D'Arcy from Winnipeg
Solution Architecture, Business & Entrepreneurship, Microsoft, and Adoption

Expectations + Rewards = Innovation

Saturday, March 20, 2010 4:27 PM


“Innovation” is a heavy word. We regard those that embrace it as “Innovators”. We describe organizations as being “Innovative”. We hold those associated with the word in high regard, even though its dictionary definition is very simple: Introducing something new.

What our culture has done is wrapped Innovation in white robes and a gold crown. Innovation is rarely just introducing something new. Innovations and innovators are typically associated with other terms: groundbreaking, genius, industry-changing, creative, leading. Being a true innovator and creating innovations are a big deal, and something companies try to strive for…or at least say they strive for.

There’s huge value in being recognized as an innovator in an industry, since the idea is that innovation equates to increased profitability. IBM ran an ad a few years back that showed what their view of innovation is:


The point of innovation is to make actual money.”

If the money aspect makes you feel uneasy, consider it another way: the point of innovation is to <insert payoff here>. Companies that innovate will be more successful. Non-profits that innovate can better serve their target clients. Governments that innovate can better provide services to their citizens.

True innovation is not easy to come by though. As with anything in business, how well an organization will innovate is reliant on the employees it retains, the expectations placed on those employees, and the rewards available to them.

In a previous blog post I talked about one formula:

Right Employees + Happy Employees = Productive Employees

I want to introduce a new one, that builds upon the previous one:

Expectations + Rewards = Innovation 

The level of innovation your organization will realize is directly associated with the expectations you place on your staff and the rewards you make available to them.

Expectations

We may feel uncomfortable with the idea of placing expectations on our staff, mainly because expectation has somewhat of a negative or cold connotation to it:

“I expect you to act this way or else!”

The problem is in the or-else part…we focus on the negative aspects of failing to meet expectations instead of looking at the positive side.

“I expect you to act this way because it will produce <insert benefit here>”.

Expectations should not be set to punish but instead be set to ensure quality.

At a recent conference I spoke with some Microsoft employees who told me that you have five years from starting with the company to reach a “Senior” level. If you don’t, then you’re let go. The expectation Microsoft placed on their staff is that they should be working towards improving themselves, taking more responsibility, and thus ensure that there is a constant level of quality in the workforce.

Rewards

Let me be clear: a paycheck is not a reward. A paycheck is simply the employer’s responsibility in the employee/employer relationship. A paycheck will never be the key motivator to drive innovation.

Offering employees something over and above their required compensation can spur them to greater performance and achievement. Working in the food service industry, this tactic was used again and again: whoever has the highest sales over lunch will receive a free lunch/gift certificate/entry into a draw/etc. There was something to strive for, to try beyond the baseline of what our serving jobs were. It was through this that innovative sales techniques would be tried and honed, with key servers being top sellers time and time again.

At a code camp I spoke at, I was amazed to see that all the employees from one company receive $100 Visa gift cards as a thank you for taking time to speak. Again, offering something over and above that can give that extra push for employees.

Rewards work. But what about the fairness angle? In the restaurant example I gave, there were servers that would never win the competition. They just weren’t good enough at selling and never seemed to get better. So should those that did work at performing better and produce more sales for the restaurant not get rewarded because those who weren’t working at performing better might get upset? Of course not! Organizations succeed because of their top performers and those that strive to join their ranks.

The Expectation/Reward Graph

While the Expectations + Rewards = Innovation formula may seem like a simple mathematics formula, there’s much more going under the hood. In fact there are three different outcomes that could occur based on what you put in as values for Expectations and Rewards. Consider the graph below and the descriptions that follow:

image

Disgruntled – High Expectation, Low Reward

I worked at a company where the mantra was “Company First, Because We Pay You”. Even today I still hear stories of how this sentiment continues to be perpetuated: They provide you a paycheck and a means to live, therefore you should always put them as your top priority.

Of course, this is a huge imbalance in the expectation/reward equation. Why would anyone willingly meet high expectations of availability, workload, deadlines, etc. when there is no reward other than a paycheck to show for it? Remember: paychecks are not rewards!

Instead, you see employees be disgruntled which not only affects the level of production but also the level of quality within an organization. It also means that you see higher turnover.

Complacent – Low Expectation, Low Reward

Complacency is a systemic problem that typically exists throughout all levels of an organization. With no real expectations or rewards, nobody needs to excel. In fact, those that do try to innovate, improve, or introduce new things into the organization might be shunned or pushed out by the rest of the staff who are just doing things the same way they’ve always done it.

The bigger issue for the organization with low/low values is that at best they’ll never grow beyond their current size (and may shrink actually), and at worst will cease to exist.

Entitled – Low Expectation, High Reward

It’s one thing to say you have the best people and reward them as such, but its another thing to actually have the best people and reward them as such. Organizations with Entitled employees are the former: their organization provides them with all types of comforts, benefits, and perks. But there’s no requirement before the rewards are dolled out, and there’s no short-list of who receives the rewards. Everyone in the company is treated the same and is given equal share of the spoils.

Entitlement is actually almost identical with Complacency with one notable difference: just try to introduce higher expectations into an entitled organization! Entitled employees have been spoiled for so long that they can’t fathom having rewards taken from them, or having to achieve specific levels of performance before attaining them.

Those running the organization also buy in to the Entitled sentiment, feeling that they must persist the same level of comforts to appease their staff…even though the quality of the employee pool may be suspect.

Innovative – High Expectation, High Reward

Finally we have the Innovative organization which places high expectations but also provides high rewards. This organization gets it: if you truly want the best employees you need to apply equal doses of pressure and praise. Realize that I’m not suggesting crazy overtime or un-realistic working conditions. I do not agree with the “Glengary-Glenross” method of encouragement.

But as anyone who follows sports can tell you, the teams that win are the ones where the coaches push their players to be their best; to achieve new levels of performance that they didn’t know they could receive. And the result for the players is more money, fame, and opportunity.

It’s in this environment that organizations can focus on innovation – true innovation that builds the business and allows everyone involved to truly benefit.

In Closing

Organizations love to use the word “Innovation” and its derivatives, but very few actually do innovate. For many, the term has just become another marketing buzzword to lump in with all the other business terms that get overused. But for those organizations that truly get the value of innovation, they will be the ones surging forward while other companies simply fade into the background. And they will be the organizations that expect more from their employees, and give them their just rewards.




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