Rewarding innovation: Is it time for mindset-based pay?

Innovation and ideas do not come solely from the top. To create a culture of innovation, organizations have to move from a dependence on lone geniuses to nurturing creative mindsets at all levels.

In 2006, Scott Cook, then CEO of Intuit, gave a talk on innovation. It was a simpler time. Facebook was in its infancy. The iPhone was still a prototype at Apple HQ. Android, Airbnb and Kindle wouldn’t launch until the following year. Cook’s take on innovation was arguably as visionary as any of these iconic tech developments: “make your people the geniuses.” For Intuit, this approach was the only one that worked. Other models, summarised as “the lone genius;” “the boss is a genius;” and “cluster the geniuses in a lab” simply didn’t cut it. As one of only eight tech companies born in the 80s and still operating today, Intuit - and Cook - must’ve been doing something right (they are #24 in the Fortune 100 Best Companies to Work For too in 2019).

The people-as-geniuses approach is based on a central belief that innovation and human capital go hand in hand. While Intuit and other leading businesses like China’s Meituan Dianping and Singapore’s Grab have cracked the innovation code, many others struggle. The challenge is how to connect the two and create a forward-thinking and creative culture. In truth, it will never be just one thing. Instead the organisation’s entire talent system - including leadership and reward - must be aligned to create an innovative ecosystem.

It starts with ADAPTive leadership

In Korn Ferry’s latest research into self-disruptive leadership, we found the new source of competitive advantage is offered by leaders who can connect resources and people adeptly to build an innovation ecosystem. This enables them to bring robust ideas to market at a rapid pace and, crucially, to adapt quickly to change by disrupting themselves again and again.

Self-Disruptive Leaders are distinguished by their capacity to tap into the intrinsic motivators that spur their people on, anticipating, driving, accelerating, partnering with and trusting their people to motivate and innovate. They lead with purpose - and cultivate purpose in their teams. They provide space and autonomy to iterate and fail fast, not just in the short-term but for the long-term. The result is a workplace where people feel free to focus on why they are there: to create and innovate.

Rewarding innovation

Today, Self-Disruptive Leaders are very much in the minority - our research shows that only 15% of leaders currently operate this way. To build the innovative culture necessary for future success, organisations need to align their talent systems to cultivate the self-disruptive mindset at all levels.

This won’t just happen organically. You can’t expect mindsets to shift simply because they need to, they’re too deep-seated. Instead, leaders and employees at all levels must be rewarded and recognised for embracing this mindset.

But it’s not a simple equation. Daniel Pink’s work tells us that the link between monetary incentives and motivation is complex. Using monetary incentives risks extinguishing intrinsic motivation, crushing creativity, encouraging unethical behaviour and short-term thinking - all things essential to cultivating the self-disruptive mindset and innovative culture.

Does this lead us to a new model for reward? Moving beyond skills-based pay and performance-based pay, it may now be time to consider mindset-based pay.

This doesn’t necessarily mean completely re-writing your reward strategy. Current elements can be re-deployed to make sure the right mindset is recruited and retained, while new elements can be added to better enable the organisation to tailor individual packages keep the best people motivated for the long haul.

It all starts with re-framing how reward is viewed to attract and cultivate self-disruptors at all levels:

  • Does the reward strategy target the right mindset at recruitment, from graduates through to senior hires?
  • Does the EVP support self-disruptive thinking inside the organisation to ensure the right people are motivated and retained?
  • Self-Disruptive Leaders create the environment for people to be geniuses, but it’s everything else - and especially reward - that makes sure that mindset can soar.

Learn more about the self-disruptive leaders and how they accelerate innovation in our latest report.