Oh why do I live this way? (Hey, must be the money!)
– Nelly, “Ride Wit Me”
Contrary to the musing of world renown performer, Nelly, motivating employees to innovate isn’t about the money. In fact, motivating employees is so challenging and complex, there is an entire field of study devoted to it.
Motivating employees to to take on the risks associated with innovation ratchets up the challenge even more.
In many companies, the innovation “assignment” is often given to longstanding corporate cronies. In many executives’ minds, the idea of taking the best and brightest salespeople, supply chain managers or customer service experts and giving them a 2-to-3 year assignment to think about new ways to do old things is a non-starter. As a result, the in-house corporate innovation team is generally substandard and inclined to fail. DARPA offers an excellent model to build a reward system for innovation professionals.
One of the major issues when it comes to corporate innovation is how to incentivize high performing employees to get involved with the initiative. Compensation for innovation must harmonize the risks and rewards associated with the development of new ideas. Entrepreneurs and initial investors who launch a new company take on the risk of losing their wealth. If the venture is successful, they are rewarded for that risk. In a mature organization, employees might not be gambling with their own capital but they are risking future compensation and possibly career stability.1)https://www.shrm.org/hrdisciplines/compensation/articles/pages/usecompensationtoinspireinnovation.aspx
The evaluation and compensation programs in place in many businesses, combined with the overriding focus on efficiency and effectiveness, means innovation is difficult to sustain. Innovators are often assigned to a part-time innovation role while compensation and advancement remains tied exclusively to evaluations of the work they accomplish on their real job.2)http://www.fastcodesign.com/1669136/the-right-way-to-reward-your-employees-for-innovations
One resource to look to for insight on how to organize projects and compensate innovators is DARPA.3)http://www.nybooks.com/articles/2014/04/24/innovation-government-was-crucial-after-all/
How does DARPA do it?
First off, who or what is DARPA? DARPA or The Defense Advanced Research Projects Agency is an agency of the U.S. Department of Defense responsible for the development of emerging technologies for use by the military and is often credited with creating the network system that would become the Internet.
The agency’s projects are designed to harness science and engineer advances to solve real-world problems or create new opportunities.4) https://hbr.org/2013/10/special-forces-innovation-how-darpa-attacks-problems The perception of an urgent need for an application that requires developing scientific knowledge inspires greater genius.
Temporary Project Teams
Projects at DARPA all have fixed duration and collaborators all have set tenures. DARPA structures project teams around fixed-term technical managers and collections of world-class experts from industry and academia.5)http://www.forbes.com/sites/tedgreenwald/2013/02/15/secrets-of-darpas-innovation-machine/ These projects are not open-ended research programs, but rather each has a set timeframe; the intensity and focus make them attractive to high-caliber talent, and the nature of the challenge inspires unusual levels of collaboration.
Leaders who leave when the projects end, and the scalability, diversity, and agility of contract performers have an edge over traditional captive research organizations. Building an innovation program with these guidelines in mind makes it possible to recruit high-caliber employees from a broader pool and onboard them faster.6)http://www.forbes.com/sites/steveandriole/2015/02/20/why-innovation-almost-always-fails/
People who seek a career in innovation are often not motivated by personal financial reward, as you might find with a sales and marketing executive. Do not confuse innovators with entrepreneurs who take on risk in pursuit of capital gain. Innovators are often motivated by the following :
- Post-project fame: securing academic positions, grants, lucrative industry jobs, or other government positions
- Bigger budgets to build other projects
- Building inspiring and interesting products
Implied in the DARPA innovation model is the acceptability of failure because no one gets it right every time. The need to willingly accept setbacks is a spinoff from the need for an innovative organization to have a more portfolio-like approach to innovation. While many organizations, government, non-profit and for profit businesses state that they’re willing to risk millions on innovation efforts, even if they fail, corporate innovators are financially and politically constrained from the moment they get the innovation assignment.7)news.ontario.ca/opo/en/2016/02/ontario-invests-nearly-100-million-to-boost-cleantech-innovation-and-create-jobs.html8)http://www.cbc.ca/news/politics/canada-election-2015-trudeau-winnipeg-innovation-1.32483919)https://www.zurich.com/en/media/news-releases/2015/2015-0825-0110)http://www.forbes.com/sites/steveandriole/2015/02/20/why-innovation-almost-always-fails/
In our next post, Extreme takes a closer look at the approach to managing individual innovation challenges and how the key there is to function like a start up by playing fast and loose.
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