So How Do We Reward Risk-Taking?

Five years ago, appliance makers Maytag and Whirlpool both faced a recessionary environment, intense global competition, and products that consumers could not tell apart. Maytag elected to hunker down and cut costs while Whirlpool took a different tack. Under then-CEO Dave Whitwam, the company launched an all-out, enterprise-wide initiative to develop a core competency in innovation. Not having a cookbook to follow, they experimented with how best to reward risk-takers and foster a culture where ideas were welcomed, supported, and funded. 

 

Now the results are in. Maytag, a once-great American brand, cost cut its way to near-oblivion, while a reenergized Whirlpool grew by 36 percent into a global appliance powerhouse. Whirlpool is in the final stages of buying up Maytag for a fraction of its former worth. 

 

More and more companies are embracing Whirlpool's strategy as they see the limits of Maytag's. Yet in attempting to drive organic growth to supplement acquisitions, companies routinely find they lack the champions and risk-takers needed to dream up and execute bold new ideas. "We've been operationally-minded for so long," they tell me, "that we are having trouble finding entrepreneurially-minded folks to lead the charge." 

 

What behavior do you reward? When it comes to changing people's behavior, it's important to remember an underlying principle: behavior that gets rewarded gets repeated. If you've rewarded risk-avoidance, punished failure, and ingrained incrementalism for decades and that was what moved managers up the ladder of success, guess what types of projects people run away from?

For years, companies from Tyco to Kraft to GE rewarded managers for making their numbers, gobbling up other companies, and cutting costs. The fact is, it worked. Until it didn't any longer. Maverick thinkers who somehow made it through the Orwellian hiring tests that help HR departments identify "people who think and act just like us" were not seen as valuable talent but as difficult-to-manage nuisances. Often their reward was to be first-fired during layoffs.

So if you're now looking for different behavior, you have to get clear on exactly what actions, decisions, cultural norms and values you've been rewarding - and then look for ways to incent different behaviors going forward. It won't be enough to have your CEO speak about the importance of innovation as one of the company's 17 top priorities and expect people to suddenly alter ingrained habits. You'll need to do lots of things to get the word out that expectations are changing, and that not innovating is the greater risk to one's career.

If you have trouble identifying people in your organization whom everyone recognizes as risk-takers and entrepreneurs, that should tell you something. My advice: steer clear of monetary rewards as a way to get attention. Beyond small monetary rewards given to teams not individuals, cash for ideas can backfire, and besides, the literature shows that recognition is the most reliable reward of all. Properly motivated and recognized, enough people will step forward and seemingly ordinary contributors that you may have assumed "didn't have it in them" will do amazing things.

Publicizing examples of innovativeness from your own people is another way to gain buy-in and reinforce the new behaviors you're hoping to spawn. Not only do you shine a spotlight on people who dearly need recognition, but you provide evidence that innovation isn't something that only the Apples and the Googles can do; it's something your people are doing too - and need to do more of. Give recognition to teams and individuals who stick their necks out to launch new products, even if they aren't successful right off and even if they fail. 

The rarest, and therefore the most valuable people to identify, are those who are more concerned about customers than they are about the latest company politics. Seek out those who care deeply about identifying problems customers have that they aren't solving very effectively using existing products. Look for people who dream up new solutions to customers' problems, who aren't content just to perfect the system but want to originate bold new products, services and solutions and change the system.

Robert B. Tucker is president of The Innovation Resource (www.innovationresource.com), an innovation consulting firm based in Santa Barbara, Calif. A frequent keynote speaker at conferences, he is the author of "Driving Growth Through Innovation: How Leading Firms Are Transforming Their Futures."

How GE Gives Leaders Time to Mentor and Reflect

It is 6:00 a.m. David is starting his first day as the “leader in residence” at Crotonville, GE’s global leadership institute, with a jog around the running trail with a couple of twenty-somethings who are half his age and might be five levels below him on an org chart. Their run is companionable; their discussion, candid. It is a serendipitous moment of connection that the three will always share.

David is one of our top executives, and he has stepped out of his day job as the head of a major GE business to make another kind of investment in the future of the company: He will spend this entire week teaching, coaching, mentoring, and learning with about 250 participants — high-performing managers and individual contributors who have come to campus from around the world. David and others who rotate through the position are helping to achieve the purpose of Crotonville: to inspire, connect, and develop GE’s talent.

The leader in residence position epitomizes our belief that a great leader is a great learner.

It models both our cultural value of expertise, which encourages a deep knowledge base as well as a passion to develop others, and the GE leadership philosophy, which holds that when one person grows we all grow, and together, we all rise. And it allows David and other senior managers to take the time to reflect on their own leadership styles — an opportunity that they rarely get in the regular rhythm of their jobs.

After his run, David rushes off to a breakfast meeting where he talks to a group of first-time managers. At 8:30, he attends a session on the neuroscience of success with a group of mid-career high-performers. At 10:30, he hosts one-on-one coaching sessions, each about 30 minutes long. In the afternoon, he teaches a class on values, offering his take on the blueprint for leadership at GE. He then conducts “speed coaching” sessions with about 10 early career leaders:  intense, five-minute discussions centered on a few focus areas such as personal brand and navigating the organizational matrix. By late afternoon, he is involved in brainstorming about next year’s curriculum, providing the faculty with a unique view into future business requirements. He tops off the evening with a live video meeting on customer focus with a group of leaders in a training program in Singapore. At the end of the day, he heads to the campus bar, where he spends the next hour chatting with all the participants.

Launched in 2010, the Leader in Residence program is emblematic of a broader shift from prescriptive to collaborative learning taking place at Crotonville and elsewhere. In a complex environment, learning comes from a combination of discovery, dialogue, experience, reflection, and application. At Crotonville, we bring people from all over the world and from different businesses and contexts. We have to create the opportunity for each person to teach and learn, simultaneously, enhancing everyone’s perspective. David, like other leaders, uses this as a listening post — a venue to capture what’s happening around the company and the world in an encapsulated way…with Crotonville providing the opportunity to listen, test, validate, and absorb on the one hand, and to share, push, elaborate, and support the students on the other.

In all, the program has enabled some 75 of our top leaders and thousands of participants to connect on a human level and to reflect on work, self, and career in a way that would never be possible in either a traditional classroom or office setting. By giving leaders access to deeper levels across the organization, and, in turn, providing participants access to senior leadership, we have created greater cohesiveness throughout the company. We have never had a problem filling out classes even during the most trying of times. Based on the success of the program, as measured through participant surveys and feedback, we recently launched a global version (74% of Crotonville experiences are delivered outside the United States currently).

In fostering a learning culture and deepening connections among leaders at all levels, we have found that we can drive better outcomes that accelerate individual growth and strengthen the talent pipeline.

Raghu Krishnamoorthy

Raghu Krishnamoorthy is GE's vice president of executive development and chief learning officer.