What's the connection between growth and talent? To drive short-term performance, you need to reward good execution: sales reps who exceed their quotas and product teams that deliver ahead of schedule, for example. But to sustain growth over time, companies need something more. They need ongoing commitment to an innovation process and the talented individuals who can drive the next wave of growth. It's difficult to find and keep the kind of talent that can drive innovation.

A good first step is simply to recognize and reward this talent through your performance management. It's easy enough to reward employees who deliver great results. Any executive would be thrilled with the team behind the Fitbit wristband that monitors physical activity, the team at iRobot that introduced the first tele-presence robot, or the team at Square that made money transfer as easy as sending an email. If talented employees are going to be motivated to take on the risk and creative effort required to develop breakout ideas, they need to know they will be rewarded. Leaders need to step out of the spotlight, wear beige, and "give away" the credit.

Studies back this up. According to the NCMM white paper Blueprint for Growth: Middle Market Growth Champions Reveal a Framework for Success, success in innovation is rewarded in the fastest growing companies. Thirty-eight percent are more likely to tie compensation to growth goals.

That's the easy part of supporting an innovation culture. Then comes the hard part: What happens to the teams that fail? Do they suffer career setbacks? Are they relegated to the backwaters of their companies or, worse, let go? This is a better barometer of your company's commitment to innovation. Did you ever wonder what happened to the team behind the Segway transporter? If you are going to start another initiative, will you be comfortable working alongside team members who have failed?

If your idea of talent is someone with an unbroken record of success, you may be in for a long search. Failure is the price of success - some call it the mathematics of innovation. Someone who has only experienced success is unprepared to handle the kinds of roadblocks that will cause most people to give up. Albert Einstein once said, "It's not that I'm so smart, it's just that I stay with problems longer."

How a company treats employees who push the envelope - and fail - sends a powerful message about how committed the company is to innovation. Middle market executives need to remember that everyone is watching. Recognize those who take on ambitious new initiatives, whether they succeed or fail. This type of performance management is the way to foster even further innovation.

Dave Power, NCMM contributor and president of Power Strategy, has guided growth companies as an operating executive, board member, and advisor for over 25 years. He was CEO of Novera Software, SVP Marketing of RSA Security, and a venture capital investor with Fidelity Ventures. He is a certified Gazelles International coach and teaches at the Harvard Extension School. Dave earned an MBA at Stanford Business School. Follow him on Twitter.