How Rethinking Motivation Metrics Can Transform Your Business and Promote Innovation
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How Rethinking Motivation Metrics Can Transform Your Business and Promote Innovation

Editor’s Note: This is part two of a two part series exploring the death, rebirth, and total transformation of business innovation. You can read part one here.

Innovation is inherently elusive. Joseph Shumpeter, one of the fathers of modern economics, warned that because it is based on novelty, the process of innovation is indeterminate. New ideas are (by definition) unknown, leaving the urgent question: What can businesses, governments, and organizations do to be future-facing?

Perhaps the most prolific engines of discovery during the twentieth century were corporate research labs, such as Bell Labs and Xerox PARC. But their time has passed; start-ups, venture capital, and broad economic trends have all but extinguished the age of scientific discovery in corporate America (see my previous article on the death of the corporate innovation lab).

Dead, perhaps, but understanding these pioneering research labs may reveal vital characteristics of the innovation process. In other words, knowing what made them tick can show why they were so productive, and perhaps even point out a way forward today. Despite relatively low pay, these research environments somehow attracted the world’s best minds and fostered a collaborative ecology that produced a dizzying array of new ideas, most of them far from the initial question and scope. The key—which we are only beginning to understand through empirical analysis—is motivation.

The Inverted Economics of Motivation

How does motivation work? Put simply, we generally assume that money equates to motivation—rewards cause us to repeat certain behaviors, and punishments cause us to reduce or stop them. This seems so obvious that renowned economist Dan Ariely decided to find out what is really happening. He offered test subjects three levels of monetary reward ($$$, $$, $) for performance in a variety of games and challenges. If the task was entirely rote and mechanical, a larger reward incentivized better performance. But if the game required even basic cognitive function, researchers observed the opposite effect: higher rewards meant worse performance.

This seems counterintuitive, but the same phenomenon has been proven repeatedly by a number of studies at a variety of scales (not only simple games). The more creative a challenge, the more it is stifled by cash incentives. Translate this into business: Provided that work is not on a repetitive Ford-esque factory line, the promise of a raise may not be an effective motivator. This sweeps the rug out from under the typical business management structure.

A New Motivation Metric

If not money, then what? Daniel Pink points out that the most important elements of creative drive are autonomy (the freedom to direct your own workflow and topic) mastery (developing skills and confidence in using them), and purpose (the knowledge that you are working toward something larger than yourself). In retrospect, this was precisely the chemical reaction that fueled Bell Labs and Xerox PARC. Autonomy, mastery, and purpose.

Funding is clearly important—research is impossible without it—but what was unique about these labs was their long-term, open-ended project structure. Today, as creative jobs become increasingly central to our economy, we need to integrate a similar (non-monetary) motivation metric if we hope to successfully foster innovative thinking.

Transforming Business

This is not just naïve idealism—there are many active examples today. One of the most familiar actually began as early as 1948, at the now-enormous company 3M. In a radical and visionary move (remember, this was the era of suits and nine-to-five jobs), 3M implemented a policy of “15 percent time,” allowing employees to pursue side projects and passions with some of their time on the clock. In 1974, 3M scientist Art Fry spent his extra hours coming up with a solution to affix loose bookmarks in church hymnals—and created what we now know as Post-it Notes. Today, this is only one of the 3,330 patents that 3M holds, many of which emerged from employee tinkering. The company’s “15 percent” policy is still in effect, and it is being widely replicated. Google popularized “20 percent time,” which led to groundbreaking products and services such as Gmail, Google Talk, and AdSense.

In 2005, Australian software company Atlassian began organizing internal mini competitions with a similar goal. Quarterly “FedEx Days” brought together teams for 24 hours, from Thursday afternoon to Friday afternoon, to work on something completely new, different, and exciting. Why “FedEx Day”? Because teams have to deliver something overnight. Friday afternoon presentations would devolve into parties, leaving fresh ideas on the table and bolstering employees with the knowledge they made an impact on the organization as a whole.

A growing number of companies are modifying and implementing this basic idea, among them LinkedIn (InCubator), Apple (Blue Sky), and Facebook (via hackathons and subsequent prototype forums). Ryan Tate, author of The 20% Doctrine, describes it as “goofing off at work, and how that goofing off can drive innovation and profit.” This sounds like too-good-to-be-true Silicon Valley rhetoric, but what it really boils down to is building an environment that nurtures ideas and free thinking—a company culture of innovation.

Google campus

Betting on Uncertain Odds

Whatever form it takes—a percentage of the workweek, a hackathon per quarter, etc.—this is not a surefire solution. The reality is a high degree of uncertainty: No policy is guaranteed results. But companies can nonetheless implement innovation strategies for three solid reasons:

  1. Among a deluge of ideas, one single success can validate the entire process (imagine 3M without Post-it Notes).
  2. Innovative or far-fetched ideas are crucial in light of a 10- or 15-year plan, even if they don’t deliver for next quarter.
  3. Most importantly, flexible and divergent work structures create a culture of empowerment and experimentation, grounded in autonomy, mastery, and purpose.

Nurturing Innovation

Success today is not about working quickly and predictably (as it was in the industrial era), but about creativity and lateral thinking. Encouraging the best results may require a fundamental reconsideration—a new motivation metric in which more money and performance are not necessarily proportional. Although programs, policies, and projects differ, the common factor across corporate research labs, start-ups, and successful companies is a culture of innovation that tolerates failure and supports divergent thinking. Novel ideas cannot be reliably delivered, but they tend to bubble up from working environments that nurture discovery through autonomy, mastery, and purpose.

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