(FORTUNE Magazine) – Companies run on ideas, but how do you get people to generate them? Think you're adept at making the most of your employees' brainpower? Try this little quiz. (Answer true or false to each statement.)

1. Big ideas are where the action is.

2. Managers are in the best position to come up with ideas on how to do things better.

3. Small ideas aren't worth managers' time.

4. Without rewards, employees won't offer ideas.

5. The best way to encourage innovative thinking is to promise financial rewards based on the monetary value of the ideas.

6. An informal approach to gathering ideas works best.

7. Suggestion boxes are an effective way to encourage new ideas.

8. Creativity is essential to innovation.

9. Along with good ideas come a lot of bad ones that waste everyone's time.

If you answered true to any of the above, think again. All those notions, while popular, are also wrong, according to Alan Robinson and Dean Schroeder, a couple of B-school profs who've done creativity consulting at hundreds of companies. In a new book, Ideas Are Free (Berrett-Koehler, $24.95), Robinson and Schroeder explain why, using short, vivid case studies from dozens of companies--maybe even yours.

What's the matter, you may wonder, with offering financial incentives for great cost-cutting or revenue-boosting ideas? Well, it seems that such schemes can backfire in all sorts of ways, sometimes by encouraging fraud and sometimes just by needlessly tangling with tender egos. Consider: A worker in a European wireless company stumbled across an error in the billing software that was costing $26 million a year. He suggested a simple fix, but his boss blocked it. Why? The company's reward system would have entitled the employee to a fat check and a lot of fanfare--and what boss wants that kind of attention drawn to his mistakes? "Money is an easy, measurable way to recognize people for good ideas," notes Schroeder. "But most people offer ideas because they want to see problems get solved, and they want to be perceived as valuable members of a team. You don't need to bribe them."

The widespread belief that blockbuster ideas are the only ones that matter is costing companies a wealth of competitive advantage, the authors say. "I've had CEOs tell me, 'I don't care about the small stuff,' " says Robinson. "It's like baseball. The home-run hitters get all the glory, but if you look at the stats, it's the singles and doubles that win the most games." And don't expect those hits to come only from the "creative" team; any practical-minded, observant player will have his share of RBIs. Okay, but if you're looking to encourage those singles and doubles, why not rely on the ol' suggestion box? "Usually the managers reviewing the stuff in the box aren't close enough to the work to know whether an idea is any good or not," says Schroeder. "Smart companies set up a forum where people can discuss ideas, so you get input from everyone who's actually involved. If you value employees' ideas, why not talk with them?" Now there's a novel idea.