Why the Pyramids Are One of the Seven Wonders

March 13, 2012  

Innovation at USAANormally we don’t do this.

We have not yet posted an entire tip to this blog.  Yet, at the request of one of my clients, the publisher has agreed to let us do it…just this one time.

USAA is one of the coolest and most interesting financial services companies out there.  Every year they appear on Business Week’s list of best customer service organizations.  And they are innovating the way they innovate.

This tip describes the way they leverage organization structure to drive innovation.  Enjoy and feel free to share the pdf.

****  Download the pdf here  ****

Why the Pyramids Are One of the Seven Wonders

The Innovation PyramidMost companies start their innovation efforts by creating a new corporate function charged with delivering innovation. These functions are composed of employees who are reassigned to and dedicated to this new organization within the company. In most cases, this is a complete waste of time and money. This model keeps innovation separate from the rest of the business, and there is no involvement by the people who make the important decisions. Additionally, the innovation efforts remain out of touch with the real needs of the business.

Recognizing this common dilemma, USAA, a 22,600-employee financial service firm, took a completely different approach.

At USAA, innovation starts at the leadership level. Leadership sets the tone for the rest of the organization and is a strong advocate for innovative thinking. Next, USAA created a “core team” composed of thirty-five individuals, all of whom dedicate 100 percent of their time to innovation. However, here is the twist: Only ten of those individuals report directly to the innovation leadership. The other twenty-five “matrixed” individuals spend their time solely on innovation-related activities, yet with a focus on the specific innovation needs of their line of business. This creates widespread buy-in.

What USAA realized was that thirty-five people could not change the culture of a 22,600-person organization. Therefore, beyond the core team, it created a network of two hundred “innovation advisers,” each of whom spends 10 percent of their time on innovation efforts, working closely with the core team.  In addition, there are ten “innovation champions.” These are leaders who serve as powerful advocates for innovation and help break through any challenges that might pop.

How can you use this same method to accelerate your innovation efforts?

First, make sure your leadership team is on board, as they will set the tone, demonstrate strong executive support, and help challenge the status quo.

Of course, your leadership cannot create a culture of innovation on their own, as they have far too many other responsibilities.  Therefore, most organizations tag someone as a full-time “innovation leader” whose role is to help shepherd the innovation process.  Innovation leaders are different from other leaders within the organization in that they do not have direct authority over those who make innovation a reality. Ultimately, everyone in the company plays an important role in driving innovation. The innovation leader is more of a mentor, coach, and negotiator than a boss or taskmaster. Their ability to influence and sell the value of innovation and its practices is paramount to their and the organization’s success.

Next, create your innovation “core team” (sometimes referred to as a center of excellence), a small cadre of people dedicated to driving innovation into every corner of your organization. In smaller companies made up of few geographies or lines of business, this can indeed be a small central group. But in larger, more widely distributed organizations, the matrixed strategy is preferred, as it addresses the complexities associated with geographic, product, and customer differences.

This core team has many responsibilities. Some of them involve the basics: generating awareness, building the necessary infrastructure, selecting tools, creating training materials and plans, and developing a process for managing the innovation pipeline. But their more valuable role is serving as the eyes and ears of your innovation efforts, providing insights into the specific needs of their departments, employees, customers, vendors, and other stakeholders. They serve as advocates and mentors for innovation, bringing innovation to the masses. They are typically responsible for the development and delivery of innovation/creativity training. They also run brainstorming sessions for various departments. And they play an important role in identifying and shepherding challenges that may exist inside the organization. In essence, they are the go-to people when innovation is needed.

But no core team alone can ever make innovation pervasive. The next step is to pull together your ambassador network. Although all of these individuals are deployed to the lines of business, they must be passionate about innovation. Quite often, these people may dedicate as much as six hours per week (15 percent of their time) to innovation activities. This helps spread the innovation message even deeper into the organization. Since these individuals play such a critical role, contribution to innovation should be one of their performance measures.

How large should your ambassador network be? According to studies conducted by scientist Robin Dunbar, individuals have the capacity to maintain stable relationships with around 150 people. If we use this capacity as a baseline for determining a maximum sphere of influence, having one person in your network for every 150 people you wish to impact (or 0.07 percent) would be appropriate, but 1 percent is a good rule of thumb. At USAA, between the core team and the innovation advisers, almost exactly 1 percent of the organization is represented.

At USAA this approach has worked incredibly well. In only one year, the company achieved 84 percent employee participation (yes, you read that correctly) and implemented approximately one hundred employee solutions. What were the bottom-line results? There was more than ten times ROI for USAA and almost thirty times ROI for USAA members. USAA is different from shareholder companies in that it has a higher goal and motivation for taking care of its members— present and former members of the military services and their families.

These are impressive results. Follow USAA’s lead by embedding innovation throughout the organization.

The Egyptian pyramids worked so well because the majority of the weight was closer to the ground, making these structures more stable. Equally, this pyramid approach to innovation will ground your innovation efforts and fulfill the needs of the business and your customers.

Excerpted from Best Practices Are Stupid by Stephen M. Shapiro by arrangement with Portfolio, a member of Penguin Group (USA), Inc., Copyright (c) Stephen M. Shapiro, 2011.

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