Many innovation discussions kick off with a reference to the future. It conjures pictures of visionary ventures and ground-breaking projects featuring corporate rockstars and famous, highly paid innovation celebrities. The resulting new offerings – and often shiny new technologies – is believed to weave a cloak of protection against irrelevance. Sometimes it does exactly that and remarkable things happen, but there are no guarantees and often times the innovation programme misses more than it hits.
By now we have learnt that innovation success has to be cultivated and that it favours the prepared. Practise makes perfect and innovation investment makes sense, but success requires an appetite for risk and funding and in difficult economic times this ask becomes almost impossible to answer.
There is continuous talk about the “future of work.” For some, this is exciting as robots and artificial intelligence technologies personifies opportunity, while others experience this progress as scary and jobs endangering. Innovation is being heralded as the historical creator of new jobs in brand new fields, but according to Barker and Berube (2018) amid all that, the trends of sluggish wage growth, an expanding contingent workforce, and diminishing power among workers prompt continued experimentation and debate around ideas like universal basic income¹.
It is clear that the future is changing and so is the shape of the economy. Some analysts call this the barbell phenomenon and it refers to an economy that is characterised by growth at the bottom and top of the income ladder, while the middle gets hollowed out. This means more millionaires at one end while over qualified knowledge workers become stuck in dead-end jobs that don’t pay enough, at the other. Another term for this is “job polarization,” as used by David Autor of MIT. More and more people are struggling to make ends meet on a continuous basis and when this happens, we default to the basic human need of money first, in order to keep our heads above water.
It is easy to see that cash is king at the moment and this holds implications for how we manage and reward innovation.
Research conducted on innovation reward practises by Innocentrix in 2007, found that most organisations used a combination of monetary and non-monetary approaches to reward innovation effort. Much of this still rings true today. Practises differed in application and was influenced by the context in which organisations operated. For many organisations rewarding innovation was not a formal activity yet and it was evident that the innovation maturity level of the organisation could influence the level of monetary incentive required. Results showed that lower levels of innovation maturity needed more financial reward to help drive and embed innovative behaviour in the early stages of an innovation programme.
In the following years a strong argument emerged for non-monetary innovation reward mechanisms as organisations navigated the minefield of unintended consequences associated with monetary reward, the most prominent being idea hoarding, and the indirect encouragement of unethical behaviour while eyes were on the money prize. A serious lack of collaboration was another side-effect and all of this flew directly in the face of innovation conducive behaviour. Research further demonstrated that people valued praise and peer-to-peer recognition a lot more than it was given credit for, especially in high performance cultures. Warden summarises this notion well and cites the book Drive: The Surprising Truth About What Motivates Us (Riverhead Books, 2009), wherein Daniel H Pink makes a case that as tasks became more complex, interesting and more self-directed, traditional carrot and stick approaches no longer delivered the expected motivational results. Pink argued that money is a motivator at work only to a certain extent, as people expect to be paid enough so that they can focus on the work instead of worrying about money: “If you don’t pay people enough they won’t be motivated” he says².
Yet, in a barbell economy this might capture the exact problem adding to the challenge of how one makes innovation happen in an environment where harsh economic factors affecting both the employer and employee might push the innovation agenda onto the unaffordable luxury item list.
The answer is not straight forward but will to a great extent depend on organisational fluidness and flexibility. Based on our own experiences working with organisations that passionately drive a growth agenda, some of the following thoughts come to mind as main contributors to building sustainable innovation reward mechanisms:
- Know that reward and recognition is a central part of innovation capability building and that it cannot be ignored. Start somewhere.
- Reward must always be earned. Raffle tickets in a hat are for school fetes looking to foster fun. Nothing kills real innovation effort faster than an undeserving winner.
- Unless people feel that they have a reasonable chance to achieve the reward offered, it will not be a motivating factor. It can actually have the opposite effect.
- Achieving the innovation outcome must be within the control of the employee. If idea development and collaboration is part of the ask make sure it is enabled by the correct tools, training and access to resources. Failing to do that are setting people up for failure and will demotivate them quickly
- Link reward to encourage the behaviour that you want to see. This also means that the reward must be available as soon as possible after the desired behaviour has been displayed.
- People differ in what motivates them. Understand the cultural drivers in your organisation and be flexible with the options available
- Reward needs to be meaningful and valued by the recipient
- Reward allocation always needs to be exciting, simple and transparent. Remember that you are communicating what you want more of and providing examples of what you want to achieve
- Link reward to the potential value return you are looking to create. Nobody like to feel they are being short changed and will go off and do it themselves
- It’s a better idea to start small and grow in your approach than to kick-off the programme with a big bang and dwindle
- Ask for input and ideas, collaborative effort almost always wins the day
All of us have an innate creative ability, it might just be buried deeper in some of us than in others. As leaders of innovation we cannot expect innovation to happen in a sustainable manner without providing the necessary structures to manage it optimally. Employee training programmes also need to consider building innovation skills and competencies in a varied and practical manner and in absolute support of the innovation programme.
So in the end, it is only logical that the way in which we approach innovation reward is not only influenced by an organisation’s innovation maturity level but also by its awareness of the current shape of the economy.
I would be delighted to hear your feedback on your experiences in tackling this thorny yet crucial challenge of innovation engagement.
For those interested in a live example of reward and recognition in practice, please checkout the open innovation challenges The Future Shapers are showcasing.