How can business and government leaders incentivize workplace innovation
I’ve read parts of the innovation, organizational communication, and change management literatures. Given that I would suggest the following six to seven recommendations:
1. Culture & norms (including support from leaders & managers)
2. Time (Google 20% time or Fed Ex time or hackathons)
3. Culture of people development & learning (including informal learning, coaching, and mentorship)
4. Culture of acceptance of failure & smart risk taking (entrepreneurship or intra-preneurship)
5. Support for innovation (ie money & innovation areas & norms around building stuff & sharing across departments)
6. Small working groups with some degree of autonomy
7. I think some would say hiring the best (or hiring people who are high achievers or who have proven mastery in a hobby or discipline–this proves they know how to pick of expertise & are likely high motivation individuals).
I think its hard to underestimate or overestimate the people power and cultural norms part of this question rather than what we typically think of as “incentives” around pay and bonuses.
You might also look to how companies incentivize effective innovation in terms of how they cultivate relationships with customers and create quality feedback loops.

Another possible answer is gamification (or changing rewards & rewards systems & processes–or potentially KPIs or filters on data).