Idea Democracy (ticker: IDMO)

It’s that time again — Barnes & Noble’s rolls out the 365 Bushisms calendars, People magazine leaves people a month to debate whether George Clooney really is the sexiest man alive, and Starbucks resuscitates the gingerbread latte for a few precious months, hoping to play off people’s nostalgia. In the spirit of ratings, charts, bulleted lists, and new journals, I’ll contribute my small part: this article describes the coolest idea I’ve heard all year. Thank you to my colleague Lisa for sharing it!

William C. Taylor of the New York Times writes about Rite-Solutions, a Rhode Island-based consulting firm that uses in internal stock market to assess and implement creative ideas.

“. . .any employee can propose that the company acquire a new technology, enter a new business or make an efficiency improvement. These proposals become stocks, complete with ticker symbols, discussion lists and e-mail alerts. Employees buy or sell the stocks, and prices change to reflect the sentiments of the company’s engineers, computer scientists and project managers — as well as its marketers, accountants and even the receptionist.

[CEO James Lavoie:] “At most companies, especially technology companies, the most brilliant insights tend to come from people other than senior management. So we created a marketplace to harvest collective genius.” “

Rite-Solutions has found a bright solution. Within the stock exchange, (titled “Mutual Fun”), employees can trade on markets like the Spazdaq, the Bow Jones, and the Savings Bonds. The fifty or sixty stocks scroll on a real-time computer screen ticker, reflecting employees’ placement of their $10,000 bank of individual opinion money.

Best of all, some of the ideas have actually been implemented, benefiting those who’d invested in them. As the article describes, a stock called Win-Play Learn (WPL) translated into a contract to develop Hasbro’s VuGo multimedia system, the hardware equivalent of del.icio.us. Taylor also ties links Mutual Fun to a real-world equivalent called InnoCentive, an online community where 90,000 scientists worldwide pitch their solutions to firms bogged in R&D.

Here’s what I see as so cool in Rite-Solutions’s model:

• It doesn’t waste a single brain. This is old news to innovation strategists : companies that harvest ideas across hierarchies always end up with a good idea or two. The more people can speak up, the more ideas you’ll have to work with in the first place.
• It’s self-regulating and quantitative. “More ideas?! You mean, more B.S.!” As Jeffrey Baumgartner wrote in this week’s innovation newsletter Report 103, the line between a “genius” and a “wacko” idea is fine – only 2 or 3 points on his 10-point scale. The stock market is the perfect agent to draw that line, because an idea’s stock price reports both theoretical interest (non-sponsor shares) and actual investment (idea sponsor shares).
• It eases the human (resources) problem. Men and women are essential in generating ideas. But reports on innovation like this one consistently cite managment structures — whether overinvolved or overskeptical — as an innovation stifler. In 1988 General Electric’s Jack Welch cause an HR “revolution” by letting employees “bitch” (I quote the Canadian government) at so-called Work Out sessions with their managers. In 2006, it’s possible for emlpoyees to have neither mandatory schedules nor job titles. (Thanks again to my colleagues for some very cool articles). Rite-Solutions doesn’t need to go to that extreme : the stock market lets everyone voice a free opinion, without worriedly pitching to the boss.
• This is corny, but… It’s an expression of this time. We’ve heard it all: Generation Y, the blogosphere, Google, Unix, Netroots, etc. Blend high-tech software, stocks, and engaged employees, and you have a true idea democracy. (*Apparently this term has been used at a conference before, though I wasn’t aware of it before.) In any case, it’s our time.

I wonder who developed Rite-Solutions’s software (though I suspect it’s one of them), and I wonder how much money they can make from it. Six Sigma and CultureRx have been and will be raking in millions selling this sort of process.

One last cool thing I want to signal in case you hadn’t heard of it, either — the Iowa Electronic Markets, where real money is at stake over political events. The graph of the 2006 Midterm Election trading is (now closed) is particularly fascinating.

That’s it! Now, if you enjoyed this post, I encourage you to purchase my IDMO stock… in the form of free comments and URLs.