by: John Caddell
Innovation via employee-generated ideas fails at most companies. Employees generate a number of ill-thought-through concepts that management, to its embarrassment, must quickly discard. "Winners" get a handshake, a plaque, perhaps a $100 check. Eventually comes a suspension, termination or petering out of the idea-generation initiative, which then finds its way into the lore of company failures, never to be repeated.
The authors write:
Companies that required employees to present business cases for their ideas and offered substantial rewards saw the number of workable ideas rise significantly...[increasing] in the 20% to 40% range.
They suggested rewards such as half the first year's savings for a cost-reduction idea. For one administrative assistant, that was worth $152,000. For that kind of potential reward, I'd put my thinking cap on, no matter what my job.
Original Post: http://shoptalkmarketing.blogspot.com/2007/03/ask-more-of-and-raise-rewards-for.html
I hesitate to write this as I have not had the opportunity to read the HBR article in question. Nevertheless, your post is intriguing as it goes against accepted theory in idea and innovation management.
First, it is important to separate ideas, which as HBR notes, are rather small things (although they can be built up and added together to build bigger concepts). Business cases, on the other hand, are much more than just ideas.
Thus, you - and HBR - seem to be comparing idea management schemes with business case proposal schemes. Similar, but not the same thing. Indeed, there is no reason why an organisation could not have both as complementary innovation tools. But, as you note, there are serious problems with most suggestion schemes (more on this in a moment).
An idea can form the basis of a business case, but that business case should eventually incorporate many ideas. Indeed a business case relying on a single idea is unlikely to be a good proposition.
An idea, however, might be a simple product improvement. It might be a process improvement. It might be a method of improving workplace efficiency.
Moreover, an accountant in a firm may have a brilliant marketing idea, but lack the expertise to write a business case about it. Even if she does have the expertise to write the business case, her superior may well not permit the accountant to spend time on the business case. So, what does the accountant do? Share the idea with a marketing person who will reap substantial financial rewards for the idea? Not likely! She'll keep it to herself. This is one downside to substantial rewards for ideas.
Now, let's consider suggestion schemes.
In our experience, most suggestion schemes fail because they are little more than electronic suggestion boxes inviting all ideas no matter how relevant or irrelevant they may be to current business needs. Typically, so many widely varied suggestions are submitted to the electronic box (usually an e-mail address or database) that the person or team in charge can no longer manage the ideas. So they stop doing so. Employees, meanwhile, see that their ideas are not being processed and, as a result, stop submitting ideas. And the scheme stagnates.
Some companies deal with this by fast processing ideas. Every idea must be reviewed and the owner responded to within a set time frame. Unfortunately, because the suggestion scheme invites any idea whatsoever, a lot of non-actionable ideas come in. They may be good ideas. They may be great ideas - but are not ideas which the company can implement at present. As a result, the idea owners are informed that their ideas have been rejected. This is highly demotivating and discourages further idea submission. So, the system stagnates.
In our experience, open suggestion schemes fail within 12-18 months of the implementation for the above reasons.
That's why, when we designed Jenni idea management, we devised the ideas campaign approach to suggestion schemes. Based on proven creative problem solving methodology, Jenni allows managers to set up ideas campaigns based around specific business needs, such as "How might we improve the usability of our mobile telephones?" and employees respond with their ideas in a collaborative, on-line space.
The result is that instead of a hodgepodge of mostly non-actionable ideas, you get a batch of relevant ideas that aim to solve a specific business problem. Those ideas are evaluated and one or more of them might well become the basis of a business case (Jenni provides tools for this).
Such an approach is much more sustainable, because it focuses on short term events, and generates more usable ideas. Innovation challenges also motivate creative thinking (compare a brainstorm session where there is no challenge or problem posed to the brainstormers with a brainstorm session where there is a challenge written on a whiteboard at the front of the room).
Moreover, ideas can come from anywhere, any department and even from business partners, customers or other participants to the user's idea management programme. Thus you bring more varied thinking and greater creativity to your problem solving.
However, we always advise our clients to run with small rewards schemes. A small gift for each idea or larger gifts for the best/most ideas has proven better motivation than large gifts.
That's because in our experience, large gifts induce greed. As the author of the above article noted, for $152,000, "I'd put my thinking cap on, no matter what my job." People will do a whole lot more for such big rewards. Managers have been known to steal ideas from subordinates, talented people have left companies having seen their ideas stolen or seeing colleagues get huge rewards they do not get and worse. Sharing ideas is simply not done. Who knows who might steal your ideas?
Although we have no personal experience with such schemes, anecdotal evidence suggests that large reward schemes for ideas are almost always devastating for innovation initiatives.
That does not mean that employees should not receive generous rewards for their creative contribution. We instruct clients to give small transparent rewards attached to specific ideas. But to give promotions, raises and more generous translucent rewards to people, people who contribute good ideas. This disconnect, ensure ideas are rewarded as motivation and people are rewarded for their creativity and innovation.
You will find much more information on the above topics in Report 103 (our eJournal) and our on-line library.
Jeffrey Baumgartner
Managing Director
Bwiti bvba ~ jpb.com
www.jpb.com