John Sviokla has an interesting blog post on Market of Ideas
The notion of having an active market for innovative ideas inside a firm is vital because inventions and innovations are incredibly dependent on people who have local knowledge of the customer needs, customer setting, technology, likely implementation issues, and so forth. All of these factors are “impacted” to use the agency theory description of local knowledge. In other words, the expertise that resides with those people close to the problem, and close to the customer is very hard to transfer to others. Most organizations put their innovations into a budgeting system that allows people to “translate” their expectations into proposal that compete for funding.
It is like internal BlogShares of the companies new idea proposals.
It has several advantages like increasing the level of participation and rewarding the winners that are good at spotting the ‘good’ innovations:
The trouble with innovative ideas within traditional budget mechanisms is that those reviewing the proposal are usually inexpert – and in fact they are probably more inexpert in those projects that are innovative, for senior executives usually climb to the top of an organization through previous innovations which means that the very expertise which was the basis of their success is often outdated.
Better, Early Review:
The best solutions come when it is easy to contribute and there is a social process for sorting out the good from the bad, efficiently – as there is in idea markets, and in open source software
Here is the pinko part:
Put another way, the market allows you to show how deep your faith is. Over time, more successful people should be given even more “nominal” money to spend, because they have shown an ability to judge well. In the stock market, Warren Buffet gets a lot more “votes” than I do, because his track record is so good. This should happen inside companies too, when it comes to innovations.
Cartoon courtesy Hugh: