A couple of months ago I read an interesting post in the Harvard Business Review about rewarding employees for innovative ideas.
The authors, Oliver Baumann and Nils Stieglitz, created a model to simulate employee and company behavior around rewards. Their research yielded some interesting results:
- Ideas pour forth when companies offer “to share a large amount of an idea’s value.”
- Companies burp when the idea pipeline becomes “congested” and are unable to act on most of them. (This, by the way, is a phenomenon at larger firms.)
- A crowded pipeline can be a demotivator. As more employees compete and come away with nothing, they stop trying.
- “Low powered” rewards, such as 10 percent of an idea’s value, produce a “healthy” number of ideas. Tiered incentives, which Volkswagen applies, may work well, too. (For example, VW offers 50 percent of the value of a small idea and 10 percent for large ideas.)
- It may be better to encourage a greater variety of ideas, rather than a greater number. For that to happen, the corporate culture must encourage “play, serendipity, and random interaction.” As a corollary, companies should consider rewarding ideas that fail, because they encourage creativity and initiative.
All this is pretty interesting, right? And I love the thought of rewarding for “brilliant failures that provide some sort of insight, even if they turn out not to work.” Still, I have some concern about the way many organizations respond to failure: the person whose idea fails or who makes a mistake often walks the plank.
Leave a Comment