Innovate or die!: At AMP

Troubled AMP finds the pursuit of innovation pays dividends in improved staff engagement. Unleash the ‘intrapreneur’ and boot up the ‘conversation cafes’.

Lee Barnett, CIO, AMPThere has been precious little good news for embattled Aussie icon AMP of late. Its share price plummeted from a high of more than A$19 in March 2001 to now hover around the A$5 mark.

AMP’s story is not unique. Rather, it has joined a long list of Australian corporations undone by failed global growth strategies. The company is now de-merging from its under performing UK operations, now called Henderson, aiming to raise A$2 billion and write down A$2.6b in assets in the process. But earnings outlooks from CEO Andrew Mohl remain bleak.

While these corporate strategies are being played out in boardrooms and regulators’ offices in the UK and Australia, at the coalface here, AMP is following through on an innovation initiative instigated by former CEO Paul Batchelor.

Sparks of genius are random and unpredictable, yet many organisations seek a formula for innovation to help them stand out from their competitors. For most, applying a formula is as far as they go but while many companies pay lip service to innovation, a few have gone a step further to create a culture of innovation. They include Carter Holt Harvey in New Zealand, Hydro Tasmania, TAFE in the Hunter Valley and AMP Financial Services (AMP).

Early last year, AMP began putting together the ingredients for creative thinking in a move that has already demonstrated some promising results. Among them is an estimated 100 per cent return on investment, a staff engagement of 25 per cent and a coveted finalist’s position in the MIS Innovations Awards 2003.

Considering the payback, AMP’s move to become more innovative was timely. The company’s innovation program has injected an upbeat mood during a period of unsurpassed anxiety in the workplace.

Head of innovation Annalie Killian says the project had a slow beginning because of this.
“There was a lot of fear and worry around that created a lot of noise, so it was hard to engage people often,” she says, although she adds that change is hard to implement even in boom times.

“Getting the innovation wheel cranking is damn hard. Many organisations run this only as part of research and development,” says Killian. “Here we are trying to get it as part of the organisational culture – and this is fairly new in Australia.”


CIO as champion
The project began when former chief executive Paul Batchelor asked a team of senior executives to examine best practice in innovation around the world. AMP’s CIO Lee Barnett was one of the team and became its champion.

“I decided innovation was important – not just the ideas but what it does to enhance a culture and foster collaboration and staff engagement, especially when that culture is risk averse,” she says.

As a result, Barnett set up a small unit to spearhead innovation within the IT department, with the blessing of AMP’s managing director, Craig Dunn. It is seen as a test-bed for other departments, although Barnett says AMP is unlikely to consider expanding the initiative before early next year.

Although it was simply fortuitous that the innovation program was seeded in the IT department, Barnett says it offers a great value proposition for technology.

“In AMP, IT has been through an enormous amount of change in the past few years,” she says. “The IT investment bubble has burst so people have to be smarter and cleverer about the way you work at the front end, to manage with a lower budget.”
AMP has also experienced significant headcount reduction due to reduced project spend in IT.

Tight unit
Against this background, Barnett set up the unit with a budget of just A$50,000 and a staff of two – head of the unit, Annalie Killian, and a full-time engagement officer. Killian was appointed to the role alongside her responsibility for employee communication and also recently inherited the Knowledge Sharing function.

“There is a logical fit and overlap among these functions – they are complementary,” she says. “It’s really about how we return greater value from our intellectual assets, both people and systems.”

Despite the financial constraints, working on the smell of an oily rag had some benefits. Killian says if she had been allocated a “fat” budget she would have taken a different route that may not have been sustainable during lean times.

“It has been constraining but it has forced us to think differently,” says Killian. “Because we didn’t have a huge budget, we were forced to be innovative to get more mileage and that resulted in us being more sustainable.

“I’ve worked before in organisations that employed in-house consultants for special projects and as soon as the business contracted, the whole project imploded,” she says. “What we really needed was to drive this through people’s normal day jobs.”

Essentially, Killian aimed to engender a culture that was by nature innovative so that it didn’t have to be shored up by costly coaches and other third parties.

“I saw my brief as making innovation top of mind and systemic for AMP to the point that it penetrates the consciousness of everyone and gives them an opportunity to innovate in their everyday jobs in a way that’s woven into their daily activities.”

She took suggestions from a report put out initially by the executive team that identified common traits and drivers for innovation around the world, with pointers to how it may be implemented in AMP.

A key recommendation was ‘intrapreneurship’ or the creation of mentors who would champion change in the business. These are volunteers who offer to undertake the role of mentor on top of their normal jobs.

Most are selected from middle management because they have the benefit of both practical skills and a big picture view of the business, says Killian.

Volunteers are given special training in creativity once a fortnight that includes programs from thinking skills specialists such as Edward de Bono, Mind Mapping and Zing.

Innovation evolution
Aside from this, the program has evolved rather than followed a roadmap, according to Barnett. “It has been something of a journey – there is no instant answer,” she says.
Killian began the evolution by turning the wheel of ideas.

“Innovation is very random and unpredictable. You can’t bottle it or create a recipe for it,” she says. “But one of the ways of letting innovation happen organically is to get people from different disciplines to spark one another off. A logical starting point is to create mechanisms for ideas to be heard and acted upon.”

A critical aspect for success is the forums should provide a safe environment to air new ideas.

“Trust is fundamental because there is a huge element of personal risk taking and failure involved,” says Killian.

To start with, AMP’s Web development team created an intranet-based capture and tracking tool, which was called Circul8, as a forum for ideas and suggestions.

Killian then stipulated a proviso for posting ideas: each suggestion must be accompanied by a quick one-page business case and the author has to take responsibility for pushing it through to its conclusion. “That focuses people on thinking the idea through,” she says.

Once accepted, the author is assigned an intrapreneur because, says Killian, “we recognise it is hard to implement new ideas and cut across bureaucracy”.

AMP also set up ‘conversation cafes’ to act as brainstorming forums to generate new ideas. This is how they work: the unit advertises discussion of a particular topic on the intranet. On the assigned day, interested people from across the business form groups of four to six around a table to discuss the topic and record their ideas on paper tablecloths or butchers’ paper.

After 10 to 15 minutes, they rotate, leaving one person as an anchor to provide continuity, and the new group drills down further on the topic. Outcomes are published on the intranet. “This has spread like wildfire,” says Killian.

Both these forums have generated a slew of good initiatives. Some are simple but smart – such as the idea to reduce the font on printed-paper so that two screens can fit into a single page, thus saving paper costs.

Others need to be taken further, such as to reduce the default calendar time on Lotus Notes from 60 minutes to 30 minutes in order to reduce time spent in meetings.

Although they spring from the IT department, some initiatives cut across the entire organisation, such as the no-email day, which was designed to remind people of other forms of communicating internally.

Ideas with far reaching implications must be endorsed at top level: the author of the idea presents a five-minute business case to directors at AMP’s executive meetings and it is ratified or rejected on the spot. Line managers then fund the new initiatives. Killian says the value proposition is usually clear to them.

Another key advance has been to introduce a mechanism to monitor and reduce the IT infrastructure expenditure.

The initiative, which cut costs by 10 per cent in 2002, saw AMP gain a finalist position in the Outsourcing category at the MIS Innovation Awards 2003.

As well as generating new ideas, the unit seeks ways to look at problems as opportunities through a newly launched initiative called Program Unexpected Value.

Rewarding system
An important aspect of fostering an innovative culture is to reward innovative behaviour. Given its tight budget, the Innovation Program does not offer material rewards for participation but instead it celebrates innovators and the group of intrapreneurs who act as innovation evangelists across the teams.

“For example, these people were all publicly praised at an all-employee event last week and they are getting exposure to many other opportunities, which supports their career growth,” says Killian.

The effort has started to pay off, but only just recently. During the past three months, the pace of ideas has accelerated. “We now have about 25 per cent of our IT employees involved. We’re now averaging an idea per day on Circul8 and it’s increasing.”

So much so that Killian now wonders whether the model she created can support current growth.
By the end of this year, Killian plans to have undertaken a cost benefit on the unit’s ROI, although she believes the cost of the unit has already been “more than twice” returned.

Nevertheless, she stresses cost savings are not the only drivers of the program.

“Operational results overall are improving and innovation will play a big role but to make a linear connection would be difficult,” she says.
CIO Barnett adds it’s too early to declare the initiative an unqualified success although, she says, “it is certainly looking healthy”.

“We have just about got our momentum,” she says.