their children, and visited suppliers to
understand their perspective. This was the stimulus for several innovations for the company. For
example, the development of a post-exercise snack line: an employee who saw the sugary/salty
snacks parents gave to their kids after swimming classes suggested Ella’s Kitchen launch a new
range of healthy snacks that were still fun and energy-boosting.
Time Out is a simple notion, but it doesn’t just 'happen'. Many employees are fearful of working on
tasks that haven’t been formally allocated to them. They need some sort of top-down intervention
to provide them with permission and encouragement, and Red Gate’s ‘Down Tools Week’ and Ella’s
Kitchen’s ‘Give it a Go’ are great examples of how this can work.
Expansive roles
A different solution to the same problem is the idea of giving employees much less specific job
descriptions. If Time Out is about setting aside some time for people to work outside their formal
role, the principle of Expansive Roles is about eschewing the formal role description in the first
place. A celebrated example of this principle comes from the American company, W L Gore,
manufacturer of Gore-Tex fabrics. In The Future of Management, Gary Hamel describes how new
recruits at Gore are deliberately hired into broad roles, such as “R&D Engineer” or “Business
Development Leader” and in the first few months they circulate among several teams, seeking to
find the best fit between their skills and the needs of the business.
Expansive Roles help employees to make connections, and to see the bigger picture, and these are
vital ingredients in the innovation process. Consider Innocent, the smoothie and juice drinks
producer founded by three friends, Richard Reed, Adam Balon and Jon Wright, in 1999. From a
stand at a music festival in London, the company now sells its products all over the world. Although
Coca-Cola now owns 58 per cent of the company, Innocent still feels like a small company, with the
vast majority of its 240 employees are based in Fruit Towers, a funky converted warehouse
overlooking the Grand Union Canal in West London. The company recruits entrepreneurially
minded people — “We are looking for people who want to leave us” was the line used in one job ad
— and employees are encouraged to continuously improve how they do their job, and how it
makes an impact on the whole company. Another principle is ‘Just Go With It,’ which is all about
moving ahead without permission, as long as you are 70 per cent confident your idea will make a
difference.
While the original line of smoothies was created by the founders, subsequent lines of new products
have typically come up from below. For example, an employee called Douglas joined Innocent in
2007 in a new opportunities role, and decided to revamp the Juicy Water line. The product had
never really fitted with Innocent’s image, as it had added sugar. Douglas rebranded it as This Water
as a separate entity a few months later. Sales quickly increased from ￡8 million to ￡30 million.
Another example is Claire, who arrived on secondment from consultancy Bain & Company in 2008
and was given the brief to find the 'next big thing' for Innocent. She suggested that Innocent could
do for vegetables what they had done for fruit, and she began developing her idea by pulling in
people and resources from across Innocent. The company’s Veg Pot line is now worth ￡30 million
at retail.
Another company that embraces the notion of expansive roles is Instant Offices, founded by Rob
Hamilton in 1999 to “bring the fragmented serviced office market into one online market place”.
Hamilton has created an egalitarian culture at Instant in which employees are encouraged to run
with new business ideas, wherever they might lead. For example, in 2008, one employee suggested
a new line of business offering clients the possibility of outsourcing the provision of offices to
Instant, an idea that proved so popular that today it is the largest source of revenue for the
company. In another case, an existing client needed complete confidentiality for a proposed
overseas expansion, so the Instant employee suggested an intermediary service. Instant took 100
leases on offices around the world on behalf of the client, allowing the client to remain anonymous
until their expansion plans were fully implemented. Instant later rolled this service out to other
clients.
Innocent and Instant Offices have the advantage of being relatively small companies — 240 and 80
employees respectively — so it’s certainly easier for them to create informal and expansive roles
for their employees. But there is nothing to prevent larger companies from experimenting with
such a model. We have seen versions of it in parts of Microsoft, Infosys and HCL Technologies,
companies with more than 80,000 employees each. But just as with Time Off, the principle of
Expansive Roles requires an underlying assumption of trust, a belief that employees will use their
greater degrees of freedom for the good of the company, and not as an opportunity to shirk.
Competitions
A third enabler was the use of Competitions as a way of getting employees’ juices flowing. The
success of the TV show Dragon’s Den over the last decade has helped people to relate to the idea
that innovation in business involves trial-and-error, competitiveness and even a little showmanship.
But of course the idea of using competitions and tournaments to spur innovation is an old one. The
classic story here is clockmaker John Harrison, who developed the first chronometer for measuring
longitude at sea as a response to a competition established by the UK government in 1714. More
recent cases were the Ansari X Prize for private spacecraft development in 2004, and the Netflix
Prize for improving movie recommendations in 2009.
Many companies have piggybacked on the success of Dragon’s Den to create their own internal
competitions for spurring employee-led innovation. Instant Offices, for example, runs a Dragon’s
Den competition where individuals volunteer to join a random team who then go away and
brainstorm ideas. Their best ideas are then presented back to top management. About 50 per cent
of the company has taken part in this process, and lots of small ideas have been generated as a
result but also one or two new businesses.
Red Gate, the Cambridge software company, runs an event called ‘9 Postcards,’ which won The
Sunday Times Best Companies special award for Innovation in Engagement Practice two years ago.
‘9 Postcards’ was used to find out what everyone at Red Gate thinks of the company. Each
employee was given nine e-postcards, three to suggest ideas on how/where their individual
performance could improve, three for how their area/department could improve, and three for
ideas on how/ where the whole company could improve. The exercise resulted in ideas big and
small. Many small improvements were made, such as putting a hook in the shower room, and
addressing the issue of noise from the canteen. Two or three larger ideas were also pursued, for
example a revamp of the corporate website which many employees considered wasn’t what it
should be.
Another example is Serco, the UK’s leading provider of outsourced services. Serco holds a market
stall event every six months for staff and partnering contractors. Organised during the working day,
individuals are invited to showcase their work and achievements and inspire colleagues in other
areas. Employees put themselves forward, decide on a theme, and then invite specific functions to
present. The events are well attended with typically between 200 and 300 people. Although there
is no winner per se, when other employees see what their colleagues are doing it can inspire them
to achieve as well as enhancing their understanding of other parts of the business.
Most medium-sized and large companies today have some sort of idea fair, on-line forum or
competition along these lines. Unfortunately, we have seen many of these companies manage
them badly. There are plenty of things that can go wrong, including defining the challenge too
broadly, a failure to follow up on promises made to the winners, and a lack of feedback to those
whose ideas are not taken forward. But with advance planning and careful follow up, they can work
well, especially as a way of kick-starting an innovation process.
Open Forums
The fourth enabler was the old-fashioned notion of a Town Hall meeting or Open Forum, in which
information about the company is shared with employees, and they in turn are encouraged to ask
questions, challenge the senior executives, and take responsibility for helping to improve things.
Several of the companies we studied used Open Forums to enable employee-led innovation. Every
month at Innocent, the founders hold a company-wide meeting where they give a financial update,
sharing with employees all the key finance figures on how the company is doing. Everyone is
encouraged to ask questions, to challenge, give feedback and most of all, understand how the
business works. Innocent believes that transparency with employees encouraged people to get
involved at a deeper level than just performing their roles.
Instant Offices has a range of initiatives that gives employees time to interact and talk with the
CEO. Once a month six or seven people are randomly chosen to have lunch with the CEO and
brainstorm how things could be done better. The weekly CEO Question Time is another small group
(six to seven people) opportunity for employees to openly question the CEO on any issue they like.
Red Gate uses a similar model: informal, weekly Q&A sessions with one of the CEOs held in the
canteen and open to everyone. The joint-CEOs take turn to host and answer questions on anything.
Each session is then written up and circulated to the rest of the company.
Why do we need these Open Forums? It has been widely shown in studies of social structure that
once an organisation starts to grow beyond 50- 100 people, it becomes very difficult for the top
team of executives to know everyone, and formal rules start being introduced to compensate for
the lack of personal connections. So Open Forums are a vital way of retaining the personal touch,
and creating the transparency and trust that is necessary for innovation to take place. So these
forums aren’t actually where employee-led innovation happens, but they are critical to the creation
of a supportive culture, one that reinforces the importance of innovation, experimentation and risk-
taking.
Small is bountiful
When seeking to make their company more innovative, many executives fall back on structure and
process: do we have an efficient stage/gate process for evaluating and reviewing our innovation
projects? Have we allocated money to the right types of activities? Do we have a board-level
sponsor for innovation? These are all valid approaches, but they slightly miss the point because
they don’t encourage the spontaneous development of new ideas from the bottom of the
organisation.
This is why we deliberately studied smaller and mid-sized companies for this research. We wanted
to try to understand companies where innovation was still in their DNA, where people from top to
bottom were fully committed to taking responsibility for new product and service development.
Through a set of linked enablers, these companies were able to consistently generate high levels of
employee-led innovation, with very little in the way of formal structures or processes to support
them. Of course, larger companies cannot entirely throw out their existing ways of working, but the
basic principles that work for these smaller companies are still valid whatever the size of the
organisation.
Referencias:
Birkinshaw, J. (2013). Employee-led innovation. Recuperado de https://goo.gl/QDJLZI Fecha de
extracción: 22-07-2016.
