Rewarding Innovation

by Jeffrey Baumgartner

Rewarding InnovationA reward scheme can make or kill an innovation initiative, such as an idea management process. Considering the amount of effort that goes into launching an idea management process in many companies, it is essential to get the rewards right.

In this article we will look at reward schemes supporting an idea management process – one that is ideally supported by idea management software like ours. This is because our software is the most intuitively powerful idea management solution around and because if you use Jenni, you would get my personal support in setting up your rewards scheme.

Getting Started with Rewards

In the early days of your idea management initiative, you should reward for quantity rather than quality. Your biggest challenge will be getting your employees to actually log into your idea management system and try it out. If the system is as enjoyably easy to use as ours is, employees will quickly become regular users. But they need to be lured into the idea management tool first.

Thus a small reward such as a chocolate, a piece of fruit or a pen for every idea can be effective. An alternative approach used by an FMCG (fast moving consumer goods) client of ours was to order a run of special T-shirts they designed to mark their first ideas campaigns. Everyone who submitted at least one idea got a T-shirt which they were encouraged to wear to work. Indeed, they were even rewarded for doing so. Thus not only did participants receive rewards simply for participating in the initiative, but also they promoted the initiative with their rewards. Such an approach might be enhanced by offering larger rewards to the top idea submitters.

Mid Term Rewards

If such reward schemes will only apply at the early stage of your idea management process, it is important to emphasize this to employees. Otherwise, once you stop complementing ideas campaigns with numerous small rewards, employees may feel you are no longer so interested in their ideas. Nevertheless, you will eventually want to move on to an easier to administer rewards scheme.

One such approach is a points based rewards system in which points are received for submitting ideas. Points might be used like airplane frequent flyer miles in that points can be exchanged for gifts, special privileges or the like. Jenni has such a points distribution system running in the background. It grants points for almost every idea related action, such as submitting ideas, collaborating on ideas, having your idea passed to evaluation and so on.

Alternatively, a small gift for each idea submitted, a recognition scheme or rewards for the most active ideas submitters are also effective.

Reward for Quality and Pay in Creativity

You will probably be tempted at some point to reward the best ideas. This is dangerous and, ironically, can actually result in a fall off in creativity. This has been my own experience and I have heard anecdotal evidence from others to support this.

The reason why this happens is in fact logical. If you reward the “best ideas” employees will submit ideas designed to please management. Such ideas are likely to follow your existing approach and be similar to ideas developed by management in the past. To give a totally un-businesslike example: if your sweetheart likes Belgian chocolates and you want to please her (or him) on Valentines day, you will probably buy her a box of Belgian chocolates rather than take a chance on something new and different. That’s because your aim is not to impress your sweetheart with your creative thinking skills, rather you are trying to please her with a gift you know she likes. Likewise, when you ask for the best business ideas, people aim to please rather than show off their creativity.

Reward for Creativity and Get Creativity

A better approach is to offer rewards for the most creative ideas, or even the “craziest ideas”, “most outlandish ideas” or “furthest out of the box ideas”. In my experience, and based on anecdotal evidence, such an approach leads to a higher level of creative thinking and ideas that are more creative. That also makes sense: ask for creativity and you get creativity!

Do note, however, that rewarding for creativity may result in a lower number of ideas. When the rewards are for creativity, people are less likely to submit incrementally creative ideas which they know will not be rewarded. This is important to bear in mind if you are looking for incremental improvements rather than creative new ideas.

Big Rewards Are Not Always Good Rewards

In general, offering a substantial cash reward to an individual for a great idea, an implemented idea or anything like that is dangerous. When people know that they can get a huge amount of money for an idea, they tend to act purely for the reward rather than for the company’s benefit. When big cash rewards to individuals are on offer, problems such as: managers stealing subordinates’ ideas, big disputes between employees and top employees leaving the company out of frustration become commonplace. The result, of course, is poor internal relationships, loss of good staff and collapse of your innovation initiative.

That said, offering teams substantial rewards for developed ideas can be very effective. The reasons why this is the case are clear

  1. People are working together as a team to develop a project, thus there is not a rivalry at the individual level for a big pot of money.
  2. Helping each other develop an idea increases the likelihood of achieving the award. When an individual gets the reward, the opposite is true.
  3. When the idea has to be developed into a business plan or other type of project, team members put substantial effort into developing the idea. Hence there is a feeling that the reward is compensation for extra work, rather than a jackpot for one lucky idea instigator.

Dynamic Horizons, our partner for Jenni in Melbourne, Australia has had success with such an approach. You can read more in their case study (do also click the link and download the PDF which goes into more detail).

Transparent Versus Translucent Rewards

Thus far, we have talked about transparent rewards, that is rewards that are announced at the beginning of any innovation initiative and which are publicly given. If you wish to reward generously a particular individual for her substantial innovative input, translucent rewards are the way to go. A translucent reward might be, as an example, a promotion in which you state, “Sally, we really like the great ideas you have been submitting to the company. As a result, we’ve decided to promote you to division manager so you can be more hands-on in terms of implementing your innovative ideas.”

Such a reward is translucent because it was not advertised across the company and was given privately to Sally. Nevertheless, in giving the reward to Sally, you make it clear that one reason she has received the reward of a promotion is her participation in your idea management system. You can read more about transparent and translucent rewards here.

The most important lesson here is to consider your rewards program carefully before you launch an ideas campaign or other innovation initiative. A well thought out rewards scheme will do wonders for your results. And, of course, if you want advice on innovation rewards, just contact me. Better yet, why not test an idea management software service in your organization?


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Jeffrey BaumgartnerJeffrey Baumgartner is the founder of jpb.com, makers of Jenni innovation process management software. He also edits Report 103, a popular eJournal on business innovation. Contact Jeffrey at jeffreyb@jpb.com or visit http://www.jpb.com/

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