Monday, December 10, 2012

Innovation – The Link in the Virtuous Value Chain

Innovation Links Employees & Customers
I get tired of hearing that “70% of change initiatives fail.”  Firstly, I’m not sure of the context and accuracy of this urban myth.  Secondly, to the extent that it is true I don’t hear of many solutions other than the tautological: “we need better management of change.”

Since this 70% mantra has been around for more than a decade maybe its time to question why we haven’t solved the problem.  Let’s step back and look for other correlations and trends.  I see two:

  • Employee Disengagement:  It’s astounding.  We’ve worked for decades to disconnect employees from their employers.  Now that we’ve hit all time lows in employee engagement we seem surprised.
  • Customer Dissatisfaction:  No matter how hard we work at the customer experience we find that levels of customer loyalty keep dropping in this world of mobile “show-rooming” and social media.  Customers are now in charge of brands; not company’s.

We have produced a vicious cycle: 
Employee Disengagement->Customer Defection

My question is: “How can change, or any initiative, be successful within such organizational malaise?”  Shouldn’t we solve the organizational question before we work on the change question?

We haven’t failed at change; 
we’ve failed our employees!

So if we start with employees, how do we re-engage them?  This topic has received myriad attention in the past few years, but a lot less by way of results.  We know the answers, we just can’t figure out the implementation paradigm.  

For example, if we look to Daniel Pink we can find one slice of answers.  His research shows that engaged employees need three things: Purpose, Mastery, and Autonomy.  Ok, that’s a good list, but how do we take action?  Well, I have a few thoughts.  Firstly, let’s look at Purpose.  My observation is that:

Employees don’t work for their employers; 
they work for their customers!

No matter how hard organizations try they just can’t remove the desire of most people to do a good job.  Very few people wake up and say “I want to do a bad job today.”  Yet, the drive for undisciplined profits and imposition of bureaucratic controls thwart the energy of people at work – except when they are directly involved in solving a problem for a customer.  How often have you heard a customer disdain an amorphous company but love the person who solved their problem.

So, customers give employees Purpose.  But what do we do about Mastery and Autonomy.  My answer is that we involve them in Innovation through:
  • Skills.  Humans are creative by nature.  They need to regenerate and they love to bounce their ideas against other ideas.  However, often they just don’t know how to structure idea generation and synthesis.
  • Means.  Employees need “Nike autonomy” – when it’s right for the customer “just do it.”  When the issue is higher than low hanging fruit we need mechanisms to register employee ideas, and get short term funding for experiments.  These tools are not a mystery in this time of technological open innovation.  

Change initiatives will succeed if we connect our employees to their customers.  Innovation is the link in this virtuous value chain:

Employee Engagement->Innovation->Customer Loyalty


  1. Bud,

    Here in California organizations have taken to a contigent worker model. 50% is common, so for a Fortune 10 company read 50,000 people who are not employees.

    This creates a level of disengagement that is almost comical, if it wasn't so sad.

    Change, even when it makes sense (makes sense is relative- keeping your role may make participation worth it) suffers without some level of loyalty.

    Describing end states and connecting work to change could benefit from your customer focus ideas.

    Good post!

  2. Great post Bud! Indeed, it is virtuous value chains we should be aiming for. Simple enough as a concept, yet so elusive in the real world.