Strategies INNOVATION
The more ideas the better How to foster a culture of innovation in your company ANDY GROVE, who was a brilliant leader and CEO of Intel, wrote a book entitled “Only the Paranoid Survive.” You might think he wasn’t serious. But the CEO of a Milwaukee-based company that has prospered thanks to a steady stream of innovative products offered on a world stage claimed it is precisely that kind of paranoia that has led to the continued success of Hatco Corp. Hatco CEO David Rolston indicated they have a culture where they are never satisfied with their success and constantly focus on improving in everything they do. Hatco was founded by Gordon and LeReine Hatch. Gordon was a technically minded engineer who was so driven by the desire to be innovative that he disassembled an electric razor that he had received as a wedding present on his wedding night to see how it worked and spread all of its parts over the wedding bed! Gordon led the company from a modest beginning to dramatic market success thanks to a highly innovative approach to product evolution and development. His son David eventually took over and, under his leadership, expanded sales to the global market so that Hatco now has subsidiaries in China and India. Their products can be found everywhere. If you need a warm sandwich on your next stop at a Kwik Trip, you will likely get it from one of their
multi-tier sandwich warmers. Rolston is a “graduate” of GE, where he learned a lot about how not to manage. GE barely survived to the end of Jack Welch’s tenure. He was famously top-down in his approach to leadership. Hatco does the opposite, and as a result it has not only survived but prospered long after Gordon and David gave up the reins of leadership. What can we learn from Hatco on how to develop a culture that drives innovation continually? 1. Start with a culture that looks to employees for the latest and newest innovations. We’ve all heard CEOs preach their employees should “think outside the box.” Unfortunately, most often that is lip service only. The leadership team is the one charged with innovation, and everyone else is there to implement their ideas. That’s not the case at Hatco. Instead, all employees are asked to offer new ideas for product innovation or quality and process improvements. 2. None of the employees of Hatco have their salaries dependent on the ability to suggest innovative ideas, but they can be rewarded with additional bonus compensation if their ideas get implemented. Everyone on the production team is asked to submit at least three ideas or more every year. 3. Unlike many companies’ “suggestion boxes,” employee ideas at Hatco are taken seriously. They are documented on a CPI form, and supervisors, called team leaders, are responsible for ensuring those ideas are vetted. Meetings are scheduled to evaluate ideas and test them using the lean manufacturing approach. Why does this work so well at Hatco, as they have innovated continually from food finishers to decorative lamps, pop-up toasters, soup stations, and chef LED light bulbs? It is clear that their philosophy is that most employees want to contribute and take pride in their work. It’s part of how all of us are hardwired. After all, we learned to walk and talk without having to be bribed or disciplined. We did it because, as human beings, we are naturally creative, wanting to expand our horizons. Unfortunately, too many American business
leaders forget to check their egos at the door and manage with the assumption that employees need to be watched and supervised. Many years ago, I visited the Nissan Corp., which had just built a new plant in Smyrna, Tennessee. The Japanese CEO could not understand why the Wall Street Journal reporter wanted to interview him when the reporter wanted to learn how their cars were built. Finally, the CEO said, “Why would you interview me? I’m just the president. Please interview the people out on the production line. They’re the ones who build the cars.” David Hatch defined the role of president as being “the first to take blame and the first to share praise.” The beauty of the Hatco culture is that it has embedded practices that ensure continued employee involvement and innovation. Therefore, it was a logical extension of their philosophy to become an ESOP, 100% employee-owned, in 2007. Everyone in the company benefits financially from their success. And isn’t that the way it should be? n
DAN STEININGER Dan Steininger is an author, speaker and business advisor. He is the president of Steininger & Associates LLC, which helps companies drive innovation. He can be reached at DSteinin@execpc.com. biztimes.com / 47
