Importance of Recognition to Innovation Success

Interview – Adrian Gostick of “The Carrot Principle”

I had the opportunity to interview Adrian Gostick, one of the co-authors of “The Carrot Principle” about the importance of recognition to successful innovation efforts.

Because innovation comes most often from engaged employees, recognition is key to moving employees from marking time to making innovation.

My book review of “The Carrot Principle” can be found here.

Here is the text from the interview:

1. Do you feel that companies should incentivize innovation?

Absolutely. We studied 200,000-people for The Carrot Principle, and a simple truth we found in that data is that people do more of that which is rewarded. If you want great customer service, you find, reward and publicize people who go above and beyond in serving your customers. If you want innovative products, service and solutions, you reward that behavior. It’s a no-brainer, but rare is the organization that actually puts this in place in a formal way.

2. How do you recommend that companies think about incentivizing innovation?

Xcel Energy is a great example. This energy company in the West has 10,000 employees. They tried the old suggestion boxes, which got stuffed with gum wrappers and suggestions such as “why don’t you pay me more.” Instead, they used recognition to drive great ideas. The year we studied the program, they saw 7,500 ideas come into the recognition-based innovation program, and more than two thirds were implemented for a $17 million savings to the organization. They recognized every idea that came in with a very small token. If the idea was accepted, it received a slightly larger recognition award. But if the idea was implemented and saved the company money, the innovation received a third, much more substantial recognition award (from a selection of merchandise awards), that was commensurate with the achievement. So they used recognition three times on great ideas, and the results speak for themselves.

3. What do you recommend that companies keep in mind when recognizing innovation achievements?

Don’t make things too complicated. A lot of recognition has to be approved by a committee and takes months. Give idea generators instant thanks. Next, make sure the awards are equal in value to the accomplishment. We’ve seen organizations where every idea gets a gift certificate to Dairy Queen (seriously). So the guy who comes up with the innovation that makes the company a hundred grand in new revenue gets the same reward as the person who cleaned out the supply cabinet. This happens all the time. Finally, make sure you are publicly recognizing your innovators. Many managers keep recognition in the shadows because they are afraid of jealousies on the team. Nothing could be more dangerous. Employees know who the innovators are on the team, and if you fail to recognize them you fail to show what we consider “excellence” around here. And you will eventually stop getting good ideas from your stars.

4. Anything you would like to say on the topic of recognition and innovation?

Be frequent in your praise as people are developing ideas. Keep letting them know their efforts are appreciated in specific ways. But when they achieve, make sure they get a reward. We praise effort, but we reward results. Get that right, and you’ll keep innovating on your team.

As a special bonus, here is a video of Chester Elton (the other co-author) giving the highlights of “The Carrot Principle” (click on the box if you get a black box):

What do you think?

Braden Kelley (@innovate on Twitter)