IBM’s Internal Crowdfunding Rewards Employee Innovation

ibmAll employees have ideas, credible or otherwise, on how to improve their job environment. Very few, however, get an allowance and an opportunity to act on their thoughts.

At most highly structured and hierarchical enterprises, the prospect of such an initiative seems far off. At IBM, however, several departments have already tested a program that puts employees in the middle of the ideation process.

The internal crowdfunding initiative was first jointly implemented during summer 2012 at a New York state IBM research office and an office in Cambridge, says Michael Muller, researcher and master innovator at IBM who helped to manage the program. Since then, it’s been tried at two more offices, with potential for replication elsewhere in the firm.

Those who are familiar with traditional crowdfunding models won’t have a hard time understanding the program. The process is, in practice, very similar to what happens on a platform like Kickstarter.

Participants scan through the proposed projects over the period of one month, and decide which ones to back with cash. The ideas with the most merit reach their funding goals, and their owners are expected to follow through with implementation (a few projects that were funded did not come to fruition). Participants could ask questions about proposals in comments, encouraging discussion and collaboration. One difference from traditional crowdfunding was that the projects needed to bring a certain number of volunteers on board in order to be considered successful.

The allowance paid out to employees to pledge to projects varied by department, Muller said. At his office, for instance, 500 employees received around $100 each. Roughly 45 projects were proposed. Around half met their funding goal, a rate comparable to Kickstarter’s; the most successful ones raised around $2,000. The projects ranged from purchasing an office 3D printer, to hosting a lecture series.

The project initially came to be when one of the research vice presidents decided to “reinvigorate the innovation culture,” Muller said. Inspired by platforms like Kickstarter and Indiegogo, IBM built an internal crowdfunding system.

After a successful first trial, the initiative was tried at IBM’s Almaden Research Center, outside of San Jose. There, the process was very similar, though it was more focused on tech projects. After that, the crowdfunding experiment also caught the interest of an IBM IT department, whose executives also decided to experiment with the crowd-powered ideation process.

That trial was different from its predecessors in that it had a much larger scope, focused entirely on technological projects, and was thought of as a “replacement decision mechanism” for innovation. The department leaders, who oversee a team of 5,500, asked those interested to volunteer to participate in the project. Roughly 300 members volunteered, and were given $150,000 to invest. The projects needed to have a minimum goal of $10,000 and a maximum of $50,000. Only ten projects were funded, but they succeeded in swallowing up the entirety of the budget (the first experiment used up around 30 percent of the budget, Muller said). All projects are being actively pursued, according to the researcher.

Muller, a social scientist, was encouraged by both the crowdfunding initiative’s process and the eventual projects that were implemented. Aside from giving employees a greater voice in the innovation process, which likely improved morale, the project promoted a high level of collaboration. Successful campaigns in the IT department, for example, saw donors from eight countries, on average (the department spans 29 nations in all). In the first trial run last year, Muller said roughly 40 percent of investors were unknown to the project owner. At the IT department, that number was higher.

Internal crowdsourcing initiatives in the form of prediction markets have been applied with success in the past. For example, Cass Sunstein, a Harvard professor and previously the Administrator of the Office of International and Regulatory Affairs, argued in their favor in his book Infotopia: How Many Minds Produce Knowledge.

Muller thinks these can be beneficial for some firms, but worries that the emphasis is too much on the financials. Of course, that’s present on platforms like Kickstarter, he clarified, where backers have an interest in getting a good return for their investment. But the driving focus of crowdfunding, the IBM researcher thinks, is ideation, which falls squarely in line with IBM’s goals and ideology.

“IBM knows as a customer-facing company that innovation is not only our life-blood, but also our value proposition,” he said.

The IT department is currently running a second trial of the experiment; if it goes well, Muller thinks the project can become a regular occurrence. What about internal crowdfunding in other departments? Muller said the research project’s funds are running out, so he and his team need to figure out a way to monetize the experience.

Like any interesting research project, he explained, this internal crowdfunding initiative “needs a commercialization strategy.”

“We are working on it, but don’t have it yet,” he admitted.

One of the avenues Muller said the team is exploring is consulting other departments on running similar initiative. Another (potentially much more impactful) option is offering the process as a product for clients.

If IBM, a company with as many employees as there are inhabitants of Atlanta proper, does decide to open up the internal crowdfunding process to other companies, you can expect the novel innovation strategy to catch on elsewhere.

If that does become the case, many more employees across the world will be able to test the merit of their ideas on how to better their company.

Source: Anton Root –


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