Bottom-Up Funding: A New Approach To Innovation
GCHQ is the UK government’s intelligence service, based in Cheltenham in the West of England. Though in some ways a traditional hierarchical organisation, they came up with a radical new approach to front-line innovation.
GCHQ needs to be at the forefront of technology and a group of employees there, inspired by ideas like pre-approval, secured a £1 million investment fund from their Directors.
They then set up a crowdsourcing site on their internal network, called Oneshot, inviting people to make bids. It might be £500 for this, £5,000 for that or £10,000 for something. (Sorry, can’t tell you the actual ideas. They are top secret!)
Speed of decision making
In most organisations, once those bids were in, who would make the decision on who should be funded? Probably the CEO or the Directors and certainly it would be people in senior leadership roles.
At GCHQ they instead divided the million pounds into 100 bundles of £10,000. They then gave that money, to bid on the ideas in Oneshot, to the most junior people in the organisation. To qualify you had to have never managed people and never controlled a budget.
One colleague there explained that he put in a £10,000 proposal for a piece of technology to improve communication. Previously it could have taken five levels of approval to get acceptance and he might not have bothered. Putting it on Oneshot, it got funding within a week and was implemented within two weeks.
What Oneshot enabled was a vastly increased speed of decision making but also it enabled decisions to be made by front-line staff.
Engagement of employees
And it is likely that those front-line staff are much more in touch with latest ideas in technology than Directors who have been at the organisation for 30 years. If the iceberg of ignorance is accurate, those directors would only be aware of 4% of problems compared to 100% for front-line workers.
“Initially the thinking was about ideation, generating ideas”, explains the Product Owner. “But at least as important was its effect on engagement, in getting people to think differently and actively engage in the process of innovation.”
This project happened in a fairly traditional manager-led organisation. However it is equally appropriate – and possibly more so - for a self-managing organisation.
Beauty of bottom-up funding
In many of the organisations we work with the real effort in getting a new idea or product out there or, in charities and unions, in creating a new campaign is internal. It is the long slog of getting the idea through the various committees and decision-making processes.
It may mean getting consensus, that everybody agrees to the idea. Or it could be just that you need a vote of the majority. Or it could be based on consent, and only require people not to object to the idea.
That makes sense where it is something that involves everybody, like moving office or changing the internal IT systems. However a key question for all organisations is how you make it really easy to create a new product or new campaign or new approach of any kind.
The beauty of bottom-up funding is that it doesn’t require consensus, majority vote or even consent. It just requires a few people to think this is a great idea, possibly (in a large organisation) less than 1% of all employees
I understand a similar idea is used in Haier’s Rendanheyi approach.
There, providing you can find two colleagues to join you, you can set up a microenterprise, and seek funding from other microenterprises. You don’t need senior leaders to think it’s a great idea.
You can even crowdsource from Haier’s customers. Some fail but many succeed. One Haier microenterprise went from zero to unicorn status ($1 billion valuation) in six months. It has created an incredibly dynamic culture.
Now you may not have £1 million to spare. It can be done as easily with £50,000 or £5,000 or even £500.
Another approach would be to base it on hours. Each front-line member of staff could have, say, 200 hours to allocate. Then somebody can come up with an idea which they need two months to work on, and see if people will contribute their hours.
The key here is to find a way to enable speedy innovation, without having to get trapped in internal processes. That is what bottom-up funding enables.
This is a guest post by Henry Stewart, founder at Bucket List company Happy Ltd in London. For more information on Henry and the company, check out his rebel page.