Innovation, Risk Taking and Compensation

April 8th, 2009 by Jim Cotterman

Just read an article in Business Week on innovation (See How P&G Plans To Clean Up).  The article and accompanying interview video clip are both worthwhile.  The video clip particularly offers insight into how P&G defines innovation, links it to strategy and integrates it with culture.  Challenges that law firms face as well.  The key message from A. G. Lafley, CEO at P&G where innovation is a major priority, “You learn more from failure than you do from success but the key is fail early, fail cheaply, and don’t make the same mistake twice.”

Innovation is not easy.  If you want people to innovate, they must take risks.  If they take risks, they must accept failure as a necessary cost to achieve significant breakthroughs.  This means that law firms seeking risk taking and innovation must be willing to reward failure.  The compensation piece for this is to reward those who take smart strategic risks and follow Lafley’s rule.

Another thought from Lafley that merits mention is that innovation is achieved only when creativity and invention are connected to the customer in a way that meaningfully changes their lives.  It places the customer in the center.  Another important element to successfully innovate.

This entry was posted on Wednesday, April 8th, 2009 at 6:41 pm and is filed under Partner compensation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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