Why Incentives for Innovation Are More Important Than Ever Before

It's tough out there.  More jobs lost, no real "stimulus" yet.  Companies hunkering down, noses to the grindstone doing everything possible to stay out of the limelight.  No one wants to see their name in the paper any more - let alone have to sit at the feet of arguably the most hypocritical and clueless elected officials that have graced CSPAN airwaves.  Gimme a break - "raise your hand if you own or lease a private jet?"  Jeez...  But I'm digressing from the point of this post and that is...

Creating influence strategies within your organization that foster innovation and advance new ideas are probably the most critical things you should have on your to-do list in 2009. 

I will go on record and predict that companies that push for new ideas during this down economy will OWN the business world in two years - and will be the rock stars the next spat of business books will rave about.

Follow my logic on this...

1. Economy goes down
2. Businesses sell less of what they make/produce/etc.
3. With sales down, in order to survive, they lay off "fringe" employees first - those that don't contribute to the core product/service
4. Businesses focus on process and get lean and mean to continue to reduce costs
5. Continued increases in unemployment cause less demand for business products/services
6. Businesses continue to contract - now some core employees are let go (process streamlined in core product/service line now allow for less employees)
7. High number of intelligent people with time on their hands after layoff
8. Unemployed start to put their talents to work on the things their past employer wouldn't touch because it either cannibalizes or replaces core product/service
9. New ideas are more cost effective and more targeted to customer needs
10. New ideas become new companies that replace old companies
11. Old companies go out of business

See the pattern?

Look Outside the Core

I'm not sure if I read this or if I made it up myself, but I believe that the future is at the fringe. Paying attention to the ideas and concepts that are furthest removed from your core business is where the future lies.  Unfortunately, as companies lay off their fringe employees - they are laying off their future.  What is required is a balance between survival and the future.  Screw the stockholders to some degree - don't worry about hitting their idea of numbers - hit the number that allows you to stay in business AND invest in the future.

Incentives and Rewards Can Help

Creating a program to reward creative thinking and new ideas focuses employees on something other than the negative stuff in the press.

Rewarding employees for thinking about the next thing means you will HAVE a next thing.  If everyone focuses on today - that's all you'll have.  Companies must find a way to reward employees (and channel partners) that are paying attention to customer needs and finding ways to do things more efficiently and more effectively.  These are the important things today - not just reducing costs and increasing next quarters P/L statement.

Engaging your employees in future discussions and future plans communicates you think there will be a future.  Talking about today's troubles and last weeks layoffs (or next weeks layoffs) communicates to your employee base that you don't know what the future holds.  Talk about scary.

Right now the only reward most employees have is if they don't do anything to get noticed, they MIGHT keep their job.  Now that's a workforce that's gonna change the world (feel the sarcasm baby.)

It's Going to Take Guts

The problem I see is that many companies are withdrawing from the fight - hiding under rocks and waiting for the wave to pass over them.  No company wants to spend money on future business lest they be held up by clueless politicians as irresponsible (see paragraph one in this post) stewards of stockholder money.

I look at it this way.  If I was to invest in a company, (and I'll wager Mr. Buffet would agree,) I would want to see how they are planning on attacking the future more than I would like to see how they succumbed to the past.  I would want to know how they will generate new ideas, keep good employees, co-create with customers, identify new products and services.  I don't think I'd want to to know how they are going to stay the same as they were when the economy started down.  But I'm crazy that way.

Invest today in tomorrow - reward the fringes of your organization - keep a few of those employees that "don't really fit into the day-to-day production environment."   Establish rewards for thinking outside the box and outside the company. 

Charles Darwin

I think it is fitting to close this post with a reference to Charles Darwin as the 200th anniversary of his birth was yesterday, February 12th.

Remember, the species that survives is the most adaptable - not the fittest at a single point in time.  Species (and businesses) do not survive because they stay the same while their environment changes, they survive because they change as the environment changes.  What are you doing to change?

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Comments

[PK]

Although one might think rewards work it is not the best way. Employees value respect of their peers and want to see their ideas implemented. Rewards might work in the short-term but you drop the ball on implementation and you lose the employees trust for ever.

[Paul Hebert]

Boy - PK - you've said a mouthful there and pointed out a very big hole in my post that I should have covered.

All the rewards in the world may generate ideas but without the implementation effort - it will be the last time the reward strategy will work. If ideas are not implemented - or at least discussed if they are not - you alienate the employee base and cause even more damage. There is nothing like being asked for an opinion and then have the point of view ignored or dismissed.

Thanks for pointing out a very important step in this process. If I had it to write over I'd put a section in on the follow up.

[Derek Irvine, Globoforce]

Paul, excellent post and a couple of points really hit the mark for me.

1) Stop looking to please short-term stockholder targets and start looking to hit long-term business goals
2) Be sure to reward those along the way.

I would link these even more strongly together -- make sure your "future" goals are clearly (and succinctly) outlined in your strategic objectives, then make sure those strategic objectives are included in a program that specifically allows you to recognize employees when they perform against those strategic objectives. And don't forget to do so as frequently as necessary to reinforce the value of stretching towards the future.

[Paul Hebert]

Thanks for the comment Derek - and I totally agree with you.