How to Kill Innovation: By Rewarding It?

No, no, I'm not going all Dan Pink on you, I promise.  Just hear me out.

In his column Innovative Insights at Harvard Business, Scott Anthony talks about why making enormous financial commitments to innovation can actually, paradoxically, stifle the very thing we are trying to drive.

It seems like every day features a slew of stories where leaders commit billions to new geographies, technologies, or acquisitions to demonstrate how serious they are about innovation and growth.

Here's the thing — these kinds of commitments paradoxically can make it harder for organizations to achieve their aim. In other words, the very act of making a serious financial commitment to solve a problem can make it harder to solve the problem.

As Anthony sees it, these large investments tend to have the effect of locking in strategies and assets, preventing the agility, the twists and turns that are necessary for innovation to occur. They push people toward the surer things, existing markets and technology, where the ROI seems more predictable, rather than the riskier possibility of dramatic breakthroughs.

I think the same case can be made for reward programs and metrics that too closely and specifically target innovative practices and outcomes. 

The biggest barriers to innovation, according to Anthony (who has consulted with major corporations and written three books on the topic), isn't a lack of money...

It is a lack of committed people, a surplus of inappropriate mindsets, and a whole series of standard operating procedures that run counter to the fast-cycle decision making, in-market learning, and iterative approach to strategy required for disruption.

He also relates an interview with Innosight, Intuit Chairman Scott Cook about innovation.  Cook tells him that in his experience, the most successful disruptive teams have "an executive that is rooting for them, cheering them, mentoring them, actively spending time with them every week and protecting them from the antibodies of the rest of the companies that are trying to love them to death, or, exterminate them."

So it is largely a leadership thing.  But a leadership thing that demands the right configuration of rewards, not an absence of them.  It strikes me that rewards, particularly incentives, have to be structured in a way that allows leaders to protect and nurture their innovators from the rules and norms, the SOPs and the short-term milestones (the "sucking sound of the core" as Anthony puts it) that impede their efforts.  To me, this suggests broad, cross-organizational metrics and longer-term measurement horizons.

The catch, of course, is the balancing act, isn't it?  While we need innovation for growth and longer-term survival, our organizations also need to bring it in and crank it out in the nearer term to be around long enough to contemplate a possible future.  That's why good reward design involves finding that right harmony with a combination of elements that addresses all aspects of individual and organizational success, over the short and the longer haul.

Nobody said it would be easy.

 

Comments

[E James (Jim) Brennan]

Right on, Ann!

Reminds me of a book published long ago about "How to Keep Your Job" when everyone else is being laid off. Not the brand-new paperback list of "how to's" but one written around 1970. The central theme was how important it was to attach yourself to a losing project in which the enterprise has already invested large sums of money. For all the reasons you cited, Ann, management is reluctant to admit failure to recover their sunk costs and will continue to invest almost perpetually in the losing proposition rather than be the ones to 'fess up and take the bullet.

Big investments equal big commitments and deep involvement; but they do not always prove to be good ideas. Innovations are more likely to be surprise discoveries or off-kilter inspirations than the products of expensively funded searches.

[working girl]

I love the previous comment. And it's true that funding and executive attention may attract the wrong element for innovation. THe only thing I would add is that the 'iterative approach' cited here as necessary for disruption is often mistaken for lots of meetings with everyone and their sister in Idaho, and that can kill innovation real quick.

[adam hartung]

Forbes posits "Why the Pursuit of Innovation Usually Fails"

Read why leaders and companies are locked-in to "best practices" that become obstacles to innovation. Even when desperately needed - like today. Offer your comments. http://tinyurl.com/yku67yj