In 1880, the Scottish shipbuilder William Denny set up the world’s first industrial suggestion system. Since that time, the suggestion box has become the method of choice for seeking employee ideas. Despite modern touches—such as collecting ideas by e-mail, Web-based applications, or special hot lines—the underlying process is the same as it was in the nineteenth century. The strange thing is that everyone knows that suggestion boxes don’t work. Even cartoonists such as Scott Adams and Gary Larson poke fun at them.

Yet the suggestion box paradigm endures. In 2002, we received a call from a desperate executive at one of the largest insurance companies in the United States.

“My CEO just bought hundreds of ...

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