The Value of Innovation

Chapter 6Collecting Data Along Chain of Impact with a Toolbox of Methods

Some of the most ambitious innovation projects occurred at Sears Roebuck & Company. Faced with serious difficulties due to poor financial performance, Sears underwent a transformational project that changed the culture of the company. Led by the CEO with 100 top- level executives at Sears, the organization developed a business model that tracked the success of management behavior through employee attitudes, customer satisfaction, and financial performance.[1] This connection was made evident through multiple linkages and was referred to as the Employee-Customer-Profit Chain. In this model, employee attitudes were directly correlated with customer satisfaction. For example: 10 questions from their 70-question employee survey correlated with a 1.3-point improvement in customer satisfaction measured on a 10-point scale. The survey demonstrated that job satisfaction drives customer satisfaction. The 1.3-point improvement in customer satisfaction was shown to drive a 0.5 percent increase in revenue growth. Applying the store-level profit margin to this revenue growth showed the profits achieved from investing in employee attitudes.

At the heart of this project were five task forces collecting a massive amount of data:

• A customer task force reviewed customer surveys for several years and conducted 80 videotaped customer focus groups in the United States so every member of the task force could watch.
• An employee ...