Andy Hargadon is author of a great book called How Breakthroughs Happen and is a Professor at the University of California at Davis. I know Andy well as I chaired his dissertation and we did an intensive study of innovation at IDEO in 1990’s, which resulted in several papers published in peer reviewed papers on brainstorming and technology brokering. Andy wrote a post a few weeks back on his blog, Harga-blog, about the virtues of qualitative research. He sings a similar song to that in my recent post on Evidence-Based Management Doesn’t Mean Just Quantitative Evidence, and in fact, quotes the same Steinbeck that I did. Andy, who knows a lot about innovation, does a fascinating job of showing how — within organizations — a focus on quantitative measures can lead to some unfortunate consequences (I hadn’t seen his post until today, his was first!) Andy quotes a Wall Street Journal story that demonstrates how what economists call "perverse incentives" for producing patents led to some pretty dysfunctional behavior at HP a few years back (before Mark Hurd got there, I believe these incentives are now removed):
"What [Carly] Fiorina doesn’t mention is why the number of patents
skyrocketed. Much of it had to do with a program put in place in 1999
to get HP into the top 10 patent producers. It relied on paying
engineers for each new possible filing. At the time, it was $175 for a
basic "invention disclosure," $1,750 if it became a patent application,
and another chunk of cash and a plaque for an actual patent. One
engineer, Shell Simpson, nearly tripled his salary by working weekends
in the first year by filing 120 disclosures and 70 patent
applications-at one point taking two weeks off to work on patents
full-time."
Or as my colleague Jeff Pfeffer sometimes says — be careful what you reward people to do, you might get just that and NOTHING else. I agree with Andy that this is a problem caused partly by placing too much emphasis on the count, but I also think that not all financial reward systems have such perverse effects. All have their quirks, but some work better than others.
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