How do you inspire your people to innovate?

Economist Intelligence Unit

Economist Intelligence Unit,

This content was produced by The Economist Intelligence Unit as part of The Disrupters series.

Social impact, autonomy and collaboration are all key components of purpose-driven culture that attracts creative employees and fosters disruptive innovation

Felt stick figures on a staircase of books

Innovative companies enjoy a positive feedback loop: they have a clear purpose which attracts creative employees, and their unique culture nurtures passion in their teams, which drives them to be more inventive. The social impact of the work, the thrill of solving interesting problems, a sense of autonomy, the excitement of collaboration, and the enhancements of one’s skills are all key ingredients to the kind of purpose-driven culture that fosters disruptive innovation.

Revenue, profits and sales pipelines are necessary conditions for a company’s existence but, when you look at the cultures of the world’s most innovative firms, they are rarely the overarching goal. Companies with the greatest innovation rates often have loftier ambitions and a higher purpose that energizes and unifies its people. They look beyond simply generating profits for shareholders to creating value for all of their stakeholders.

Use carrots, get donkeys

Traditional approaches to motivating staff – what author Daniel Pink calls ‘Management 2.0’ – are clunky and simplistic: give bonuses, commissions or other material perks for good performance (the carrots) and fire, demote or otherwise punish people for failures (the sticks).

But as modern work has become more complex, this approach has become as outdated as the fax machine. For creative workers, money is rarely their primary motivation, and they often have active disdain for authority, rather than cowering in fear of punishment. Innovation requires people to dig deep within themselves, fuelled by intrinsic interest in the work. “Innovation requires discretionary effort by employees,” says Tammy Erickson, an Executive Fellow in Organisational Behaviour at London Business School. “You can’t force me to innovate. You can’t say ‘I demand you to innovate’. If I’m going to do it, I’m going to dig down inside myself.”

Innovation requires discretionary effort by employees. You can’t force me to innovate. You can’t say ‘I demand you to innovate’. If I’m going to do it, I’m going to dig down inside myself.

Tammy Erickson, Executive Fellow in Organisational Behaviour at London Business School

To attract innovative people, and inspire them to ‘dig down’, companies need to understand the different ways people get motivated, and they need to provide an overarching, authentic sense of purpose that keeps staff energised, committed and passionate. There is no one-size-fits-all approach, says Erickson. “We accept that in consumer marketing everyone wants something a little different, but we fall into this ridiculous assumption that all employees are motivated by the same thing. It’s not true for us as customers, and it’s not true for us as employees.”

How do people perceive purpose in their work? Erickson believes there are five types of people. For the first, work simply will never be a priority. They can be valuable employees – often dependable and hard-working – but their focus is elsewhere; on their family, often, or hobbies and creative pursuits. These are often valuable staff in ‘plug-in, plug-out’ roles, especially administrative and back-office. They often work hard because their work provides them with security in their personal life, their primary source of meaning. But they are rarely the creatives that ‘disrupters’ most need.

“Then there is a category of people who care deeply about the social purpose of the work they are doing,” explains Erickson. “Am I doing something that is changing the world, something meaningful, am I building something that will last?” Programmers, technologists, architects and engineers are some of the occupations that such individuals gravitate towards.

The third group are motivated by a sense of stability and progress, and flourish when companies offer a clear plan to develop and grow them over time. A fourth group are team-oriented, motivated by collaboration with others, and the fifth are ‘risk-takers’. “They want to know they are pushing it to the limits. They recognise they could lose big, but they are attracted to the idea they could win big,” she says

Unsurprisingly, the ‘world-changer’ and ‘risk-taker’ groups are vital for disrupters. These are the characters who challenge norms, disrupt the organisation from the inside, and generally ‘make a ruckus’, as best-selling business and entrepreneurship author Seth Godin puts it.

You know them when you see them. Edward Twiddy, chief innovation officer for Atom Bank, a digital-only bank based in the UK, says there is a certain type of personality who can drive innovation. “We can spot them immediately when they turn up,” he says. “They are the ones who are desperate to break out of norms and see ways to do things better.”

Mr Twiddy says one of his best hires was a young woman who previously worked for a tiny ‘pub and club’ taxi service. She revamped the business, creating a training programme for drivers, getting the cars cleaned up and registered for corporate pick-ups, and ultimately expanding the fleet from seven taxis to 150. When she left that firm in search of a job in finance, Mr Twiddy hired her on the spot as a team lead for customer service, even though she had almost no banking experience. “That’s the kind of talent you want on your team.”

Group of young people working together on a sofa

Profit after purpose

Cynics might chuckle at talk of ‘purpose’ and ‘meaning’ in the commercial world. People work for a salary, they say, and to pay them, companies pursue profit. If the work has meaning, that is secondary.

The truth might be the reverse. Some of the most wildly successful and disruptive companies or organisations put purpose long before profit. As argued in Daniel Pink’s bestselling book Drive, Wikipedia, WordPress and Firefox were all effectively developed by unpaid volunteers or through open source models in which many key contributors received no financial reward, or even recognition. They were interested in the nature of the problem, the process of collaboration, or the utopian vision embodied in the technology (this is certainly true of the Internet’s founding fathers, like Tim Berners Lee). In short, all those goals that Erickson and others have articulated as intrinsic motivators. And their output has been far from trivial: Wikipedia is now the world’s go-to encyclopaedia, WordPress powers a quarter of Internet websites, and Apache, the world’s most used web server, is developed and maintained by an open community of developers.

Meritocracy and openness

While the five-category framework is a useful heuristic, it’s also true that people share certain common needs which are key to a healthy working culture that gets the best out of its people. One of those is autonomy. Rigid hierarchies are disillusioning and innovative companies build a more open, meritocratic structure.

When Darren Childs took over as CEO of UKTV in 2010, one of his primary goals was to build a corporate culture that generates a regular flow of good ideas. This meant radically changing the organisational structure and day-to-day running of the company. Mr Childs dispensed with the more traditional ‘command and control’ hierarchical, which he says is “better suited to the industrial revolution than the ‘digital revolution’”, in favour of a more open and collaborative environment where everyone works to brainstorm on ideas. “The new environment allows for collaboration and ideas to come from anyplace,” says Mr Childs. “One way we can disrupt the industry is by having more great creative ideas.”

The cultural transformation has paid off. During Mr Childs’s tenure, UKTV has launched new channels, video-on-demand and non-linear programming products, created a huge raft of original hit shows, and formed partnerships, including with pay TV providers BT and Sky. Viewership, revenue and profits have soared, with 2015 proving to be the most successful year in UKTV's 23-year history. “Our culture is the single biggest contributor to our financial success,” Mr Childs says. “Focusing on culture is one of the most important things a leader can do to change performance and outcomes.”

It is also one of the toughest innovation challenges business leaders face today. Entrenched corporate cultures thwart innovation efforts and suffer complacency in the face of disruption.  Business leaders are trying a variety of approaches to reinvent their culture and deliver better innovation. Companies such as Cisco, Coca-Cola and GE have launched ‘internal start-up’ programmes, where teams work in an entrepreneurial bubble, to stimulate creativity. Others, including Booz Allen and UKTV, have launched Shark Tank style competitions where employees pitch ideas to improve the business, and the best ones get funding and support.

“Great ideas can come from anywhere,” says Mr Childs, who notes that more than 70% of his employees been involved in pitches to the quarterly ‘Innovation Pot’, which has led to several successful investment projects. One noteworthy example is a social media campaign for the 2015 premiere of Most Haunted, a ghost-hunter reality show. An employee suggested they run live-stream behind-the-scenes camera feeds on the network’s YouTube channel throughout the live ghost hunt event. That ‘second screen’ attracted nearly one million viewers and spurred 14 million tweets, according to Mr Childs, making it one of the most successful social media initiatives the company has ever run. It is one more confirmation, he says, that great innovation is not exclusive to the C-suite. “Everyone at UKTV knows they can contribute ideas and that they will be rewarded for their contributions. That empowers them to think differently on behalf of the business and provides new learning for us all.”

Recognition is a second cultural attribute that can drive disrupters. As companies get larger and work becomes inherently more complex, people can start to feel they are lost in a machine – risking the ‘clock-in, clock-out’ culture that disrupters and innovators avoid. Helping individuals see the direct impact of their work is vital to a culture of innovation. Companies must continually find ways to celebrate individuals for the work they do, says Mr Twiddy.

The biggest lesson we learned about building an innovative culture is that you shouldn’t make projects so big that the individual contribution is lost.

Edward Twiddy, Chief Innovation Officer, Atom Bank

“The biggest lesson we learned about building an innovative culture is that you shouldn’t make projects so big that the individual contribution is lost,” says Mr Twiddy. Instead every project is broken into small chunks, which gives people ownership of their work while letting them try out lots of ideas quickly. He believes this supported the company’s innovation culture from the gaming platform his teams developed, rather than traditional banking apps, to biometric identification tools.

“The biggest lesson we learned about building an innovative culture is that you shouldn’t make projects so big that the individual contribution is lost,” says Mr Twiddy. Instead every project is broken into small chunks, which gives people ownership of their work while letting them try out lots of ideas quickly. He believes this supports the company’s innovation culture.

Key findings

  • Innovation and purpose go hand in hand. To attract and retain innovative people, organisations need to provide an overarching, authentic sense of purpose that keeps staff energised, committed and passionate.
  • Giving employees a voice inside the companies through competitions is likely to breed new ideas.
  • One challenge of the modern organisation is that staff, and their ideas, get ‘lost’ in the machine. Helping individuals see the direct impact of their work, either in terms of products and services, is vital to a culture of innovation.  

 

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