Sunday, November 18, 2007

New Peer-To-peer Banking Solutions Facilitate Intrapreneurship For Development of New Ideas

Strategy guru Gary Hamel recently posted on the topic of 5 design flaws in organizations which prevent them from innovating effectively, in his "Management 2.0" Harvard Business Review blog. Design flaw #4 was a suggestion for creating internal venture capital markets to finance the development of ideas. Hamel argues:
While an entrepreneur in Silicon Valley typically often has the chance to pitch a business plan to a half a dozen or more venture capitalists, in the average Fortune 500 company, an employee with a new idea has only one place to go for funding—up the chain of command. This is often a substantial barrier to lining up capital and talent behind new ideas.

A potential web-based solution: An internal “band of angels.” A new breed of online peer-to-peer banks, such as Zopa and Prospect, are helping lenders and borrowers to find each other and do business without the overhead of, well, bankers. These social markets provide a model for how your company might create more funding options for employees eager to experiment with new ideas. In most of the companies I work with, there are somewhere between a few hundred and few thousand individuals who control a budget of more than $100,000 per year. Imagine, that each of these budget holders was given permission to invest up to 55% of those their discretionary resources in any idea, anywhere across the company, that they deemed attractive. Suddenly, internal entrepreneurs would have the chance to appeal to dozens of potential “angel investors.” No longer would a new idea die simply because it didn’t fit the prejudices or priorities of one’s boss.

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