The human factor of innovation: motivation versus funding

Silvia Leal. Professor. IE Business School

1 December 2012

Motivated people are the best source of innovation. Companies with motivated employees have no need for investors. All they need to do is give a free rein to latent talent.

Innovation is now a key resource. It is not a new subject of debate that has emerged from the global financial crisis. Quite simply there is no hope of salvation without innovation.

Tom Peters already explained in his well-known best sellers that the golden rule of business excellence boils down to two things: marketing and innovation. Nevertheless his contribution was nothing new. Peters was simply reminding us of what Adam Smith (18th century) or David Ricardo (19th century) had already expounded in their theses.

Fifty-five percent of the increase in business productivity between 1995 and the beginning of the crisis can be attributed to technological innovation. In Spain, however, only 18.6% of firms could be considered innovative. Why?  Forty-four percent consider the costs involved in innovation to be very high, while 28.39% do not consider it necessary. Haven’t they read Peters? Or Adam Smith? Or David Ricardo?

According to recent research undertaken at IE Business School, innovation is a “human factor” that should be managed from three perspectives: the creative identity of each individual; the creative ecosystem of each organization; and inherent motivation, the biological engine that motivates an individual to act. I am going to use a simple metaphor to explain. Innovation is the result of the combustion of three elements: people, the organization and motivation. If these three things are managed right the result is a powerful creative energy, new businesses, markets, etc. But if they are not managed properly, it only leads to burnout.

According to our research, an individual’s creative identity is a highly complex reality. Self-confidence (Am I capable?), self-efficacy (What can I accomplish do ….?), aversion to risk (What if I fail?) and optimism all have a marked impact on a person’s behavior. Similarly, the ecosystem in which day-to-day work is carried out will either stymie or unleash creative energy.

Companies are aware of this and they invest a great deal of resources into improving their innovative culture. However, our research has shown that management practices (Does my boss value innovation?) and available resources (Do I have time to listen to my thoughts?) are what really influence the process. Yet many firms are neither questioning their management practices, nor listening to their employees.

And we still have one more factor to go, namely motivation, the biological engine or power that generates that certain kind of creative identity and innovative ecosystem that will make people try to innovate. Motivation lies behind questions like Will I succeed? or Is it worth it?

Hence innovation is not the direct fruit of massive investment, but rather of the people’s innovative energy. That’s why companies that decide to buck the statistical trend and grow in the face of turbulence will find it easier than they think. They don’t need to look for investors, or funding. All they need to do is “stop”, “listen” and “learn to manage the “latent” creative genius of their organization.

In other words, they need to learn to manage the innovation process efficiently, just as they have to manage all their company’s processes, because the incorporation of best practices and new management models (like that developed in the course of our research) in this field are not only profitable, but will also mark a before and after in the turbulent quest for innovation.

El País Via@iebusiness November 23 2012

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