The Hindu Business Line : Why do people innovate?

A desire to challenge the intellect with complex problems and gain recognition for solving them sparks innovation. Money is also motivation, but only to an extent.

LAST time, I detailed how the open source model of software works. To recap, we have a never-before environment, where people from around the world contribute their time and energy for no monetary reward, using the Internet as a meeting point, all for the joy of seeing their name as a contributor to a large, important project.

Part of the lesson from this story is on the competitive front. Once again, we have a situation where a dominant giant is facing a disruption from the most unlikely of sources, and is stumbling because it cannot understand what motivates the challenger. However, the more interesting part of the story is in how it relates to innovation.

The unlikely open source model has resulted in an innovation explosion of a sort never seen before. Sourceforge, a key Web site for open source software, now has something like 60,000 ongoing software projects. That's right: 60,000! And this does not even begin to count the number of other Web sites that host similar software. True, some projects are more or less defunct, and some are simple me-toos. But even allowing for all this, there is still a huge number of ideas that have taken concrete, usable shape. Any normal organisation would love to have an idea-generating machine like this.

So what's happened here? What has sparked off what is probably one of the world's most fascinating models ever of innovation? And can this be of any use to normal, everyday organisations in more mundane businesses? I think it does. In fact, I would go further and say this is a truly epochal experiment being carried out, and one that needs far more examination by management theorists.

But getting back to what could have sparked it off. None of what are traditionally thought of as the factors driving innovation were present here. Necessity is the mother of invention, is what we've all been told. But what necessity? None of these people really "needs" to develop software for free. And what about an overall guiding force? None again. As I explained last time, nobody owns open source software. Neither is there any overall objective, which decrees which type of project to follow and which not to follow. Finally, and I think crucially, whatever happened to the gospel that people will innovate only if they get paid for it? Certainly not in this case.

All of which should make us re-examine these fundamental assumptions, particularly two. The first relates to why people innovate. And no, money is not the sole answer. Truly innovative people, those who will always look for a better way, be it in software products or marketing processes, are motivated by money only to a certain extent. For them, the journey itself is an important part of the reward. These are people who love to match their intellect against tough problems. When the problem is finally solved, a financial reward is welcome (as always!), but what they really want is recognition of their intellectual ability, and to be identified as the person who solved a knotty problem. Which in turn means that any innovation system must have a reward mechanism that does two key things. First, innovative contributions need to be formally recognised, and not just rewarded with an occasional pat on the back. Second, it must move away from the common current practice of an annual, company-wide innovation award to a series of year-round, function-specific awards.

The second issue is the question of what sparks innovation. Certainly the desire to do something new, but what is also needed is the opportunity to translate that desire into action. There is no doubt that software programmers always craved recognition, but without the Internet, open source software could not have existed on this scale. And definitely, the pace of innovation that one sees in open source would not be possible without the Internet-led quick and easy exchange of ideas. In other words, the innovation environment is critical, and that's a second major learning for corporates. It is an article of faith that managers will perform better if their salary is linked to performance, or if the organisation deliberately fosters internal competition. Yet, without an easy exchange of ideas, innovation is not going to take off, and internal competition encourages managers to keep their ideas to themselves. Performance-linked bonuses reduce the incentive to take risks. These mechanisms could result in a major divergence between the individual's objectives and the organisation's needs.

None of which is to say that internal competition and performance-linked bonuses are bad per se. The point instead is that if these (or any similar mechanisms) are to be installed, it is critical to also install knowledge-sharing and risk-inducing mechanisms to balance their negative effects on innovation. Without this, they will inevitably lead to long-term loss of competitiveness.

These learnings point the way to an understanding of the innovation process, which in turn is the beginning of developing a full-fledged innovation system. And without such a system in place, even the largest of today's corporates will find its dominance eroded in a few years.

(The author is a Chennai-based marketing consultant. Karate-gy is a proprietary term for strategic exercises conducted by Paradigm Management Knowhow. Feedback can be mailed to bleditor@thehindu.co.in)

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