How to Unleash Innovation Hidden in Your Enterprise

Toyota is a heavyweight. Not only is it the world’s largest automaker, but it’s also a master at innovation on the factory floor to continuously improve its operational efficiency.

Consider the concept of “Genchi Genbutsu,” a cornerstone of the Toyota Production System. Japanese for “actual place, actual thing” (and sometimes translated as “go and see for yourself”), Genchi Genbutsu bucks the traditional top-down operational hierarchy. It calls for leaders to descend from their ivory towers to the production floor, where they can truly understand issues, dig into root causes and discuss solutions.

This isn’t the tired “manage by walking around” approach. Genchi Genbutsu requires real engagement. Its goal isn’t to help leaders get their 10,000 daily steps; it’s to help them discover insights where insights live.

Few western CEOs exhibit the level of humility Genchi Genbutsu requires. Elon Musk, though he might not know it, is perhaps its most visible American practitioner today. When Tesla learned there were far too many injuries at its plant in Fremont, California, Musk put on his walking shoes. In a heartfelt email to employees, he pledged to personally investigate every employee injury and vowed to perform the very tasks that might cause those injuries.

But Musk’s manifesto isn’t just for executives whose employees might be hurt in the line of duty. Its kernels of learning and listening have broad implications for innovation.

Creativity Requires Diversity

To many executives, involving rank-and-file workers in business strategy is a strange concept. Isn’t business strategy better left to those trained in it? Can’t the VP of operations provide all the insights a regular employee could — and then some?

The reality, however, is that strategic planners tend to be a homogenous bunch, and organizational creativity thrives on diversity. Three-quarters of a strategy team might be ex-consultant MBAs or members of the executive suite. Sure, their ideas might look great in 2×2 or 9-box matrices, but they’re all several degrees of separation from the factory floor.

Innovation happens when those executive-level ideas collide with equally valuable ones from everyday workers. Without the 30,000-foot view, ideas might work in practice without benefiting the broader company; without the ground-level one, ideas that sound great in the boardroom might hamstring production.

What, exactly, do “lower level” employees bring to the discussion that senior managers cannot?

Customer Feedback and Efficient Solutions

Beyond the beginner’s mindset they’re likely to bring to the table, they possess insight into two critical areas: customer feedback and efficient solutions. Customer service representatives, for example, hear story after story from customers. Those in sales, particularly retail sales, know which products sell well before the quarterly sales report is released.

Rank-and-file employees also understand how executives’ plans are accomplished. Picture businesspeople planning a product feature to head off a competitor. They start from scratch, estimating that it’ll take four engineers and a project manager three months to complete. And they might be right. But had they invited a software engineer into their original discussion, she might have pointed out that she read on Hacker News about a startup that offers an API she could use to implement a version of the new feature in just a week.

Of course, a “soft” benefit to bringing designers, developers, and customer service people into the project-planning mix is stronger workplace culture. The Engagement Institute estimates that worker disengagement costs companies between $450 billion and $550 billion every year. Engaged workforces exhibit lower turnover, increased productivity, and fewer workplace accidents.

Those cultural benefits, customer insights, and execution details are ripe for the taking. All that’s left is for leaders to go find them. Genchi Genbutsu.

Try ‘Trickle Up’ Innovation

Even when leaders seek broad input, however, shifts in strategy are scary. For management, they represent risk. For employees, they represent potential job loss. (Remember the Bobs from “Office Space”?) Yet an organization that fears change is one that can’t adapt quickly enough. So if you want your business to survive, both executives and workers must embrace change.

Start with these steps toward a “trickle up” system of strategy development:

1. Incorporate Mission Checkpoints

It’s easy to lose sight of your company’s mission in the day-to-day details of the business. To keep it at the forefront of everyone’s mind, conduct mission spot checks. When an employee comes to you with a question, don’t answer it immediately. So ask her, “What’s the big goal we’re trying to achieve?” Mission-driven thinking tends to be innovative thinking.

2. Encourage the Right Kind of Rule-Breaking

Did your employee reach out to a client when she wasn’t supposed to? Before reprimanding her, ask yourself whether the rule makes sense. Did she act out of an understanding of the company’s mission? If her behavior was in line with corporate goals (especially if it yielded better results than the existing rule), don’t bring down the hammer. Instead, reward her experimentation.

3. Bust Down Silos

Different departments are subject to different dynamics, which can create an “us and them” mentality. Help team members see that they’re all in it together with cross-functional staffing. For your next project, bring as many departments into the mix as early as possible. Then spend time shadowing individuals on other teams, doing what they do. More often than not, you’ll find it more challenging than you’d imagined.

4. Leave the Building

Get out of your office chair, turn off your devices, and go meet your employees and customers where they are. Make this a mandate for managers. After promising to walk in the shoes of any injured employees, Musk wrote, “All managers at Tesla should do this as a matter of course.” No company can thrive if its executives can’t empathize with employees.

There’s a sort of tragic irony surrounding this hunt for innovation. Executives spend thousands of dollars hiring pricey coaches to coax it out of higher-level employees. But in the meantime, billion-dollar ideas could be swirling in the minds of low-paid team members.

The question isn’t whether your team members have valuable insights; the question is this: Will you hear them?