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Jan 22, 2016

It can be difficult to measure innovation, but researchers at Monash University and LaTrobe University in Australia have taken a novel approach by examining the value and quality of in-house patents at several companies, and how they correlate to workplace culture.

Here’s what they found: The better employees are treated by their employers, the number and quality of ideas they have at work increases — significantly.

The companies who enjoyed the biggest benefits were those with an employee recognition program or “treatment scheme” in place. The researchers concluded that treating employees well facilitates the idea generation process, and those organizations that are good at it are quite simply more likely to pursue a coherent innovation strategy.

Companies that are disconnected from employees tend to follow weaker strategies, lacking the unity of purpose and collective effort an engaged workforce brings.

An environment where innovation can thrive

You can’t really order someone to be innovative and expect results – people don’t work that way. True innovation occurs organically, and it needs to be coaxed rather than extracted. Creating an environment where innovation can thrive is the goal.

The way you treat your employees is directly correlated with the caliber of your ideas. The authors of the study use Google as a prime example:

Anecdotal evidence from the high-tech industry suggests that treating employees well is an essential component of innovative success. For example, Google’s “20 percent time”, a program which gives employees the freedom to spend 20 percent of their paid time as they please, gave birth to some of its more iconic products including Gmail and Google Earth.”

The Journal of Financial Economics published a similar study in January showing that offering non-executive employees stock options has the same net effect on innovation, and the Harvard Business Review’s Walter Frick recently chimed in with his own theory:

If workers feel pressure to deliver results in the short-term, either for fear of being fired or in order to be promoted, they may be less likely to pursue riskier innovations. On the other hand, if failure in the short-term is acceptable or even rewarded, and if workers have a stake in the company’s long-term performance, they should be more likely to innovate.”

Innovative irony

In another one of life’s many ironies, a company must embrace the prospect of short-term failure to achieve long-term success with innovation.

The greatest innovations by nature carry the greatest risks, and the company must have faith in its talent along with the patience to let ideas develop and play out. It all goes back to building a culture of trust and respect that employees can depend on.

Here are the basics on that:

  • Let them play – Game-changing discoveries like penicillin, microwave ovens, and X-rays were found by mistake while the discoverer was working on an unrelated problem. The truly innovative ideas tend to reveal themselves when no one is thinking of them, so it pays to give employees freedom to play, experiment, and ruminate.
  • Reward excellence – When good work happens, make sure the employee is clearly recognized and be sure to communicate the how and why to everyone else. Always be connecting individual performance to overall performance, and make sure they know that risk-taking is rewarded.
  • Keep it going – Building culture takes time, no two ways about it. Make a long-term investment in your employees’ happiness, and keep the momentum going. Constant communication and reinforcement of long-term goals tempered with genuine moments of recognition provides a greater purpose that will expand the horizons of your staff.

Proven impact, tangible results

Some organizations will drop millions before realizing that all they ever had to do was treat their employees a little nicer.

Creating a workplace that is more conducive to innovation is something you can start doing today — with proven impact and tangible results.

This was originally published on the Michael C. Fina blog.

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