Find the Right People to Boost Innovation

Human resources executives trying to promote innovation inside big companies have it tough. Innovation is an intensely human activity where a large portion of the work is done by individuals or small teams. And the best innovators have the option of working for start-ups where financial rewards can be limitless. It seems next to impossible for a large company —especially a publicly traded one — to compete financially for the best talent. The good news is they don’t have to if they thoughtfully blend rewards at their disposal — such as novel career paths — with a failure-tolerant culture.

Some of the most useful research on innovation incentives is recounted in Daniel Pink’s book Drive: The Surprising Truth About What Motivates Us, which details how performance on creative tasks decreases with monetary incentives. Instead, successful incentives provide people with a sense of autonomy, give them a chance to achieve mastery and allow them to pursue a purpose.

Of course, money matters. But HR executives should consider the following three options to attract and retain world-class “intrapreneurs” — individuals who pursue innovative opportunities but operate inside an established company.

Unique career opportunities: Anyone who has come to work for a large corporation has demonstrated a willingness to sacrifice upside potential for stability and security. So companies can and should think about how they can provide interesting career opportunities to their best innovators.

Critical to making this work is rethinking how to identify a company’s best innovators. Many companies obsessively measure their employees’ results. But innovation has a degree of uncertainty and randomness. Sometimes, people can do everything right and still fail. Therefore, companies have to move from tracking results to monitoring behaviors.

Look for innovators who invest time to understand their target market, think holistically, design and execute smart experiments and demonstrate a willingness to change course. Even if an individual effort doesn’t succeed, innovators who follow these behaviors are more likely to succeed over the long term.

Public recognition: Procter & Gamble regularly appears on lists of the most innovative companies, and almost all of its innovation-related rewards are soft. Consider its Victor Mills Society. The society — named for the scientist who developed the technology that underpinned P&G’s diaper brand Pampers — acknowledges tenured scientists with strong records of technology advancement and innovation. Executive leaders induct individuals who have made sustaining and business-building contributions throughout their careers at P&G. The society only consists of a few dozen P&G scientists, and membership is considered a prestigious reward. Inductees also mentor younger, high-potential scientists and advise the chief technology officer on prospective innovations.

Beyond special societies, companies can consider rewards ceremonies or other simple mechanisms to highlight internal innovators. These kinds of recognition systems don’t cost much, but can have big impact.

Social impact: The popular perception is that impact-oriented individuals ought to go work for non-government agencies, philanthropic organizations or mission-driven start-ups. But there’s no better place to have impact than at a large company. For example, for all the debate about health reform, the future of health care rests on innovative ways in which companies like Walgreens increase adherence to prescription regimes and provide lower-cost ways to manage chronic conditions.

More and more large companies recognize that the pursuit of social impact is congruent with growth. For example, the agrochemical company Syngenta has a number of efforts to help farmers in developing countries increase crop productivity. There are hundreds of millions of these farmers, making it good business for Syngenta, and success impacts poverty and hunger, which is a key United Nations Millennium Development Goal.

Encouraging innovation isn’t just about what companies reward — it is also what they choose to punish. Leaders often demonstrate their view on this topic when they use lines such as, “failure is not an option.” But in innovation, failure is definitely an option. Beautiful business plans don’t always turn into beautiful businesses. Any successful entrepreneur will tell you the best ideas emerge out of trial-and-error experimentation. Failure is a natural part of that process.

Scott D. Anthony is managing director, Asia-Pacific, of Innosight, an innovation consulting firm. He is the author of The Little Black Book of Innovation. He can be reached at editor@talentmgt.com.