There are a lot of companies seeking innovation, and possibly even more who should be given the ever increasing complexity businesses are facing and the combination of technology and globalisation driving up the value of creativity.
So it’s not unreasonable to consider how reward can contribute to innovation, but I think the answers are less straightforward than applying our standard models.
The conversation that sparked my pondering went down a well-trodden road, i.e. “what if we introduce an incentive plan, or maybe an award for innovator of the year?”
Here’s why I think we can do better.
Let’s start with the incentive plan. Putting aside for a moment the practical challenges around defining and measuring “innovation”, there are some things that cash just isn’t the best tool for. Driving creativity is one of those things.
My musings reminded me of this fantastic TEDTalk by Dan Pink on motivation, incentives and innovation. Dan sums up more eloquently than I could (he’s trained as a lawyer, after all…) how research has shown time and time again that money doesn’t drive innovation. Basically, extrinsic (“if you do this, then you get that”) rewards are great motivators for mechanical or process driven tasks. But they can actually decrease performance in activities requiring creativity because they tend to narrow thinking.
So, maybe not an incentive…
How about the “innovator of the year” idea – or some variation of recognition scheme? Definitely better, although there is potentially still the question of money – a fine balance. Too little and it could be insulting; too much and you’re right back in incentive territory. Not to mention your finance director could have something to say if you start handing out big recognition payments to too many people.
But, recognition can be an intrinsic motivator where people feel they are contributing to something worthwhile, or for the greater good, or even just interesting. It’s the way they are recognised that makes the difference.
If you want to read a more about recognition, here’s a useful article in Forbes. If you’re in a bit of a hurry, I’ll boil it down – the biggest impact comes from the most personal recognition, not the most cash. Build a culture where people are genuinely and regularly appreciated for their discretionary effort – and innovation certainly falls into that category – then you’ll have a much better chance of them giving it.
So, there you have it, how reward can drive recognition.
This all kind of misses the most important piece.
If we broaden reward to include the employee value proposition, the culture of the business, the “way we do things around here”, then we get to the most important enabler for innovation. People need permission to fail.
You read that right – it needs to be OK for people to fail before they will be willing to try something new. And that scares us.
Maybe, though, the risk of failing to innovate will scare us enough to start exploring the balance between risk management and openness to trying something new. And that will give our employees the space to innovate.