“There is a difference between positional authority in a company and pure leadership,” says Clay Mathile, Founder and Chairman at Aileron and Former CEO and owner of The Iams Company.
Leadership, excellent decision-making, and great ideas can come from anywhere in the company, when you train and empower everyone to make decisions that serve the company’s strategy. That’s why Clay says, “The wisdom of the decision has nothing to do with the power of the position ."
Clay’s seen countless examples of where innovation and problem-solving happen regardless of where an individual is on the org chart.
Listening to Your Frontline Workers
Clay shares the story of how, in Aurora, Nebraska, an Iams manufacturing plant was responsible for supplying all products to the central part of the United States and to the West Coast. Goods were shipped in rail cars, on wood pallets, to their intended warehouse from the plant.
“We would buy the wooden pallets locally, we would load the wooden pallets with product, and then we would put them in a rail car,” explains Clay.
When they arrived, they would be taken off the rail car. The pallets, no longer needed and not suitable for re-use, were burned. Frontline employees said, “Why don’t we just eliminate the pallets?”
The workers found a way to ship the product in stacks, but without the need for pallets. “They came up with an attachment to the lift truck that would pull the load onto forks, and then we would push them off when you got to the [warehouse].” By eliminating the need for pallets, the frontline workers’ solution helped to save more than a million dollars per year.
Providing Structure to Support Innovation
Iams had quality circle teams within its plants. Supervisors and managers were intentionally not involved in those meetings. Although not involved in the meetings, they helped to put the structure and boundaries in place to spur innovation, a sense of authority, and shared decision-making.
“The only thing we asked is that you tackle a problem or you take on an issue that would support the company in those meetings,” explains Clay.
At one particular plant, as much as 4 percent of the production was fines. It was one group’s goal to change that outcome. “The team had the goal of reducing the quantity of those fines since it was negatively impacting total capacity,” adds Clay.
Working together, the group reduced the percentage to less than 2 percent. “It saved the company about a million dollars per year, per plant,” says Clay.
Spreading Out Your Decision-Making
Another group, in the early 1990s, was tackling environmental-related issues. In order to reduce the carbon footprint, the team created a solution that would recycle heat within the plant.
They found a variety of other ways to reduce the consumption of fossil fuel and to reduce their consumption of electricity.
This ongoing process of “spreading out decision making” and creating the space for innovation involved guidance and controls on the front end, says Clay. This typically included making a presentation of the idea or proposed solution, and it would always include a demonstration of the financials involved. “Once we agreed or we approved of their approach to solving the problem, we turned them loose to solving it.”
Empowering Your Employees to Find Opportunities
“Everything has to ultimately benefit the customer—or at least have a positive impact on the customer,” adds Clay. Employees who have a mindset of, “What can I do to improve quality and reduce cost?” will routinely find areas of opportunity for the company.
Leaders have to believe that quality is not the same as additional cost. “Quality reduces cost,” explains Clay. “In the case with the pallets, we reduced costs and we improved the quality since the pallets couldn’t be re-used. They didn't have to take those products off those pallets and turn around and burn them.”
“People are happier when they're innovating, when they're involved, and they want to be involved ,” says Clay. “They just want a system that will allow them to do it, and not penalize them all the time. That’s the best way to run a business, it's the most profitable way to run a business, and it's the best thing you can do for your customer. It's a win-win.”
Grow Yourself, Your People & Your Business
Learn how to set direction, operationalize objectives, monitor and control results, and involve others along the way, no matter their position within the company. In Run Your Business, Don’t Let It Run You, you’ll discover ways to cultivate a committed, passionate workforce that will help you deliver long-term business objectives so you can advance your business forward. You'll also read the story of how Clay Mathile, who grew the Iams Company from $500K to $1 billion in sales, discovered and applied proven management fundamentals to his business. Learn the story, directly from Clay, on how he went from working in the business, to working on the business.
A version of this post originally appeared on Forbes.com