If You Want To Innovate, Decentralize Your Operations

Empowerment is the key incentive for creativity.

In his book “Conscious Capitalism” (read my review here), John Mackey reminds us that, to be effective, decentralization must be combined with a high degree of autonomy given to employees.

Without autonomy, there can be no innovation in the field because employees must apply decisions and processes decided at higher levels. Autonomy should be associated with accountability in order to foster performance.

John Mackey cites the example of Nordstrom, an American department store chain that is renowned for the outstanding quality of its customer service. Nordstrom has always believed in empowering its salespeople and lets them make as many decisions as possible by themselves in order to meet their customers’ demands.

The best illustration of this strategy is Nordstrom’s employee handbook which, for years, held in less than a page*. Its text goes as follows:

Welcome to Nordstrom. We’re glad to have you with our Company.

Our number one goal is to provide outstanding customer service.

Set both your personal and professional goals high. We have great confidence in your ability to achieve them.

Nordstrom Rules:

Rule #1: Use good judgment in all situations.

There will be no additional rules.

Please feel free to ask your department manager, store manager, or division general manager any question at any time.

This level of autonomy allows Nordstrom salespeople to often find creative solutions to satisfy their customers rather than sheepishly apply top-down procedures. Obviously, such an approach, which is suited to a service-driven activity, should be fine-tuned to the business of any given company.

But, whatever your business, if you want to innovate, decentralize your operations. It is always more risky but also more effective.

* Today, its key message (use good judgment) is even shorter but the handbook includes a few legal disclaimers required by the juridicization of the American Society.