How Companies Incentivize Innovation

How Companies Incentivize InnovationNinety percent of companies do not ‘as of yet’ have a formal mechanism for incentivizing and rewarding innovation but believe “it’s something we should be doing better”. That is one of the many conclusions in SIT’s latest Insight Paper, How Companies Incentivize Innovation (April 2013).

The Tel Aviv-based innovation consulting company interviewed more than twenty companies from around the world, ranging in size from 200 to 200,000 employees.  They covered a variety of sectors including finance, healthcare, consumer goods, marketing, agriculture, food, hardware and more. They interviewed people in roles across the organizations including senior management, innovation managers, engineers, marketers, and others. The one common denominator was: Innovation is important to the organization and they want to see more of it.

The research explores how companies incentivize their employees to engage more actively in innovation. How do you get staff to move out of their comfort zone when sticking to regular things on one’s plate seems like a safer bet? And most innovation efforts never see the light of day?

Other key issues addressed by the report:

  • Barriers to rewarding: What’s keeping companies from using rewards for innovation?
  • Rewards versus recognition: What is the difference and how do they relate to each other?
  • Reward-worthy: What does an employee need to do to get rewarded?
  • Types of rewards: What kinds of rewards do employees receive?
  • Choice in the matter: Do employees get to choose what they receive?
  • Public or private: Does it make a difference if the reward is broadcast to others?
  • Time to reward: What stage in the product development process will rewards do the most good?
  • Who to reward: The inventor? Implementor? Individually or team-based?
  • Who decides who gets rewarded: Is this an HR function, division head, or third-party?

SIT advises companies to “invest the proper time to determine which reward would work in your company, if at all. This is not a case of one size fits all, whether between companies or even within the same company. If you choose rewards as tokens of appreciation, that could provide more flexibility in the terms and criteria in which it is given. However – if it is to act as a motivator, ensure that it will match up, otherwise you won’t see the benefits you had hoped it would achieve.”

You can download the full report here.

image credit: in hands image from bigstock

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Drew boydDrew Boyd is co-author of “Inside the Box: A Proven System of Creativity for Breakthrough Results.” Follow him at and at

Drew Boyd




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No Comments

  1. Abram Bore on May 29, 2013 at 3:10 pm

    There is comment on how companies should rewards its employees for innovation. Are there success stories of rewarding employees for innovation within public Health sectors?, especially developing countries



  2. David M.J. on June 6, 2013 at 4:08 pm

    This study is worth reading, as it gives a good overview on which different options on giving incentives you have. Even more important – how many mistakes you can make in incentivizing… and have less creativity and innovation than before.

  3. Leila on June 7, 2013 at 5:07 pm

    Recognizing and rewarding employees’ innovations can surely play a part in how much your employees are participating. The same goes for an employee suggestion program and and how many employees are submitting their ideas. A good reward program can encourage innovative thinking and idea submission. I recently wrote a blog post about 9 great ways to reward employee suggestions and 1 way that may demotivate employees:

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