Saturday, June 5, 2010

Incentives DO work, monetary rewards may not!

You think incentives don't work? Here's the proof to the contrary.
  1. Assume that an action A is an incentive
  2. "A" by definition must "incite" users to perform the right type of action (check the definition in the dictionary)
  3. Incentives DO work
  4. QED
Alright I will stop being facetious and come to the point before you decide to boycott my blog entirely. I am always amused when people argue for or against "incentives and rewards". Incentives, by definition, must work, monetary rewards may not. The overwhelming feedback 400+ enterprise communities on Spigit platform is that you have to actively motivate community members to contribute. In other words, community members need different types of incentives to participate frequently and meaningfully. Monetary rewards work in certain contexts and promote behaviors that support the ideation process.

The central issue is not so much if (monetary) rewards work, but what you should be doing as a community manager to motivate the crowd. There are three dimensions to this problem: the motivational stimuli, personality types, and the context for ideation. Let's start with some answers to the fundamental question of what motivates people.



What motivates people to contribute on an innovation network?

Autonomy
Some individuals have the intrinsic desire to be creative and continuously strive to improve and innovate. Although a rare commodity, such people do exist and are at the core of every successful organization. As long as you don't create impediments in their work, this group does not really need outside motivating influences. They are happy to contribute as long as their ideas are seeing the light of the day and they get the freedom to be at the heart of the implementation process.

Recognition By Leadership
Organizational leaders are ultimately responsible for creating a culture that values innovation. Recognition from the leadership in such an environment is a great motivating factor for the community members. Recognition can certainly be demonstrated by public celebration of individual accomplishments but personal communication will work even better.

Recognition By Peers
Human beings are social creatures. Most of us seek and enjoy attention from people around us at home and in the workplace. If organizations create a culture that values innovation and make creative accomplishments widely known, it would provide a great motivation to contributing citizens.

Monetary Rewards
Money may not buy happiness but certainly helps achieve it in most cases. Effectiveness of money as a motivator depends on the relative worth of the award and how it correlates with achievements. Multiple strategies are possible ranging from fixed awards for being in the top list of contributors to awards that are roughly proportional to the ultimate value of the innovation.

Competition
Competition is a great motivator for people, something that is often ignored as an incentive that boosts participation. Competition can happen at individual level as well as a group level. Highlighting top leaders in terms of their virtual wealth or reputation is a way of encouraging individual competition. Aggregating ideation and collaboration statistics at geographic location, divisions, job functions, departments, etc. can spur a group level competition.

Personality Types on Innovation Networks
The second factor in solving the incentive puzzle is different types of personalities that contribute to the innovation process. I have observed the following types on Spigit's innovation networks.

  • Ideators - Users with original ideas. Note that "ideators" may not necessarily "innovators" in the sense that people with great incites or novel solutions may not carry the idea through to working innovations. That typically happens via collaboration among many personality types.
  • Co-Creators - Individuals that collaborate to improve upon the original idea. Dynamic team formulation is a must for any social innovation environment. In fact an idea will not achieve enough escape velocity without a team that evangelizes it and explores feasible ways of implementing that idea.
  • Mavens (term I borrowed from "The Tipping Point") - Every organization has people who are experienced or simply curious enough. These individuals have amassed considerable knowledge that can be very useful to ideators and co-creators. Leveraging maven contribution requires making them aware of ideas in their sphere of expertise and motivating them to share their knowledge with the rest of the community.
  • Connectors - Making the right connections between ideas and people becomes very important within large communities facing the "long tail" problem. There are a few individuals within any social network that frequently communicate with a broad range of community members and therefore provide a natural mechanism for bringing together ideators, co-creators and mavens.
  • Cheerleaders - Community members that provide positive feedback and encouragement to other users. Whether cheerleaders need to motivated is debatable. Cheerleading in excess can become spam that detracts collaborators from central topic of conversation. On the other hand, I have observed that they keep the dialog going in many cases and motivate users that may be somewhat reluctant to share their ideas and viewpoints in an open forum.
Ideation Context
The innovation context is shaped by a number of factors but two stand out the most: the ideation framing and community composition. In general we advocate creating an always-on ideation environment that offers multiple ways in which the ideation is framed:

  • Continuous Open Innovation - This model can either provide a completely open forum for blue ocean thinking or provide a gentle direction by spelling out broad strategic objectives. In general this type of community should be encouraged to submit horizon 2 or horizon 3 ideas. This format is too inefficient for incremental innovation.
  • Innovation Themes - Theme-based ideation can provide a focus and lightweight direction for open innovation forums. In fact we encourage Spigit clients to introduce themes that change periodically in order to create a dynamic environment for ideation.
  • Ideation Campaigns - Companies often engage a segment or all of their business community members in ideation campaigns that run anywhere from a few weeks to few months timeframe. The ideation campaigns are focused events that either invite innovative solutions to a well defined problem or ideas for incremental improvements leading to new product features, process efficiencies, or cost savings.
Community composition is the second important aspect of ideation context. In pharmaceutical and tech companies, the community tends to have a much higher percentage of knowledge workers due to the nature of their business. On the other hand, retail sector companies are at the other extreme. Retail industry also has a highly transient, younger workforce that has significant seasonal variation.

So how do I choose the right incentive?
The right incentive, or I should say the right mix of incentives, depends on the particular combination of personality types and contextual parameters described earlier. I have observed that in more sophisticated domains with high percentage of knowledge workers, peer recognition and individual competitive element work very well for co-creators, mavens, and connectors. If a community runs a focused campaign/competition, members expect some type of monetary reward at completion especially in external facing communities. Smaller monetary rewards tend to work for less sophisticated domains. In this case, care has to be taken to highlight and reward quality contributors otherwise the reward scheme often leads to a lot of spam.

You can certainly perform analysis on the type of innovation network you are managing and characterize it in terms of personality type and contextual elements. This will give you a starting point for setting up a mix of incentives that should work for that combination. Ultimately there is no substitute for actively monitoring the effects of your incentive schemes and changing the mix that yields the right motivation for each type of person in your community.

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