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More than most employees, those in R&D work autonomously. This makes sense: They often know more about their field of expertise than do many company executives. R&D employees also often work in ways that make measuring individual performance and motivation tricky. But while difficult to understand, knowing what motivates an R&D workforce is an essential concern for companies looking to be at the forefront of innovation.

In fact, new research suggests ways to find the best employees in this field, advancing the idea that you shouldn’t look for employees motivated by job security but for those inspired by intellectual challenges. Henry Sauermann, an assistant professor at the Georgia Institute of Technology, and Wesley M. Cohen, a professor at Duke University, analyzed survey data from more than 11,000 scientists and engineers in various industries. Among topics the survey covered was the importance the scientists and engineers placed on eight different work benefits: salary, fringe benefits, job security, intellectual challenges, independence, advancement opportunities, responsibilities and contributions to society.

Those who responded that intellectual challenges were an important aspect of their jobs spent more hours at work and produced more patent applications. In contrast, those who ranked job security as important tended to produce fewer patent applications.

Sauermann and Cohen offer several ideas about the relationships they found between motives and productivity. They hypothesize that finding challenges invigorating may lead scientists and engineers to select more demanding and innovative projects. The authors also suggest that employees’ underlying motivations may affect their creative thinking. Those intrinsically motivated by challenges may find they think better when challenged -- they may find their attention heightened and recall more, for instance -- while those more extrinsically motivated, concerned about job security, may find their creativity stifled, their exploratory way of thinking less invigorated.

This article is adapted from “Motivated to Innovate,” by Martha E. Mangelsdorf, which appeared in the Spring 2009 issue of MIT Sloan Management Review. The complete article is available at http://sloanreview.mit.edu/smr/.

For better or worse, a new reality has sunk in. The crisis we were dealing with last year has become a condition, one that might last for quite some time. Innovators, take heart. A quick study of past downturns illuminates signs of hope.

First, many great companies were formed in years featuring a downturn. Take NCR. The 1870s and 1880s were very tumultuous times in America. Despite seemingly never-ending turbulence, an important change began to take place as retailers moved from small, mom-and-pop operations to larger-format stores staffed with employees.

This transition led retailers to realize that existing cash management systems — which for some retailers meant no more than a wooden box — had real limitations.

John Patterson and his brother Frank had first-hand experience with these limitations. They owned a general store in one of their coal mines in Ohio, and often struggled to figure out why they weren’t making money.

In the early 1880s, they purchased a product called "Ritty’s Incorruptible Cashier" sold by a small Ohio business. John Patterson grew so passionate about the product that in 1884 he purchased the company, re-named it National Cash Register, and began to accelerate the cash register’s development.

The company developed novel approaches to market development that are common practice today, such as developing sales collateral and creating incentives for the sales force. Thomas J. Watson Sr., who went on to transform IBM into the technological powerhouse it is today, honed his legendary sales skills at NCR. By 1911, NCR had sold more than 1 million cash registers and had close to 95 percent market share.

NCR is not an anomaly. General Electric, Microsoft, the Walt-Disney Company, Revlon, Hewlett-Packard, Whole Foods Market, and many others started in downturns.

Further, downturns can’t hold back game-changing innovations. For example, in the 1890s not many people consumed soup. The product was very cheap to make, but high water content made distribution expensive. The nephew of the general manager of the Joseph Campbell Preserve Co. had an insight: if he could just reduce soup’s water content, he could dramatically decrease its price.

Condensed soup didn’t taste as good as fresh soup, and mass-production constrained consumer choice. But condensing soup cut costs by 70 percent. The company took off, became profitable for the first time, and renamed itself the Campbell Soup Company in 1921.

Similarly, Fortune’s first issue was in 1930, right after the stock market crash. Procter & Gamble introduced disposable diapers in 1961. Nokia introduced its first car phone in 1982. And Apple began its stunning transformation by bringing out its iPod in 2001.

It is natural to think that relatively small companies might feel the brunt of a downturn. Innosight research suggests otherwise. We looked at the last three U.S. downturns and identified 44 “on the brink” disruptors. These were companies like Nucor in the late 1970s, Best Buy in the late 1980s, and Amazon.com in the early 2000s that had begun the process of transforming an existing market or creating a new one, but hadn’t quite broken through to the mainstream.

In the face of tough times where sock markets sagged and market leaders stumbled, these companies grew on average by more than 30 percent a year.

Downturns can also be a great time to lock in competitive advantage. In a November 2008 interview, Cisco Systems CEO John Chambers described how Cisco historically has become more aggressive in investments in business opportunities during downturns.

“Remember the Asian financial crisis in 1997?” Chambers said. “Most of the economies in the area were contracting. I knew that Cisco’s peers were making a potentially major mistake by dramatically cutting back their resources there, so we did the reverse. Straight into the economic downturn, we decided to increase our resources and send a number of senior executives to expand our presence in the region. Within a year, we gained the number-one market position in almost all of the Asian countries, and we never gave it up.”

Innovation is possible, no matter how dark the times. And innovation has never been more important. Industries are converging, competitors are emerging, and technology is advancing at break-neck pace. Competitive advantage that took years to create disappears seemingly overnight.

Many companies think that innovation and survival are discrete choices. They are not. Companies that put their heads in the sand and wait for times to get better are sowing the seeds of their own destruction. Thriving in today’s “Great Disruption” requires that companies confront the new reality of constant change.

The silver lining of today’s tough economic times is that the scarcity and discipline that will be imposed on innovation efforts in many companies is actually good news. Abundance is a hidden innovation killer. Scarcity will force companies to do what they should have been doing already, such as prioritizing near-term profits over ethereal promises of long-growth that often never materialize.

It can be done. Decades of academic research and applied research have brought great clarity to the world of innovation. Companies like Procter & Gamble, Johnson & Johnson, Cisco Systems, and many others are showing how to make successful innovation systematic.

Companies will have to make some tough choices, some of which are sure to be wrong. But companies that learn to think and act in the right way have a chance to create the next decade’s worth of competitive advantage.

Scott D. Anthony is president of Innosight, an innovation consultancy. He has worked with Fortune 500 and start-up companies in industries ranging from media (print and broadcast), consumer products, and investment banking to transportation and logistics, healthcare, medical devices, software, petrochemicals, and communications equipment. He is the author of the new book, The Silver Lining: An Innovation Playbook for Uncertain Times.

http://www.innovationtools.com

Open innovation, or partnerships for outside sources of new technology and market access, has become one of the most talked about movements in innovation. There are over half a million Google citations for open innovation, and Amazon.com lists no fewer than 4,500 books referencing the subject.

Author Henry Chesbrough claims: "You cannot meet your growth objectives if you ignore all of the smart people out there who aren’t on your payroll." Hearing that, you can't help but think you're missing out if you don't have an open innovation alliance.

P&G has become the corporate face for the movement, and deservedly so; A.G. Lafley, former CEO, moved mountains to deliver P&G from the land of “not invented here” (NIH) to the world of "proudly invented elsewhere." In less than a decade, they went from being an aging behemoth struggling with the new world of store brands and the emergence of Wal-Mart, to being an agile innovator that once again knows how to create products people want to buy.

Results like that make you wonder what role open innovation can play in your business. But we're not all P&G, nor should we be; prescribing open innovation as a cure-all would be like suggesting everyone take two aspirins a day regardless of their condition. Open innovation alliances have their place. But you should read the warnings before you take the medicine. As English scientist Richard Dawkins said, "By all means let's be open-minded, but not so open-minded that our brains drop out."

So, how do you know if you are ready for open innovation, and what does it take to get there? My friends and colleagues, Dr. Gene Slowinski and Dr. Matt Sagal of the Alliance Management Group (AMG), liken alliances to corporate marriages.

The fairy tale: Our corporate couple meets, gets married, has a wonderful family, and lives happily ever after.

The reality: AMG's studies reveal that 70% of attempts to work outside of traditional buy and sell relationships fail.

Early on, companies get caught up in the excitement. They rush to consummate the deal. Then when it comes time to execute, they find themselves misaligned with their new partner. Worse yet, they aren't even aligned across all of the groups within their own company. Sounds less like Cinderella and more like a couple that wakes up hung-over and married in Las Vegas.

Unfortunately, many companies wait until the corporate marriage is coming unglued to call in help. But there are tools you can use while still dating, to determine if you're ready for something more and if your partner is a good fit: think of it as premarital counseling for companies. I've worked with AMG using their "Want, Find, Get, Manage"® (WFGM) approach, which debuted in Gene's book "Reinventing Corporate Growth", and find it very powerful.

I. Want - Do you have a clear understanding of what you want and need from the alliance? Open innovation alliances require clarity on what unmet customer need you are trying to solve, what value that creates and how much of that value you and the partner might be able to share. If you don't have an effective process for finding and evaluating unmet customer needs, spend your time and resources shoring up that weakness instead.

II. Find - Do you know where to look for external solutions? Or is your alliance strategy left to the chance meeting of two like-minded CEOs or business development managers? Assign your R&D and business development folks to research the technology solutions that you "want" well enough to know who the players are and where the action is so that you can tap into the right networks. If you don't have a network in place already, begin developing one within the companies and universities doing leading work in the area of your "want". The players can change quickly, so you should also familiarize yourself with leading web-based open innovation sources such as NineSigma and Innocentive.

III. Get - Do you have a rigorous process for evaluating and negotiating partnerships? AMG's Alliance Framework starts with these questions to identify where your partnership might be in jeopardy:

1. Objectives - why is each partner considering an alliance?
2. Roles - what part will each partner play in the alliance?
3. Resources - what will each partner bring to the alliance?
4. Boundaries - where will the partners be allied and where won't they?
5. Market model - who and what will the customer see?
6. Strategic exclusivity - Will the partners be allied exclusively for any markets, regions, timeframes, etc?
7. Intersections - Does either partner have existing arrangements, such as exclusive sourcing or distribution, that would legally constrain their actions within the proposed alliance?

These seven strategic assessment elements tell you whether there is a reason to go further and begin negotiating more sensitive items like financial pie split, intellectual property and termination. If not, you've quickly eliminated a relationship that could have needlessly tied you up for months if not years.

IV. Manage - Do you have the tools, metrics, and most importantly the discipline necessary to carry out the alliance? Managing alliances is complex. If getting silos to cooperate internally is a challenge, try dealing with three sets of them: those in each partners business and the new ones that can form in the alliance. You must not only agree on how to manage the alliance, but you must be confident that your organization will cooperate. If you haven't mastered the elimination of silo behavior in your own business, you're not ready for alliances.

The more impact bottom line

Open innovation can be a potent approach to increase your innovation capacity, but it's not for everyone. If you haven't done the work to wring out all of the capacity from your existing resources or don't have your own innovation process under control, adding a partner will be a disappointment for both parties. You'll get more out of working on your own issues first. When you are ready to take on a partner, using the WFGM approach and the Alliance Framework to structure your search will ensure that you end up with an enduring alliance.

Mike Dalton's Guided Innovation Group helps companies that are struggling to get more impact from their new product innovation investment. Companies using the Guided Innovation System for continuous innovation improvement see more growth impact from their new products in less time. If you want to take on your innovation issues, download the firm's free report on continuous innovation improvement. You can also subscribe to Mike's twice-monthly eZine here.

http://www.innovationtools.com