Take bigger risks.
Act more like a start-up.
Be more innovative.
…and don’t forget your quarterly numbers.
We talk to a lot of organizations who are attempting to build a “culture of innovation.” They want their employees to think differently, and be more “innovative and agile.” Yet, most leaders are speaking out of both sides of their mouths.
Existing organizations are designed to execute a repeatable and scalable business model, which makes it extremely difficult for continuous and disruptive innovation. One of the innovation gurus in our space, Steve Blank, calls out specifically that many of the Key Performance Indicators and performance management processes that make companies efficient at execution are the “root cause of corporations’ inability to be agile and responsive.” In other words, one of the most important talent processes that gets in the way of disruptive innovation is incentives/rewards.
All of the new ping-pong tables, bean bag chairs and Fail Fast banners won’t create anything beyond innovation theater if your employee still gets dinged on her bonus by trying something new and failing—no matter how fast she did it.
If leaders want innovation, they have to define the behavior they want and reward it accordingly. So let’s talk about that behavior.
Your employee has an idea for improvement or innovation. She has three potential paths:
- Try it and succeed
- Try it and fail
- Don’t try it. Hide that idea deep down in the cellar. Under the floorboards. In her grade school lunch box.
Now, in almost every organization she will get rewarded for #1. Sweet success—hooray!
The tricky part is the battle between potential failure (#2) and inaction (#3). In most organizations, keeping business as usual trumps trying something new and failing—no matter what is learned during the attempt. And the riskier (or bolder) the idea…the more likely it is to fail. Plus, this employee’s quarterly numbers suffer when she fails. Better to just keep her head down and follow the standard operating procedures, right? This is the sad and unfortunate truth in many of our organizations. As leaders, here is my challenge to you: if you want a truly innovative culture, you need to make inaction less popular than trying and failing.
In the areas of the organization that are exploring new ideas or business models, we should prioritize making a decision and learning from it; not waiting for the “right” decision. If we truly want to “fail fast” so we can keep learning and succeed in the long run, we have to learn how to start celebrating and incentivizing it.
This month, evaluate your employees’ (and especially mid-level managers’) incentive plans and KPIs and ask yourself, “are these driving inaction where I need bold ideas and attempts?” Hopefully, you’ll find a few modifications you can make. You might even resurrect a few lunch boxes.
This post was contributed by long-time Talent Anarchy friend, Josh Berry. Josh is the co-founder of Econic, a research and collaboration firm focused on helping organizations accelerate innovation. He’s also the co-host of the Inside Outside Innovation podcast. In a prior life, Josh spent close to a decade in talent management consulting around the globe.