How to incentivise innovation

Read the full article in Swedish

The challenges in driving innovation are long lead times and the difficulty of creating attractive incentive structures that lead to change. However, if employees themselves want to drive innovation and feel creative, there are great opportunities, write Lisa Hamling and Joel Ackerstierna at PA Consulting.

Many companies make large investments in ideas and projects where their feasibility and value are evaluated far too late. The key is to start small and prove that it works.

Britain’s Network Rail, the equivalent of the Swedish Transport Administration, is responsible for operating and maintaining railway infrastructure. In a roundtable discussion facilitated by PA, the choices made  during Network Rail's innovation journey were discussed, where they had significantly reduced the time from developing new solutions to actual implementation.

In its quest to create efficient and safe journeys, with greater punctuality, Network Rail identified and introduced several new ways of working with innovative ideas. An important insight gained was the need to distinguish between innovation projects and traditional research and development projects. A common mistake is to carry out innovation within the framework of the organisation's research and development, where the focus on a long-term perspective and structure can have an inhibiting effect on creativity in the initial phase of the innovation project.

Trust is good for creativity
Innovation always comes with a risk of failure. By testing, developing and learning during the process, it is possible to create new products and services that match a market that is not yet really mature. Furthermore, it should be made clear to management from the beginning that mistakes are an active part of the innovation process that may incur cost. It is cheaper to make mistakes at the start than in the finished product.

At the beginning of the innovation work, you need to encourage creative thinking and create an open environment where all ideas are welcome. A high degree of trust within the teams and the ability to involve different stakeholders from the start facilitates creativity. The balance between structure and creativity should also be addressed in different ways depending on where you are in the innovation project's life cycle. Structure becomes more central the further you get in the project and the more involved the business becomes. Use frameworks such as SAFe that the business feels safe with.

Consensus is a must
Regular quarterly meetings can keep staff updated on what is happening. These lay the foundation for an in-depth understanding and acceptance between different departments. Get inspiration from others, in or outside your industry, with long experience of innovation work. Also celebrate successes to create a positive environment and highlight individual achievements to create engagement. A successful innovation climate is based on employees being given the right conditions to be creative. Only when employees, management and the finance department have reached an agreement can the best ideas emerge quickly. With a creative  environment in place, structures are developed that can take the process from the idea stage to production.