Innovation is not something that you can create with money. It is not like an IT system where you can throw money at it and know that you are going to end up with something brilliant, it is not like a car where you know that if you buy a top of the line model it will be better. Instead innovation is about a state of mind, an understanding of what will work and what won’t, but most importantly how something can solve a problem for either your business or customers, even if they don’t realize it’s a problem until you’ve found the solution.
It means that the company who spends the most on R&D isn’t necessarily the company that’s going to come up with the ideas that change the world, likewise the person who is paid the most at the company isn’t necessarily going to be the person who comes up with the best ideas. Instead, the best ideas are the ones which come from across the company, that include as many stakeholders as possible, that are communicated most effectively, and that are ultimately supported throughout an organization.
These elements have little to do with spending a huge amount of money on any one part, although it certainly helps. It is natural that the people who perform the best and who are of most value to the company are the ones who are amongst the top earners, but spending more on a salary doesn’t necessarily increase the likelihood of a disruptive idea, however, one that certainly will is spending less.
Once somebody hits a certain threshold in their salary the motivations for whatever they’re doing generally tends to be fulfilment rather than monetary value. The actual number is clearly dependant on a variety of factors like housing prices and living costs, which differs depending on country, economic climate etc. According to Daniel Kahneman, a founder of the field of behavior economics puts this number in the US at, ’60,000 dollars a year, people are unhappy, and they get progressively unhappier the poorer they get. Above that, we get an absolutely flat line. I mean I’ve rarely seen lines so flat. Clearly, what is happening is money does not buy you experiential happiness, but lack of money certainly buys you misery, and we can measure that misery very, very clearly.’
If somebody isn’t happy in their work, they are considerably less likely to come up with the best ideas, support the ideas that are being implemented, or even stay at the company. It isn’t especially sustainable to set $60,000 as a starting salary for a junior hire, but the reality is that the people who you want to keep, the people who have the best ideas and who work the hardest, should be working their way towards the figure as quickly as possible to avoid potential negative outcomes.
Innovation should be both the end goal and the motivation within a company in order to keep the best people on board, create the best ideas, and continue growth. People are only motivated by money for a limited time (and normally when they’re under the $60,000 mark). To get the most out of them after this point it is essential to both innovate to keep them motivated and allow them to innovate to keep themselves motivated. Allowing people to own what they’re doing is considerably more powerful than money beyond this point, plus it’s likely to increase employee retention, meaning better innovative ideas in the future too.