If you want managers to innovate, you must also change goals, capacity, and how their performance is rewarded

When innovation stalls, senior leaders often blame culture or supposedly conservative middle managers. The practical problem may be much simpler: managers are behaving exactly as the company's performance system encourages them to behave. If their main measures are meeting deadlines, predictability, utilization, and hitting the quarterly plan, experimentation is mainly a risk. It consumes time, increases uncertainty, and may fail. From the manager's perspective, the incentives are asymmetric. If an experiment succeeds, the company benefits. If it fails and the normal plan is missed, the individual manager bears the consequences. Rejecting experiments may therefore be a rational response to the system rather than resistance to change. If leadership genuinely sees testing new services, processes, or business models as a priority, that priority must appear in managers' evaluation. What is absent from metrics and rewards tends to remain a wish rather than a real operational priority. The second requirement is capacity. Adding “innovation” to a list of goals is not enough when the team is already using all available working time on current tasks. Experiments always consume resources. Leaders therefore need to specify which activity can be reduced, which deadline can move, and what budget a manager may use without additional approval. Otherwise the manager receives a new objective without the means to achieve it. The third problem is authority. Formal permission to experiment means little if every trial still requires another layer of approval. A practical approach is to define a decision space in which the manager can act independently: set the goal, risk boundaries, available resources, and the cases that require higher-level approval. The real test comes with the first failure. Leadership's response shows every other manager whether the company genuinely tolerates a failed but properly managed experiment. Middle management also has an important information role. Upward, managers should carry the experience of employees closest to customers and operating problems. Downward, they should explain not just new tasks but also the reasons behind them. If strategy turns into a list of isolated tasks while moving through several management layers, employees may know what to do this week without understanding the problem the company is trying to solve. Leadership can therefore run a simple audit. Look at what managers are actually rewarded for, how much spare capacity they have, what they may decide without their boss's approval, and what happened after the last unsuccessful innovation attempt. The answers often explain more than broad surveys of company culture.

If you want managers to innovate, you must also change goals, capacity, and how their performance is rewarded

The full article is available to users registered at Hard Skills