Harvard Business School Working Knowledg e Archive

The Art of Appreciative Inquiry

9/22/2003
The process of "appreciative inquiry" gives your company a boost by leveraging what you already do well. Read how the 4-D technique—discover, dream, design, and destiny—is working everywhere from a casino to a coffee roaster.

In the late 1990s, Waterbury, VT-based Green Mountain Coffee Roasters (GMCR) was expanding into a major enterprise—tripling its sales force and doubling its plant size. It was an exciting time of growth for the now $100 million specialty coffee company that CEO Bob Stiller founded as a coffee shop in 1981. By 2000, however, GMCR realized it needed to capture the economies of its new scale. If it could not do so, the company might find itself sinking under its own significantly increased weight.

That's when Stiller decided to employ appreciative inquiry (AI)—a positive approach to change that focuses on probing a firm's best attributes and practices—to help achieve the company's "25¢ Challenge," which was ultimately successful in reducing operating costs by 25 cents per pound of coffee, roughly a 7 percent reduction in gross costs.

AI is typically thought of as a "soft" strategy used in creating organizational visions, aligning groups, and building cultures. But as GMCR's experience shows, AI can contribute directly to measurable results. GMCR organized formal AI summits on the company's major business processes—procure-to-pay, order-to-cash, plan-to-produce, and market-to-sell—during which more than 200 employees, over half the work force, focused on raising productivity. They worked through a "4D" AI process to:

GMCR's success with AI supports one of the approach's guiding principles: A positive focus tends to deliver a positive effect. The notion of accentuating the positive flies in the face of conventional business wisdom, which says the best way to overcome a major challenge is to focus on what you're doing poorly and determine how to improve. But Stiller is one executive who believes there's too much emphasis on the negative in business. "You have 99 percent customer satisfaction and the first thing everybody says is let's look at that 1 percent" and determine what the company is doing wrong, he says.

When you focus on what works and you dream of the possibilities, it's very inspiring to people.
— Bob Stiller, Green Mountain Coffee Roasters

Among the improvements generated during GMCR's AI initiative was the adaptation of purchase orders for all buying activities, a change that cut costs in obtaining competitive bids and the processing of payables. The company also enhanced cash flow by optimizing its order entry and delivery systems, thus speeding the receipt of revenues.

"We identified the one best path in each process," says former CFO Bob Britt, "and asked, 'Why don't we do this with everything?'"

AI was born in 1985, when a team from Case Western Reserve University's Weatherhead School of Management (Cleveland) was consulting with The Cleveland Clinic, consistently ranked among the top hospitals in the country. As the team asked the clinic's employees questions focused on the positive aspects of their work, a wave of energy was unleashed. The factors that had contributed to the clinic's success were actually enhanced by the interview process.

The team had unwittingly tapped into the organization's positive core. That is what Amanda Trosten-Bloom, a principal with AI consulting firm Corporation for Positive Change, in Golden, CO, and coauthor, with Diana Whitney, of The Power of Appreciative Inquiry, calls "the collective wisdom, knowledge, strategies, attitudes, skills, and capabilities of the organization at its best."

Since the Cleveland Clinic study, practitioners have found that they can use AI in creating large-scale change that is focused on hard, as well as soft, organizational issues.

"When you focus on what works and you dream of the possibilities, it's very inspiring to people," says GMCR's Stiller. "It was very neat for me to see the energy it created."

Other companies have successfully captured financial improvements using AI, according to Trosten-Bloom. At its Akron, OH, trucking terminal, Roadway Express held an AI pilot project aimed at building employee involvement while simultaneously reducing waste and speeding workflow. The project, which involved approximately half of the work force, spun off eight self-organized topic teams. One of those teams generated savings of $10,000 per month in driver delay reductions and more than $70,000 per year in other cost reductions.

Hunter Douglas's Window Fashions Division (Upper Saddle River, NJ) used AI as the foundation of its Focus on Excellence business process improvement initiative. Implementing the ideas that were generated saved the division $3.5 million in the first year.

A casino makes a bet
AI is also proving to be an effective method for actively engaging employees in financial turnarounds. In Bernalillo, NM, Santa Ana Star Casino general manager John Cwiklik is using AI for just that purpose.

Opened in 1993 just ten miles from Albuquerque, the Pueblo Santa Ana-owned casino thrived through its early years. Profiting from the pent-up demand for gambling, it enjoyed the highest market share in the region. But competition soon developed from other nearby pueblos, and after an unsuccessful attempt to maintain its position through a $60 million facility expansion, the Santa Ana Star had slipped to fourth place.

"Quite frankly," remembers Cwiklik, "customer service was very low. You would come in and the employees wouldn't engage. They wouldn't talk to people much. They wouldn't smile. There was also a feeling on the employees' part that management didn't care about them, didn't want to talk to them."

The Santa Ana Star needed a new strategy. And so, in an effort to differentiate itself, the casino's entire 820-member staff participated in an AI focused on delivering a superior service experience to its patrons.

When the casino was forced to downsize its work force by 250 employees in October 2002, the mindset developed in the AI effort played an unexpected role. "We had to do it to save the business," says Cwiklik, "but we wanted to do it in an appreciative way." Looking to apply best practices, the casino reached its goals by offering a generous severance and outplacement package to permanent employees on a strictly voluntary basis.

In December 2002 and January 2003, Santa Ana Star turned to AI again, in an effort to reposition itself as "The Hometown Casino" and attract local customers. "We did an AI in our table-games department and in our slots department," says Cwiklik. "We asked employees how to become this new hometown casino, and we took their ideas and implemented them in our marketing and operations."

How has it worked? "We made a $10 million turnaround in operating profits in fiscal year 2003," says Cwiklik, who hopes to regain the third slot in market share this year. "AI has been instrumental in making our numbers a lot better."

Reprinted with permission from "Exploit What You Do Best," Harvard Management Update, Vol. 8, No. 8, August 2003.

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Williamsburg, Virginia-based writer Theodore Kinni has authored or ghostwritten seven books. He can be reached at MUOpinion@hbsp.harvard.edu.