In a rapidly changing world, organizations can maintain a competitive advantage by extracting knowledge from unstructured data and turning it into action. Frontline workers, who are at the point of connection between the organization and customers, are keenly aware of the early signs of change and are the first to see signs of problems, paraphrasing Stanford University professor Robert Burgelman and the late Intel Corp. In the words of former CEO Andy Grove, frontline workers can feel the winds of change because they are on the front lines facing the storm.
Frontline workers can provide a real treasure trove of insights that can help strategic decision-making. However, top management teams rarely ask front-line employees what they expect from the strategic issues the front-line will face, or their views on new products. As a result, many executives miss out on new information that could help them improve their analysis, and risk making decisions alone in the "echo chamber" of the C-suite.
One Line Paradox
I call this the "front-line paradox": in an organization, front-line employees are often the first to feel the impending change, and the last to be heard. As a result, many organizations do not realize that there is some knowledge they already possess. And every day, organizations miss opportunities or experience unnecessary crises because of this paradox.
The reality show "Undercover Boss" best illustrates this paradox. In each episode of the program, a company executive will disguise as a front-line employee to "privately visit" in the company. In private interviews, they often find some important issues and feel astonished because they know so little about the company.
How many undercover bosses ignore the wisdom of front-line employees? A simple thought experiment can illustrate how many insights from the front line are lost on a daily basis. Let's take a call center with 500 employees as an example, and let's say each person receives an average of 160 calls per week (640 calls per month), with an average talk time of 380 seconds per call. This means that 500 employees receive a total of 320,000 customer calls per month, or about 33,778 hours of talk time. Often, decision makers do not take advantage of this rich repository of information, which is wasted every day.
The remedy companies can do is to listen to their frontline workers. Based on my own research based on the latest developments in the field and leading company practices, I propose a model that leverages the collective intelligence of frontline workers to help executives spot early signs of change—forecasts and estimates that frontline workers can provide accurate enough to make People were surprised.
A New Model of Strategic Decision-Making
The front-line paradox model distinguishes the source of knowledge (executive team or front-line employees) and two different methods of analysis (descriptive, diagnostic, or predictive, normative). Together, they form a matrix of four analytical approaches that influence strategic decision-making. (See sidebar "Frontline Paradox.")
Quadrant 2 represents new approaches to strategic decision-making, while quadrants 1, 3, and 4 represent traditional approaches to strategic decision-making supplemented with input from front-line employees. The second quadrant recommends treating all frontline employees as prophets and advisors. My own research and that of my colleagues have shown that frontline workers are able to accurately predict organizational performance. As a result, the enormous potential of frontline workers that can be harnessed in this way has been overlooked in the past.
In contrast, many less successful organizations treat the executive team like a god (quadrant 1), using only front-line employee KPIs and satisfaction surveys as inputs for strategic decision-making (quadrant 4), and The executive team analyzes and interprets itself (Quadrant 3). There are two downsides to doing this: Organizations either focus on empirically focused historical data, or they may take the risk of relying on simple and incomplete information to make forward-looking decisions. Harnessing the collective intelligence of frontline workers can compensate for these shortcomings.
Some companies have begun to realize the potential of the collective intelligence of frontline workers, listening to their predictions or giving input on important predictive or prescriptive decisions.
Today's soaring in-house betting market is a prime example of using these insights for forecasting. Best Buy, for example, asked front-line workers to predict how much certain events, such as the number of gift certificates bought as Father's Day approached, would affect retail sales. It turns out that collective forecasts by frontline workers are often more accurate than official forecasts. Twitch, the live-streaming platform owned by Amazon, has gone a step further by offering training to help employees become more digital-minded and better forecasters.
Other organizations focus on the collective opinion of the front line. For example, the Spanish clothing company Zara uses the input of its front-line employees to decide which clothes to make, and store managers around the world only order items they think will be sold locally in the short term. Technology company Rite-Solutions is ahead of its time, simulating the real stock market and creating an internal market for employees to come up with new ideas and solutions, which then become "stocks" that can be traded on the company's internal electronic betting market . Rite-Solutions' move is in line with its co-founder Jim Lavoie's fundamental belief that "no one person is smarter than everyone".
Implications for executives
What these leading companies have in common is the use of innovative business practices to harness the collective intelligence of frontline workers and thereby gain a competitive advantage. Of course, it's easier said than done. Doing this requires major changes to an organization's culture, processes, and mindset.
Frontline workers need to reflect on their daily interactions and hone their ability to distinguish real signals from noise when making predictions and giving opinions. For the executive team, it will require a major shift in mindset—just as it is dangerous to drive a car through the rearview mirror, making forward-looking decisions based on historical data alone is just as dangerous. Executives need to put the person who can best see the road ahead at the wheel.
Harnessing the collective intelligence of frontline workers requires mining and managing data. To excel at both, companies need to have the right data collection and analysis tools, as well as the right training. Employees need to be trained in science and forecasting; executive teams need to be trained in intellectual humility to recognize their own limitations and data-trained to understand and use the insights gathered.
At the end of the day, frontline employees can provide input on decisions, but executives need to weigh the pros and cons and take responsibility for the decisions they make. Some people say that the front line is also the most important line. Yet, as The Front Line Paradox reminds us, few organizations live up to this statement. The new management model presented in this paper provides a first step in addressing this challenge. Get to the forefront now and start listening to your employees.