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At Winnebago Industries, the recreational vehicle maker, a worker pointed out that the ten percent of customers who ordered the deluxe-sound-system option were getting additional speakers they never used. No one had told the crews on the main assembly line that installed the speakers for the regular sound systems to skip the vehicles that would be having the deluxe speakers installed later. The regular speakers were never connected. They were seen, but not heard. The worker's solution to the problem not only saved money, but also stopped customers bringing vehicles back to the dealers and asking them to fix speakers that were not working.
At one Dana facility, a worker wondered why his machine was consuming so much cutting oil, since the oil was being recycled. He realized that the loss was due to the oil-drenched metal shavings that came out of a chute on the side of the machine into a scrap bin. He proposed attaching a two-foot-long sieve to the end of this chute, so that oil would have time to drip through it as the shavings were pushed slowly over it. His idea saved ten gallons per day on his machine. With fourteen other machines in his department, the total savings worked out to 150 gallons per day.

Most lean production initiatives fall far short of delivering the performance improvement they could because they leave out a critical component -- a system to tap large numbers of employee ideas. Front-line employees work every day with the company's products and processes, and have intimate knowledge of how things really work. They see a great many problems and opportunities that their managers do not, and have many ideas to save money and improve productivity and quality.

When most people think of lean production, Toyota comes to mind, as the pioneer of the lean movement and still one of the leanest organizations in the world. But relatively few people know that ever since CEO Kiichiro Toyoda saw Ford's suggestion system in 1951, Toyota has also pushed the state of the art in managing employee ideas. In fact, employee ideas have been a primary engine of its kaizen activity for the last 50 years. Since the mid-1970s, Toyota plants worldwide have averaged some 20 to 30 ideas per employee per year, of which more than 80 percent were implemented. Only a handful of manufacturers in North America and Europe have put even a fraction of Toyota's effort into getting employee ideas. As a result, they are missing most of the advantage they should be getting from their lean production initiatives, and continually having to struggle to stay competitive. There is a clear link between an organization's ability to tap ideas and its overall performance:

Milliken, a global fabric and specialty chemicals manufacturer, averages 110 ideas per employee each year. In a number of its textile product lines, it competes with companies in developing nations whose prevailing wages are less than one twentieth of those in Europe and the United States, where most Milliken operations are located. To be successful, therefore, the company has to out-manage its competitors. Over the last two decades, Milliken has actually been able to increase its advantage over them, a feat that Roger Milliken, Chairman and CEO, attributes in large part to the company's idea system. Milliken is one of only two companies in the world that has won both the Malcolm Baldrige National Quality Award (MBNQA) and the European Quality Award.
Dubai, an aluminum producer in the United Arab Emirates, has none of the natural advantages typically associated with aluminum producers. It must produce its own electricity, desalinate seawater from the Persian Gulf to get the large amount of fresh water it needs, and import its bauxite from Australia. Yet Dubai, whose people average more than nine ideas each per year, is the second lowest cost producer of aluminum in the world. According to CEO John Boardman, the main reason for the company's success is its idea system.
Dana Corporation, a global company with over 60,000 people, expects every employee to submit at least two ideas each month. Worldwide, Dana has an 80 percent implementation rate. Two of the company's U.S. divisions have won the MBNQA.

What these companies understand, as do other companies that are "lean leaders," is the value of front-line ideas. They have created simple and effective systems and procedures to ensure that employee ideas are handled smoothly and fairly. And they know something else that their competitors don't. While top-down improvements -- such as six-sigma programs and kaizen blitz events -- may be necessary to lean production, the potential improvement from front-line ideas is far greater. When companies track the sources of their performance improvement, they usually find that most of it comes from employee ideas. For example, only a few years after a Johnson Controls facility in Kentucky started its idea system, the management team was already budgeting for half the annual cost reductions written into its long-term contracts with customers to come from employee ideas. At Dana, whose system is more mature, one manager reported that his data showed 80 percent of newly identified cost savings coming from employee ideas.

A great many managers in lean environments either don't appreciate the power of employee ideas, or don't know how to go about tapping them. The authors just completed a global study of idea systems involving more than 150 companies in 17 countries, ranging in size from small family-owned businesses to large multinational corporations, in both union and non-union environments. The findings are published in the new book, "Ideas Are Free." We examined best-practice companies -- ones getting more than 50 ideas per employee per year, and those who were struggling or just beginning. We compared what worked with what didn't, developed hypotheses, and tested them against a wide spectrum of organizations. We continued to refine and test until we were confident that we had distilled the general principles needed for success. It is surprising how many of them are counterintuitive.

This article is the first in a series of four that will abstract select key principles of managing ideas for lean manufacturing. We will describe how some of the leanest companies in the world get and use large numbers of employee ideas. This includes:

Why, despite the attraction of big and dramatic ideas, it is much smarter to go after small ideas.
What truly motivates employees to offer ideas, and why the most common reward schemes backfire?
How you can make ideas part of everyone's job.
How to focus your employees' ideas on the areas most critical for improving performance.

The bottom line is this: if you are not seriously going after employee ideas -- and getting lots of them -- you haven't begun to unleash the power of lean production.