the role of employee engagement in the innovation process ... · 17/03/2015 · innovation process...

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The Role Of Employee Engagement In The Innovation Process Improve Efficiency Of The Innovation Process By Engaging Your Employees

by Eugene Ivanov and Doug Williams

March 17, 2015

ABSTRACT

Experts and innovation practitioners agree that innovation thrives in companies that have established a culture of innovation. They also agree that a culture of innovation is first and foremost a culture of employee engagement: for innovation programs to succeed, companies must ensure employee participation in these programs. Data from our exclusive survey of innovation practitioners indicate that active employee engagement in the innovation process improves its efficiency. Our data also suggest that incentivizing employee participation in innovation programs has a positive impact on their outcomes. Our report provides a comprehensive view of specific forms of recognition and rewards that companies use to encourage employee participation in innovation activities.

The Role Of Employee Engagement In The Innovation Process 2 March 17, 2015

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The Role Of Employee Engagement In The Innovation Process Improve Efficiency Of The Innovation Process By Engaging Your Employees By Eugene Ivanov and Doug Williams March 17, 2015

FORMALLY ORGANIZED INNOVATION PROGRAMS HAVE A POSITIVE EFFECT ON BUSINESS PERFORMANCE As more and more businesses view innovation as a new paradigm for achieving competitive advantage, the focus now is on how to make the innovation process more effective. A consensus seems to have emerged that a key to the success of innovation programs lies in establishing a culture of innovation.1 Many experts and innovation practitioners would agree that a culture of innovation is first and foremost a culture of employee participation: for innovation programs to succeed, organization must ensure broad and active employee participation in these programs.

Companies That Take Innovation Seriously Choose To Establish Formal Innovation Programs The notion that innovation is a “team sport” implies that innovation activities within a company should not be an exclusive prerogative of a single department or business unit, be it a traditional R&D, marketing, or a dedicated product development team. Instead, companies are employing innovation tools that enable participation of employees from all across the organization, including departments and units that are not traditionally involved in the innovation process (manufacturing, finance, HR, etc.).2 Such employee engagement may occur in a variety of forms, most popular of which are external and internal innovation portals, innovation competition (challenges), idea generation sessions, ideas suggestion “boxes” (now almost exclusively digitized), innovation training, etc.

Planning and execution of innovation activities, especially in large organizations, would require some form of management, which in many cases may take the shape of formal innovation programs. This begs the following questions: How often do companies choose to establish formal innovation programs, and do these programs have any positive effect on organizational performance?

A survey of innovation practitioners conducted in Q3 2014 by IX Research demonstrates that:



• Many companies choose to establish formal innovation programs as a way of organizing innovation process. Almost two-thirds (59%) of innovation practitioners surveyed in our study indicate that their companies have chosen to establish formally organized innovation programs (see Figure 1).3 For the purpose of this study, we defined “innovation programs” as formally organized, planned and managed initiatives aimed at improving the company’s products, services and operations and all other activities the company undertakes to meet its business objectives. It was implied that these innovation programs were specifically designed to engage a broad range of the company’s employees across different departments and business units (i.e., not just those in traditional R&D or product development roles).

• A decision to establish formal innovation programs reflects how high innovation is on the list of the company’s priorities. It would appear that a company’s decision to establish a formal innovation program means two things. Firstly, it means that this company is rather new to the innovation process and wants to make it more efficient. Secondly, it means that for this company, innovation is relatively high on the list of priorities. Forty-seven percent of innovation practitioners claim their company considers innovation as the top (17%) or top-3 (30%) priority (see Figure 2).4 Of those, 72% report having formal innovation programs (see Figure 3).5 In contrast, only 48% of innovation practitioners whose companies consider innovation to be of relatively lower importance have formal innovation programs. Our data therefore indicate that the higher innovation is on the list of priorities for any given company, the higher probability that this company would establish a formal innovation program.

• Establishing formally organized innovation programs has a positive impact on corporate performance. Our research suggests that companies that go to the trouble of establishing formal innovation programs reap benefits. A majority of innovation practitioners agreed that formal innovation programs have a positive impact on various aspects of their companies’ operational performance (see Figure 4).6 Not surprisingly, the level of agreement was the highest for new product/service development (91%), a corporate activity where innovation is expected to have the most obvious effect. However, the respondents also agreed that formal innovation programs had a positive impact on their companies’ competitiveness (77%), customer satisfaction (75%) and various financial targets (72%). The impact of innovation programs was less pronounced when employee morale (66%), a company’s market share (58%)7 and employee retention (52%)8 were considered, yet those factors may also be more difficult for individual practitioners to evaluate independently.



Figure 1: Formal innovation programs are more common than not

Source: IX Research Survey, Q3 2014

Figure 2: Innovation is a different priority for different companies


Yes 59%

No 41%

Does your company have formally organized innovation programs designed to engage a broad range of the company's employees?

(Select one.)

Base: 112 innova-on prac--oners

8%

7%

38%

30%

17%

0% 20% 40% 60% 80% 100%

I'm not sure how important innova?on is to my company

Innova?on is not a priority at my company

Innova?on is the top-‐10 priority at my company

Innova?on is the top-‐3 priority at my company

Innova?on is the top priority at my company

Base: 112 innova-on prac--oners

Which statement best reflects your company's perspec-ve on the importance of innova-on?

(Select one.)



Figure 3: Innovation programs are more common in companies that prioritize innovation


Figure 4: Innovation programs positively impact companies’ business

Note: Percentages may not sum due to rounding


48%

72%

52%

28%

0% 20% 40% 60% 80% 100%

Top-‐10 priority/not a priority*

Top priority/top-‐3 priority

Base: 53 innova-on prac--oners for whose companies innova-on is a top priority Base*: 59 innova-on prac--oners for whose companies innova-on is not a top priority

Does your company have formally organized innova-on programs designed to engage a broad range of the company's employees?

(Select one.) Yes No

56% 33% 33% 27% 30% 23% 20%

35%

44% 42% 45% 36% 35% 32%

5% 9% 15% 17% 21% 29% 30%

12% 9% 9% 11% 11% 9% 9%

0%

20%

40%

60%

80%

100%

Base: 66 innova-on prac--oners with formally organized innova-on programs

To what extent you agree the following statement: My company's innovation programs have a positive impact on...?

(Select one for each column.)

Completely agree Somewhat agree Neutral Somewhat disagree Completely disagree



Employee Engagement Improves Efficiency Of The Innovation Process The definition of innovation programs adopted in this survey implies the engagement of a broad range of the company’s employees in innovation activities. What we wanted to know was whether employee engagement affects the efficiency of the innovation process itself, and if so, which aspects of this process are specifically affected. The data indicates that active employee participation in innovation activities does in fact lead to an increase in program efficiency. Eighty percent of innovation practitioners claim that employee engagement in innovation programs had a positive impact on the success of their companies’ innovation programs (Figure 5).9 More specifically, the highest impact was reported for increasing the total number of employees participating in innovation activities (82% of “agree” responses) and increasing the total number of ideas generated through innovation programs (80% of “agree” responses). This is hardly surprising given that active employee engagement means more people participating in innovation activities, which usually results in more ideas/suggestions generated through these activities. The impact was less pronounced for the increased quality of generated ideas (66% of “agree” responses). This is not a surprise either, because, as most innovation practitioner would likely attest, the relationship between the number of submitted ideas and their quality is far from linear.

Seventy-one percent of innovation practitioners also indicated that employee engagement helped to foster a culture of innovation throughout their companies (giving yet another boost to our assertion that a culture of innovation is first and foremost a culture of employee participation), and 66% of them noted that employee engagement helped improve the communication between different departments and units of their companies, confirming our previous findings about a close connection between communication and innovation.10



Figure 5: Employee engagement positively impacts efficiency of innovation programs


Even Companies That Have No Formal Innovation Program Still Consider Innovation Important Forty-one percent of companies surveyed in our survey do not have formally organized innovation programs (see Figure 1). However, only 11% of innovation practitioners in this group said that this was because their companies considered innovation unimportant to their business (Figure 6).11 In contrast, almost half of innovation practitioners indicated that their companies were either in the process of developing formal innovation programs (20%) or considering developing such programs (29%). Even more intriguingly, almost a third (31%) of innovation practitioners claimed that separate innovation programs were unnecessary in their companies because they viewed innovation activities to be part of their employees’ regular

23%

24%

24%

29%

32%

38%

33%

38%

42%

42%

42%

48%

44%

47%

29%

21%

23%

21%

15%

14%

18%

8%

8%

9%

3%

3%

5%

2%

0% 20% 40% 60% 80% 100%

…has improved employee morale

…has helped improve the communica?on between different departments and units in our company

...has increased the quality of ideas generated through our innova?on programs

…has helped create a culture of innova?on throughout the company

…has increased the number of ideas generated through our innova?on programs

…has increased the total number of employees par?cipa?ng in innova?on ac?vi?es

…has had a posi?ve impact on the success of our innova?on programs


To what extent do you agree the following statement: Employee engagement in innova-on programs...? (Select one for each row.)




responsibilities. In a sense, one could consider such companies even more mature, in terms of innovation process, than companies with formally organized innovation programs.12

Figure 6: The majority of companies that do not have formal innovation programs still consider innovation important


INCENTIVIZING EMPLOYEE ENGAGEMENT IN INNOVATION PROGRAMS INCREASES THEIR EFFICIENCY In many companies, especially large ones, engaging employees in innovation programs would be considered a normal bureaucratic process (in the good sense of this term), which requires some sort of management. As part of these management efforts, employee engagement would be measured, and encouraged through the use of incentives.

9%

11%

20%

29%

31%

0% 20% 40% 60% 80% 100%

Other

My company doesn't consider innova?on important to its business

My company is in the process of developing formal innova?on programs

My company is considering developing formal innova?on programs

Separate innova?on programs are unnecessary because my company considers innova?on ac?vi?es to be part of its employees' regular responsibili?es

Base: 45 innova-on prac--oners whose companies do not have formal innova-on programs

Which of the following statements best explains why your company doesn't have formally organized innovation programs?

(Select one.)



Many Companies Use Formal Metrics To Measure Employee Engagement In Innovation Programs Following Peter Drucker’s famous quote “What gets measured, gets managed,” companies routinely employ metric systems to measure efficiency of various business processes.13 Measuring efficiency of the innovation process is still not a trivial thing, and it definitely deserves a special study; however, measuring employee engagement in the process is rather straightforward. Our study demonstrates that where formal innovation programs are in place, a majority (58%) of companies do employ quantitative and/or qualitative metrics to measure employee engagement in innovation programs (see Figure 7).14 Most companies (47%) used both quantitative and qualitative metrics, whereas six percent relied solely only quantitative metrics and five percent relied only on qualitative metrics.

Figure 7: Companies use both qualitative and quantitative metrics to track employee engagement in innovation programs


Employee Incentives Are Common Within Innovation Programs The question of whether companies should incentivize innovation activities is actively debated. Some argue that innovation does not need to be extrinsically motivated.15 Their opponents contend that innovation should not be treated differently from other business processes;

42%

5%

6%

47%

0% 20% 40% 60% 80% 100%

My company doesn't measure employee engagement in innova?on programs

Qualita?ve metrics

Quan?ta?ve metrics

Both quan?ta?ve and qualita?ve metrics


What type of metrics does your company use to track employee engagement in innovation programs?

(Select one.)



therefore, employees who distinguished themselves in innovation activities should be recognized and rewarded as any top performer within the company would be: with promotions, stock-option grants and/or cash bonuses.16 Academic research does not provide much help with regards to a “correct” approach; however, one study does suggest that companies can increase efficiency of idea-generating process by offering rewards to their employees.17

Our survey of innovation practitioners provided the following insight on incentivizing innovation:

• The majority of companies provide incentives to employees to encourage their participation in innovation programs. Fifty-nine percent of innovation practitioners claimed that their companies offer incentives to employees to encourage their participation in innovation programs (Figure 8).18 These incentives could take the form of recognition, rewards, awards, bonuses, profit sharing, promotions, etc.

• Incentivizing employee engagement in innovation programs increases their efficiency in numerous areas. To understand whether incentives have any impact on efficiency of innovation programs, we compared the responses of innovation practitioners whose companies incentivize employee engagement in innovation to those innovation practitioners whose companies do not provide such incentives. While both groups tend to agree employee engagement leads to innovation process efficiency, we found that innovation practitioners at companies with incentives are often more certain that employee engagement in innovation programs has a positive effect on their efficiency as compared to innovation practitioners at companies without incentives (see Figure 9).19 This level of certainty is assessed by the degree with which each group agreed with a statement. For example, whereas 49% of innovation practitioners from the first group “completely agreed” with a statement that employee engagement had increased the total number of employees participating in innovation activities, only 22% of innovation practitioners from the second group expressed the same sentiment (Figure 9B). The same increase in certainty was seen for the positive impact of employee engagement on the total number of ideas generated through innovation programs (Figure 9C), their quality (Figure 9D),20 establishing a culture of collaboration (Figure 9E), and, somewhat surprisingly, employee morale (Figure 9G).21 The effect of incentivizing employee engagement was less pronounced, albeit still present, for the improvement of communication between different departments and units within companies (Figure 9F) and, for the reasons we cannot explain, for the overall success of innovation programs (Figure 9A).

• Many companies choose not to incentivize innovation while still considering innovation important. Forty-one percent of the companies surveyed in our study choose not to incentivize innovation activities of their employees. However, as we saw in the case of establishing formal innovation programs (Figure 6), the decision not to incentivize innovation is not always an indication of a laid-back approach to the innovation process. Twenty-eight percent of innovation practitioners indicate that their companies are either in the process of or are considering developing incentive programs to encourage employee



participation in innovation programs (see Figure 10).22 Moreover, 44% of innovation practitioners claim their companies do not incentivize innovation because they consider participation in innovation activities a responsibility of each employee, arguably an indication of a high level of innovation maturity of these companies. Finally, a small fraction (4%) of respondents indicate that their companies provide employees with a fixed amount of time during regular working hours to participate in innovation activities, an approach employed by some highly innovative companies, such as Google and 3M.23

Figure 8: Employee incentives within innovation programs are common


Yes 59%

No 41%

Does your company currently provide incentives to encourage employee engagement in innovation programs ?

(Select one.)




Figure 9: Incentivizing employee engagement in innovation programs has a positive impact on some parameters of these programs

To what extent you agree with the following statements:

30%

36%

48%

46%

22%

15%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Companies that do not incen?vize innova?on*

Companies that incen?vize innova?on

Base: 39 innova-on prac--oners whose companies incen-vize innova-on Base*: 27 innova-on prac--oners whose companies do not incen-vize innova-on

Figure 9A: Employee engagement in innovation programs has a positive impact on the success of our innovation programs (Select one.)


22%

49%

48%

41%

26%

5%

4%

5%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%




Figure 9B: Employee engagement in innovation programs has increased the total number of employees participating in innovation activities (Select one.)




11%

46%

59%

41%

22%

10%

4%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%




Figure 9C: Employee engagement in innovation programs has increased the number of ideas generated through these programs (Select one.)


4%

38%

56%

33%

30%

18%

7%

10%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%




Figure 9D: Employee engagement in innovation programs has increased the quality of ideas generated through these programs (Select one.)




19%

36%

48%

38%

26%

18% 5%

7%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%




Figure 9E: Employee engagement in innovation programs has helped create a culture of innovation throughout the company (Select one.)


22%

26%

33%

49%

33%

13%

7%

8%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%




Figure 9F: Employee engagement in innovation programs has helped improve the communication between different departments and units of the company

(Select one.)




Note: Percentages in some panels may not sum due to rounding.


15%

28%

26%

46%

48%

15%

7%

8%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%




Figure 9G: Employee engagement in innovation programs improved employee morale (Select one.)




Figure 10: Companies that do not incentivize innovation still consider it important


Innovation Program Incentives Can Take Many Forms Every company has its own ways to engage employees in activities that it considers beneficial to the organization’s performance, and use of these various monetary and non-monetary incentives is a common business practice. It is therefore comes as no surprise that companies use a wide variety of forms to recognize and reward employee participation in innovation programs. More specifically, our survey shows that:

12%

32%

4%

8%

20%

44%

0% 20% 40% 60% 80% 100%

Other

I don't know

My company gives our employees a fixed amount of ?me during regular working

My company is in the process of developing an insen?ve program to encourage employee

par?cipa?on in innova?on programs

My company is considering developing an incen?ve program to encourage employee par?cipa?on in

innova?on programs

My company considers par?cipa?on in innova?on programs a responsibility of every employee

Base: 27 innova-on prac--oners whose companies don't provide incen-ves to encourage employee engagement in innova-on programs

Why doesn't your company offer incen-ves to employees to encourage par-cipa-on in innova-on programs? (Select all that apply.)



• Companies offer employees a wide variety of non-monetary rewards to encourage participation in innovation programs. It may sound basic, but the most popular form of recognition is simply acknowledging employee participation in innovation programs via corporate communication (e.g., intranet, newsletters, whole-company email, etc.): 63% of innovation practitioners at companies who incentivize employees toward innovation use this specific form of incentive (see Figure 11).24 Other non-monetary rewards are popular too: public acknowledgement ceremonies (40%), achievement plaques or trophies (34%), achievement certificates (26%), appreciation letters from executives (24%) or managers (24%).

• Monetary rewards are also used to encourage employee participation. At the same time, companies are not shy of providing their employee with monetary awards, such as cash bonuses (42%), gifts (37%) or gift certificates (24%) (see Figure 11). Interestingly, 29% of innovation practitioners report that their companies grant employees work-related privileges (opportunities for personal development, the opportunity to select next project, etc.), yet only 8% indicate that companies promote employees who distinguished themselves by participating in innovation programs.25

• Companies take a flexible approach with regards to rewarding innovation at the group or individual level. Nearly two-thirds (64%) of innovation practitioners told us that, depending on specific circumstances, their companies recognized both the individual and team effort when participating in innovation programs (see Figure 12).26 About one-quarter (28%) recognize/reward only at the individual level. Despite all the talk of the importance of collaboration in the workplace, very few innovation practitioners (8%) claim that their companies incentive innovation only at the team level. Companies seem to realize that while innovation is a team effort, it is often driven by dedicated and committed individuals.



Figure 11: Companies use numerous forms of recognition and reward to encourage employee participation in innovation programs


8%

5%

5%

8%

8%

21%

24%

24%

24%

26%

29%

34%

37%

40%

42%

63%

Other

Addi?onal vaca?on ?me

Stock op?ons

Digital badges shown on company intranet/email signature

Promo?ons

Mee?ngs with the company's CEO or other top leaders

Gi^ cer?ficates

Apprecia?on le_ers from managers

Apprecia?on le_ers from execu?ves

Achievement cer?ficates

Work-‐related privileges (personal development opportun?es, ability to choose next project, etc.)

Achievement plaques or trophies

Gi^s (e.g., bo_le of champagne, iPod, headphones, iPad, jacket or other clothing item, etc.)

Public acknowledgement ceremonies

Cash bonuses

Acknowledgement via corporate communica?ons (e.g., intranet, newsle_ers, email, etc.)

Base: 38 innova-on prac--oners whose companies provide incen-ves to encourage employee engagement in innova-on programs

What specific forms of recognition and reward does your company use to encourage employee participation in innovation programs?

(Select all that apply.)



Figure 12: Companies incentivize innovation both at individual and team levels

Source: IX Research Survey, 3Q 2013

RECOMMENDATIONS: IMPROVE EFFICIENCY OF THE INNOVATION PROCESS BY ACTIVELY ENGAGING YOUR EMPLOYEES As described at length herein, our data shows that:

• Companies that consider innovation a high priority introduce formal innovation programs as a means to increase efficiency of the innovation process;

• Innovation programs improve corporate performance;

• Employee engagement in innovation activities has a positive impact on their outcome;

• Companies that incentivize employee engagement in innovation programs report higher efficiency of these programs; and

• A variety of monetary and non-monetary awards can be used to recognize/reward employee participation in innovation activities.

64%

8%

28%

0% 20% 40% 60% 80% 100%

Depending on circumstances, my company recognizes/reweards both individual and team

effort

My company recognizes/rewards team effort

My company recognizes/rewards employees at an individual level

Base: 38 innova-on prac--oners whose companies provide incen-ves to encourage

employee engagement in innova-on programs

Which of the following statements best describes your company's approach to innova-on incen-ves?

(Select one.)



Accordingly, innovation practitioners seeking to improve the efficiency of their innovation process should take the following steps:

• Launch formal innovation programs as a way to jumpstart the innovation process in your company. Take a hard look at the state of innovation in your company. Consider creating a formal innovation program if you see signs that the innovation process is stalling. Evidence of this would be that (a) innovation is confined to just a few “dedicated” spots in the company; (b) employees at large are unsure of what innovation means for your company; and/or (c) there is no clear innovation strategy articulated by your top management. Formally organized innovation programs will not solve all of your business problems, but they will help to harness the collective wisdom, knowledge, and experience of your employees across the company. Innovation programs will become the first, usually the most difficult, steps toward creating a bona fide culture of innovation. Once innovation has taken solid roots within your organization, your effort should begin shifting from formal innovation programs to establishing conditions in which every employee in your company understands his or her place in the overall innovation process.

• Incentivize employee engagement in innovation programs. It is tempting to say that “in our company, innovation is a responsibility of every employee.” Unfortunately, in the vast majority of companies, this is no more than an illusion. In reality, employees are fully occupied with their every-day responsibilities, so that innovation is viewed by them as an extracurricular activity. One must incentivize employee participation in innovation programs as you would incentivize any activity beyond employees’ standard job descriptions. Once innovation has taken solid roots within your organization, begin switching to a system where participation in innovation activities is considered a factor in annual performance evaluation.

• Use incentives that fit the culture and traditions of your company. There is no need to invent “innovation-specific” incentives. To incentivize employee engagement in innovation programs, use a combination of monetary and non-monetary stimuli that are routinely employed in your company to recognize/reward exceptional performance. Engaging the HR department into this process is a very good idea!



ANNEX: RESEARCH METHODOLOGY In August-October 2014, IX Research collected complete responses from 112 global innovation practitioners via an online survey tool. Their industrial affiliations and the level of involvement in the innovation process were as follows:

• Industrial sectors. Respondents to the survey represented companies belonging to more than 20 industries, of which the most prominent were Consumer Packaged Goods, 13%; Technology and Software, 13%; Banking, Finance and Insurance, 10%; Healthcare, 10%; and Life Sciences (Pharma, Biotech, Medical Devices), 6%.

• Company size. 23% of the respondents represented companies with fewer than 100 employees, 23% with 100-1,000 employees, 28% with 1,000-20,000 employees and 25% with more than 20,000 employees. (Percentages may not sum to 100% due to rounding.)

• Positions within organizations. The survey respondents were comprised of C-level executives (e.g., CEO, CMO) or vice-presidents (in charge of one/several large departments), 25%; directors and managers, 51%; full- and part-time employees (working within a team or as individual contributors), 18%; and outside consultants, 6%.

• Involvement in the innovation process. Thirty percent of the survey respondents indicated that innovation was their primary job responsibility; 48% of respondents stated that innovation was a significant part of their jobs. Twenty percent of respondents claim that they contribute toward innovation in their organizations, but it is not a significant part of their jobs. Three percent of respondents claim that innovation is not part of their jobs. (Percentages may not sum up to 100% due to rounding.)



ENDNOTES 1 A 2013 white paper by Stefan Lindegaard provides an eloquent and detailed discussion of this topic. See http://15inno.contentrobotllc.netdna-cdn.com/wp-content/uploads/2013/05/Innovation-Culture-The-Big-Elephant-in-the-Room.pdf. 2 For some examples, please see “Best Practices For Innovation: Microsoft’s Innovation Management Framework,” June 2013, available at http://www.microsoft.com/enterprise/industry/manufacturing-and-resources/discrete-manufacturing/innovation-management-framework/default.aspx#fbid=7AKq2Sw0XMq. 3 IX Research Survey, Q3 2014. For a description of the study, see the Annex, preceding. 4 IX Research Survey, Q3 2014. 5 IX Research Survey, Q3 2014. 6 IX Research Survey, Q3 2014. 7 This may appear somewhat surprising, as market share should in principle closely follow competitiveness and customer satisfaction. Two reasons could explain the apparent paucity in the market share growth relative to other performance metrics. Firstly, one might imagine that for companies that have just recently introduced innovation programs, there must be some lag between the introduction of new products and a visible growth in market share. Secondly, the growth in market share is a performance metrics only the C-level executives would deal with on a daily basis. As there were only 25% of C-level executives among the respondents, it is possible that the other respondents simply did not have enough information to follow market share changes. 8 There are so many different factors influencing employee retention that it should be difficult to clearly discern the impact of innovation programs on it. 9 IX Research Survey, Q3 2014. 10 See IX Research, “The Role Of Communication In Successful Innovation,” February 2014. 11 IX Research Survey, Q3 2014. 12 It would be interesting to conduct a special study comparing the efficiency of the innovation process in companies of both types. 13 https://www.entheos.com/quotes/by_teacher/peter+drucker 14 IX Research Survey, Q3 2014. 15 The proponents of this point of view assert that innovation is based on creativity, and creativity feeds on intrinsic motivators: natural curiosity, joy of learning, thrill of solving a difficult problem. Extrinsic motivators, such as money or other “material” rewards, can do little to make a person more creative. Hence, the argument goes, incentivizing innovation is pointless. Daniel Pink’s book “Drive” is often invoked to justify these assertions. 16 See “Can Money Buy Innovation?” available at http://www.innovationexcellence.com/blog/2014/06/01/can-money-buy-innovation/. 17 Oliver Baumann and Nils Stieglitz, “Rewarding value-creating ideas in organizations: The power of low-powered incentives,” (2013). See http://onlinelibrary.wiley.com/doi/10.1002/smj.2093/abstract. 18 IX Research Survey, Q3 2014. 19 IX Research Survey, Q3 2014. 20 This finding seems to contradict published data suggesting that incentivizing innovation with monetary rewards stimulates the numbers of submitted ideas, but not their quality (see, e.g., http://onlinelibrary.wiley.com/doi/10.1002/smj.2093/abstract). 21 The boost in employee morale may not be innovation-specific; it may only reflect employee satisfaction with the introduction of yet another system of incentivizing their business-related activities. 22 IX Research Survey, Q3 2014. 23 See “Time Off To Innovate: Good Idea Or Waste Of Tech Talent?” available at http://www.computerworld.com/article/2506129/it-management/time-off-to-innovate--good-idea-or-a-waste-of-tech-talent-.html. 24 IX Research Survey, Q3 2014. 25 This may reflect the fact that in many companies, participation in innovation programs is still not an important factor being taken into account during annual performance evaluation. As a result, employees have a better chance to be promoted for performing their day-to-day activities rather than for taking part in innovation programs. 26 IX Research Survey, Q3 2014.

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