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Smaller organizations can often move faster on implementing innovative ideas because they have less bureaucracy. When Jack Welch was reengineering General Electric he said, “My goal is to get small company’s soul and small company’s speed inside our big company.”
Faster implementation encourages further inventive thinking. Think for a minute. If you had an idea for an innovation, and it required 6 weeks to clear channels and another 3 weeks to get funding, would you have lost any impetus for further contribution?
Instill A Sense of Ownership
An ownership mentality creates a powerful incentive for inventive thinking. When an individual is clearly aware of how his or her interests are aligned with those of company, he or she has a strong reason to “go extra mile” to further mission.
Stock ownership is a significant, if not essential, incentive for employees. However on its own, profit-sharing doesn’t guarantee your employees will think like owners.
When employees don’t see how their individual efforts affect company profitability, they tend to be passive and reactive. To encourage greater involvement, make sure each employee knows how his or her work affects company performance.
Southwest gave pilots freedom to design and implement a plan to reduce fuel consumption because they were in best position to determine what would be effective. Pilots pitched in enthusiastically because they understood impact their actions had on bottom-line and ultimately, on their own futures.
Make Sure Recognition and Rewards are Consistent
While financial rewards are often tied to innovations, rewarding only individual or team responsible for “big idea” or its implementation, sets up a subtle competitive atmosphere that discourages smaller, less dramatic improvements.
Even team-based compensation can be counterproductive if teams are set up to compete with each other for rewards. These incentives discourage cross functional collaboration so critical to maximal performance.
Companies that successfully foster an innovation culture design rewards that reinforce culture they want to establish. If your organization values integrated solutions, you cannot compensate team leaders based on unit performance. If your company values development of new leaders, you cannot base rewards on short-term performance.
A Tolerance for Risk and Failure
Tolerating a certain degree of failure as a necessary part of growth is an important part of encouraging innovation. Innovation is a risk. Employees won’t take risks unless they understand goals clearly, have a clear but flexible framework in which to operate and understand that failures are recognized as simply steps in learning process.
Toyota’s Production System transfers quality management and innovation authority to front-line plant workers. Workers are able to make adjustments in their work if they see an opportunity for improvement. If innovation works, it’s incorporated into operations, if not, it’s chalked up to experience.
A major psychological benefit of Toyota’s method is development of trust. Employees who trust their bosses are more likely to take intelligent risks that have potential benefit for company.
Eliminate Projects and Processes that Don’t Work
As your organization innovates you need to practice what Peter Drucker calls “creative abandonment.” Projects and processes that no longer contribute should be abandoned to make room for new, progressive activities.
While no organization wants to squander financial resources on unprofitable activities, it is actually irreplaceable resource of time and employee energy that is wasted if a company holds on to old way of doing things.
Innovation requires optimism. It’s about an attitude of continually reaching for higher performance. You can’t expect employees to maintain an optimistic attitude if they feel compelled to continue in activities that are going nowhere.
© 2005 Dr. Robert Karlsberg & Dr. Jane Adler
Dr. Robert Karlsberg and Dr. Jane Adler are senior leadership consultants and founders of Strategic Leadership LLC. They work with senior executives to maximize performance, facilitate transitions and accelerate major change initiatives. Contact them at 301-530-5611 or visit http://www.PsychologyofPerformance.com