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Why Most Companies Fail at Innovation (And What to Do Instead)

Recognize This! – Innovation is not just the big, market-transforming end result, but the little ideas along the way.

What’s the most powerful word in business today? Innovation.

Read any blog, any news source, any prospectus and you will quickly stumble over “innovation.” How the company pursues innovation, how innovative the products are, how “innovation” is a core value of the company. And this is all well and good – innovation truly is what propels industries and markets ever forward.

But the real question smart companies should be encouraging every employee, in every role, to ask is: “What can I do, in what I do every day, to be more innovative? How can I innovate our product, our service approach, to better serve our customers, change the market, or push the company forward?”

Unfortunately, too many people think innovation is too big for them or “not in my job description.” I believe that’s because we as leaders have failed to explain what real innovation actually looks like. David Steinberg, chief executive of XL Marketing, gives a much better definition of innovation in a recent New York Times “Corner Office” column:

“Innovation to me doesn’t have to be about creating the light bulb or the telegraph. Innovation can be very important small changes to something that’s already working. That’s the stuff that’s overlooked, and it can take things to the next level.”

Innovation is the perseverance to keep searching, to keep tweaking, to keep making something better. In reality, it’s usually many small innovations over time that result in a huge “new” innovation that gets all the press.

Kaihan Krippendorff explains it as committing to continually looking for the fourth option:

“The ‘fourth option’ is the option others don’t see and don’t expect. Your competitors contemplate three choices and feel satisfied that they are considering enough. But the strategic innovator is not satisfied. She asks, what else? What other option are people overlooking?”

So, back to my original question – how do you encourage all employees to seek the fourth option, to pursue the small changes for continuous improvement?

You must help employees see and understand what this looks like in their daily work. The quickest, most positive, and most effective way to do so is through strategic recognition. Every time an employee demonstrates an attribute of innovation in this way, recognize them for it. Say, “John, thank you for contributing to our goal of continuous innovation with your diligence on the Suarez project. The way in which you kept asking the next question to drive to not just our standard solution, but a truly unique approach in this situation not only solved the client need, but gave us an avenue to advance our solution and meet an unexpected market need going forward. Well done!”

That specificity makes the difference for John by letting him know what exactly “innovation” looks like in his daily work. When publicized through an internal social newsfeed, it also serves as an excellent training mechanism for other employees who can see why John was recognized and emulate that behavior in their own work.

How is innovation encouraged in your organization? How are you innovative in your own work?

What Does “Meaningful Work” Really Mean?

Recognize This! – Only the employee can define what is meaningful work to them. Leaders, however, are critical for helping them catch the vision.

Yesterday, I wrote about the importance of engaging in meaningful work for employees. But what, exactly, does “meaningful work” mean? As I was catching up on my (admittedly large) backlog of news and blogs in my reader, I found this nugget from the Switch & Shift blog (which is rapidly becoming one of my favorite daily reads):

“Managers cannot make work meaningful for employees. Managers, however, can shape the workplace environment to let meaningful work become possible for employees. With a context set to let meaning be experienced, employees can leverage the environment to derive meaning from their work.

“Meaningful work is vague. What exactly is it? Assuredly it begins quite selfishly. But this is out of necessity. For work to be meaningful, it is the employee who must label it so. This requires a belief that meaningful work is a desired outcome from managements’ actions. And employees believe managements’ intentions and see actions aimed to let meaning emerge.”

This reminds me of the possibly apocryphal story of the senior military leader touring NASA Space Center during the early days of the space race. The leader noticed a janitor cleaning an area of mission control and asked, “What are you doing?” The janitor didn’t reply with the obvious, “I’m sweeping the floor.” No, he said, “I’m helping to put a man on the moon.”

In this story, the employee knew and understood the greater purpose of his efforts. Keeping a neat and clean work environment would help to eliminate distractions for the scientists and engineers in mission control, thereby helping to contribute to the greater space mission. This employee knew the meaning of his work.

Personally, I don’t lead a group of strategy consultants. I help companies change their cultures to ones of appreciation and recognition.

What do you do for work? What’s the real meaning of your work?

3 Lessons for Employee Engagement through Recognition from XL Axiata

Recognize This! – Learning from others’ success can enhance our own efforts for engagement.

I enjoy Abhishek Mittal’s Mumblr blog. Abhishek is a senior consultant for Towers Watson based in Singapore. Recently he shared a case study on XL Axiata, an Indonesian mobile services operator and division of Axiata Group. In the case study, Xl Axiata explains four key steps they took to create an engaging work environment for employees, including a Performance-Based Culture:

“XL Axiata knew that if it wanted the employees to display the right behaviours, it had to recognize and reward these behaviours. The leaders shaped a culture where people and performance are talked about in the same breath. Employees who were creating value for the company were being recognized through company-wide emails and there was a focus on celebrating small successes in the long journey to achieve the vision. It also placed a higher emphasis on differentiating rewards based on performance. Mittal says,These initiatives helped employees build a clear line of sight to the company goals and sent a clear message that the company values high performance above everything.”

From this one focus alone, I see three clear lessons for employee engagement:

Recognize and Reward the How not just the What
Results (the What) can be achieved in many ways, not all of them positive (think Enron or any of the other recent scandals were the end was more important than the means). By focusing recognition and rewards on the right behaviours, XL Axiata is reinforcing that how the work is accomplished is as important as what is accomplished.
Celebrate progress on the way to the big win
While everyone must understand and work toward the ultimate vision and “big win,” small successes and progress along the way make the big win ultimately possible. Research conducted by Harvard Business School and reported in the book The Progress Principle by Teresa Amabile and Steven Kramer proved the single greatest motivator for employees is making progress in meaningful work. Doing so increases engagement.
Offer multiple, differentiated awards
Recognition and rewards must be differentiated based on several factors including level of effort, contribution and results achieved. Offering the same level of recognition to someone who came up with an innovative idea that could transform product direction as you also offer to someone who contributed as part of a team to a lesser initiative merely serves to demotivate those who achieve great ambitions. Offering differentiated awards (awards at various levels) ensures both proper recognition and reward activity as well as eliminating any concerns around recognition becoming expected or run-of-the-mill.

What major initiatives has your organization undertaken to encourage employee engagement?

What Makes a Happy & Innovative Employee? Big Data Tells Us.

Recognize This! – Knowing the mission, how to contribute and being empowered to do so drive employee happiness and innovation.

Regular readers know I’m a big proponent of Big Data – especially Big Data for HR. It’s catching on and in a big way. This article in the New York Times shares several examples of the benefits of workforce science, which it defines as:

“It adds a large dose of data analysis, a k a Big Data, to the field of human resource management, which has traditionally relied heavily on gut feel and established practice to guide hiring, promotion and career planning.”

In today’s workplace, we can and do measure much more than ever before. I’m not talking about employee surveillance (though that can be a component where appropriate), but rather about using the information we already gather in more effective ways. Says Erik Brynjolfsson, director of the Center for Digital Business at the Sloan School of Management at MIT, in the article:

“The heart of science is measurement. We’re seeing a revolution in measurement, and it will revolutionize organizational economics and personnel economics.”

So, what’s the data actually telling us about our workforces? Several examples shared in the article:

Past performance isn’t a good indicator of future results.
The personal warmth and quality of the supervisor is more important to employee results than the experience and attributes of the employees themselves.
Being outgoing doesn’t make you a good salesperson. The ability to persist and keep going forward, even after being told no, does.
At Google, the happiest and most innovative workers are those who “have a strong sense of mission about their work and who also feel they have much personal autonomy.”

Let’s look at just that Google finding more deeply for a moment. What makes Google employees happy? It’s not the free food or the amenities of the campus. What makes them innovative? It’s not predicated by their college degrees or prior accomplishments. No, happy and innovative employees at Google understand the big picture, know their role in helping to achieve it, and feel empowered to do so.

I know from the data gathered by our clients that this is true for the vast majority of employees in workplaces everywhere. Through their strategic, social employee recognition programs, our clients gather (in a very positive way) a great deal of data on employee accomplishments and attitudes about work.

These are the 3 keys to happy, innovative employees:

Understand the big picture – a mission statement on your website, hanging on your wall or even spelled out in your Employee Value Proposition is useless unless employees personally and individually understand what that means for them.
Know their role in achieving the big picture – Understanding the mission is one thing, but knowing what I personally can do to help achieve it is entirely another. Making lofty goals real for employees in their daily work makes the corporate mission much more personal – and achievable. Specifically and in a timely way tell employees when and how they and their efforts are helping the company achieve the bigger mission.
Are empowered to do so – Towers Watson, Hay Group, Bersin by Deloitte and others all tell us that companies who enable their employees have at least 2x higher engagement. Enablement includes communicating back to employees when and how they’ve achieved the mission.

Are you using workforce science analytics in your workplace? What results or conclusions are you able to draw?

Strategic Employee Recognition Critical to Strong Manager/Employee Relationships

Recognize This! – Gallup research shows “best” managers empower, recognize and communicate with their employees regularly, supported by an effective performance management system.

If present trends continue, this week’s series of blog posts may be an ongoing theme of “isn’t that obvious?” Yesterday, I shared results of the Parnassus Fund (consisting of companies that treat their employees well and with respect), which performs consistently better than the S&P. Today, I’m sharing about Gallup research showing the manager/employee relationship is critical to employee engagement.

I’m sure we’ve all uttered the truism: “People leave managers, not companies.” This is the research to back it up as featured in an Incentive magazine article:

“A new article from Gallup researchers points to the pivotal role that the employee-manager relationship plays in driving the performance of companies. Drawing on data from more than 50,000 employees across 10 major industries, the analysts found that while effective engagement and recognition programs are key to a company’s success, strong relationships between managers and their subordinates are the key factor in making those programs work.”

Breaking this down further:

70% of employees giving managers a “best” rating also ranked the company’s recognition and engagement system as very good (vs. only 5% who rated managers as “best” also saying recognition programs were poor)
85% of those rating their manager as “below average” said their recognition programs were poor

Call me an optimist, but I really believe the vast majority of managers want to do right by their employees. They want to facilitate excellent work and help their employees in the best way possible. Yet, why do so many fail? I also believe we don’t equip managers with the tools they need to be the best managers they can be.

Managers know they need to recognize and reward employees for exceptional effort. Perhaps they’ve even received training on this management philosophy. But have you given them the tool and process needed to not only recognize employees, but to do so in a meaningful, personal way tied to what matters most to your organization (demonstration of your core values in contribution to achieving strategic objectives)?

Desires and objectives without a means to deliver are nearly useless. Empower your managers to be the “best.”

Perform 4% Better than S&P – Engage Your Employees

Recognize This! – Companies that treat employees well outperform the S&P Index.

Creating a work environment in which employees choose to engage directly impacts the bottom line. Companies who treat employees well have returns at least 4% better than the S&P Index, year after year.

That’s a bold statement to make, yet the results are proven directly in the US Stock Market. Companies in the Parnassus Workforce Fund (as explained in this Fast Company article) include many of the “100 Best Companies To Work For” as well as others that “genuinely cared about their employees as people, not just hired hands.”

The results are indisputable In eight years, the fund has had a 9.63% annualized return (as compared to the S&P Index earnings of 5.58% in the same period). Moreover:

“Another compelling statistic buried in the Parnassus prospectus: Over the past five years–the height of the Great Recession–the average annual return on the Workplace Fund was an incredible 10.81%. The S&P Index for the same period was just 3.97%, a 6.84% difference. [James] Dodson, [founder of Parnassus Investments and portfolio manager of the Parnassus Workplace Fund], believes the wide gap in performance is easily explained: ‘I think what happens when you have a contented workplace, people are willing to put out more effort to improve operations during really difficult times. While I think every organization has their ups and downs, the downs are not as pronounced because everybody pulls together to try to get through the crisis. And, of course, this consistently more engaged performance inevitably reveals itself in the firm’s bottom line.’”

Employee engagement matters. Caring about employees as people and not just human resources makes a tremendous difference to organization success. What can you do?

Give them something to believe in and strive for.
Make your mission and values more than just a statement. Make them integral to what every employee does every day in their own, unique, job roles and functions.
Recognize and reward them for significant accomplishments and behaviors.
Help employees understand when and how they personally contribute to achieving the mission while living the values by recognizing and rewarding them for doing so – frequently and in a timely way.
Empower them to be the caretakers of your culture.
Show you trust employees by encouraging them to also recognize and reward peers and colleagues when they see others living the values and achieving the mission. The culture must be owned by all to be relevant and real to everyone.

Do you believe in the power of employee engagement to drive bottom-line results?

Intentions for Building and Sustaining a Strong Company Culture Will Fail without a Process to Back It Up

Recognize This! – Give all employees the tools and systems needed to reinforce your desired culture every day for everyone.

Your company leadership makes a commitment to build a strong culture. They understand how powerful of a differentiator culture can be in the market. They know what kind of positive culture they want to instill and they take steps to make it happen. Yet over time, the culture changes into something else. What happened?

Over on the Fistful of Talent blog, Suzanne Ramsey tells a parable that ends this way:

“So, now we’re at the point in the story where the company is at a crossroads. To those who have been around a while, there is a feeling of the founding culture being unappreciated and not cared for by new employees coming in. To those newly joining, there is a feeling of having been slightly duped; that the descriptions of cool culture and being a different kind of firm, etc., shared during the recruiting process aren’t really true. Both groups are frustrated, and sad, and the early founders are befuddled. Their principles and priorities for the company, for differentiating itself through its awesome culture, have not changed. So what has?”

Read her story and it’s clear what happened – while there was every intention of sustaining and building the culture over time, there was no process to make it happen. Suzanne ends her post with these two recommendations (quoting on both points):

It is time to stop assuming that the desired culture will sustain itself as the company grows, and time to make sustaining the culture a key responsibility of ALL within the company. Identify and develop the skills (storytelling, interpersonal relationship building), programs, and actions necessary to do so. And hold everyone in the company explicitly accountable for doing so through their behaviors.

And it is time for the company to get laser focused on how it onboards and welcomes new employees into the fold, from leaders right on down to the most junior of hires. It is not fair to put the entire burden of acclimating to the new organization, a new job, a new culture, on a newly joining employee, no matter how senior. And it is not fair to have the entire burden rest on the company, either. New employee onboarding needs an overhaul.

While I agree with these two points, Suzanne has missed a key third step – the sustaining process for making sure your culture is not just understood but actively lived by every employee in their daily work. Yes, we must onboard new employees properly into the culture, and we must all own the responsibility of sustaining that culture – as leaders we must also give everyone the tools and methodology to do so daily.

So, what is the process? Strategic, social recognition focused on recognizing and rewarding employees when they live the culture. That is, when they demonstrate your key cultural attributes (your core values) in their daily work. And since this is the responsibility of all employees, then all employees must be empowered to recognize each other when they see someone living the values or embodying desired cultural attributes.

How is your culture proactively encouraged and sustained in your organization?

Today on Compensation Cafe: When You Can’t Differentiate Based on Compensation, What Do You Do to Stand Out?

Recognize This! – Merit increases and compensation packages are no longer sufficient to draw top talent (or keep them).

Research study after research study and poll after poll show that merit increases are no longer keeping up with cost of living. More to the point, compensation packages are no longer enough of a draw to lure top talent away from competitors or to keep your top talent from jumping ship.

Companies must differentiate on something more. Your culture – how your employees experience the work environment every day – is your most powerful differentiator in today’s market.

Check out my post today on Compensation Cafe to see more about why relying on compensation and Total Rewards alone will cause you to lose your top talent and how this is playing out in the highly competitive talent market in the tech industry in Silicon Valley.

Top Performers Are Least Engaged? Read More on Compensation Cafe

Recognize This! – If top performers aren’t valued and appreciated for their efforts, they will choose to stop delivering at a high level.

“Have any of your employees Gone Galt?”

This is the question I ask in my post today on Compensation Café. I encourage you to pop over and read the entire post, in which I unpack the idea (originally shared by the HR Capitalist, Kris Dunn) of top performers who choose to dial-back their efforts because they see no differentiation in how their exceptional efforts are valued in comparison to low performers.

This idea of “going galt” is backed up by recent research from Leadership IQ that in 42% of companies the most engaged employees are actually the lowest performers. This happens when top performers are underappreciated and low performers, as the research says, “have fallen in love with their cushy jobs” and don’t realize just how poorly they are performing.

The solution? Strategic recognition that differentiates recognition based on contribution, behaviors and level of effort. Differentiation is the key.

Again, be sure to click over to Compensation Cafe for the full post and links to research/attributions and tell me if any of your employees have “gone galt” or if you, yourself, have.

The 3 Biggest Trends in HR and Talent Management

Recognize This! – Big data will continue to drive HR and talent management, especially when we allow that data to flow from everyone, not just managers, and we then apply it to broken processes such as the traditional performance review.

I recently had the opportunity to participate in an Argyle Conversation by Argyle Executive Forum. I enjoyed to give and take very much, and appreciated the chance to close out the discussion with a look into the future on major trends coming for HR and talent management. Below is my answer, but I also encourage you to read the full conversation to understand how we arrived at this point with employee recognition and engagement:

There are three large trends that I see out there. One is the importance of big data, which is obviously not a brand new trend. But if you think back about some of the things that I mentioned about how strategic recognition differs from traditional recognition, and how big data is a key driver of that, then Globoforce certainly is a leader in bringing data to the recognition topic. We’ve invested way beyond the curve in reporting capabilities, predictive analytics and being able to use data to drive important decisions around the talent that you have, by spotting hot spots of who gets recognized for great performance. If particular groups of employees continuously recognize certain individuals for perhaps their level of energy or their level of innovation, those can be important indicators to include in a much richer talent conversation. So I think data’s a big trend in recognition being part of that.

The second major change is the social component, and within social you have the idea of crowdsourcing feedback like the travel guide example. In traditional organizations, you follow everything down the straight hierarchy where your senior management makes the big decision and it gets passed down in a linear fashion. That’s dramatically changing already with all the social tools that are going into the enterprise. So that’s a major trend, and recognition is within that conversation because it’s social recognition that offers the opportunity to capture people’s feedback and how people are thinking about the way that we’re living a company’s values.

Finally, if you think about traditional performance management and the annual appraisal, that can be impacted by some of the trends I already mentioned. The traditional performance appraisal tends to be the single manager’s view of your performance in a year. It tends to be done on an annual basis and can be very structured. There isn’t a single person that I’ve met in my career who looks forward to their annual appraisal. I think that’s going to change as a consequence of social recognition and the opportunity to use social recognition and its crowdsourced feedback. Just imagine the ability to capture all of that feedback that employees are giving to each other about how you live the values during the year, if that can become an additional reference point. So I don’t think the traditional performance appraisal is going to die completely. But I think it can be significantly complemented by collecting more opinions to get a much deeper and better-rounded understanding of how the employees really performed during the year.

Those would be the three biggest trends: big data, social and the transformation of the traditional performance review.

What trends do you see on the horizon for HR and talent management?

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