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Get Inspired by IBM's Successful Open Innovation Internal Crowdfunding

Can the principles of crowdfunding work within an established worldwide corporation? Yes, they can.

With the increasing popularity of platform as Kickstarter or Indiegogo, crowdfunding has attracted the interest of big companies, most of those able to capture innovation flow. Instead of going out to seek financing or new disruptive idea, IBM decided to use crowdfunding model as a viable way to generate engagement and participation within its own business units and to spark innovation and collaboration by its own employees.  

Organizations always try to engage their employees to innovate. There are many specialized applications and website to support these activities. However, as shown by IBM, this method tends to have top-down decision-making flows. For these reasons, the company has decided to get the opportunity to their employees to act on their thoughts.

The IBM initiative is one of the world’s first enterprise crowdfunding projects. IBM has decided to explore the crowdfunding principles “behind the firewall”, using a Kickstarter-type method of crowdfunding that happens internally not open to the public. IBM has done it by providing an Internal crowdfunding platform that allows the employees to use the funds to support the projects of their co-workers, not their own. Five hundred employees were each given $100 and the chance to propose a project. Crowdfunding uses the "wisdom of the crowd" to make funding decisions: If other employees (the "crowd") invest enough of their budgeted funds to reach a project's funding target, then the budget is committed and the project begins.

This crowdfunding effort was put in place to encourage the employees of IBM to innovate, and many internal departments have collaborated to create projects and to fund the projects as well.The results showed that approximately 46% of the employees involved participated by investing, viewing projects, volunteering to participate in projects etc. The projects they created sprang from needs shared by all employees, in areas such as the cafeteria or the printers used by many departments. In a later crowdfunding effort at IBM, which involved an IT department and a research center in California, participation was high and there were "dozens" of funded projects. Some even reached as high as $35,000. It also showed heightened collaboration, with as many as eight departments working together on a project.

Muller believes that IBM is the first to conduct internal crowdfunding efforts, and says it has had a positive impact on the company.The IBM initiative helped create highly innovative projects and increased employee engagement since the projects were all for the common good. It created a strong community ethic within the company and encouraged real innovation and genuine collaboration.

The IBM initiative shows that companies can benefit from crowdfunding by truly connecting to and engaging employees and community, leading to grassroots innovation, better executive decisions, an improved participatory company culture and higher morale.