Thursday, April 23, 2015

Can Money Buy Innovation

The business innovation success is not always proportional to how much money you pour in.

It is very important to recognize that innovation is an essential factor for company success. Organizations need both: out of the box and in the box/core innovation; both breakthrough innovation and incremental and evolutionary innovation, how to accomplish this balance is a crucial issue for organizations. From an innovation management perspective, what’re the resources and key success factors to lead innovation success, can money buy innovation?

The business innovation success is not always proportional to how much money you pour in: There is an underlying assumption that ideation can be done if you invest more. However, based on the innovation study from the prestigious consulting firms, business innovation success is not always proportional to how much money you invest in. Meaningful new products are available simply by applying the effort of creative people. So, consider this logic:
a) If this were the case and if money could accelerate the effort applied,
b) if companies were willing to reward new product innovation
c) if new products/Blue Ocean strategies are far more valuable than Red Ocean/ sustaining strategies and so incentivize companies to pursue... wouldn't we be flooded with new products and then the leading companies would be flooded with profits? If this is true and is so apparently obvious, wouldn't we see more examples of it happening in the business world?

Money facilitates innovation, but not guarantees the result: As the research shows that money does improve some outcomes of the innovation process. What you are primarily doing is harvesting ideas that have emerged and are waiting to be picked. The money will increase the willingness of employees to give you those ideas. It doesn't mean though that it will increase the volume of ideas that are available to be collected. The research also shows that money does improve some outcomes of the innovation process--as does a plethora of non-monetary rewards.

Reward risk-taking to build a culture of innovationThe failures should not be rewarded, but they should be understood and not penalized. And surely the risk-taking also should be supported - morally at least. Does incentivizing alone solve all the problems? Of course not. And this is an important finding given a popular assertion that incentivizing innovation with money doesn't work at all. It’s about a "culture of innovation" which incorporates multiple and diverse components. It doesn't mean you should reward "failure" as such; but to inspire the culture of innovation, you should rather reward taking risks. The culture of innovation starts with a culture of participation because employee engagement in the innovation process increases participation.

Innovation does not have a chance without top management support and commitment: There are many human links within the innovation phases and usually implemented in teams. What inspires and motivates many innovators are the passion for learning new things with a focus on new technologies and for understanding how they work. They want to make a difference in learning and development, to do meaningful work and to develop new applications and products that can help other people learn faster and better and do great things. Money is important, but it’s not the only thing matters. The first step to drive innovation within an organization is to commit to it and develop the capability to innovate, from discovery (front-end) to development (middle) then deployment (back-end). It’s about setting a cultural adjustment and understanding within the organization that innovation is embraced and expected, including the acceptance of failure along the path to innovation and ensuring the culture supports that versus penalizing innovation that doesn't initially (or ever) work out. Staff won’t embrace innovation in a bold manner if failures associated with it hamper their career growth or reputation within the organization.

It seems that many companies going through a period of introspection believe that they already implicitly understand the nature of innovation. All too often they perhaps manage a few innovation projects successfully, but they lack the systematic approach to manage resources, to bridge talent gaps, to build culture of innovation and to shape the business level of innovation capability, there are multiple factors beyond money in innovation success, which will bring multi-dimensional values to drive business success.  


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