Cooking up innovation: when it comes to helping employees create new products and services, HR's efforts are a key ingredient

HR Magazine, Nov, 2004 by Ann Pomeroy

Villanueva is trained as an i-mentor and has substantial experience that helps her serve as an innovation consultant to others in the company. Profiles of i-mentors are accessible online to help those with a specific idea identify the right person to serve as a mentor. The idea pipeline helps avoid re-inventing the wheel. "If it's a great idea, someone else may have had the same idea," says Villanueva. If so, it will be listed online.

Employees can go to the company intranet's knowledge management section to view the ideas in the pipeline at any given moment and see what stage they have reached--from business concept to experiment, prototype and "scale up." This site also notes whether the idea has been approved to go forward, killed or put on the back burner as an idea whose time has not yet come. If all systems are go, an estimated date to market for the new product or service will be listed.

Whirlpool's open culture fosters this sharing of ideas. "A lot of people have great ideas," Binkley says, "and our knowledge management system is just loaded with things to capture [them]. In many respects, we have surrounded this thing."

(For more information on developing an effective knowledge management system, see the cover story in the May 2004 issue of HR Magazine.)

When ideas don't work out, the company does not assign blame. "Whirlpool is very sensitive to killing projects," says Binkley. "However, for whatever reason, some ideas just don't take in the marketplace. I think we've learned to distinguish better which ones to walk away from and which ones not to walk away from because they still haven't proved they won't work." The bottom line, he says, is that "projects do fail; people don't fail."

Rewarding Innovators

When ideas do work out, the employees who proffered them should be given some form of recognition. Whirlpool's strategy regarding rewards for innovation has shifted over time.

Five years ago, says Whirlpool's Snyder, the company's thinking was, "If someone has a great idea, you need to make them a millionaire." Today, the company realizes it takes a team of people with diverse skills, not a single "superstar," she says, to bring an idea to fruition. In fact, the company does not award bonuses for innovative work, although financial rewards may come in the form of promotions, spot awards or bonuses tied to meeting company goals.

"From the beginning of time, man wanted to create," says Snyder, "so when you tell employees, 'I believe in you--that you can innovate--and I'm going to surround you with resources to do it,' that is really powerful."

The question of whether or not to give financial incentives for innovation is a controversial topic, says Stanford professor Antonio Davila. One school of thought argues that financial incentives will cause people working in creative areas to focus on the bonus rather than on true innovation. Another school of thought holds that employees won't be motivated to be creative without financial incentives.

Davila surveyed 56 companies in the medical device industry and discovered that economic incentives do work--up to a point. Salary bonuses averaging about 30 percent--there is an optimal amount for each project depending on how difficult it is, says Davila--were found to be good motivators. But too much or too little cash can be detrimental. Too little and it's not enough of an incentive; too much and employers risk "killing the internal drive," Davila says. Even those employees who labor for love of the work may become less willing to take chances when the stakes are high. Too much money "changes their objectives," says Davila. He advises companies to "promise a bonus for successful work, then give recognition after the work has been done." In his view, both are needed.