Monday, September 07, 2009

Incentives - Its a Whole New Ball Game

The recent McKinsey article about "How companies are benefiting from Web 2.0: McKinsey Global Survey Results notes the change in incentive structures for effective adoption.

"Many companies experiment with Web 2.0 technologies, but creating an environment with a critical mass of committed users is more difficult.3 The survey results confirm that successful adoption requires that the use of these tools be integrated into the flow of users’ work (Exhibit 5). Furthermore, encouraging continuing use requires approaches other than the traditional financial or performance incentives deployed as motivational tools. In the Web community, status is often built on a reputation for making meaningful contributions. Respondents say informal incentives incorporating the Web ethos, such as ratings by peers and online recognition of status, have been most effective in encouraging Web 2.0 adoption. They also say role modeling—active Web use by executives—has been important for encouraging adoption internally."

1. The kind of incentives that work are those that involve recognition rather financial incentives. In an era where time and attention are scarce resources, attention in the form of recognition is the highest accomplishment.

2. Peer ratings and online recognition require a community, network, or audience engaged with each other in an ongoing way in which one develops a reputation. The new incentives are contextual and connected as opposed to financial incentives which have often (though not always) rewarded individual accomplishment. The new incentives are usually less concrete and more intangible, collectively awarded as opposed to managed by those holding the most power and more individualized as opposed to standardized.

3. Role modeling requires a leader to "be the change you want to see."

What are the implication for leadership of this new "incentive" system? Is "incentive" the appropriate word or is this something different? I think that the new system values new leadership skills and values -- listening, integrity, ego contraction and an awareness of your interconnectivity with others. What do you think?

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