Initiative Investment Exchange

“The Initiative Investment Exchange promotes innovation by implementing a realistic reward system for value added feedback and suggestions.”
Concept Summary
An Initiative Investment Exchange is a system by which associates can select or “invest” in initiatives or projects that are being proposed by an organization. The associate would then receive a monetary return based on the success of the resulting initiatives that are implemented. The rationale for this is that few people understand an organization’s strengths and weaknesses in conjunction with a target market better than it’s associates, therefore they are best suited to understand what will and will not work, even more so than the organizational leadership. To bridge this gap between the decision makers and the collective knowledge of the workforce, the Initiative Investment Exchange bypasses the inefficiencies of bureaucracy and other bottlenecks that impede value added communications.  This system of mutual benefits gives associates a vested interest in their organization’s initiatives and  also gives management an honest appraisal of proposals or initiatives that are under consideration.
Crowd Funding – How can crowd funding be incorporated into an organizational setting for the purposes of increasing buy in or value added feedback? Could the central principle of crowd funding, which is to let individuals select specific initiatives that they feel offer the highest rate of return, be used by organizations to better analyze their own proposed initiatives?
Innovation How can an organization improve the participation rates of its employees in the innovation process? What types of tools can provide realistic value added feedback from the workforce, which has the highest level of practical everyday experience with the products and services the organization offers?
Bureaucracy – Organizations are often afflicted with excessive levels of bureaucracy which inhibit innovation and realistic feedback from employees. What kind of system can be created that would allow value added feedback from the workforce, while bypassing the hidden agendas of the layers between them and the decision makers?
Bottlenecks– How can an organization prevent bottlenecks from slowing the development of new ideas or feedback?
Vested Interest – Individual employees, managers, leaders, etc have their own personal interests and agendas that they seek to realize or protect. This vested interest causes feedback to be tempered, modified, or at worst ignored before it reaches the intended recipient.
Mutual Benefit– There needs to be in a system which promotes value added innovation as a mutual benefit. It is naïve to assume that employees will offer truly valuable suggestions out of goodwill or in return for token rewards. The benefits to both decision makers and employees should be obvious and as such will reinforce innovation practices and tools.
Innovation Culture– Ultimately the creation of a culture that supports and encourages innovation should be the goal for any organization. Any system or tool implemented would have to be simple enough to be widely understood, easily accessed, as well as provide tangible benefits to users. The integration of such a system into an organization will attract users as well as mold behavior and  perceptions through its utilization.
The Situation
Organizations are bombarded with countless ideas for new products, services, improvements, etc by their employees and customers in the course of operations. These are essential for remaining competitive as competitive forces are always seeking advantage. However the downside is that it is very difficult to discern which idea or initiative will provide the best return or create the most value for the organization. This can diminish value over time as leaders juggle several different initiatives simultaneously and spread resources too thin to see any of those initiatives through as effectively as they could have. Leaders are constantly second guessing themselves as to where to go and what to do.
To better answer this question leaders turn to market analysis, surveys, project groups, etc. These largely external measures have historically provided mixed results for a variety of reasons. For the most part there is not a personal vetted interest in determining what approach might enjoy the best chance of success within an organization. Across large organizations the success or failure of a specific initiative might have very little bearing on the overall share price or compensation of participants.
Second surveys conducted on outsiders often do not take into account what competencies, core and individual, an organization and its employees have. These competencies provide a set of boundaries which determine what ideas or initiatives may be more successful  in their development or implementation.
Organizational leadership often fails to properly understand the abilities of their own organizations as well. They may voice confidence about a new product line to be launched while the engineers on the floor are struggling with the technology needed to produce it. The barriers and hidden agendas between the top floor and those engineers paint an unclear picture for leadership. Perhaps the engineers, if consulted prior to the decision making process for the new product line, would have opted for an alternative initiative that was within the reach of their organizational competencies.
            Leaders require organized innovation to remain competitive. They have to be able to understand what their organizations are capable of and where the lines must be drawn. They need unrestricted access to the collective opinions and knowledge of their workforce without weighing them down with additional responsibilities. In addition they must be able to have the information in a concise easily understandable format with a minimum of interpretation. Most importantly leaders need to bypass whatever hidden agendas and motivations lie within the organization and get impartial feedback from all levels in order to determine the best way forward.
The Concept
I believe that employees within an organization have the best idea as to what initiatives may provide the best value or return. This stems from the fact that they  have a unique knowledge on how their organization operates and the limitations of their organization’s collective abilities and competence. The Initiative Investment Exchange allows an organization to take advantage of market principles in order to assist in the planning process by tapping the realistic opinions of that organization’s employees.
The Initiative Investment Exchange does this by allowing an employee to invest in ideas or initiatives that are proposed. Investing for the purposes of this system is the same as voting. Employees would in exchange be provided a return for their investment based on the success of chosen initiatives. Therefore all employees will receive a return provided for successful initiatives. This will encourage participation and discussion across all levels.
If an employee knows they will be appreciated for submitting a vote or investing than they will be more inclined to do so. However offer them a premium for determining the best value and they will not only vote, but research the idea and invest where they feel the highest return could be obtained.
This would require that a measurement of return could be calculated and valued. For example if an initiative would reduce the number of man hours needed to make a widget was suggested, a possible measurement for the return could be the dollar value of those man hours saved. A percentage of this would then be returned to those who participated in the exchange.
The Exchange would also require that competing initiatives be presented in a manner that is understandable by the investing/voting segment of the workforce. Allowing employees to contribute their own initiatives and ideas in a structured format would further enhance the value of the Exchange.
The results of this Exchange could be utilized in several environments including strategic planning, R&D, and maintenance to name a few. The feedback the Exchange would receive would be enormously useful when leaders come together to make a decision. Previous assumptions may be dispelled, new ideas may be brought forward, and organizational buy in can be maximized. It would be a brave and possibly foolish leader to continue to push an idea the Exchange did not invest in, for they would be pushing against the collective opinions of their organization.
Hidden agendas and bureaucracy are largely avoided in this exchange as investments/votes can be anonymous. By channeling feedback through a yes/no investment, leaders can avoid having to ensure that what they are getting from their subordinates is the true reality of how employees feel.
Through the act of allowing employees to become personally invested in understanding various initiatives, organizations can increase buy in and motivate employees to contribute where they can to ensure the project succeeds. This Win-Win where the employees get monetary incentives while the organization gets value added feedback can go a long way in creating an innovative culture.
1.      To test the feasibility of the Initiative Investment Exchange the leader should first choose a functional area within the organization.
2.      Develop a standardized format for the communication of various initiatives. This must be applicable not only to existing ideas or projects under consideration but also those that may be submitted by employees in the future.
3.      Determine the method of measuring the returned value of each initiative. This is basically determining how one would measure success as a unit and then applying a dollar value to that unit. A predetermined amount of the returned value if realized is divided between all participants regardless of how they invested. Alternatively an additional percentage of return from a specific idea or initiative can be allocated to all employees that invested in that initiative regardless of their investment choice. This may further encourage intelligent investment and participation.
4.      Present two or more initiatives in a structured format to the employees and instruct them to invest where they feel they would see the greatest return. Outline the system of returns for them so they see the personal value of making the best decision. This ties their personal interest to the decision making process.
5.      They should be able to submit their investment along with additional information or suggestions either through an automated system or manually. The information is then presented to the decision makers within the organization for consideration.
6.      A decision is made. Over a set period as returns are realized from the initiative they are distributed as described in step three. The owner of the initiative if applicable also receives a portion of the return in value, as this will encourage those with ideas to come forward.
7.      New ideas and initiatives should be encouraged and brought forward to management and reviewed for possible application in the Initiative Investment Exchange. Return to step 3 and work through again.
Luffy Notes
A.     There are several ways to customize this tool for the various organizations out there. The core principle is that employees are often the most valuable source of information but decline to offer this information due to various factors, both internal and external. A company must seek to incentivize value added employee feedback to encourage participation, buy in, and provide valuable information for the decision makers.
B.     The usage of the term investors instead of voters has a more involved connotation. A personal stake in the success or failure which encourages an active rather than a passive approach.

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