Balancing Innovation Rewards

There is enough literature on Incentivizing employees to be innovative. The often quoted examples of Google and 3M giving a percentage of work time to employees for their free will is also seen a productive way to incentivize. Lesser mortals end up announcing schemes where at the end of the funnel there is a tangible reward. Sometimes these are even cash awards for the best idea – remember not the best implemented idea but the best suggestion. There are two opposite views to incentives and an organization must balance the two to achieve a usable result.

Most established big organizations tend to push people to work within the boundaries of their well laid out systems and processes. This brings in a kind of complacent behavior that tells people that they need not think and all they have to do is adhere to systems and produce what is expected. Over a period of time thinking is seen as someone else, mostly top management’s job. To get people out of this, to make them think creatively and to tell them that it is even expected of them needs an incentive scheme – something that would lure them to work over and above the base expectations.

On the other hand, incentives should not become an end in themselves where people will work just enough to get those rewards and then go back to their work. There would be some activity but overall it may not help the organization move ahead as people never saw that as the goal. Incentive initiatives should have a clear goal – if it is an HR exercise to motivate people or a strategic move to use the collective brain power available to the organization. For the later, the whole exercise must not end at rewarding the winners but it should actually start from that point onwards by implementing those ideas and drawing benefits from there.

Incentives should also not be limited to organization level as that would only let people compete within organization, the design of initiative should encourage them to compete with the best in the industry if not exceed the benchmarks already set. This is when you and hence the employees will truly benefit from an innovation initiative. Not many companies think through these angles when they announce idea contests.

Measuring Innovation

Paul Sloane in his article ‘How can you measure your Innovation? What are the best metrics?’ shares his thoughts on Innovation metrics. Basically you can track metrics at three stages : Input, Process and Output.

The most common sensical approach that organizations take is to see what the so called Innovation has generated over a period of time – usually an analysis of the past – which would occur after 2-3 years of beginning of the innovation initiative. Should you really wait till the innovations are ready to be measured or do we need to measure them in interim.

Paul lists the data points that can be measured at various stages. Input parameters include what is being invested in innovation and how consistent is that, process measures how are you progressing and if there are points where your ideas are getting stuck. Output parameters of course we understand the best.

What I like the most about the article is the fact that none of the parameters will ever give you a dependable picture as that is the nature of the Innovation. You can have indications, you can ensure the movement, you can to some extent ensure the output but it is very difficult to assess the outcome. All the measures put together give you only the feel of what may happen. So Innovation initiative will always have an element of intuition that you need to depend upon.

Innovativeness of Nations

Prof Saumitra Dutta of INSEAD speaks about his report on Global Innovation Index that measures innovativeness of 125 economies in an interview with Strategy+Business. ┬áThe parameters used to come up with the report include both the input parameters like institutions, human capital, infrastructure and market & business sophistication ( I do not understand the last 2 parameters) and the output parameters in terms of creative and scientific. Among the Asian economies he says east Asian economies are competing with Europe now, China is moving up the index and is ranked at no 29, while India is slipping in rank since 2009. When questioned about India’s rank vis-a-vis India’s perception, he says well it depends on what you measure, if you go by output return based on input then yes India is innovative. Now does that make me feel that the criterion can be defines to suit what economies you want to highlight where you want to push the next set of investments towards. Not that I want to defend India’s competitiveness, but should a low input producing a high input not a positive contribution to the index rather than a negative.

I think it is time we stop promoting careers around these lists which can be made in any which way. If there has to be an index like this to me the most important parameter is the impact the new innovations are creating – be it scientific or business innovations. If you can not measure the impact, everything else is irrelevant, whatever the input or output may be. Another question that keep asking these days is – Are we too impatient when it comes to celebrating anything new without ever waiting for it to showcase its impact?

 

Net Promoter Score…

Roger Martin in his HBr article The Innovation Catalysts mentions an interesting concept of Net Promoter score (NPS) that is being used by Intuit, a software development company.

NPS gets calculated on the answers to one simple question by Intuit’s customer. The question is “Would you recommend this product to your friends or colleagues?” And they can answer on a scale of 10 with 0 being most unlikely and 10 being extremely likely. Scores 0-6 are counted as Detractors, 7-8 as Passives and 9-10 as Promoters. Now subtract the percentage of detractors from percentage of promoters and you have the NPS. Simple, Isn’t it.

Now to improve the NPS company needs to work on reducing the no of detractors and increasing that of promoters.  And is that not all that an organization needs to focus on?