How to Create A Thinking Corporation

From guest blogger, David Frood



“The term Thinking Corporation applies to any organization that accepts the basic truth that all people have the ability to create their own futures. In accepting this, they provide for everyone to be successful in the realization of their own vision through culture, systems and processes that facilitate the implementation of employee generated ideas.” – extract from “The Thinking Corporation” by David Frood.

Why Change?

Many of the developed economies are struggling with low growth and unemployment. Countries that used to lead the world are ranking between 130 to 160 in GDP growth and many of their citizens are trying to adapt to a lifestyle to suit their new income, or lack of it. So it seems that the current system is no longer serving us as it has in the past and needs to be adjusted.

There are many academics, politicians, business leaders and members of the public that view innovation as a way to move forward, start clearing the debt and generate a better life for all. Given that we are all capable of contributing new ideas, the question becomes “How do you successfully generate, capture, process and implement ideas, turning some into much-needed innovations?

The benefit of becoming an organization that is capable of answering this question is not only helping with the big economic picture, but also accrues its own benefits. Such as:

Growth through innovation/ creativity

Rather than be constrained by the ideas for new products, services and new markets coming from just a few people, A Thinking Corporation can tap into the creativity of all employees. This means that it has a never-ending flow of ideas from which to select those that best fit the strategic plan. 

Increased profits

Having the ability to harvest new ideas, the corporation will experience an increase in profits following savings in operating costs as well as sales from new products, services and ventures. Naturally, the organization must allow for the lead-time for new ideas to make the transformation from cost to profit. Managing lead-time is only an issue in the early stages as momentum takes care of the longer-term.

Higher business values

The link between profits and business value means that the moment a corporation creates a new sustainable level of profit, the business value is adjusted accordingly. This provides a real opportunity for public companies to provide long-term shareholder value and private companies to create wealth for owners and employees.

Lower staff turnover

A Thinking Corporation will provide employees with fair and reasonable remuneration for implemented ideas. This combined with the culture that must exist for innovation and creativity to flourish means that new employees will be attracted to the organization and stay longer. 

Improved productivity

Staffing costs can be reduced because many employees will be far more productive than they were previously. They will be more productive because of the increased motivation and enthusiasm that comes from planning and implementing their own ideas. Of course, this does not apply to every employee, only those that choose to be part of the opportunity that this new generation of corporate culture and behavior presents to them. 

Steps to Becoming A Thinking Corporation

The management of any corporation that is considering making this transition must genuinely value employees and the contributions that they are capable of making. Senior management must also be open to the view that the organization is not receiving the full value of what employees have to offer and see the potential in change.

One of the first steps is to understand the organization’s current capacity to generate and implement ideas. This is a combination of cultural and procedural factors that lead to people being willing to contribute, or not. Employees must feel as though they want to help and then know how the system works if they have a contribution. Ideas can range from simple ways to save costs, right through to big ideas for a new product, service or even business. The system must cater for all of these to be a success.

The next step is one of education. To ensure that all people within the organization have the same understanding of what the new way of working will be, including the reasons for the change and how it will be executed. It is critical that the most senior management is actively supporting the change and is seen by all employees to be doing so. Failure to do this step properly will seriously undermine the probability for the successful implementation of any change program.

Finally, the corporation must institutionalize a methodology to capture, process and implement new ideas and carry out the training that goes along with this phase. Just as they do with a CRM for managing customers and contacts, ERP for managing resources and systems for accounting, stock and manufacturing. All of these are examples of institutionalizing “the way we do things”. 


Transformation into A Thinking Corporation requires senior managers, directors and owners of the business to question the validity of some long standing business paradigms. These are the main reasons for resistance. Some are mentioned below:

Management is better at thinking than employees

As ridiculous as it sounds, most corporations are still structured around this paradigm. This is despite the fact that employees are entering the work-force with high levels of tertiary training and therefore have minds that are geared to investigating, interpreting and recommending. Also, the relationship between thought, action and results is well understood by the majority of the population. So why place unnecessary restrictions on people?

All Intellectual Property (I.P.) is the property of the Corporation

This is a real sticking point any employee’s willingness to part with their ideas. Corporations will generally consider that all ideas that come from employees are the property of the organization. No wonder they do not receive too many big ideas! We need to free up our views and treatment of I.P. to recognize and reward the people who contribute original ideas that lead to significant increases in profits.

Only the most senior people can earn large incomes

Although it is not uncommon to find executives who earn $millions, it would be extremely rare to find a person in a normal functional role with anywhere near this level of income. This is fine providing that the executives are producing the results for the organization. However, this business model excludes what the results could have been if everyone was given the opportunity to contribute. Reconsidering earning boundaries could lead to a whole new level of employee contribution.


The case for corporations to change is quite strong. Apart from the economic reasons, there is still a level of distrust in the community on moral and environmental issues. The population is also growing tired of seeing huge salaries, payouts and profits when so many people are struggling. If people are willing and capable of contributing towards the organization’s results they should also be able to share by way of income, profit share and business values. Why not, if the corporation is producing “over and above” results?

Corporations have the infrastructure, resources, access to capital and global presence to really make a difference. Within their ranks they have people who are bursting with ideas and are often contained within an environment that is pro conformity, rather than encouraging brave, entrepreneurial innovations. Yet, we hear managers openly stating that innovation is the answer. There is a notable mismatch between the use of the word “innovation” and the practical application of it.

The way to prosperity is through equality, sharing and being bold.

Please visit David’s website at:

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