Chris Grams

Hi Michael--

Thanks for a great article. I think you've provided more clarity for me in understanding innovation over the years than almost anyone I've met. In this piece, I especially liked this paragraph:

"Unfortunately, Dr. Upton's research also shows that most executive compensation structures do not reward disciplined continuous improvement, but rather efforts that are typically "win big/lose big". And perversely, they tend to reward upfront those who place the bets rather than those who are around when the bet can actually be judged. This encourages executives to make innovation a risky business when it could be a reliable engine of sustainable value creation."

I've be reading a lot about incentives recently, and they are a huge topic in the book "The Big Short" by Michael Lewis about the small group of people who successfully bet against the housing market. One of the points Lewis makes is that in almost anything money-related, he's found that it inevitably all comes back to incentives/rewards.

I wonder how we make incentive structures for executives rewarding long-term value creation instead of short-term results? Seems like the huge elephant in the room.

For private companies, this is definitely possible, but I wonder if Wall Street's structure (quarterly earnings reporting, stock options for execs, etc.) makes it all but impossible for public companies to create long-term-value-rewarding incentive systems for executives?

Rachel-- thanks for the great ideas, and thanks for the original post-- it was awesome!