The 20% Solution

Entrepreneurs who want to stimulate their businesses could use something much stronger

Written by Jeff Dennis
Special Report: Fire up Your Workers: How Smart Leaders Stimulate Their Staff

To stimulate his mind during periods of boredom, the great fictional detective Sherlock Holmes turned to his 7% solution—an injectable cocktail of cocaine and water. Entrepreneurs who want to stimulate their businesses could use something much stronger.

If I seem to be advocating for or trivializing drug use here, then please accept my apologies. Holmes’ habit is an appropriate metaphor for a practice I’ve seen used in a pair of successful companies—namely, assigning 20% of every employee’s time to business-related activities and projects outside of their core, day-to-day jobs. But whereas Sherlock’s solution could be considered destructive, the 20% Solution can turbocharge growth in just about any business.

Admittedly, the 20% Solution sounds counterintuitive. When I’ve raised the idea with entrepreneurs, the typical response is that they couldn’t possibly afford to have their employees spend the equivalent of one day a week on “extracurricular” activities—after all, most companies need all hands on deck at all times in order to function, even when they aren’t in high-growth mode. I argue that you can’t afford not to. Companies that implement this strategy find that it increases innovation, develops the skills of their workforce, improves employee engagement and retention, and accelerates progress towards the company’s vision.

There’s no better proof than the 20% Solution’s most famous adherent, Google Inc. Google engineers are required to spend one-fifth of their working hours on projects that interest them, provided the activity has some business potential. The better projects enter a product funnel, and the few great ones come out the other side and get the funding necessary to take them to the next level. What Google calls “Twenty Percent Time” is the genesis of more than half of the firm’s product launches, including Gmail, Google News and Froogle, an online product- and price-comparison service.

The 20% Solution has also been a powerful weapon in the battle for top talent. Employees say it is a large part of the culture that exists at Google, and one of the major reasons that some engineers choose to work there. It’s both a privilege and a duty: fail to dedicate adequate attention and energy to Twenty Percent Time, and you’ll have a black mark on your overall performance review.

Razor Suleman is a Toronto entrepreneur who applies the 20% Solution a little differently. A year ago, Razor created five volunteer committees at I Love Rewards Inc., his Web-based incentive marketing company. (I chair its advisory board.) The committees cover social responsibility, public relations, employee experience, employee recruiting and celebrating success. Staff can join their committee of choice, no matter what their job description is. As a result, you could find IT geeks at the 35-employee firm on the PR committee, or call-centre staff working on employee-recruitment ideas.

Search YouTube.com for “I Love Rewards” and you’ll find a 4.5-minute video written, filmed and directed by the company’s recruiting committee, starring a guy from IT and a woman from sales and marketing. Its theme is how not to recruit employees, and it’s hilarious. The film not only provides practical suggestions to existing employees about encouraging their friends to apply for jobs at I Love Rewards, it also offers potential employees a glimpse of the company’s culture. Is your staff having that much fun?

Amusement aside, employees love it because they get to work with colleagues they don’t encounter day-to-day, develop new skills and grow as individuals. No wonder every employee serves on a committee, even though participation is voluntary. Razor loves it because employees are more engaged and turnover is down.

From what I’ve seen, companies do not necessarily reduce their employees’ normal workload or lower their expectations of staff to accommodate extracurricular activity. But by encouraging employees to work away from their “real” job 20% of the time, they get more productivity out of their people during the other 80%. Less is more.

With our aging demographic, it will be increasingly difficult to attract and retain employees over the next decade. Entrepreneurs who are innovative and find ways to motivate and keep their employees engaged will find it easier to cope with this trend. Studies suggest that Gen Yers are more interested in quality-of-life issues than were their baby-boomer parents, who were more focused on money. Providing the next generation of worker bees with Twenty Percent Time will enable them to pursue those quality-of-life opportunities, increasing the likelihood they will stick with their employer for a longer haul.

So, start now and develop your own take on the 20% Solution. Use it to create an environment in which your employees can explore, learn and grow. The returns can be huge, in terms of innovation, retention and employee engagement. It could be a habit you’ll never want to kick.

Jeff Dennis is a serial entrepreneur and president of Toronto-based Cale Financial Corp., which provides strategic advice and financing to fast-growth companies. He is also a co-author of Lessons from the Edge: Survival Skills for Starting and Growing Business.

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Originally appeared on PROFITguide.com