Try Internal Crowdfunding

Jurgen Appelo
Sep 19, 2014 · 4 min read

When I was CIO, our management team felt responsible for gathering innovative ideas from employees. We appointed an innovation committee, with representatives from several departments, which had the task of choosing which ideas to invest in as a company.

That didn’t work.

People submitted more ideas than we could handle, and many felt personally rejected when their idea was not selected by our innovation committee. The effect was the opposite of what we had intended: instead of getting better ideas, the flow of new ideas dried up!

Internal Crowdfunding

Some companies have discovered that it is better to leave the selection of innovative ideas to employees. They turn the proces into an innovation stock market by giving all employees a personal (virtual) budget that they can use for investing in ideas. Any employee is allowed to float a new idea on the stock market, but she will have to convince her peers to invest in her idea. With this approach, there is no innovation committee needed because employees decide together, as a crowd, which of the ideas have the best chance of succeeding and generating a return on their investment. Basically, what you achieve with such a system is an internal version of crowdfunding. [Burkus, “Why Hierarchy Stifles Creativity”] This can work beautifully because the job of management is not to select the best ideas; it is to create a great system that allows for the best ideas to emerge.

The job of management is not to select the best ideas; it is to create a great system that allows for the best ideas to emerge.

A worker-driven idea stock market, however, is probably not enough to survive in an ever-changing global market. One cannot leave strategic product development to pure chance and self-organization among employees. This is one reason why Google replaced its free-format Google Labs experiments with its more focused and disruptive Google X program. [Schrage, “Just How Valuable Is 20% Time?”] But a top-down pursuit of long-term strategic opportunities and bottom-up development of short-term ideas for improvement don’t need to be in conflict with each other. Probably, you need both. You cannot bet the future of the company on whatever employees come up with as playful experiments. [Mims, “20% Time Is Now As Good As Dead”] But you do not have a future at all as a company without an incentive for employees to develop themselves, motivate themselves, and generate innovative ideas. [Mims, “20% Time Is Not Dead”]

Top-Down and Bottom-Up

As with any other adventure, there are different paths to the same goal. When your regular education days and 20% time don’t work, you might want to consider turning them into ShipIt days, hack days, or a more exclusive and secretive program like Google X. And it may or may not be interesting to add an idea market, powered by internal crowdfunding, as a complementary approach to any disruptive innovations that top management is working on. These are all useful contributions to people’s self-education. They address intrinsic motivators such as autonomy, mastery, and purpose, but also social connectedness and status. People work on something they like to do for a cause they think is important. But people also see what their colleagues have worked on, and why this matters to them. And there is nothing as rewarding as delivering something interesting in just 24 hours, except maybe seeing it being turned into a real product thanks to an internal crowdfunding system.

You get the best out of employees when you treat them as entrepreneurs.

Some experts say you get the best out of employees when you treat them as entrepreneurs. [Vanderkam, “Encouraging Employees to be Entrepreneurs”] By making a bit of time available for them to work on their dream projects and allowing them to gain support from their peers to actually get those projects funded, you help people feel more connected to their co-workers, and you help the organization become more innovative. No committee in the world can achieve that.

Jurgen Appelo is Europe’s most popular leadership author, listed on Inc.com’s Top 50 Management Experts and 100 Great Leadership Speakers.

References

Burkus, David. “Why Hierarchy Stifles Creativity” <http://bit.ly/1gwpJ88> Psychology Today, 23 March 2014. Web.

Mims, Christopher. “Google’s ‘20% Time,’ Which Brought You Gmail and AdSense, Is Now As Good As Dead” <http://bit.ly/1q46QPd> Quartz, 16 August 2013. Web.

Mims, Christopher. “Google Engineers Insist 20% Time Is Not Dead–It’s Just Turned Into 120% Time” <http://bit.ly/1dXmI6g> Quartz, 16 August 2013. Web.

Schrage, Michael. “Just How Valuable Is Google’s ‘20% Time?’” <http://bit.ly/1fV4OME> HBR, 20 August 2013. Web.

Vanderkam, Laura. “Why Encouraging Employees to Be Entrepreneurs Can Create an Incredible Place to Work” <http://bit.ly/QOgKKy> FastCompany, 16 January 2014. Web.

    Jurgen Appelo

    Written by

    Successful entrepreneur, Top 100 Leadership Speaker, Top 50 Management Expert, author of 4 books, junior in humility.

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