Friday, January 25, 2013

Employee Engagement->Innovation->Customer Loyalty: Case Study

Leverage Innovation
Organization transformation is a business full of: principles, tools, models, approaches, frameworks and perspectives.  It’s a mind-boggling and mind-numbing stew of overlapping and contradictory ideologies.  Just defining a word like “innovation” will call forth passionate debate.

When I get tossed in these storms of righteousness I struggle back to a few “truisms” that I’ve learned along the way, like:

… nothing happens in organization transformation unless the executive team is “open and trusting.”  If you can’t fix this problem then you can’t fix the organization!

I discovered another truism when I spent 26 months in Korea working the transformation of a 30,000-employee public company.  A decade ago I came to the understanding that organizational change had to be driven from the outside-in.  Successful change is customer driven change.

As I worked with this idea of “customer driven change” I found collateral benefits.  I found that when employees leverage customers, the employees become engaged in their organizations.  A short line of sight between employees and their customers not only generates effective change, but it does it by solving the biggest malaise in organization’s today – the disengagement of employees.

So it became clear to me that organizational transformation should be based in engaging employees to solve customer issues.  Trite, but true!

My practical problem was that HR programs aimed at solving employee engagement didn’t always solve customer issues; and marketing programs aimed at customer loyalty didn’t always engage employees.  A link was missing.

Then in mid-2010 we got a request from the CEO of Korea Telecom to help him engage his people to change the organization.  KT’s market was shifting, yet the employees tended to abide by traditional hierarchical and deferential rules.  How could we connect employees to their changing customer base?  The answer was “innovation.”

Innovation has some glorious characteristics that go beyond the customary Employee Engagement and Customer Loyalty programs.
  1. Innovation needs to be framed within the context of a “customer value proposition,”
  2. Innovation draws on the energy and passion derived from creativity which is innate in all humans, irrespective of culture, and
  3. Innovation has a discipline that leads to commercialization.

Thus another truism: organization transformation is based on the virtuous value chain of:

Employee Engagement->Innovation->Customer Loyalty

This understanding was fundamental to our success in Korea – and that success has been documented in the public domain.  Here are two references.

The first reference is a case study at the London Business School.  The study was prepared about a year and a half into our 26-month engagement.  The connection to LBS was through Gary Hamel who led our project.  The case study has a strategic focus on the large issues of transformation.

The second reference is written by my client and best friend in Korea, Misook Lim who now heads the Innovative Management Center at Korea Telecom.  Misook has just published this article.  It comes about a year after the first reference.  This article focuses on the practical working level and implementation of the strategic context provided in the first reference.

Pervasive Innovation at KT

I’m not a fan of the common wisdom that: “70% of change efforts fail.”  The virtuous value chain and the dedication of my Korean colleagues have proven it wrong.

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