Put in Values and an Organizational Structure That Will Stimulate Innovation

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Donald Mitchell asked:

le associate industry-changing innovation with high technology products and services, and certainly those industries create lots of innovation. On the other hand, almost every business seems to enjoy the potential to be more innovative if people think about the business that way.

Few industries had a greater reputation for being stodgy than steel making during the 1950s and 1960s. Today, the industry has been totally reshaped, by relying on technology that did not exist until it was developed in the United States. Discuss this success as a technology story with North American profit leader, Nucor, and they will tell you that you have it all backwards. The success was due to the organizational culture and system that Ken Iverson emphasized for Nucor.

Mr. Iverson’s successor as CEO, Dan DiMicco, sees the foundation as being found in the company’s values:

(1) Don’t overextend yourself

(2) Be a risk taker and take on the unknown

(3) Focus on long-term rather than short-term, whipsaw thinking

(4) Treat customers, employees, and other stakeholders the way you would like to be treated

(5) Minimize barriers to effective communication

(6) Build relationships

(7) Hold people accountable to honor the relationship and perform

(8) Take your time in evaluating people you hire

(9) See continuous improvement as a nonstop journey up a mountain

(10) Give people the freedom to do it

(11) Help people learn

(12) Don’t penalize failure because big flops are part of necessary learning.

To implement these principles, Nucor has made many innovations. The company has only two organizational levels between the head of a division and the floor worker in a mill. Responsibility and authority are delegated as much as possible.

Education is generously supported for employees, their spouses and children. The company emphasizes promoting from within. In hiring, Nucor looks for people who want to move ahead in life.

To encourage them, everyone in the company gets variable compensation based on the firm’s profit performance n the Profit Sharing program. And production bonus incentives are paid weekly to constantly encourage the “pay for performance” culture of profit consciousness.

The vision behind this culture and structure was to be a growing company and to take advantage of commercializing new technology to leapfrog the competition.

If such opportunities can be found in the steel industry, why should your company and industry be any different in terms of providing profitable innovation? Work on your values and organizational structure, and who knows what you can accomplish.

Copyright 2008 Donald W. Mitchell, All Rights Reserved

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