4.6.4 How to implement or improve systematic management of internal innovative ideas?

Summarising what we have studied so far, there seem to be two main fields of action from a management perspective

  1. We need a proper company culture as well as motivated and well trained staff, which allows, stimulates and awards innovative thinking and acting.
  2. We need tools to deal effectively with innovative ideas. Criteria of a companies culture promoting innovative thinking1

Every organisation has its own unique culture. Often it will have probably been created unconsciously, based on the values of the top management or the founders or core people who direct that organisation. This culture is influenced by and influences the decision-making processes, it affects styles of management, cooperation and communication style in the organisation.2

A programme to promote innovative internal proposal needs top management support. Since those innovative thinking and acting processes among employees are “on a more or less voluntary basis and since knowledge and experience are to a large degree personal, there should be a culture of motivation, a sense of belonging, empowerment, trust and respect within the organisation”.3

Between others, the management should focus on developing and maintaining a working environment, characterised by the following conditions:

  1. Awareness of the innovative potential and esteem for all employees (even those with a relatively weak education and lower positions are interested in and able to make their work easier and more effective)
  2. Willingness to invest in time and resources to use the innovative potential
  3. Willingness to invest in education and competences development of the employees
  4. Free access to information sources like internet, data bases as well as to internal knowledge sources like meetings, informal briefings, which help to knowledge creation and tacit knowledge transfer
  5. Open communication culture about and involvement in organisational development problems
  6. A culture of properly dealing with mistakes and unsuccessful actions (whoever has made a serious mistake will normally be the right person in the right position as he will never repeat it again – learning-from-mistakes/lessons learnt-culture.)
  7. Tools to register, evaluate, and provide feedback to innovative proposals and to guarantee implementation after positive assessment
  8. Reward system.

The factors 1-3 are mainly determined by attitude and organisational measures, particularly the third, systematic development of professional competences.4 Factor 4-6 – access to information, knowledge, communication and a culture of learning from experience - relate to knowledge management tools. This management topic often sounds difficult to SMEs but you don’t need to fully understand all knowledge management concepts, models and theories. On the contrary SMEs managers should focus on some practical and easily implemented solutions to support knowledge management. Do we continuously promote a culture of trust and open discussions, about problems to solve, mistakes, success…?

Do we speak about these issues within work groups; do we sometimes ask staff about feelings with the company, what problems they encounter and what their expectations are? Do we inform staff about decisions, developments and strategies? Do they have access to all the information they need for their work and to develop innovative ideas?
These factors are indispensable for proper management of internal innovative ideas but not specific to it. Moreover, all tools and practises should be selected and adopted according to the market, work and staff profile, company sector as well as other company peculiarities. Further information is also available in this guide.
For implementing factors 7 and 8 – tools to register, to assess, to provide feedback and proper reward systems, we probably need some further specific guidance.

Please stop and think: Go through slowly again the eight factors mentioned above. Please reflect about the degree of existence/ implementation in your organisation. Do you have ideas about what could/should be done next for improvement? It might be useful to take note of these ideas.

Factor 7 - Tools to register, to evaluate and to provide feedback to innovative internal proposals
For your convenience we have provided “Tools” in this case which mean examples of proper, practical forms which you can find annexed to this component.

Time is an important factor as the reaction time to requests is extremely important.
If an employee is showing real commitment, identifying an area where margins of improvement exist, investing his time to develop and to present an innovative idea, he should expect to get an answer within an adequate period. In addition, he will expect a careful evaluation and adequate, sound, feedback. Time Management is easy nowadays and management should find the right place in their agendas.

Assessment of the idea should be flexible concerning the composition and number of evaluators. However, evaluators must have the required professional (and social) competence. They have to be very careful with their judgement in order not to destroy a creative environment and cause individual frustration.

Annexed you will find the following forms (suggestions)
a.    Improvement proposal form
b.    Receipt and registration of a proposal
c.    Protocol for evaluators
d.    Feedback after evaluation

Factor 8 – Reward system, belongs to management tasks which help to create and maintain an innovative organisational culture. We could give general tips here but prefer to ask first, how we can key into the interests and expectations of our staff.

Please stop and think: Imagine that an employee has made a proposal that has lead to a significant improvement of a product. Now think, what is the best way of rewarding her? What comes to mind? Will money be the best and only way? Individual motives and factors promoting innovative thinking

Employees are often afraid of making a fool of themselves with their idea, to hurt solidarity with their colleagues or make a proposal which highlights the “failures” of their management.5

Therefore, motives have to be stronger than the arguments against.

When regarding motives we can go back to general catalogues, like the following one:6 Fig. 2 Individual motives

Bayer (2003) conducted a survey of motivation of employees and innovation.
From this analysis in SMEs about commitment for internal innovative proposals, we can find the following three key motives:7

  1. Motivation and satisfaction received from facing a challenge and mastering it
  2. Motivation and satisfaction when solving a problem
  3. Motivation of experiencing success and recognition from cooperation with a group of other creative colleagues.

These results go perfectly with the above-mentioned catalogue of motives. An interesting result is that recognition from close colleagues and within their own department was more motivating than more “public” recognition e.g. in a company event.
Financial and personal recognition have more or less the same importance.
The analysis shows that the most important reason for starting to search for improvements was detecting a possibility for improvement and annoyance with a situation or failure.

What are the important accompanying conditions for innovative solutions?
The outcome of the above mentioned analysis focuses on the following factors:

  1. Trustful relationship with superiors
  2. Motivation by superiors
  3. Broad general knowledge
  4. Sound basic knowledge and skills in the area of profession
  5. Professional expert knowledge
  6. Developed handicraft skills8

Another interesting result from the above mentioned survey was that brainstorming with others (see component 4.2) has been seen as important, even more important than cooperation in Communities (see 11.3) and that knowledge about creativity techniques in general (see 4) was considered to be not very important.
Now that we have a little more knowledge about motivation and motivating factors lets look at factor eight again, how to reward individual proposals for improvement?
We have learnt that financial remuneration and other form of recognition seem to be more or less of similar importance. Financial rewarding – if resources allow – will not be a problem. Therefore, we are going to focus on non-financial ways of rewarding. This topic is not limited to rewarding innovative ideas. It is also relevant when talking about stimulating knowledge sharing and we have adopted suggestions, which we have found in this field:9 Practical (non-financial) rewarding tools

Non-financial rewards can be as effective as financial rewards. In the following, you will find suggestions on practical non-financial rewarding possibilities.

Managing an Incentive Programme

  • We identify what initiative we want to reward, whether it will be the improvement or development of a product or better workflow, cost reduction, improvement of communication with customers or a higher degree of clients’ satisfaction etc.
  • We link the targets to the companies’ strategy and make sure that the staff consider them as fair and achievable
  • We use assessment criteria, which are reliable and consistent
  • We manage recognition of internal innovative proposals systematically
  • We offer a variety of rewards in order to meet different values and motives

There are two different groups of non-financial rewards:

  • Immediate rewards and
  • Career rewards.

An immediate reward can be a one-time material reward such as gift vouchers, dinner vouchers, paid holidays or any other gift in the form of personal or public praise. A career-related reward is a more effective form of non-financial reward, which may have a long-term implication for the employee.

Please have a look at Fig. 3 Non-financial rewards Cases of good practice

This paragraph under the heading “How to implement or improve systematic management of internal innovative ideas?” should provide you with a good practical example applicable to SMEs. Despite an intensive search, we were unable to identify a relevant example. We know that the system works well in SMEs, but the presented examples all referred to large organisations with different structures. Those organisations have bought or developed specific software in order to manage the large number of innovative proposals. We present the example of a Spanish bank below.
Those readers, who do not want or cannot afford specific management software for the purpose, might be interested in using the annexed check-lists and forms which are results of good practice in SMEs. They can also be sufficient to start implementing a system of management of innovative proposals in your company. Please let us know your experience so that those can appear here as good practical example when updating the guide.

Real Time Suggestion of Related Ideas in the Financial Industry, Bankinter 10

General Description
The financial industry is becoming increasingly competitive. There is strong pressure to rapidly generate new products and services, and successful ones are copied by competitors within months. Time to Market is thus a critical factor. Bankinter, the fifth largest Spanish bank, is recognised as one of the most innovative banks in Spain, and technology often plays an important role in the innovation. To speed up the process of innovation, Bankinter has had a system in place for many years where any of its 4200 employees can submit ideas for new products or services, cost reduction, or improvement of internal processes. Several successful products and the efficient operation of the bank are partly due to those ideas.

The problem
Over the years, tens of thousands of ideas have been submitted by employees. Consequently, managing and evaluating these ideas has become a major role of the human resource management (HRM) department. Apart from the effort it costs to evaluate ideas, it is also hard to identify the similarities, and to perform analyses on the information (most valued employee, social networking, implicit collaboration between departments, etc.). The result is that there maybe many missed opportunities.

The solution
Bankinter is currently deploying a system based on Semantic Technology that helps HRM to manage the ideas. When an employee enters a new idea, the system analyzes the text and recognises the relevant concepts from a financial perspective. This happens in real time, enabling the user to be shown other ideas that contain the same concepts (not words!). This approach provides employees with a simple tool for checking whether their idea is actually new.
The concepts are defined and related in a financial ontology, which includes products, channels, departments, clients, etc. In the same way, employees can search for ideas that contain relevant concepts, and concepts are highlighted in real time to provide feedback to the user. The figure shows a small fragment of the ontology, that is defining different types of channels, objectives of ideas, and operative actions.
Search and analysis can also be performed on dates, individual employees, departments, etc. Moreover, the system is able to give an explanation as to why it thinks certain ideas are similar by showing the semantic relations between the concepts in the new idea and existing ones.

Key Benefits of Using Semantic Web Technology

  • Better innovation management leading to faster time-to-market
  • Differentiation from competition
  • Talent management
  • Leverage full intellectual capital for improvements of business and operations
  • Employee satisfaction
  • Documented, shared understanding of relevant vocabulary for business

1 The following statements are based on Oslo Manual, 3rd Edition 2005 quoted in component 1 of this guide.
Trainmor-Knowmore: Knowledge Management guide. 3.14 Developing & Evaluating Organisational Culture for Knowledge Management (KM), 2008
Trainmor-Knowmore: Knowledge Management guide. 2.5 Success Factors in KM Implementation, 2.5.3 Culture, 2008
You will find more detailed information about this topic under 10.1 Human Resources and Innovation in this guide
Arbeitsberichte Nr.26, Betriebliches Vorschlagswesen. Quote from: Beyer, Stefan 2003, p 151
Herczakowski, Gerd 1991
Beyer, Stefan 2003, p. 153
Trainmor-Knowmore: Knowledge Management guide. 3.15 Methods to Encourage Knowledge Charing, 2008
study copied from: www.w3.org/2001/sw/sweo/public/UseCases/Bankinter/