What I like about this approach is that it sidesteps the bureaucratic hokey pokey, run-it-up-the-flagpole, command and control, funky chicken shuffle that all too often scuttles powerful new ideas in need of a timely infusion of capital to get them rolling.
From my experience, there are two choices in how to fund innovation: invention or development. Invention means the actual genesis of the idea, usually through a concentrated effort or workshop using a proven method. Development is what you do with the ideas that have commercial merit. Both take time and money. The choice depends on whether you think spending the money to generate ideas will yield more than a pool of funds to invest the ideas that you already have.
Fortune 100 companies vary widely in how they approach it. Some invest in idea generation to create large stocks of potential opportunities. They invest in innovation teams and processes to keep innovation happening day in and day out. The ideas generated must compete for resources against the rest of the portfolio of opportunities. The other approach is to create a bounty like what Mitch has described…a slush fund to motivate and lure the creative people to come up with ideas.
My preference is to fund invention, systematically. My sense is that employees need to feel there are sufficient resources and sufficient time for them to take the risk of ideating. By investing in the ideation process, employees feel liberated to give it their all. I think the idea of a slush fund makes sense if it is used for pure ideation. Tell people there are dollars available to conduct formal ideation workshops…a slush fund…and they will beat a path to your door. That’s what I do. As Mitch puts it:
And remember, as one wise pundit put it, “It’s not the money that starts the idea, it’s the idea that starts the money.”
Fund ideation, and the result will yield more funds.