Maine businesses are facing unprecedented challenges. Beyond the severe economic downturn, Maine companies also must cope with an underlying shift in business climates. The pace and intensity of competition has accelerated worldwide due to the rise of information technology, globalization, speed of new product and market development, increased customer choice and knowledge, outsourcing and many other factors. These changes have erased many traditional business boundaries, and they affect all of us.
Today’s business environment demands that companies build capacity for flexibility, innovation and change. To survive and grow, businesses need a steady stream of new initiatives that respond quickly to changes in the marketplace, address immediate threats from all competitors, and may be implemented without major re-tooling of company infrastructure. Fortunately, the resources they need are at hand.
Often, a company’s own employees sense changes and opportunities early on and respond with adaptive ideas. Smart managers recognize the value of these efforts and build bottom-up innovation into company routines. For example, Westinghouse recently revised its innovation strategy by pulling some middle managers and their teams away from normal activities, to seek out new markets and technologies exclusively. By the same token, Best Buy has revised its marketing strategy to reflect the belief that local niche-market strategies can improve sales growth.
New research shows how companies can successfully implement bottom-up innovation — ideas and initiatives that originate in local contexts and are championed to the attention of top managers. I have conducted research that surveyed hundreds of middle and line managers in three retail companies to try to understand how bottom-up innovation works and how to enhance it. Each store in my study was an independent facility, under overall company jurisdiction, with a store manager and a number of department managers. By comparing store-to-store and company-to-company patterns in the responses, I arrived at some interesting findings.
First, the quantity of new initiatives originating with middle and line managers varied significantly across the sample, but there were traceable patterns within each company. Overall the level of initiatives was low, suggesting this approach is not widely being implemented yet, or that it was not an important aspect of these employees’ jobs. Most important, the level of initiative development reflected the middle managers’ perception of company support for bottom-up innovation and their own attitudes about the activity. I tested the cumulative flow of initiatives, not their quality or how many were ratified eventually at the top, since the best ideas can more readily be pruned from a steady stream rather than an intermittent one.
These results indicated that there is no “one best way” for a company to adopt a bottom-up innovation strategy. Each localized site in which the company operates is likely unique, and local employees not only know their own backyards best, they also tend to respond to cues from their local manager. Companies greatly influence the realization of bottom-up innovation through their policies, certainly, but even more so through the culture they instill and encourage. The values and attitudes of middle managers seemed to make the largest difference in new idea generation, over and above what managers said or wrote in their policy statements.
Some very practical suggestions emerge from this research for managing bottom-up innovation. First, managers should underscore the importance and value of bottom-up initiative development. They should also provide education and “incentivize” local idea generation, but customize it to the existing culture and channels in their company. Other ideas include providing time and resources for employee innovation, and encouraging communication with all stakeholder groups to obtain the best information possible about local changes.
Bottom-up innovation is a powerful tool for creating ongoing competitive advantage in today’s fast-paced marketplaces — one that Maine businesses should develop and use. Many companies already have, and I am hopeful that these findings will help make their efforts even more successful.
Terry Porter is an assistant professor of management at the University of Maine Business School. This is the third of four weekly columns on subjects covered in the University of Maine’s Building a Vibrant Maine Economy online conference. To view the conference, visit www.umaine.edu/vme.