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Boosting Profits in Recessionary Times
Using Your Employees’ Brainpower
Co-creation and Organizational Innovation Factory
Albufeira, Portugal
March 20, 2009
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Min Basadur
• Engineering Physics, University of Toronto
• Procter & Gamble
• McMaster University • Basadur Applied Creativity
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These are Extraordinary Times• Recovery will not be “Business as Usual” - consumer confidence badly damaged - much smarter in future spending - need fewer businesses offering similar products
• Only the more innovative organizations will survive -by differentiating themselves - by redefining how to attract consumers
• Collaborative innovation will be highly valued - joint creative problem solving - both discover unexpected innovative ideas.
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Characteristics of an Effective Organization
Flexibility Reactive
Efficiency Routine
Adaptability Proactive
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Typical Organizations
Many people say that these companies are good examples of the 3 characteristics:
Flexibility Tylenol
Efficiency Toyota
Adaptability 3M
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CRISIS
Chinese symbol for crisis.
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In These Extraordinary Times
Efficiency and Flexibility
Improvements ……….
Will not be sufficient
Adaptability is a must
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Adaptability Requires Different Thinking Skills
Problem Finding is the key
Innovative Organizations do not wait for problems.
They find them!
They Deliberately Drive Change!
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Problem Finding Cultures
• Toshiba
• Japanese Employee Suggestion Systems • Procter and Gamble • Frito-Lay
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Problem Finding Culture
• Toshiba
-New Scientists and Engineers
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Japanese World Class Employee Suggestion Systems
- Not optional
- Golden eggs
-Natural work teams - find, solve and implement
- Motivation, group interaction, job satisfaction
-Top down impetus; strategic alignment
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Japanese Work Team
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The P&G Problem Danger: We are not going to double our business in the next ten years for
the first time in 147 years. Why? 1. Revenues flat
2. A new bad economy never before experienced
-Stagflation: stagnant growth plus huge inflation - Unprecedented interest rates …(up to 21%)
3. No new products expected from R&D
4. Acquisitions blocked by government intervention
5. Repeated Oil Embargos: uncertain supplies of raw materials
6. Analytical thinking and optimizing dominates company culture - Employees not used to dealing with uncertainty
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P&G’s Solution: A Deliberate Change Cost Improvement Program
1. Communicate a compelling business need -set a concrete motivating goal
2. Engage people all over the organization -form inter-functional teams at all levels -leverage the latent creativity found in every individual
3.Employ a common creative process for problem solving
4. “Money is saved where money is spent” -share cost information to find best opportunities 5. Track implementation
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P&G President’s Concrete Goal
• Save 4% of sales this year.
(4% of $10 Billion sales = $400 million savings )
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Creative Problem Solving Process
The Structure:Inter-functional teams in a Deliberate Change Program
The Problem or Goal: $400
Million Savings
Annually
P&G’s Innovation Strategy
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P&G’s Deliberate Change Program
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Four Criteria for A Deliberate Change
1. A change was made
2. The change was deliberate
3. Real money was realized
4. Equal or better results
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From a recent email from the P&G Alumni Network:
P&G's Connect + Develop program is looking for Anti-Bacterial Actives for Liquid Detergent Applications
“Is this the P&G you recall?The old P&G invented everything internally; owned all the intellectual property rights; almost never collaborated with external partners. A culture change is underway, and P&G has moved from "Not Invented Here" to "Proudly Found Elsewhere." P&G now looks external first for best-in-class solutions to its innovation needs. And P&G defines innovation broadly - technology, "cooked products" in market, packaging, design, manufacturing processes, new business models, new ways to go-to-market, and trademark licensing. “
P&G is Still Changing
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QUESTION: What is Leadership in the 21ST Century?
• Answer #1: Driving change
• Answer #2: Developing new leaders who can engage others in driving change
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• Start with PRIORITIES….. • Get your BEST people on it.
• You need a PROCESS for change…..
• Then you MEASURE it….. • There must be CONSEQUENCES…..
• Teach EACH other (how to do it best).
• Permanent change TAKES TIME…..
How DO You Drive Change?
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Creative Process
Inter-functionalTeams
Offset
Inflation
Specific Innovation Strategy Example: Frito-Lay
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Frito-Lay’s Problem
CostsProfit
Margin
1970s 1990s1980s
Revenues
Projected if inflationary costs not flattened
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..
Frito-Lay’s Specific Business Need
CostsProfit
Margin
1970s 1990s1980s
Flatten Costs in Five Years
Revenues
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Frito-Lay: Make the Business Need as Measurable as Possible and Start at the Top
Apply a Creative Process
Begin With Vice-Presidential Inter-functional Team
$500 Million in Five Years
to the bottom line
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Creative Process
StructureProblem or Business
Need
Generic Innovation Strategy
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Creative Process
So what is a “creative process”?
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Creativity as a System
Results =Innovative Content+
Process+
Process Skills+
Tools+
Style
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Innovative Results System
Innovative Results
=Content
+ Process
+ Process Skills
+ Style
+Tools
No JudgmentNo Logic
RelaxQuantity
Stream of optionsRadical options
Think in picturesBuild onto fragments
Yes JudgmentYes Logic
Clarify meaningsUse relevant criteriaFocus on a fewConsider risky optionsModify and refineMove toward action
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Now what happens when we mix divergent thought with
convergent thought?
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Killer Phrases
•A good idea, but….•Against company policy.•All right in theory.•Be practical.•Costs too much.•Don’t start anything yet.•It needs more study.•It’s not budgeted.•It’s not good enough.•It’s not part of your job.•Let’s make a survey first.•Let’s sit on it for a while.•That’s not our problem.
•The boss won’t go for it.
•The old timers won’t use it.
•Too hard to administer.
•We have been doing it this way for a long time and it works.
•Why hasn’t someone else suggested it before if it’s such a good idea?
•Ahead of the times.
•Let’s discuss it.
•Let’s form a committee.
•We’ve never done it that way.
•Who else has tried it?
Killer Phrases stop innovative thinking
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Innovative Results System
Innovative Results
=Content
+ Process
+ Process Skills
+ Style
+Tools
Deferral of Judgment
Separate divergentand convergent
thinking
No JudgmentNo Logic
RelaxQuantity
Stream of optionsRadical options
Think in picturesBuild onto fragments
Yes JudgmentYes Logic
Clarify meaningsUse relevant criteriaFocus on a fewConsider risky optionsModify and refineMove toward action
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The Process is Circular
ProblemFinding
Problem Solving
SolutionImplementation
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Innovative Results
=Content
+ Process
+ Process Skills
+ Style
+Tools
The Divergent and Convergent Skills are used in EVERY STEP
This speeds up “Good Thinking”
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A System
Innovative Results = Content +
Process+
Process Skills+
Tools+
Style
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Two Different Ways of Gaining and Using
KnowledgeGaining Knowledge by
Experiencing
Gaining Knowledge by Thinking
Using Knowledge for Creating
Options
Using Knowledge for Evaluating Options
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The Process Has 4 Stages
Generating “Getting things
started – finding new problems & opportunities”
Conceptualizing“Defining problems & putting ideas together”
Optimizing“Turning abstract ideas into practical solutions and plans”
Implementing“Getting things done”
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Different Process Styles
Optimizing
Implementing Generating
Conceptualizing
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Some People Have Strong Process Preferences
Strong Optimizer
Strong Implementer
Strong Generator
Strong Conceptualizer
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What Our Research Shows about the Different Process Style Preferences
1. Everyone is a blend of preferences
2. States not traits
3. You can be skilled in all four quadrants
4. Heterogeneous teams perform more innovatively (but have less satisfaction)
5. Generators are in short supply in corporations
6. Different jobs/functions favour different quadrants/styles (this can cause much wasted time and frustration)
4141
Not Enough Time Devoted to Conceptualization and Optimization
An organization attempting to establish new financial products quickly in a very competitive environment, but encountering a high percentage of failures.
4242
Not Enough Generators
A typical group of managers from a large aerospace company serving the aircraft, airline, and aerospace industries and having trouble expanding into new products and new markets
4343
Creative Problem Solving Profiles
-25
-20
-15
-10
-5
0
5
10
15
-10 -5 0 5 10 15 20 25 30
I-E
X-T
ImplementingGenerating
Optimizing
Conceptualizing
Warwick Manufacturing Group
Great ideas but no action!
Not enough optimizers or implementers
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Directors College
CPS Profile Scatter Diagram : Date October 23, 2004
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
30
-30 -25 -20 -15 -10 -5 0 5 10 15 20 25 30I-E
X-T
Many directors have enjoyed successful careers due to their implementation skills
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Different Styles
Optimizer
Implementer Generator
Conceptualizer
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An Interconnected System
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Innovative Results
=Content
+ Process
+ Process Skills
+ Style
+Tools
A tool for Problem Definition
We can’t because…
We don’t have any others…
The bulb burned out…
It would cost to much…
It’s not on our list…
We don’t do it that way here…
How might we…?
Defining Problems Before Jumping to Solutions is Hard for People and Teams
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Examples of Lack of Creative Thinking in Organizations
• Irish Spring
• Lay the bags Flat
• Cube Utilization
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Irish Spring
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Challenge Statement
HMW make a better green striped bar?
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The Why? / What’s Stopping? Analysis
A tool for Problem Definition
Step 1: Ask “Why? / or What’s stopping us? of the challenge
Step 2: Answer in a complete simple statement
Step 3: Transform the answer into a new challenge (How might we…?)
Innovative Results =
Content +
Process+
Process Skills+
Style+
Tools
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Irish Spring Challenge Map
HMW make a better green striped bar?
HMW regain market share?
Why
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Irish Spring Challenge Map
HMW make a bettergreen striped bar?
HMW regain market share?
Why
?W
hy?
HMW make a more refreshing bar?
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Coast
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Where did the team spent it´s time?
Optimizer
Implementer Generator
Conceptualizer
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Why teams are often not creative in problem solving
• No common process for thinking together• Mixing thinking skills counterproductively• Unaware of others’ problem solving styles• Unable to synchronize• Overly focused on solutions• Impatient• Lacking tools for complex thinking• Mixing process and content• Not having the right people
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More Examples of Non-Creative Thinking in Organizations
• Lay the bags Flat
• Cube Utilization
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Lay the Bags Flat
Fact: Manufacturing has found a new way of putting bags of
potato chips into cartons which would save $30 Million but the bags must be laid flat instead up upright
Fact: Sales people need to let the grocer count the number of
bags in a carton quickly and if the bags are flat this will take a longer time and this will stop them from making their target number of sales calls per day
Fact: The group is stuck and management is wondering why
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Defining the Problem Creatively
“How might we lay the bags flat yet still let the grocer quickly know how many bags are inside the carton?”
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Cube Utilization
Fact: Frito-Lay trucks go out only half full of potato chip cartons
Fact: A new method of loading trucks has been identified -Trucks would be 95% full - $12 Million would be saved Facts: A team has been testing the new method to ensure the new
method will not result in more chip breakage
The team is also trying to determine if there is an optimal level of chip breakage that consumers prefer
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Digging out the Hidden Facts
• The facilitator repeatedly asked the team the question:
“What else is stopping you from making a recommendation to adopt the new method?”
• Someone on the team finally answered:
“We are afraid of making the recommendation without being sure there is no risk ”.
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Defining The Problem Creatively
“How might we write the recommendation in such a way that management understands the risk and shares it with us?”
-the recommendation was written that same day and adopted by management immediately
- saving $12 Million directly to the bottom line
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In Tough Economic Times… Enlightened Leadership is Needed
Unfortunately, many organizations do not have it. Adopt a Reactive mindset (reduce costs)
– Make short term cost reductions which reduce quality– Weaken capacity for new growth– Lose good people
Rather than being Pro-Active (improve costs)– Create innovative improvements which increase quality– Make strategic changes to prosper
• -- Engage their people in using their brain power
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Engaging the Brainpower of your Employees is FREE!
But it takes Creative Leadership!
Facilitative Skills for Leaders are Critical!
The Creative Process is important..... But Skill in Facilitating the creative process is even more important!
What if every Presidents in Portugal were a Skilled Facilitator?
What if every employee in Portugal were engaged in creative problem solving by their Facilitative Leader?
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Let’s Practice! I will be the Facilitative Leader
A Problem for the Algarve hotel industry is that from November to March there are very few customers.
Why is this so? What are the most important reasons?
What are some creative CHALLENGES? - “HOW MIGHT WE…..?”
What are some IDEAS that might solve thesechallenges?
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Let’s Create Your Innovation StrategyKeep it Simple!
You need three things:
• a clear-cut problem or business need
• a simple structure to engage people easily
• a creative process everyone can use
First, what might be your organization’s most important problem or business need?
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A Creative Process
Structure: For example, interdepartmental teams
Problem or Business
Need
An Innovation Strategy Looks Like This
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Creative Process
Structure: Engage your people in finding good problems to solve all over the organization
Business Problem or
Need:
Improve Costs
Suggested Recessionary Innovation Strategy
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Now, What About Your Structure?
• How would you engage your people in creative problem solving?
• Would you use teams?
• What kind of teams would make sense?
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Now, What About Your Creative Process?
• What could you do to build your own creative problem solving facilitation skills?
• What could you do to build facilitative skills in other leaders in your organization?
• What could you do to equip your employees with skills in participating in facilitated creative problem solving sessions?
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Now, Fill in Your Complete Strategy!
Share with a partner
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Now, Let’s Think About Implementing Your New Strategy
. Make a plan to begin implementing your strategy. -what would be an easy next step? -then the next step?
. Put a definite time on each step. Look at your calendar! . Discuss your plan with a partner .
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Time for Action
• Now it is up to you!
• There is no creativity without action!
• Creativity is Implemented Change.
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The Creative Process Ends in Action
Optimizing
Implementing Generating
Conceptualizing
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The End
Questions? Ideas?
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Extra Stuff
Just in case
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What’s Behind the Extraordinary Times?
• Catastrophic bank and financial institution failures
• Boomer generation managers have never experienced failure
-only know a culture of continuous growth -this new unknown situation creates fear and insecurity spawns a “Circle the Wagons” mindset
• Media proliferation makes matters worse
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The New “Normal”
• Consumer consumption more rational
• Equity growth through real productivity gains (not paper)
• Governments more intrusive
• New regulations more stringent
• New levels of transparency and disclosure for investments
• Investment in sectors of high risk / high reward potential - genetic engineering; software; clean energy
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THE CHALLENGE for Both Large and Small Organizations …
How might we engage our employees in reducing bottom line costs while increasing the quality of our products, services and processes?
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Your structure?
Creative Process
Facilitation
Your Problem or Business
Need
Your Innovation Strategy
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Why Teams?
SINGLE DISCIPLINE
2 + 2 = 4
Yesterday’s Focus SIMPLE
PROBLEMS
Today’s Focus
MULTIPLE DISCIPLINE
COMPLEX PROBLEMS E=mc²
Which skills and tools are required to do this work?
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Creative Process
Commercialization Teams
Commercialize More New
Products Each Year
Another Specific Innovation Strategy
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43 2 1
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A Fundamental Concept:
Creativity
is a combination of
Knowledge, Imagination and Evaluation
But we have different styles of using this combination…
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The Basadur CPS Profile
Two ways of gaining knowledge:– Through direct experience– Using abstract thought
Learning by Direct Experience
Learning by Detached Abstract Thinking
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The Basadur CPS Profile
Two ways of using knowledge:– To ideate (create options)– To evaluate (judge options)
Using Knowledgefor Evaluation
Using Knowledgefor Ideation
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Two Different Ways of Gaining and Using Knowledge
Gaining Knowledge by Experiencing
Gaining Knowledge by Thinking
Using Knowledge for Creating Options
Using Knowledge for Evaluating Options
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89
..
.
.
90
Do Well or
Like to Do
Don’t do so well or
Don’t like to do
91
Strategic Plan for Innovation
HMW differentiate ourselves from others in the market?
HMW derive additional revenueeach year from newly commercialized products?
HMW commercialize more new products each year?
HMW sustaincurrent profits?
HMW grow our short & long term profits?
HMW get 4 differentfunctions workingtogether as a team tocommercialize morenew products?
HMW sell newproducts as well as wesell current products?
Why..?
What’sStopping..
?Note: HMW =How Might We?
HMW increase the %of high margin sales?
STRUCTURE
BUSINESS NEED
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Real & Tangible Results
Procter & Gamble
– US$400M per year – 4% of sales
Frito-Lay
– Off$et program led to cost savings of over US$500M
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Real & Tangible Results
Ford Motor Company 40 cases/shift
Implementer(Action)
Optimizer(Solutions)
No fact finding
Think of a solution and
try it;when it fails, repeat this half cycle
No problem definition
Only half of the creative process used.
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Two days infact finding
and problemdefining
One day insolution
development
The entire creative process used.
Implementer(Action)
Optimizer(Solutions)
Generator(Problem finding,
fact finding)
Conceptualizer(Problem Definition)
Implementation
Ford Motor Company 120 cases/shift
Real & Tangible Results
95
Real & Tangible Results
Pfizer
– Bold business-accelerating ideas for double-digit growth – Aspirational strategic planning – unified regions under a single World HQ vision and
imperative
96
Real & Tangible Results (continued)
J.P. Morgan – Simplex used as a RAPID BUSINESS ANALYSIS tool to
strategically plan company wide IT investments. – Prioritised 300+ projects down to 16– Completed in 4 months vs. traditional tools > 1 year.– Breakthrough success resulted in 50% increase in IT
budget.
Hamilton Juravinski and Toronto Sunnybrook Regional Cancer Centres – Process improvement teams reduced Radiation Therapy
Wait Times by 39%
97
Innovative Team Results System
Innovative Team Results
=Content
+ Process
+ Process Skills
+ Style
+Tools
98
Why Teams Fail
1. Incomplete Content
2. Incomplete Process
3. Lack Skills to Execute the Process
4. Lack Tools
5. Unable to Synchronize Styles
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Why Teams Fail
1. Incomplete Content Fact finding inadequate
• In depth customer & environment understanding No customer input No supplier input Key people not invited
• Sales? Manufacturing? Insufficient time to process the content Hidden agendas Lack of ownership
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Why Teams Fail
2. Incomplete Process No consistent process No common language Not understanding the difference between being a
participant and an owner Focused only on ideas No detailed action plan No process leader SWOT is just a tool
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Why Teams Fail
3. Lacking Skills to execute the Process 1-8 behavior Preconceived solutions – unable to focus on facts Difficult to defer judgment Poor diverging skills especially in conceptualization Poor converging skills Jargon & incomplete articulation
102
Why Teams Fail
4. Lacking Tools No tools for key stages of the process Not understanding the difference between tools & skills Incomplete tools for convergence Unable to clarify before evaluating 50% Diverge / 50% Converge required
103
Why Teams Fail
5. Unable to Synchronize Styles Unaware of other styles Frustration Team selection incomplete Impatience Unequal time devoted to stages
