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Whilst the above is conjecture I suspect that anyone reading it from Google or Yahoo would probably be nodding their head as they read. The guys at Google will obviously be trying to avoid falling into the same trap whilst they need to keep innovating, whilst I suspect the Yahoo team are wondering how they can get back to a point where they will pay sufficiently well for new ideas that their employees are encouraged to innovate. The difficulty is also plain to see in more traditional businesses. I work for a Life Insurance company and prior to this worked in Banking. In both industries suggestion schemes are the norm, but tend to carry token payments or rewards for new ideas as opposed to any share of the generated profits. Taking a theoretical example, someone I know well shares an idea with me that is brilliant and could generate millions of dollars worth of profits. My very first instinct is to protect the idea and make sure that my employer does not access it. The reason for this is that I believe my friend can make more money by taking the idea independently to a small player than either of us could benefit by taking the idea to my large employer. Naturally my employer would be angry to know that this is the way I would react. I hold a fairly senior management position, but suspect that there are people in more senior positions who would react the same way. Note that my employer has written into my contract that any intellectual property developed whilst working for them belongs to them, which is a nice attempt to try and overcome the issue through aggression, however in my theoretical example the idea is not mine and I have done nothing to develop it, but clearly the company could benefit. If I worked for a company such as Virgin, with a reputation for innovating in numerous industries including banking and insurance I might expect to be rewarded by being given shares in a new entity or by being paid to run the project concerned. In larger more traditional industries however the idea of setting up spin off units is usually frowned upon and considered to water down shareholder value. My argument would be that the disincentive to innovate found in most large corporations is such that shareholders lose value every day. I have lost count of the number of executives who have told me that they have a secret idea which they hope will make them rich one day. If these executives were rewarded appropriately, surely they would come forward with their ideas and generate additional profits for the company? Certainly some more junior employees will put forward ideas in the hope of advancement up the corporate ladder, but when you are already above midway and earning a tidy sum you are a) more likely to be able to pitch the idea and carry it through to fruition, and b) less likely to put it forward because you understand the worth to the company versus the incremental value to the individual. There is an analogy here with the sporting world. Many think that the money paid to sports stars in games such as football, basketball and soccer far outweighs the value that they bring to the world as a whole. Sports teams and organisations realised long ago however that without the incentives they were getting less than 100% in certain situations, which meant less crowd enjoyment and lower incomes throughout the league. Higher salaries and bigger incentives have lead to more creative play and stronger commitment from many athletes, which in turn have lead to higher $ values for gates, TV deals and advertising. Should large business then go down the same road? Should we be developing our own superstars to innovate and generate ideas that will take our businesses forward? Is there a model possible where the guys who generate the most revenues for the firm share in that wealth directly, thus creating higher (not lower) value for their shareholders? If you wish to comment please drop me a line using brad@ideas2earn.com . Fell free to copy this article if it is useful to you, but I would appreciate link back to my homepage at www.ideas2earn.com Article Source: http://www.articlewheel.com
Brad Emery works for a multi-national Insurance company by day and runs www.ideas2earn.com in his spare time. He aims to provide would be entrepreneurs with ideas of how to start businesses with minimal capital in their spare time. www.ideas2earn.com launched on January 1. This article is taken from Brad's blog which can be found at ideas2earn.spaces.live.com/
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