Innovation
When a company survey shows that people don’t feel like they can innovate in their day-to-day work, the automatic response is: let’s run more hackathons.
Hackathons are fun. Some good ideas come out of them. But they don’t build a culture of continuous innovation.
In my experience, more hackathons isn’t what people ask for. And even if they are, that’s not what solves the innovation problem. Innovation is closer to habits than occasional events.
As with most things, it all comes down to incentives.
Daniel Kahneman laid out in behavioral economics that people fear losses more than they value gains. If taking a risk means ending up on a performance plan… I’m just not taking it. Especially when the upside is a shoutout or a pat on the back.
And innovation requires taking risks — like investing resources and time into something big that might not work out, and delaying something that could have just worked well.
Innovation isn’t just applying GenAI to our existing products, that’s table stakes in 2025.
Innovation is about doing something we can’t guarantee will work, because no one has done it before, at least not the way we’re doing it.
It means making ourselves less efficient in the pursuit of something bigger.
So if we really believe in innovation as a differentiator — something that can bring huge value, but won’t always work — we need to revisit the incentives.
If we want more innovation, we need to create an environment where that behavior is easier, safer, and better rewarded. Regardless of how things play out.
When rewards focus only on outcomes — not on decision quality or thoughtful risk-taking — we kill the incentive to innovate.
I’m fully convinced of this, but I acknowledge its implementation is difficult. Outcomes are much easier to measure than decision-making quality.
This is not a simple problem to solve. Real innovation is risky, expensive, inefficient in the short term, and not everyone can afford it.
But if we want innovation to thrive, we have to stop rewarding only what’s safe and predictable. Leaders need to make space for smart risks, backing people when things don’t go as planned, and rewarding the thought process, not just the result.
