Rewarding Innovation And Punishing Stagnation

In yesterday’s blog post around business failures I discussed how failing companies often get into patterns where they become more interested in “defending the religion of their business model”, instead of making the changes they need to make in order to survive. One of the consequences of this is that the company begins to punish those who try to innovate and change the company, while rewarding those who celebrate the status quo. This dubious business practice creates a double edged sword that destroys the company by encouraging the very business practices that are destroying the company, while simultaneously chasing away the agents of change who can save it.

So as one of my readers asked this morning: “How do you reward innovation and punish stagnation?”

One of the answers to this question resides in a situation that practically anyone who has worked in an organization has been exposed to: you’re trying to accomplish a particular goal/objective/etc, and are unable to because of some sort of impedance that is intrinsic to the way the organization operates. Maybe it’s the way your distribution network is set-up, the way the sales force operates, etc. Everyone in the room knows what the real problem is, but you also know that speaking up about is a bad idea from a political perspective, or that perhaps management won’t support you in removing the impedance, etc.

I.e. the organization’s top level leadership s too busy defending the religion of their business model to do their real job, removing the barriers to success standing in the way of the people below them.

So what does everyone do? They think of ways to mitigate or work around the part of your organization that is holding them back, because removing the impedance is a non-starter. I’ve had first hand experience with this, because I once worked in a marketing organization whose sole mission it was to mitigate the aspects of the company that led to sub par products, an ill-prepared sales force, the wrong approach to selling particular products, etc.

So how do you combat this problem within an organization?

The easy answer is that you have to send the message that nothing is sacred, and that the goal of the organization is to perform at the highest level possible, not to defend, perpetuate or preserve the current way of doing business. Continuous improvement should be one of the organization’s key missions, and all managers should be incented for regularly thinking of ways to refine, tweak and evolve the company’s business model forward.

Finally management has to send the message that one of their key missions is to enable the people below them to be successful. In other words: if there is something about the way the company is currently doing business that is making it hard for people to successful, they should have no fear about speaking up about it, and they should feel that if they will be taken seriously if they present valid alternatives to the current way of doing business.

Of course it goes without saying that all of these things are easier said than done.

I could easily write a book about this topic as I have many ideas on it and well, thinking about these sorts of issues is basically what I do all day. SO, I plan to write an on-going series of blog posts on this topic. Once a week I’ll either post a real world example of something I’ve done to encourage innovation, or some general ideas on same.

Next time I’m going to discuss the issue of trust and how to get your managers on your side when you’re trying to incent innovation, the idea is simple: the mere offering of carrots doesn’t necessarily mean that will people will eat them.

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