Manage, Measure, and Reward: Nurturing a Culture of Innovation in Posti

Posti is one of the leading delivery and fulfilment companies in Finland, Sweden and the Baltic states. The company is currently undergoing a large business transformation characterized by the decline of traditional mail and the rise of e-commerce and parcel services. To support its transformation and growth, Posti also utilizes innovation management, where the aim is to identify and accelerate new growth ideas that create value for Posti’s customers.

Leading innovation in companies is not an easy task. According to a McKinsey survey, 86%* of executives put innovation as a top three priority, but only fewer than 10% said that they are satisfied with their organization’s innovation performance. Posti sought out the School of Business to conduct a Customized Student Business Project to find the best practices to manage, measure, and incentivize innovation activities more effectively. ^{(*McKinsey & Co. (2021). Innovation - the launchpad out of the crisis.)}

The project was carried out by Viktoriia Batanova and Ryoko Yamada, two master’s students majoring in Management and International Business (MIB). The project was supervised by Dr. David Derichs, Senior University Lecturer from the Department of Accounting.

Interviews Findings Paved the Way for Future Innovation Practices

To identify the existing approaches and best practices in the field of innovation management, the team reviewed a wide range of books, academic articles, and consulting reports.

Theoretical findings were backed up by real-life evidence from practitioners as Ryoko and Viktoriia conducted 19 interviews with a variety of experts, including innovation leaders of top Finnish companies, startup CEOs, and academics. Several Posti employees were also interviewed to provide the team with a better idea of the company’s innovation operations. All in all, the students spent roughly 60 hours collecting and analysing the interview data.

Ryoko said that being part of the project allowed her to engage with many industry professionals across Finnish companies. ‘It was an amazing opportunity to meet and interview so many industry leaders in Finland in just a couple of months. Not only did everyone provide plenty of insights for our research, but it also gave me a chance to grow my network and increase my own knowledge regarding innovation management practices.’

‘The daily work of innovation leaders is almost an art where there aren’t any off-the-shelf solutions and you need to be highly competent, pro-active, creative, and ready to think out-of-the box to succeed. Hearing about these people’s hands-on experiences helped us to take a deep dive into the subject and build enough expertise to compile a comprehensive set of innovation tools and methods for Posti,’ added Viktoriia.

Managing, Measuring, and Rewarding Innovation

The project aimed at answering three main research questions: managing innovation processes, measuring it, and rewarding internal innovations.

Innovation management is most successful when it is supported by a strong innovation culture in an organization. Such cultures include different elements such as clarity and prioritization, radical transparency, dedicated resources, and tolerance for failure.

Innovation management is more to just having the right culture and people. Students discovered that it is vital for organizations to have the right metrics in place to properly measure progress and align innovation to their overall strategy. Afterall, management depends on metrics and one can only manage things if one can measure them.

All in all, the right metrics should guide organizations, reflecting on their past, present, and future, to answer the main question “Are we moving towards the direction we want to go?”

To incentivize internal innovation, companies need to introduce a rewarding system. Rewards are extremely important because they let employees see that they are valued and help companies attract top talent or entrepreneurial-minded people, who are eager to experiment and therefore drive innovation forward.

Rewards aren’t necessarily about money and gifts: in fact, studies show that non-monetary rewards, such as perks and recognition, or task-related support and resources, are more effective in terms of fostering intrinsic motivation needed to innovate successfully. Another important question was: do we reward innovative teams or individuals?

Recommendations for Posti on how to fine-tune their innovation management

The team enjoyed the opportunity of presenting their findings twice: an extensive two-hour presentation was delivered to Posti’s Business Strategist Eeva Tiainen who had commissioned the project, and its more condense executive summary presentation was given in front of Posti’s growth board responsible for innovation-related decisions within the corporation. In both cases, the presentations evoked interest in the audience and were followed by a vivid discussion. 

Eeva Tiainen praised the students for their role in the project and its successful delivery: ‘It was a very exhaustive presentation compiled with dedication. I could feel the energy and dedication Viktoriia and Ryoko had put in compiling the material, conducting several expert interviews, and summarizing the theoretical frameworks and insights around the topic. They produced value for us in our innovation work.’

‘The real challenge for companies is to select right tools and to start piloting and testing what works. There is no “one size fits all” model but every company has to find the best tools for their setup,’ Ryoko Yamada says.

The learnings from the project allowed both Ryoko and Viktoriia to be in great positions to develop an open university education module for Aalto. ‘Ryoko and Viktoriia have been a student consultant dream team. They planned and executed this project independently, professionally, and on time. I am really excited to continue to work together with them and put their newly accumulated knowledge into action for a life-wide learning module on innovation management and controlling,’ concluded Dr. David Derichs.