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A word with Char McArthur on innovation at Idaho Transportation Department

Catie Clark//July 28, 2020

A word with Char McArthur on innovation at Idaho Transportation Department

Catie Clark//July 28, 2020

photo of char mcarthur
Char McArthur

Over the last several years, the Idaho Transportation Department has been on a trajectory of behaving more like a business and less like a government bureaucracy. Part of its business strategy is the Innovation ITD initiative, which started in 2014. To date, the program has turned 1,600 employee ideas into $11 million in savings for Idaho taxpayers.

Innovate ITD has now been named an international finalist — one of eight — in the “Small Idea, Big Impact” category of the Gartner Awards for business. The awards committee received more than 200 entries from 30 countries. The ultimate winner will be named in early August.

The Idaho Business Review reached out to Char McArthur, who heads up the Innovate ITD initiative, for her insights on how ITD has transformed itself into the award-winning organization it is today.

The interview transcript has been edited for length and clarity.

Let’s start with you. How did you end up being ITD’s chief of innovation?

Chief administrative officer is my title, actually. Functionally, I’m responsible for finance, budget, facilities, procurement — all the administrative functions except for human resources report to me. I have been here about seven, almost eight years, this fall.

I’m a Boise native, but I came to ITD after working over in Seattle. I was working there doing global finance for manufacturing, and I really just wanted to come home. I never thought I would find myself in government. In fact, when people found out I was going to work for the state, they sort of laughed at me. They were like, “You’re what? You’ll never survive!” But you know, Brian Ness, the director of ITD, told me his story and what he was trying to achieve by getting the transportation department transformed to function more like a business.

I had a background, not only with my CPA but also in technology, and I had earned my black belt in lean. So the whole idea of continuous improvement, process improvement and culture transformation was super appealing to me. I am not a typical accountant. I like to bring all those analytical skills and transformational skills to the table to do process improvement.

So when Brian talked to me about innovation and what he wanted to do at ITD, I was so on board and so sold with the notion of being the innovation champion for the department. He had me; he hooked me.

How did you find out about the position at ITD? Were you already looking to move back to Idaho at the time or did somebody tell you about the opportunity?

I’m not a straight path kind of person. I sort of meander my way and find things that interest me. Follow your passion, right?

I was looking to move back, and I had been looking around. I’d been gone from Idaho for 13 years, and so my networks were a little thin. A lot of the people I knew had moved on or just weren’t there anymore. It was really a struggle because when I would apply for things, people would say, what’s wrong with you? You’re going to leave this wonderful job, this career, and you’re going to put in for a job here at half the pay? So there must be something wrong with you. So it was really hard to get in the door anywhere.

I had been looking, and I can’t remember exactly how I got connected with Brian Ness and with the recruiter they were sourcing. In fact, I think when they first called me, I was like, “No, I’m not a government-type person. I’m not interested.” And then we talked a little more, and I actually listened to him. And having listened, I really got hooked on the notion of what Brian was trying to do with ITD. To run the department more like a business was Brian’s idea.

When Brian came to ITD, he came at a time where things were a little bit of a mess, right? There was not a lot of credibility. There had been some serious audit findings. Things were icky at ITD. And Brian came along and said, look, we need to change the culture. We need the people to be thinking more about customers instead of being just government bureaucrats or just following our process and what we’ve always done.

Instead, Brian wanted our people to think about what we do. He wanted us to serve the customer and to think about how could we do that better. Fundamentally, that was his notion. And so, he endeavored to start to make the organizational and structural changes to achieve that change in culture. That’s what he pitched to me when I interviewed with him. I would be the champion for the innovation strategy for ITD. So that’s how it came about. I can’t take credit for his vision of what was supposed to happen.

How did you go about turning ITD into an organization that started innovating?

The first step was getting together with the team of leaders who were tasked with this effort. At our first meeting, they said, “Hey, Char, here are all the innovative things we’re doing. Here’s the list of innovative projects we want to do.”

And I went back and said, “Gosh, guys, I don’t think that’s what we’re supposed to do. We’re not supposed to be a group of people that do innovative projects or tasks. We’re supposed to create an organization that’s innovative.”

People scratched their heads like, “Well, isn’t that what we’re done?”

I said, “No, we’re not supposed to do that. What we’re supposed to do is get other people to do that. It’s a fundamental shift. What we have to do is get the organization to create a culture of innovation.”

So what do you have to do with your organization’s culture to allow for that to thrive? We had a lot of missteps along the way — well, maybe not a lot, but we had a few mishaps while we figured out the things we needed to do to enable people anywhere in the organization to be innovative. Because if you have a team of 10 people and each of those 10 people does an innovative thing, you get 10 innovations. However, if you teach the organization of 1,650 people to be innovative and you empower them to innovate, now you get 1,650 innovations.

Fundamentally, you have to start with defining what you mean by innovation. For us, it was a mindset and a culture. It was looking at being flexible and changing — but changing with the purpose. That purpose is to achieve your strategic objectives and to improve on delivering your mission for your customer. So when we change the culture, it will be focused on that outcome, that mission for our customers. And that makes us more like a business and less like a government bureaucracy.

Can you tell me about the Gartner award that ITD is up for?

Gartner’s famous for its technology consulting. Apparently, ITD got submitted into an award category for little ideas having big impact, and lo and behold, we’re a finalist. Our wonderful communications team really likes to let people know when we’re finalists.

Before this, we did get nominated for innovative company of the year twice through the Idaho Technology Council, and we made it into the top three twice, but we have yet to win. I think we’ll just keep on swinging until we do.

It’s about the employees who are doing this stuff. All I do is tell their story and give them the opportunity to have their voices heard. It’s not me. It’s the whole organization. And it’s the culture and the people that we’re very intentionally cultivating. It’s less about the things we do, all of these innovations, because without the people and without the culture, none of that other stuff happens.

I work on several different national-level committees with other state departments of transportation on innovation. We are unique in Idaho compared with the other DOTs because everybody else thinks that innovation is about selecting to do this or that innovative thing. They get a list of innovation projects and they are going to approve them. But that’s strategically top-down. We tried to do that at first until we realized that we just have to open the door for employees.

That’s one of the mistakes we made at the very beginning, doing things top-down. It used to be that our employees would submit their innovative ideas, and then our committee would look at the ideas and decide whether they were innovative or not. So you can imagine that if you ever got the courage up to submit something to us, and then you got this letter back saying, “Well, thanks for your letter, your submission, but it’s not really innovative. It’s not good enough. Why don’t you try again?”

With a letter like that, what’s the chance that you’re going to try again? Yeah. You’re not.

The way we learned not to do this was by engaging with the Boise State University Capstone students through an M.B.A. Capstone project. We asked them to come in and look at what we were doing to see what we could do better. We did this for two or three years with them, but that first year, they came in and they said, “Do you realize you’re killing your culture when you send this (rejection) letter out?” We said, “What do you mean?” It was really hard for me and the rest of the team to get past that. We were killing the culture we were trying to encourage. We actually stifled innovation.

We had to stop trying to get the innovations and instead to create the environment and cultivate the mindset in people to get the innovations out. And it’s so hard. I’m an accountant. I work with engineers, and all of us are very process-minded and just want to control things. But when you stop doing these things (like soliciting and evaluating a list of innovations in a top-down manner) and you give your employees guidance, saying, “Hey, we would like you to do innovations that improve safety, or we want you to do innovations that save money or improve customer service,” now they’re really focused. They’re focused on mission-driven things that improve our business and through that, the departments become more business-oriented. Making that change was a critical pivot for us, and I’m forever grateful for the Boise State students for helping us see that.

So what’s your favorite innovation? 

There are so many. One of my favorite ones is our new approach with interviewing. We’re really set on making sure we hire people that fit into our culture. If you want to work for us and be a bureaucrat, it’s not a good fit, right? We need you to be customer-minded, but it’s really hard in an interview to garner that. If you just have a supervisor interviewing somebody and have to make a decision to hire based on that one-off situation, then a lot of times you make bad decisions because you’re not getting a full perspective.

Our HR team came up with these group interviews. So imagine this: you apply for a job at ITD. We’re going to put you in a group interview in a room with the other five to 10 candidates who are applying for the same job. You as a group are given a group activity where you have to collaborate and you’re observed. That’s part of your interview process. That has taken us leaps and bounds forward in being able to identify people who are going to be really good fits for our culture. It lets us find people who are collaborative, who don’t squish other people and try to dominate them, but who also engage and speak up. With the group activity, you can watch the candidate’s thought processes, their thinking and how they’re able to verbalize. It’s a fascinating way to go about interviewing and it works really well for us.

I’ve never seen anything like it in all my years and all of my experience. I think it’s a game-changer for us and in our recruitment. So that’s one of my favorite innovations which probably comes in at the top of the list.

Another innovation I love is the 0sprey nest platform. We won an award for that one a few years ago. Then there’s also one called the Six, Five, Four Project, where the three districts over in Eastern Idaho got together and collaborated in combining the way they bid out small bridge projects. That saved a few million dollars by combining the projects. You might say that it was just common sense, but the way they changed the processes was a completely novel way of thinking for them.

I like to tell people that they have the courage to stand up and be counted. We empower our employees, giving them their voice and giving them credit and celebrating that. Giving them focus, giving them voice, empowering them to find ways to improve safety or improve the customer experience — we give them that, and it makes the whole culture thrive.

I just really want to stress that it isn’t about me. Innovate ITD is about the employees of ITD. Director Ness would say the same thing. I’ve talked all over the country about what we’re doing at ITD, and it’s all about the people and the culture. And so I really hate for it to look like it’s about me because it’s not.