Measuring and rewarding innovation

ThinkingInnovation

I often get asked how organisations can build a more innovative culture. It is a valid but difficult question to answer as culture is something that is multi-faceted, involves history and legacy, and includes a set of deeply-held values.

It is one thing to have a list of values on the wall or published in a corporate annual report. It is yet another to live and breathe innovation in daily activities — what I would call “day-to-day innovation”, challenging assumptions and doing things differently.

So how can it be done? At the top, leaders have to ensure that innovation, the creation of new ideas, is intertwined and integrated into the very fabric of the company’s strategic direction. Employees must also have a common understanding as to why it is important to innovate and what this means in the context of the industry in which they operate.

Many organisations support their innovation strategy by having different frameworks to give a sense of direction and a means to quantify whether goals are being met.

Author Robert Kaplan’s famous Balanced Scorecard comes top of mind. The Scorecard is made up of four quadrants: the Customer, Financials, Learning and Growth, and Internal Business Processes. Each has its own set of measures, dependent on the needs of the organisation, such as customer satisfaction studies for the Customer quadrant or employee engagement surveys for Learning and Growth.

SETTING TARGETS

Drawing from this scorecard example, companies could consider having innovation targets that can be measured. Apart from gauging customer satisfaction, companies can monitor the percentage of revenue from new products or services created in the past year or include a question in the employee survey that asks whether managers encourage workers to think differently about their work.

Cascading this from top to bottom and making innovation relevant to daily activities will motivate people to think through their objectives and how their performance is being measured. To what degree can being innovative support them in what they are trying to do?

If you are a marketing manager, for example, how can you approach your customers in ways that you haven’t done before, perhaps measured by an increase in market share or publicity? Or if you work in a more process-orientated role, how are you able to streamline some of your work processes to speed up efficiency and effectiveness?

Day-to-day process improvement may not be deemed as radical, but the compounded effect can free up time for other activities, improve speed and overall productivity.

When we look at innovative companies, innovation is usually an intrinsic value. But promoting this value cannot happen overnight as it requires time to be ingrained in individuals and the work culture. Yet it is worthwhile to take the time to build up this innovative value, as it will shape the behaviour of leaders and employees across an organisation — for the better.

There is a well-known adage that what gets measured gets done. While we might long for innovation to be so embedded in the work culture that it becomes the norm, it is simply not the case for many companies. So start to look at what can be measured and rewarded to foster an innovation culture, and be brave enough to start a debate about how innovation can help drive your company’s performance.

This article was written by Natalie Turner and originally published in Today Online on August 6th, 2014