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Incentivizing Innovation: Training Staff to Take Risks



By Marrecca Fiore
07/31/2006

Launching new products and services is critical for publishers, particularly as their clients change the way they consume information. So how does a CEO convince her upper-level managers to take a chance and launch a new product when an annual bonus is tied to the product’s success? And how does a company encourage innovation among lower-level employees who stand to gain nothing but a thank you?

To create a culture of innovation, the CEO of Cygnus Business Media and president of TimeWarner’s Time4Media division say lower-level employees should be encouraged to offer ideas. And executives must be encouraged to look beyond a single year’s paycheck.

At Cygnus, to dispel the angst associated with an executive losing his annual bonus for a product that doesn’t do so well out of the box, CEO Paul Mackler says he forgives the first year’s numbers. “If we’re talking about launching a full-scale magazine or full-scale trade show, we will give the management team some downside protection in the first year,” he says. In effect, if a property is budgeted for $100,000 in the first year and the executive is rewarded with a bonus on that number, Mackler says a first-year near miss is still rewarded. “We still have a very disciplined launch approach and we set goals the new products must achieve along the way,” he adds.

Finding a Niche Takes Time
Mackler says new products often need the opportunity to find their niche in a market and shouldn’t be discredited because they don’t make a profit or achieve their goals in the first year. “When you launch a new product you’re really in uncharted waters until that product gets its legs and you want the team to be motivated to work with the product to achieve that,” he says. “You may have to go back and revise your goals after the first year. And we don’t want our management teams to think, ‘There’s risk to my incentive plan so I’m not going to focus on new products.’ We want them to take the chance because that goes back to the core of innovation. You can’t worry about failures because you’re always going to have some, but you’ll have far more success if you’re willing to take a few risks,” says Mackler. “We’ve made communication easy, so people are not intimidated to suggest new ideas,” he says.

At Time4Media’s multimedia division, home to Golf, Popular Science, and other magazine titles, president Thomas Beusse, at the helm for just six months, has also tried to create an innovative environment. “On my first day, I went around and introduced myself and told everyone that no idea is ever silly,” he says. “The next day, I got 400 e-mails all suggesting new products and services ranging from changing the office space to opportunities for new businesses.”

Beusse says some of his company’s best ideas have come from mid- and lower-level employees. “Somebody just recently came up with the idea of combining the resources of Popular Science and This Old House and creating the house for the future,” he explains. “That’s a smart idea and probably will be some of the better content that the magazines will publish this year. And that was suggested by a mid-level person.”

Getting a top executive to take a risk on a new product is also key, Beusse said. “That’s the trick, you need people in those positions who look far enough out and long enough out that they’re protecting the brand’s future,” he adds. “It’s tough because people do like to make bonuses. But you have to do two things. First, you have to create targets that are reasonable and you have to build in some money that gives you the ability to launch new products. But more importantly, you can’t have people in those positions who are so shortsighted that they’re only thinking about this year’s pay. They need to think about their future and the future of the company.”

Beusse created a new position, senior vice president of Time4Media’s Time4Digital division, to expand the company’s digital video and audio offerings. “My view about the planning for the future isn’t just about hitting the numbers this year,” he says. “It’s about positioning ourselves for the next five, 10, 15 years and, yeah, by the way, hitting a number this year.”

Tips for Developing an Innovative Workplace
• Foster ideas through communication.
• Self-fund new product launches by finding ways to save money on existing projects.
• Set reasonable monetizing targets for first-year product launches.
• Promote from within.
• Encourage senior executives to take a chance on new products by looking beyond one year’s bonus to the future of the company and themselves.
• Be willing to forgive the numbers in the first year of a new product launch.

By Marrecca Fiore
07/31/2006







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