KPIs and Incentives to Quantify and Reward Corporate Innovation

Posted on Jun 27, 2018 - By OnPoint Global

In the simplest sense, innovation is about new ideas, processes or products that can transform a business. Usually, we equate innovation with something groundbreaking or disruptive that changes the competitive landscape or consumer market. Innovation is one of the most sought after employee traits, because those ideas can catapult a company from good to great. But, what does innovation look like in your organization, and how can you quantify and incentivize for it?

Start-ups often foster innovative thought by allowing employees to spend time on their passion projects, participate in hackathons and explore bleeding-edge technology. Because employees on smaller teams often wear many hats, each individual’s thoughts and contributions can shine. Unfortunately, as organizations scale, emphasis on the individual usually diminishes, and is replaced by more uniform procedures and processes that tamp down unique creativity. At OnPoint, we believe the key to long-term growth is creating a successful bridge between teams’ start-up energy and scalable processes that standardize innovation without “flattening” individual contribution. To guide you on this path, we’ve broken this evolution into a few, key steps.

Champion What Works

Before you change any processes, spend time outlining what’s already working in your business. If you’re a medium- to large-size corporation hoping to breathe new life into your brand, be careful not to compromise your core business model by disrupting your teams too much. On the other hand, if you’re a small organization hoping to grow, protect the cultural elements that enable your highest performers.

Define Your Goals

Before you can standardize and encourage innovation, your organization has to understand why innovation is necessary. Maybe you’re hoping to differentiate your brand in a saturated market. Maybe your corporate culture needs a bit of modernization. Understanding this root motivation will help you put clear measurements around what innovation looks like.

Establish What Success Looks Like

Once you know what you’re trying to accomplish, you can create S.M.A.R.T. goals (and rewards) to motivate employees to contribute in new and meaningful ways. If your goal is to cultivate talent and thought leadership, you may favor cultural-based goals, such as a number of conferences or trainings attended, participation in mentorship programs, or ideas submitted to a hackathon. If your goals are focused on revolutionizing your products, you may reward a number of A/B tests run, prototypes built or customer insights mapped. Overtime, these things can be measured for correlation to new customers, revenue, product development or operational efficiency.

Reward Achievement

This part is the fun and easy part. Start with easy, low-cost incentives, like lunch or coffee with an executive leader, or public recognition, then build into more tangible prizes, such as bonuses or conference tickets as your innovation program matures. If innovation is not the norm in your organization, you may need to dedicate extra time and resources to positively reinforcing this behavior, rather than simply telling employees to behave a certain way.

Reward Failure

Because you’re asking employees to put themselves and their ideas out there, make sure you also reward failure. Intuit hosts an annual award ceremony in which a “Failure Award” is presented, crowning the bummed idea that provided the most business insights and teachings. As Intuit VP Hugh Molotsi explains, “More value is created through innovation than through invention,” so, failing fast and learning quickly is a key ingredient to continuous improvement.

Your company’s next amazing idea could be anywhere, so seek ways to standardize and support an open environment where employees can respectfully challenge and explore everything. After all, Amazon Prime’s free shipping was an innovation idea submitted by a junior software engineer named Charlie Ward. And the rest is a multi-billion dollar history.