Idea Stock Exchange

Retrospeak writes to tell us The New York Times has an interesting article on an interesting business strategy used by a company called Rite-Solutions. The system recognizes the need for harvesting ideas from the entire company instead of just one or two "idea-men" in a stock-market-esque idea exchange. From the article: "We're the founders, but we're far from the smartest people here," Mr. Lavoie, the chief executive, said during an interview at Rite-Solutions' headquarters outside Newport, R.I. "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."

Re:Japanese methods?

[tomhath]

My experience with employee suggestion systems or quality circles is exactly what the executives at this company are trying to avoid. An idea comes in, some big shot decides it's not worth pursuing, and the whole suggestion system/quality circle/whatever falls apart because employees get discouraged. These guys are willing to let their decisions be driven by internal market forces (the employees). Sounds like a pretty good process to me.

Good idea, but doomed to fail

[Opportunist]

It might've worked in Japan. It won't work in the Western world. Here's how it would most likely end up:

Some worker on the chain finds out that what he does could be streamlined. He commits some of his free time (you don't think you'll be allowed to hand in ideas during work hours, do you?) to write down his idea and submit it.

Middle management sees the idea, ponders it and punches as hard against it as it can, since it comes from one of the grunt workers and by default, they can't have good ideas. If they did, middle management could be sacked without a problem.

Should the idea somehow survive this pummeling, the middle manager will write his name onto it and ship it upwards. Where it's found to be great and the manager gets a huge bonus.

Should the grunt complain it was originally his idea, his reward is a pink slip.

Re:A market for innovation

[killjoe]

I have a hundred ideas every day. It's easy to come up with ideas. The hard work is in trying to figure out if the idea is feasable, gathering resources, manufacturing, marketing, etc.

Your system would allow anybody with an idea to instantly stop anybody who is actually trying to accomplish something by working. It rewards the people who sit on their ass all day and type their goofy ideas into a web site hoping somebody actually tries to make something some day.

That's the problem with patents. It punish people trying to accomplish something. It punishes doers.

In the age of...

[Anonymous Coward]

...employment agreements where the employer claims dominion over something the employee thinks of when he's taking a dump in his house during his Christmas vacation, I don't see how anyone would be trusting enough to throw their good ideas out for the taking like that. What if the company takes your idea and makes billions with it? What's to prevent the company from screwing you from a compensation standpoint?

Re:A market for innovation

[MP3Chuck]

Reminds me of an article [oreillynet.com] by Derek Silvers (creator of CD Baby).

"To me, ideas are worth nothing unless executed. They are just a multiplier. Execution is worth millions."

When Pentagon tried this idea...

[mi]

When Pentagon tried this [pbs.org] to help predict the outcomes of and details of conflicts, terrorist acts, etcaetera, the project went down in flames amid accusations of "trading in blood and destruction" and similar nonsense.

The idea is not entirely dead yet, and so the opposition continues its histerical "criticism [hangoverguide.com]" of it...

Re: "Idea Futures" - We didn't develop this market

[daveperry]

The market you are referring to is called the Foresight Exchange and is located here [ideosphere.com] (originally launched in 1995). I work for the company that develops the software and we did not develop the Rite-Solutions market. However, we are working with GE, Siemens and others to do the same type of collective forecasting and decision making. More info can be found here [consensuspoint.com].

More on prediction markets

[FleaPlus]

I'm happy to finally see a slashdot story on prediction markets [wikipedia.org], like the one described in the article, as they're one of the neatest new concepts I've come across. They've shown themselves to be on average the most accurate way to predict future events, more accurate than, say, individual experts or opinion polls. Having people "put their money where their mouth is" greatly improves the quality of predictions.

If you've never seen a prediction market in action before, I highly recommend checking out the real-money Intrade [intrade.com] market, or the virtual-money Foresight Exchange [ideosphere.com]. At such markets you can get estimated probabities for almost any major event. Here's a few examples from Intrade:

* Sony Playstation 3 release before October 6: 33% chance
* Hillary Clinton to be the Democratic Presidential Nominee in 2008: 43.1%
* John McCain to be the Republican Presidential Nominee in 2008: 36.6%
* Osama Bin Laden to be captured/neutralised by 30 June 2006: 5.7%
* Donald Rumsfeld to announce his resignation on/before 31Dec2006: 18.5%
* Bird flu (H5N1) to be confirmed in the USA ON/BEFORE 31st December 2006: 70.0%

That said, I think the company described in the article can probably improve the way they handle their pay-offs. From the article:

At Rite-Solutions, the architecture of participation is both businesslike and playful. Fifty-five stocks are listed on the company's internal market, which is called Mutual Fun. Each stock comes with a detailed description -- called an expect-us, as opposed to a prospectus -- and begins trading at a price of $10. Every employee gets $10,000 in "opinion money" to allocate among the offerings, and employees signal their enthusiasm by investing in a stock and, better yet, volunteering to work on the project. Volunteers share in the proceeds, in the form of real money, if the stock becomes a product or delivers savings.

The wording in the article is a little ambiguous, but it seems that if you choose to bid on an idea which you "know" is good, and would be if it were selected as a product, if other people don't agree you lose your money. It would be better to have a system where if the stock isn't selected as a product, you get your money back. If the product is selected, you gain money if the product does well, and lose money if the product does poorly. This also adds an incentive for people to "short" popular ideas that they think are going to perform poorly.