White Knight Innovation

We have assembled and integrated business turnaround and innovation best practices with our program for the last 25 years.

Effective business turnaround moves through distinct stages:

1• Black Knight Turnaround (Business Rescue)

2• White Knight Innovation:

a- Incubation (Business Renewal or Revitalization)
b- Culture of Innovation (Continuous Improvement)

3• Quantum Leap or “Quest for the Killer Ap”

Black Knight Turnaroundhas been equated to business rescue for a business that is in severe financial difficulty.  Business survival is the primary goal.  

Any “Black Knight Turnaround“ must take on a sense of urgency.  Success requires business “battlefield triage” to stop the bleeding and setup for recovery. The Black Knight leads the triage by cutting back to a viable core. The swift action and aggressiveness of cuts will leave the remaining employees fearful and traumatized, thereby stifling individual initiative and creativity. 

This stage of the turnaround must pass the baton to the White Knight in less than 3 months or human intellectual properties (Know How) will leave and the only option is authoritarian management.  The White Knight gets involved because the level of action required for recovery needs the focused hearts and minds of everyone at a 150% level of effort with a continued sense of urgency. The White Knight creates the incubators for a focused culture, driven by action and loyalty to the leader.

White Knight Innovation is equated to business renewal or rejuvenation and continuous improvement.  It usually takes one of two tacts:   

Following Black Knight Turnaround: If the turnaround follows the Black Knight formula, the White Knight comes in to restore the enthusiasm and loyalty of the workforce for the business mission, through a mass collaboration (team) innovation and action training program.

As a Business Renewal or Revitalization:  If a business renewal or revitalization, the White Knight immediately catalyzes latent employee skills and “know how” in the context of the current understanding of business mission and strategic direction.  A frenzy of creative ideas results allowing immediate action on high value low cost (HVLC) opportunities and redirection of misunderstood strategic direction.

In either of the above two conditions: Intense and meaningful activity is the fuel for employee enthusiasm, loyalty and continuous learning.   These elements are essential to business long term success.  

First we incubate the innovation process with an immediately immediate call to action for all employees to focus on the CEO’s Initiative.  Incubation starts with action to build the kinetic energy, and eliminate inertia, then this momentum is redirected to optimize continuous improvement processes and leadership styles.  Redirection must be founded in solid business methods. e.g. strategic direction should evolve from growing ability to implement change and communicate strategic planning technique validating the evolving strategic direction. Note: this growing understanding is required to sustain employee enthusiasm and loyalty.  Additionally this growing understanding, ability to embrace change, and innovate translates directly into Business "Know How" the most critical intellectual property for business survival.

White Knight Innovation is a process that the principals have evolved over the last 23 years in over 150 companies.  It is a process that engages all employees in a turnaround or renewal process that looks for opportunities and then mission relevant “High Value/Low Cost” HVLC solutions.  Teams of employees are trained to look for fast solutions and then present their proposals to the business unit leader for approval.  This process brings all the employees together with a sense of common purpose and urgency to move the company forward to profitability and growth.  The process also creates the ideal environment for building and sustaining leadership. i.e. Repetitive earned respect paid to  employees by business leaders.

White Knight Innovation is a tool for business improvement that works even when a company is profitable.  It creates a sense of urgency and action that energizes the whole company.  And it gets the big results.

Quantum Leap “Quest for the Killer Ap” is our term to describe the company that has made a major, positive change in its profit structure.  We want to tell people about what makes this happen and hope others will do the same for us.  It is important to understand this company.

Early on we struggled to define what this company was all about. We had observed that some companies made a leap in improvement during or immediately following the War on Waste.  It was a significant leap in performance improvement.  “Why did it occur?” was certainly a good question to ask.  We’ll explore that later.  But what are the characteristics of this company?  We wanted to know how we would recognize when the Quantum Leap had occurred?  Or better yet, can we do anything to make it happen?

First, we made a few observations about the Quantum Leap companies.  We noted that the HVLC Innovation presentations created a major excitement in the company.  Employees became energized and began to feel a greater sense of pride in their work.  As HVLC Innovation projects were implemented, the employees told us that they began to feel a real sense of empowerment.  They were energized to do more.  This is the first step of the Quantum Leap (see Diagram).  All companies that we have worked with usually get this far.  But it is a mandatory first step, the first step of the Quantum Leap Process.

After a company makes this first step, it could remain there for days, months or years.  We call this step a meta-stable state because the company can improve or return to where it was before the training began.  It is in a fragile state.  A Black Knight (see “Black Knight”) Company that went through the HVLC Innovation training or a Black Knight who is new to the company and not familiar with the No Blame Management culture can destroy the company at this point. The Black Knight can create doubt in the commitment of the CEO to the success of the HVLC Innovation initiative.  It is at this point that we encourage CEO’s to explain to everyone the consequences of being a traitor during the War on Waste or a contrarian during HVLC Innovation.  The second step of HVLC Innovation will make the company a lot of money in improved profits and so traitors are not welcome.

To make the second step of the Quantum Leap, the company is poised for action as a result of the initial activity resulting from the presentations.  The “Quantum Nudge” (see “Quantum Nudge”) will move the company to the Second Excited State.  This nudge may come at any time.  And it takes lots of forms.

For example, in one company the Quantum Nudge came when an employee approached us to ask help in keeping the CEO out of his way so that he could develop a special robotic controlled version of the traditional chemical process of the company.  He needed someone to keep the meddling CEO and founder from interfering with his new design.  It turned out to be a Quantum Leap because the company was able to capture significant new business at lower and more profitable levels than with the older process.  And it led to the company growing 3 times its previous year’s revenues and ultimately to a sale of the company at over 12 times EBITDA 10 months after the War on Waste.

In another Quantum Leap company, the Quantum Nudge idea came from one of the employees after the presentations were complete.  The employee observed that once they had organized templates that had been badly disorganized, they could respond to any product request and have it completed in less than an hour.  That meant that the company could now serve a market in which customers needed “May Day” service.  The company could charge a premium to get the product to the customer because the customer’s equipment was down.  The company could “same day” ship products to the East Coast from California if the order was received by 4:00 PM.  This idea allowed the company to become the prime supplier of product to this market.  And the Quantum Leap was achieved.

Another Quantum Leap company completed the HVLC Initiative and had improved its operating processes.  The Quantum Leap came several months later when they (this was a machine shop) found that they could deliver a sample product with each quote to their largest customer.  They ended up getting all of the customer’s business because the customer felt more comfortable giving them the business.  This company grew for three years with a 25% pre-tax profit.  They were sold 4 years after the HVLC Innovation Initiative for 13 times EBITDA.  

So we conclude that the HVLC Innovation Projects will lead to a potential Quantum Leap with the following probabilities (See Quantum Leap Table).

Many of these Quantum Leaps occurred with our facilitators on site.  Some of them occurred when we had completed our consulting assignment.  In just about all of these situations, the CEO realized that the HVLC Innnovation Initiative prepared the way for the Quantum Leap idea.  The idea emerges and the company is now receptive to make the idea happen.  The precise nature of any company’s Quantum Leap is not predictable.  But if an idea leads to a 30% improvement in profit, lead-time, or direct labor productivity after the HVLC Innovation Initiative, then a Quantum Leap has probably occurred.  These are just some of the indicators but if the Quantum Leap has occurred, significant improvement will be noted in most key business indicators.  We generally are looking to see Gross Margin Improvements of 20% or greater, revenue increases from the Quantum Leap idea of at least 50% and lead time reductions of at least 50%.

Quantum Nudge

In the diagram, the Quantum Nudge is the energy input required to move the company from the metastable first level to the Second Excited State.  A company receives a good dose of energy as a result of the HVLC Innovation Program (for instance, a "Killer AP" is discovered). So if such an event occurs and a company gets enough energy to make it to the Second Excited State, it will have made the Quantum Leap.  We call this energy input, the “Quantum Nudge” because to get the results of the Quantum Leap, you don’t have to put much energy into the company.  After the HVLC Innovation Initiative, the company is poised to make the Quantum Leap.  You just have to nudge it to get the desired result.   If you read the book, “White Knight Innovation - Creating the Culture of Innovation,” by Leonard Bertain, you will understand how hard it is to complete an HVLC Innoavation initiative.  It requires a good deal of energy and that is noted on the chart as the "HVLC Ideas – Energy Input."

The Opportunity: a CEO’s Initiative.

The White Knight Innovation is a collaborative innovation process focusing core competencies “know how” and the enthusiastic energy of all employees.  Innovation is involved in productivity improvement ideas as well as new product or market ideas.  The White Knight Innovation process is the driver for continual profit improvement and internal growth.  Any CEO Initiative requiring the focused effort of all employees can be expedites with White Knight Innovation processes.

• Sustainability / Green
• Social Responsibility / Global Responsibility / Dirversity
  
• Stakeholders Value
  
• Workout / Quality Circles / TQM / Six Sigma / Lean

In all cases any CEO Initiative must deliver in the Corporate Mission / Strategic Success Factors and Financial Return, therefore HVLC is the optimal opportunity selection criteria for achievement of the Business Excellence.

We have taken this process into over 150 companies in various stages of profitability.  Our methods rapidly generate cash from realized high value/low cost projects that create a sense of urgency and focus in the rank and file.

Some Background:  What we’ve learned!

#1 Attitude is every thing. Ideas implemented enthusiastically by the rank and file get done easily and quickly, whereas ideas from the top down are slow to communicate and have lower probability of success.   Proactive listening & measured opportunity develops skills that lead to change with the right attitude.

#2 100 Employees with big ideas are always more enthusiastic about implementing their ideas than ideas of a few smart exec’s. 

#3 A Strawman is Practice for the Joust.  "It is easier to criticize that create".  A rough idea is quickly refined by those who must embrace it and make it their own.  If not adopted leave it.  You can come back later. 

#4  You get results, not by hugging or yapping, but by action which helps employees focus on innovation ideas for process improvement, new product ideas or product improvements.  Employees tell us, over and over, that this process is fun and makes them really want to help.  And by the way, they really like it.

#5 Employee operations’ knowledge is greater than that of management and leads to better and more cost effective HV/LC ideas for improvement.  Listen to this example:

#6 A culture of change (innovation) is an overlooked corporate asset.  When change in a culture is a constant, new ideas become more and more sophisticated over time.  All employees feel compelled to continually find new ideas for productivity improvement and internal growth (new product and product enhancement innovation). Growing knowledge and experience becomes “Know How”, which is the most important business resource.  It is business intelectual property as much as patents.   intellectual property (know how and corporate agility) grows from using it and disseminating it.

#7 The Educated Eye.  When all employees understand and have "Know How" they have the vision to spot "Blue Birds" or opportunities and business threats.  This could be that next great invention, a start up to acquire, or a technology to embrace. Once acquired any new business, product or technology can be melded quickly and seamlessly. 

#8 White Knight Leadership requires proactive participation and cannot be delegated.  The process also creates the ideal environment for building and sustaining leadership. i.e. Repetitive earned respect paid to  employees by business leaders.

The audited results are exceptional as indicated by 3800% ROI for 23 companies that went through the program.  These data were measured in an audit by a State of California agency after these companies had completed the initial phase of the HVLC Innovation Program.

Over the last 25 years, we have clarified management best practices that we call “No Blame Management.”  It flows naturally with this approach to innovation and guides the Corporate Innovation Culture.  No Blame serves as the protection mechanism for all ideas. There are no dumb ideas but attitudes that stifle idea generation are. Employees recognize this quickly as a no-nonsense approach.  And it is fair.  We have discovered that acting on good ideas of employees leads to a change in the way we look at the work of an organization. We are not talking about just any work; we are talking about ‘‘the right work.’’ We have found that the resultant organization is different – the Corporate Innovation Culture.

The evolving organization focuses on understanding the value-adding functions of the business. This leads quickly to a highly productive structure with the ability to change in response to market demands, which in turn leads to greater profits.