How can nudges promote intrapreneurship?
Many people know the founding fathers of Google: Larry Page and Sergey Brin. But who developed the most important Google innovations (Google Mail and Google AdSense) after the launch of the search engine itself? Surprisingly, neither Larry Page nor Sergey Brin initiated or developed these services. Instead, they were independently developed by Paul Buchheit; also known as employee #23.
Paul Bucheit is not the exception. Many innovations (for example Sony Playstation, 3M Post-It, the digital camera, and the Facebook ‘Like’ button) are not initiated by the founding entrepreneurs and do not result from large corporate R&D programs. Rather, they are developed by employees who take initiative, hands-on responsibility, and who figured out how to turn an idea into reality. These employees are often referred to as intrapreneurs, i.e. entrepreneurs within existing organizations.
Ways to stimulate intrapreneurship
Many researchers have focused on leadership styles, type of monetary incentives, and type of organisational support systems that are needed to increase intrapreneurship within firms. We took a different approach and applied the concept of nudging to focus on the effectiveness of non-monetary incentives. Nudging refers to subtly pushing individuals to alter their choices and behaviour in response to changes in factors other than monetary incentives. For example, by providing consumers information about their energy consumption relative to their neighbours, people reflect on their own energy consumption and often feel a need to adjust their consumption to the norm.
Nudging has been proven to be very effective in the policy domain, but has not been applied within corporate settings (corporate nudging). We therefore asked ourselves: to what extent can corporate nudging be used to motivate employees to become intrapreneurs? This question is of particular relevance as an increasing body of research shows that the monetary incentives that are commonly used by firms tend to have negative effects on creativity and innovation on the long term.
Can we nudge employees to become intrapreneurs?
In order to answer this question, we collaborated with a large international firm and organised an Innovation Challenge within one of their divisions. Employees that were successful in the Innovation Challenge would receive support from the company to continue developing their idea. The Innovation Challenge was setup as a randomised controlled trial (RCT) and teams of employees were randomly assigned to different conditions, which meant they would receive different types of nudges along with their invitation to the Innovation Challenge. Employees were invited to the Innovation Challenge in different ways and were provided different information about the type of innovations that were successful in the past.
Our research shows that it is possible to increase the number of ideas submitted to an Innovation Challenge just by changing the way employees are invited to the challenge. More importantly, the type of invitation did not, in contrary to monetary incentives, significantly decrease the average quality of the ideas. Additional information about successful former innovations did reduce the quality of the ideas. This is most likely due to the fact that it limits the creativity of the employees by framing what successful ideas should look like.
It turns out that the way the challenge is communicated to employees and the type of information provided to them can have an important effect on the quality of ideas that are submitted. Companies focusing mainly on the prize(s) for top performers may therefore be losing out. However, careful corporate nudging and framing is of the essence, as seemly useful information can actually reduce the effectiveness of an innovation competition/challenge.
The research above was funded by the Innovation Growth Lab (IGL) Grants Programme. We offer research funding to randomised controlled trials that help build the evidence base on the most effective approaches to increase innovation, support entrepreneurship and accelerate business growth. The current round of funding is now open for applications and will be until 26 October 2016. For more information please click here.
This blog was originally posted on the Innovation Growth Lab blog on 30 August 2016. To see the original post please click here.