Facing the choice to punish or reward employees’ unauthorized projects

Innovation is taking place in your company right now. Employees are finding novel ways to accomplish tasks, they’re exploring new market and product ideas, and creating and utilizing new technologies. And why not? You have been encouraging them to innovate, extolling them to invent the state of the art in your industry. You should be proud.

But in many companies, much of that kind of innovation is taking place off the book. Employees are using their own time to explore and create. They’re working overtime, scrounging funding from stretched-too-thin budgets, sometimes even using their own money and doing the work at home.

Maverick innovation

A well-known example of this comes from engineers who were working at 3M, a market-leading manufacturer under intense competitive pressure to devise new products that generate millions if not billions of dollars every year. Companies of its size must be focused on the execution of their business plans, exactly as approved on the projects that have been through the stage-gate process.

With its engineers mandated to work only on approved projects, it’s surprising that the prototypes for one of the company’s most famous product, Post-it® Notes, were created at the inventors’ homes, on their own time, with their own money.

To be fair, 3M says it allowed its employees to spend 25 percent of their time working on pet projects as a matter of policy. It was something the company saw as a benefit to everyone, and was a motivator and recruiting tool used to attract and retain the best talent. The story can now be retold as proof that the company’s leeway paid off. But what if the tinkering engineers had failed?

Stealing time

We probably all can recite stories of an employee or group of employees who created something of value on their own time because the company didn’t allow them to work on unapproved projects. Employees are often thinking about new materials, new ways to build, manufacture and design because that’s what you’ve taught them to do.

But what if they’re “stealing” time from the company by working on such projects. Could they be drawing energy away from imperative projects? How are you as a manger or executive going to deal with this? Have you thought about how you might react if it works? What if it doesn’t work? Should you punish the offenders? Should you reward them? Maybe encourage more of it? Have you thought about what you are going to do with unauthorized innovation that happens right under your nose?

Here’s another famous story you may want to consider. Nikola Tesla, while working for Thomas Edison, insisted on creating a power distribution system for alternating currents even though his employer was improving his direct current system, which was functioning in the market. Stubborn feuding led to their split. When the battle between AC and DC picked up after Westinghouse Electric acquired Tesla’s patents, AC won, leaving DC a far-gone relic of an antiquated system.

So when you discover an employee working on an unauthorized pet project, what will you do?

John Myers is entrepreneur-in-residence, director TA2 at University of Mount Union. He is helping the University of Mount Union build out its entrepreneurship program, connecting with manufacturing companies to provide R&D and to establish a patent and IP commercialization policy as well as managing its incubator.