Can internal crowdfunding help companies find their best ideas?
Crowd-funding platforms like Kickstarter and Indiegogo have proved adept at channell ing f unding to innovative new products and projects, often by previously unknown inventors and designers. Can larger companies employ the same type of system to find and fund internal innovation?
IBM has been experimenting with ‘enterprise crowd-funding’, in which the company gives its employees a small budget and encourages them to commit it to projects proposed by their colleagues. The experiments are the subject of an academic paper by IBM researchers, and the results have been promising, with a few surprises: crowd-funding may help improve morale, for instance. I spoke with one of the authors, Michael Muller, about what he and his team have discovered. What follows is an edited version of our conversation.
Q: Tell us a bit about the experiments with crowd- funding at IBM.
A: IBM has been interested in finding different ways to support innovation inside of companies – inside of IBM and inside of clients companies – for a long time. When we bring it inside the enterprise, what we call enterprise crowd funding, several things are different.
Number one, we don’t have people use their own money. An executive allocates a budget to the participants in the experiment. In our first case, a vice president in research allocated $100 to each of the 500 people in his organisation. There was a website that was inspired by Internet crowd-funding websites, where members of the organisation could propose projects, and members of the organisation could take their $100 and spend it on each oth- ers’ projects. The trial lasted about a month and the funds were available on a use-it-or-lose-it basis, meaning you could only spend it on somebody else, not on yourself. And at the end of the trial, if you didn’t spend the money then you didn’t get to keep it. A second trial in research was at IBM’s Almaden research centre [in San Jose, California]. The third trial was in a relatively large IT part of IBM,
roughly 5 500 people strong.
Q: What kinds of projects were funded?
A: Many addressed a bunch of technical challenges that we have been having. I don’t think they were new inventions here so much as they were making technology available so that people could have new thoughts around the technology,
which would then lead to inventions, we hoped. In the first research project people had said that they needed access to a microtasking site – an example of this would be Mechanical Turk – and it was hard to negotiate how to do those payments through the standard IBM channels. It was funded and the vice president moved heaven and earth to get that through the IBM purchasing organisa- tion. And I have seen conference papers based on the data that were collected through the use of that particular setup. In that case, not only did the project go through, but it’s enabling useful research.
Q: There were also some other projects that addressed morale issues and the culture.
A: Several of the proposals had to do with things that people would have to do together in order to participate in it. One was “afternoon beverages”. It was at a standard time and if you came for afternoon beverages you [were] going to talk to your peers and network. Another was simple small- scale pieces of athletic equipment, generally speaking for shared use. The theme seemed to be over and over again, “We’ll do this together, we’ll use this together, we’ll talk to each other, we’ll meet each other.” Q: What was participation like?
A: We ran this really not knowing what to expect. We knew the standard figures for social media, where about 10% of the people would be pretty active or at least somewhat active. Then 90% of the people would maybe occasionally contribute or mostly look around to see what was going on. We had those kinds of expectations in mind, and what happened really surprised us: We had well over 45% participation.
We had thought, well maybe it’s going to be the case that the higher you are in the organisation, the more inf luential you are, the more likely you are to get funding. We found the reverse, actually. People as high as IBM fellows were making proposals that did not get funded; it was really grass-roots. Since then we have done two other trials, and in one of them the effect of rank in the organisation was a complete wash, no statistical effect at all.
Q: You found considerable participation across geo-graphies, correct?
A: Unlike the two research groups, the IT group from the third experiment was geographically distributed across 29 countries and a bunch of different divi---