Rewarding Innovation: Beware the Trap!

by Bob Eckert

There are 12 strategic action areas that wise executives need to actively attend to in order to create a culture of innovation within their organizations. While the e-book describing all 12 is free and available, we’ve been asked to chunk it into 12 smaller articles for LinkedIn Pulse. We’ll explore each in turn with case examples. But be forewarned! It is all too common to fall in love with a few of the strategies while perilously ignoring the others. (click here to download the 12 Strategies)

For each strategy, there is a sweet spot. None can be ignored even though they may not all be equally important to your efforts. Continue reading for more detail, success tips, and real-world examples for each of the areas in the complete eBook, Demystifying Innovation Culture Efforts.

Accountability and Recognition

We are not talking about a system of perks and rewards for those who produce notable innovation. We’re talking about the basics.

For example:
• How are people rewarded when they support the creative thinking of others or held accountable when they don’t?
• How are managers recognized when they create team climates that allow for effective, collaborative and critical thinking or held accountable when they don’t?
• How is employee engagement in identifying new problems that arise, and working to solve them, reinforced?
• Are employees praised or criticized for exhibiting the humility that drives curiosity and feeds the mind with new information from which creative thinking develops?
• Are employees acting courageously and tenaciously to pursue that which they believe will strengthen the enterprise or are they managing to “just get the job done”?
• Are all employees supported to maintain integrity with the fundamental behaviors and values that drive creative thinking and collaboration in themselves and others? (See whitepaper, The Way of the Innovation Leader, describing this key value set). Are they accepting of feedback when they’re not staying true to these values – and are they willing to give feedback to others when others are not?
• Are business units held accountable to meeting negotiated metrics for improvement in the fundamentals above or are they not?

Reward is one of the most challenging areas to “get right.” There are many pitfalls. The default is to reward those who stand out in the implementation of innovations having to do with an organization’s offering, but the data about the effectiveness of such a strategy is confusing. In fact, this kind of reward is sometimes shown in the research to be counterproductive. Since there is already a system for rewarding good employee performance in general, we wonder why there is a need to create a separate system for innovation.

Success Tip #1 Consider acting to strengthen the current employee evaluation system by asking: “What might be all of the ways to utilize our current systems of employee and business unit appraisal to strengthen our culture of innovation?” Run some experiments. Evaluate. Refine. Borrow a leaf from Starbucks: find ways to increase employees’ sense of ownership while at the same time strengthening their creative problem solving skills. This, research has shown, is a guaranteed innovation energizer.

Reward Can be Dangerous

Success Tip #2 Find ways to recruit for – and reinforce with evaluation – what has been shown to be two core differentiators between low and high innovation producers: The ability to find and connect that which was previously unconnected, and the ability to empathize well with customers, both internal and external.

Real-world Example: At Amazon, they are aware that a short term focus is dangerous to the survival of innovation. They’ve found a way to manage accountability and recognition that is providing them with more of the innovation-fostering mid-manager behaviors that they desire. The problem is that in most “normal” situations, managers of business units must be held accountable to deliver on the things the business is requiring of them now. It can become too easy to always ignore long-term creative work in favor of the short-term win. This is even easier to do when manager bonuses are awarded based upon these short-term wins. It’s essentially impossible to bonus someone based on long-term potential since bonuses are structurally built to be driven by short-term results. In order to combat this contradiction, Amazon eliminated all bonuses. Instead, they make employees owners – people with a long-term view – by awarding actual stock, not options, for performance.

“Accountability breeds response-ability.”

Stephen R. Covey

Join the global innovation community
Don’t miss an article (3,700+) – Subscribe to our RSS feed and join our Innovation Excellence group!

Top 10 Innovation Drivers

Bob Eckert is a veteran of 25 years in the Creative Thinking and Innovation fields. A thoughtful, frank and engaging speaker known for thinking in the box, out of the box, under the box and around the box, he is the co-author Demystifying Innovation Culture Efforts: 12 Strategies for Organizational Change Practitioners & Executive Leadership and More Lightning Less Thunder: How to Energize Innovation Teams.