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Why Firms Need a Performance and an Innovation Culture

Most management cultures fail to reward those employees most likely to be successful innovators. It's time to merge the classic performance culture with one that rewards other behaviors too

For the world’s R&D staff, worrying about their career progress is not much different to managers in any other function. They’ll know their bonus and a possible promotion depend on whether they hit certain quantitative targets, on time, on budget, and “on spec.” Almost all their targets and goals are specific quantitative measures that make a company more efficient.

It’s no surprise that their bosses want to create a culture of efficiency. There is a deep legacy stretching back from the industrial revolution – if not further –  from the works of Frederick Winslow Taylor and Henri Fayol on creating efficiencies, to Max Weber’s work on bureaucracies, through to Henry Ford’s efficient assembly line, and on to Kaizen and just-in-time manufacturing methodologies becoming popular in the 1960s.

And then in 1986 Motorola introduced the concept of Six Sigma, which was then followed by Lean Six Sigma into this century. All of which has meant that R&D staff have ended up being incentivized and encouraged to be “result seekers” and display “result seeking behaviors.”

The problem is that result-seeking behaviors are not the same as “innovative” behaviors. In fact, the kinds of result-seeking behaviors above are actually a subset of innovation behaviors, according to CEB analysis, and there are other behaviors that should be just as apparent in an employee that is truly innovative: behaviors such as, “risk taking,” “customer empathy,” “integrating ideas,” and “influencing.”

Often, by focusing only on the output of a process – the quantitative targets – companies can end up hamstringing themselves and missing opportunities to enter new markets or product categories with truly transformative ideas.

‘Innovator’ and ‘High Performer’ are Rarely Synonymous

Given all this focus on results-seeking behaviors, only a few employees that make for really high-class innovators are also recognized as high performers, according to CEB research.

While companies claim to want to build an innovation culture, they rarely recognize or encourage innovative behaviors. It is ironic how disruptive innovative methodologies in their own right such as Kaizen, Lean Six Sigma etc. were invented using creative thinking and scientific trial-and-error yet have left a legacy of a system that would kill similar breakthroughs.

If companies want to make room for more disruptive innovation in pursuit of growth and ways to push push society forward, it is time to change the performance paradigm present in most companies. It’s time to merge a culture of performance with an innovation culture.

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