Saturday, 12 February 2011

A market for Ideas within firms or corporations.

When in 1991 my treatise had been published in Danish the idea of software patents were starting to unfold.
I went to a patent agency and they said that my idea-exchange algorithm could have been patented if I had not already published it!
It was as well that I did not waste money on a patent as a patent expires after 17 years. 
Now 20 years later an understanding of   “new ideas” and their importance to our economies has been established. Though it is still not understood, exactly how the old industrialized countries are to survive, on the basis of such new ideas.
For years I did not publicise the algorithm in a more comprehensive form as I did still hope that I could benefit from it economically. 
This article is the "business introduction" that I formulated with the aim of selling the concept to a major firm. 
I contacted several, but they did not undrstand the perspective and business oppertunities!
When reading the following please keep in mind that it is the individual human being drive to optimize his conditions that has led to our present complex and advanced societies.

In feudal societies the noblemen expected their vassals to put their own needs and interests aside in favor of the nobleman´s interests.

In modern firms and organizations the employees too are expected to put their own needs and interests aside in favor of the firm´s interests.

The feudal society ended when the emerging goods producing society made it possible for the individual citizen to optimize his opportunities! 
The immediate reaction will probably be negative, to a system where individual employees are going to get 10 – 20 % of the profit that their ideas and initiatives generate.
Consequently it is crucial to keep in mind that the firm will obtain 80 – 90 % of the profit obtained from ideas and initiatives that today would not be realized and therefore would result in a big - very big - zero!


When a firm or another kind of organisation grow so large that the head management no longer are able to maintain direct and individual contact with the whole staff and with each and every function in the firm, a gradual development of a bureaucracy takes place. The reason for this is that with the expansion of the firm a need for structure arises. The hierarchical bureaucratic structure gives the most immediate advantages and the bureaucratic structure is so persistent exactly because it reflects the real power structure within firms. On the other hand the bureaucratic structure is also causing some grave disadvantages as the organisation grow ever larger. One of the most significant of these disadvantages is that the over all processes becomes more and more sluggish and rigid, and the larger the firm grow the more difficult it becomes to establish or maintain proper contact between the top and the bottom of the organisation.
In a world where the product generations becomes shorter and shorter and creativity is of paramount importance, it becomes clear that big corporations are inhibited in their creativity and decision taking processes, often to such an extent that the advantages of economies of scale nearly disappears. This is naturally most evident in the largest and most technology dependant firms, but it is a problem which in principle mares all large organisations.

If the existing organisational structures are to be supplemented with a new and more effective system, the aim must be to eliminate the disadvantages, in the form of restrained communication of personal initiative and new ideas in large corporations without inhibiting other aspects of the existing organisational structures.

This paper gives the solution to the above described problem. This new effective system that fully takes human nature into account can in fact make large firms as creative and dynamic as small newly started firms are known to be, but it is only possible to fully understand and accept the new system, if it is described in a wider societal context.

 If the solution to the problem of idea exchange was obvious, the problem would probably have been solved long ago. One of the obstacles is our way of thinking. We are so engrossed in the present goods producing society, that it has proven hard if not impossible to look at the exchange of immaterial products with fresh and unbiased eyes. A scientiffic approach is needed, and in order to overcome the obstacles and I have found it expedient to give a brief historical overview.

The historical perspective.

Seen in a biological perspective the human race has not changed at all up through the rather short span of years we call history. The most significant change throughout the history of man is our instrumental ability to survive and take control of our surroundings. In all of history creativity and the accumulation of skills has been decisive factors, thus creativity and accumulation of knowledge is nothing new. The new element which makes the transition to "the information society" possible, is the new instrumental capability to much more efficiently utilise creativity and systematise, communicate and accumulate knowledge.

As a result of the accumulation of knowledge and skills, the human race first got to dominate the other animals and organised itself into tribal groups. On the next level man tamed the animals, developed agriculture and organised himself into agrarian production families with feudal superstructures. On the next, the present, level the human race is dominating the material world and has organised itself in national states with representative democratic political superstructures. The obvious but also radical conclusion to be drawn from this extremely brief and very schematic description of the historical societal development may necessarily be that in future our present societal structure will develop into a new societal structure which is as different from our present capitalistic, democratic societal structure as our present societal structure is different from the preceding agrarian/feudal structure. This new superior societal structure will not be based on the production and exchange of physical goods, as is the case in our present society, but will be based on the creation and exchange of new knowledge and ideas. As hunting still exists in our present society, but has become a marginal activity, and as agricultural production still is vital today but only as a societal sub-activity totally subject to the capitalistic industrial society, the present industrial physical production will in the future society be totally subject to the new dominating societal factor the production and exchange of new knowledge and ideas.

In order for early man to develop the hunting society, hunting tools had to be developed. In order to develop the agrarian society man had to control his surroundings even further and he had to give up his more or less nomadic life and become settled. For the agrarian society to develop even further into the present goods producing capitalistic society, interconnecting tracks and later roads had to be established before a market could emerge. Together with the creation of the market the abstract exchange mechanism money was also created. The abstract concept money made valuation of otherwise incomparable items possible, a valuation which efficiently balance the needs and interests of the producer with the interests and needs of the consumer. In its essence it is the market for physical goods which is the pivoting point in our present goods producing society.

The agrarian society was in principle in itself a closed production/consumption circulation which could exist wholly on its own and where all the products produced also were consumed by the local community's own inhabitants. The agrarian feudal structure did in itself not necessitate any communication and exchange with others.
In order to utilise surplus products that otherwise only would have marginal value, tracks, roads and markets were established between otherwise separate and self sufficient agrarian groups, so that surplus items could be exchanged with other more needed items. In order to optimise the possibilities in an otherwise self sustaining closed societal structure, the physical communication channels - the roads and the markets - were created. Roads and markets were indispensable for the unfolding of our present society. Another fundamental precondition was the enforcement of private ownership to physical objects.
In our present day society the dynamic competitive pressure results in an increasing refinement of the production and exchange apparatus, and this process - which is based on the exchange of physical goods - has led to the intense development of "non-physical" exchange channels in the form of electronic communication and storage.
Just as the agrarian feudal society established roads in order to optimise the otherwise self sustaining closed production/consumption circle, which led to the establishment of a thoroughly new societal structure, our present goods producing capitalistic society. The goods producing capitalistic society's development of "non-physical" electronic communication and storage, which initially is aimed at optimising the production and exchange of physical goods, will eventually lead to the development of a thoroughly new dominating production category as well as a new societal super structure.
As was the case with the establishment of the capitalistic societies where private ownership to physical goods were a precondition, the private ownership to non-physical assets is an essential precondition for the establishment of a society based on the exchange of ideas and other non physical assets.

As long as new ideas are seen as just another commodity within our present physical market system, it will not be possible to establish a viable solution to the problem of idea exchange.

The present state of idea exchange

One should think that the old industrialized countries would do their best to motivate those citizens that create new bright ideas. Unfortunately the opposite is the case. Within our present system new ideas do not enjoy any legal protection, and in the rather rare cases where new ideas might lead to a patent, the patent application often serves as a blueprint for competitors who want to circumvent the patent protection. Furthermore the costs of maintaining the legal rights of patents against the onslaught from firms or corporations who want to circumvent the protection quickly grow beyond the means of individual inventors or idea originators. To foster ideas of such a high quality that they make it possible for our complex and advanced societies to compete and survive is no mean feat. The idea originator must through his life, his personal and professional development have accumulated very special qualities that makes it possible for him to combine his thoughts into something which are unique. What sets new ideas apart is exactly that they do not spontaneously emerge anywhere else, but the consequence of that uniqueness is that new ideas are difficult to communicate to others. Therefore it is often a major project to develop the idea to the point where others can see the inherent possibilities.
To us it is obviously grotesque that Mozart’s music was stolen and copied by others as soon as it was first performed. He had to earn his living as a musician and conductor in stead of dedicating all his energy and time to composing. Although it is less obvious to us it is equally grotesque that the persons who today get bright ideas are in a similar situation as Mozart was then. The creator of novel intellectual achievements the idea originator or inventor enjoy no legal protection and is often robbed of his ideas.

To put the present situation for the exchange of ideas and other non physical achievements into a wider perspective one can draw historic parallels to the conditions for the exchange of physical goods in e.g. the Homeric period of Greek history or in Europe at the time of the Vikings. On a Viking raid the Vikings robbed others goods when they had the upper hand, traded on a neutral beach when the opponent was of equal strength, and fled as fast as possible when the opponent was of superior strength. It was more prestigious to rob than to trade so the Vikings bragged about their robbing and killing during the long winter nights when they sat at the long table drinking beer.
The Vikings way of trading was obviously very inefficient, and it was first when the European societies had established firm laws for the exchange and ownership of goods and had police and military to protect and enforce these laws, that trade expanded faster and faster and led to the modern societies and the efficient way of trading that exists today.
Unfortunately the exchange of ideas is still on the same level today as was the exchange of physical goods at the time of the Vikings.

 Apart from all the benefits the globalisation has brought to the national economies it has also got a grave but overlooked negative effect. Before the opening up of the national economies, a new idea or an invention would be utilized within the national economy for some years before the new knowledge and technology was exported. This delay was enough for the national economy to recoup the costs connected with maintaining and developing society. The situation today is such that the old industrialized economies provide the complex foundation for creating advanced ideas and new inventions, but those ideas and inventions are now in many cases exported directly out of the countries.
 The only possibility (apart from brute force) the old industrialized countries have in order to maintain their leading economic and political position is to get a larger share of the income from new profitable ideas channelled back into those old industrialized countries where the ideas were created. That can only be done by elevating the exchange of non physical assets from the present “archaic” level to a level similar to the one that today exists for the exchange of physical goods.

Preconditions for the formation of an Idea exchange system.

15 years ago I published a book describing these problems and also the solution to the problems, and 30 years have gone since I started my work on that book “Science, History and the Future”. It is exactly because I chose a scientific approach that it was possible for me so many years ago to formulate an understanding of the fundamental dynamics of a future Idea exchange system.

The key element to the understanding and unfolding of an Idea exchange system is an understanding of the fundamental dynamics of the present goods exchange system. The most essential quality of the market for physical goods is its ability to balance the needs of the producer with the needs of the consumer thus motivating all participants in the market economy to do their utmost. In order to create a truly dynamic market for the exchange of none physical achievements there must therefore be established a mechanism that balances the needs of the idea-originator with the needs of the idea consumer.

While the existing system for the exchange of goods, the capitalistic market, is reflecting the immediate value of the physical goods. A market for the dynamic exchange of ideas must necessarily reflect the future value that the idea will generate! That is the whole point, a bright idea has no immediate value but might, or might not have a great future potential.
In a market for ideas it must naturally be possible both to sell ideas against cash here and now as in the goods exchanging market, in expectation of possible future gains, but a truly novel mechanism must create a market that negotiates what percentage of future gains will go to the idea originator and for how long. As there are no physical objects that can secure the ownership to such intangible assets, a legal body that register and secure the ownership must be made.
In a future global market for ideas it will be part of the political process to decide for how many years an idea originator shall have legal rights to an idea. It might very well be so that the idea originator will have legal rights to the idea for the period of his or her lifetime plus a specific number of years, as is the case with copyright today, but that the royalty % decreases gradually during those years.

The present copyright and patent system is legally monopolizing new knowledge and this is distorting and hampering development.
A fundamental difference from the present copyright and patent system will be that anyone wishing to use or elaborate on new ideas will be allowed by law to do so, but they have likewise by law to pay the idea originator a % of the proceeds for their use of the original idea.

All human societal activity is conducted on the basis of two fundamental drives. The one drive is the reproduction mechanism making sex a very central element of social life. The other just as fundamental and important drive is the individual’s relentless search to optimize his living conditions. Without thinking about it all the time we in every decision we take try to do the best thing. In a primitive form this is expressed as egotism but often we manage to maintain a broader view where the self interest is expressed as a mutual benefit for one self and the family, one self and the company, one self and society etc. Modern society is founded on this individual and relentless drive to optimize ones living conditions, and if a market for ideas is to function optimally its mechanism too must reflect and cater for this fundamental and dynamic human quality.

It is obvious that at present the establishment of a world market for ideas will not be possible, but as is always the case with powerful new knowledge and technology said new knowledge will be utilized in other ways than firstly envisaged.
 Already now it will be possible to profit from the above described insight by implementing this dynamic understanding in large firms and corporations or groups of such, as they are free to implement new dynamic organisational structures, and they will do so if such new structures give them a striking competitive advantage.

 It is thought inspiring that while economic gain and the market forces rightly are hailed as the cornerstone of the dynamic modern business environment, it is within all firms still expected that the employees do their utmost on the basis of sociological structures similar to those within a feudal organisation. Employees are for the most part expected to do their utmost out of loyalty and enthusiasm for the well being of the company, just as the vassals were expected to do their utmost for their lord in medieval society. An employee’s advancement and salary rise still depends on the good will of his superior as did the fate of the vassals. The feudal system was abandoned because it was outdated by capitalism. By implementing A Market for Ideas the internal feudal system of present day companies and large organisations will gradually give way to a more dynamic structure based on economic gain and market forces.

Initiative and idea exchange.

Although a lot have been done through the years in order to avoid the negative effects of the hierarchical structure in large firms the fundamental problem still remains. This is due to the fact that the very strength of such a system is also its weakness. Business strategies can be implemented in order to empower the ordinary employee and encourage him/her to transgress the traditional organisational boundaries, but as long as it is necessary to maintain a stratified pyramid structure with different layers of managers the fundamental problem will still remain. In large firms and corporations managers have the power and obligation to judge the achievements of their subordinates, and this function as supervisor makes the subordinate dependant of his immediate superior as the possibilities for keeping the job or of advancement is affected by the superior’s judgement. The subordinate therefore naturally tend to act in accordance with the wants, views and needs of his superiors and one of the many unspoken expectations superiors have to their subordinates is that the subordinates actively contribute to improve the superiors image/position. All communication and all initiative that bypasses the superior is therefore in principle a potential thread to the superior’s position. Such a fundamental factor can not be eliminated but only modified by the implementation of corporate cultures that tries to break down departmental boundaries and further the free flow of information.

When one reflects on how easily misunderstandings arise in ordinary communication it is not difficult to understand that the communication of novel ideas and initiative faces even graver difficulties when such novel thinking has to be communicated through several organisational layers.              When ideas and initiative goes through the chain of managers on still higher levels there are a great risk that the idea or initiative will be filtered out as each superior manager might have different views on or understanding of the subject, or simply might not give the message enough attention to properly understand it. If the subordinate on the other hand decides to run the risk of passing his superiors by in anything but trivial matters there has to be individual and personal incentives to do so!
A hierarchical structure is still an unavoidable necessity in larger corporations, the negative side effects of the filtering of communication and information is unfortunately that ideas and initiative might be treated just as all other information.
A further constraint on the development of ideas and initiative is that when new cognition is understood and especially accepted it often seems so obvious that everybody feels that they could have reached the same conclusion themselves. It is naturally a compliment to the idea originator that his superior after a meeting feels that he got the idea himself or others the next day recounts the idea as their own as often happens, but this is not motivating the real idea originator to be inventive in future. What might require special skills achieved through a special individual development and education might be perceived as something everybody easily can create. One might think that it is of no great significance weather it is the idea originator or someone else who is given the credit for the creative ideas as long as the creative ideas are utilized to the benefit of the company, but such a viewpoint is not correct. The “idea seed” that always emerge from the unconscious in the form of inklings, hunches or feelings must be nurtured and developed before they become useful and well formulated ideas suitable for presentation for others. A high degree of motivation is needed for the idea originator to make this effort. Remember that such “idea seeds” are flimsy and illusive and a surplus of mental energy is needed in order to catch them. That is why new ideas or solutions to problems mostly emerge when one is relaxed or at sleep. If a creative employee is not properly credited for his achievements the next new “idea seed” might never get developed.
A filtering of the vast stream of information must necessarily take place to make a large organisation function. The negative and restraining effect on the communication of ideas and initiative can in future be removed by introducing a structure which gives the employees the possibility to express the importance of their communication, a system which consistently rewards the employees for ideas and initiatives that objectively becomes economic beneficial to the firm. Such an idea system can be implemented as a supplement to the existing organisational structures of firms, alongside IPO (Input, Process, Output) or (Lotus) Workflow structures, as this new system maintains another and more advanced function. The basic organisational structures need no alterations and the benefits of economies of scale can be maintained at the same time as creativity is freed as much as in small dynamic firms! On the following pages a structure which is capable of optimising the internal flow of ideas and initiative will be described.

The Model.

The basic IPO (Input, Process, Output) structure is a formalised one-way communication where process upon process or person after person one-way forward the goods or information. The basic (Winograd & Flores (Lotus)) workflow structure is a formalised two-ways communication system. This two-ways communication system takes for granted that the two participants in the communication process are equal. Unfortunately that is not the case in the real world when the communication transgresses the departmental boundaries. The workflow structure therefore only has a very limited field within which it functions optimally. It is unfortunately an everyday event that superiors or another employee forgets that a bright idea or an initiative was produced by someone else and forward an idea as their own. For non-equal participants in a firm to be equally secure and equally safeguarded that they in their exchange of ideas and initiative maintain their rightful position, an intermediate third party is needed, an arbitrator. As a consequence of this understanding A Market for Ideas has to be organised as a three-ways communication. The three participants will therefore be the Idea-originator being the inventive employee, the Clearing Centre being a independent or semi-independent body within the firm or organisation (several firms may very well collaborate around this function or leave this function to an independent agency), the Idea-consumer being a person or part of the firm/organisation/corporation or someone outside the organisation with whom the firm/organisation/corporation chooses to negotiate or communicate ideas and know how.

The basic structure

As mentioned earlier contributing with new ideas and initiatives are not dynamically and systematically rewarded in toady's business organisations. That it is so witnesses the emergence of the many new-started small firms. Firms founded to exploit new ideas or products, in many cases created by their idea-originator during his employment in established firms, but where the idea-originator for one or other reason has not been able to have his idea developed and utilised by his employer with the prospect of adequate economic gain for himself. Therefore the idea-originator chooses "to jump out on the 100 fathoms of water", perhaps staking house, fortune and everything else he owns in order to develop and hopefully also reap the fruits of his idea.
In order to optimise the utilisation of ideas and initiatives in firms and organisations, it is therefore necessary to establish a dynamic and consequent system which secures that the idea-originator/employee reaps a reasonable economic benefit from those of his creative achievements which eventually results in an economic gain for the firm or organisation.
The notion that employees are going to get a % royalty from their creative achievements made within the firm might be alien to the present management understanding, but the point is that those firms that implement this system is going to gain vastly more by doing so than by not catering for the employees natural drive to creatively optimize their own situation. As the employees only will get around 10 % of the profit from new ideas and the firm will get around 90%, it will be the firm that will profit most from an increase of inventiveness and streamlining of processes.

The filtering.
The hierarchical organisational structures are maintained in order to filter the flow of information, thereby preventing the higher levels of the organisation from being clogged by more or less irrelevant information. The hierarchical organisation structure makes it possible for leaders to maintain perspective. The challenge for A Market for Ideas is consequently to allow the filtering process to take place at the same time as it eliminates the impeding and limiting effect of such filtering on ideas and initiatives. The solution to this problem must include a mechanism through which the idea-originator dynamically can express the value and importance of his idea balanced with the importance of not unnecessarily disturbing the higher levels within the organisation. These conditions can be met if the idea-originator "pays" for having his idea accepted and analysed on a specific level and by specific persons in the organisation.
The organisation establishes a semi-independent register and Clearing Centre, or makes a contract with a management firm (or IBM) that has established such a body on the basis of A Market for Ideas. Each employee is given a number of points/coupons. Those points/coupons can subsequently be used by the employee to "buy" attention for his idea on the desired level in the organisation.
Presuming that the idea is judged to be directly usable on the lowest level within the organisation and therefore only are "sold" to that level, it will only cost few points, if e.g. the new idea is meant to change the immediate work routines. If the idea is aimed at the next level it will cost more and so on. It becomes more and more expensive the higher in the organisation the idea is aimed at. Ideas aimed at the board of directors or the advisory board will thus respectively be much more and much much more expensive to register.
The new ideas are first registered in the Clearing Centre by the idea-originator/employee, and provided the idea, after having been checked by the Clearing Centre, is judged to be new to the organisational level in question, it is forwarded to that level to be thoroughly treated and valuated. If it results in the idea being utilised the economic consequences of its utilisation are analysed, and the idea-originator then receives a bonus which is a fixed proportion of the economic gains the firm/organisation reaps from the utilisation of the idea. The percentage of the bonus can be gradually reduced over a period of years. If the bonus e.g. are 15% the first year, 14% the second year and so on, the actual economic gain to the idea-originator might never the less grow even with the percentage decreasing, as the economic gains the firm reaps e.g. the fifth year might have grown with an even higher proportion making 11% that year more worth than 15% the first year.

Feed back loop

An idea that has been paid for filed and forwarded to a specific level and person in the organisation is then processed by that level. The result of that processing is then sent to the idea originator, and the Clearing Centre. If the caseworker decides to have the idea further developed by other caseworkers, the idea will stay within this closed development system. If further development is postponed, the last active caseworker decides the level of secrecy that is to be applied to the idea/project. The secrecy level depends on the economic prospects the idea is judged to have. The idea is then made available to the segment of employees that have obtained clearance to that secrecy level so that they get a chance to creatively contribute to the project so that it can be developed further. Does the employees on that secrecy level not contribute to the idea/project within a fixed time, the secrecy level are lowered one step and so on. If further development of the idea is given up, the idea is made available for the whole staff. The idea originator and the Clearing Centre have access to all information and are informed every time a new phase of development is started, so that they can follow the process and decide weather or not they are satisfied with the decisions taken.
If another employee in the organisation is capable of developing the idea further so that the idea becomes better or wider applicable than it was originally envisaged, that employee (the idea-elaborator) is free to do so and subsequently invest the required points to have his elaboration of the idea registered by the Clearing Centre. If the elaborated idea leads to economic gains to the firm/organisation, the idea-originator will receive a reduced percentage of the total proportionate to his contribution, and the idea-elaborator will receive the rest of the royalty. An idea can be developed through several stages and consequently the royalty might be split between the idea originator and several individuals or teams of idea elaborators.
          With the implementation of this system, work within the organisation will evolve and find new expressions, as the employees naturally will compete with each other to develop new ideas and approaches, to the benefit of the firm and themselves.

Further development of ideas.

In reality it is only some of the employees who are capable of contributing with new creative and realizable ideas. The allocation of points to all employees will therefore naturally result in the emergence of a market for points/coupons. Such a market will make it possible for some individuals to buy extra points for cash and forward more ideas than their own allocation of points permit. In that way it will be possible for persons on the lowest level of the economic and organisational hierarchy to have their ideas directly valuated by e.g. the board of directors provided that the employee invests in that. The liquidity of points can naturally be regulated by the firm in such a way that the cash price of points is kept optimal on the internal market. Persons who already have contributed with profitable ideas might be allocated extra points.

A skill and interests database.

With or without the implementation of this system it will be extremely beneficial for a company to establish a database where each and every employee describes his competencies and his professional as well as private interests. This way other employees and idea originators will be able to much more precisely target their extra departmental communication at the right persons. To properly understand new ideas unusual combinations of skills and interests might be required, and the more information that is available about the prospective caseworker, the more precise the idea originator will be able to target his idea.
If such a register is deemed too sensitive to be openly available it might be designed as a closed database to which the idea originators can express a row of keywords. As a result of the search a prioritized list of employees then turns up. The idea originator might then by e-mail ask the persons on the list further questions before he forward his idea to be processed by one of them. 
If A Market for Ideas is implemented, an eventual individual resistance to such a detailed register will be eliminated by the fact that the more detailed information an employee gives to the register, the more likely it will be that the idea originator manages to forward his new idea to the most suited employee. As the new idea is first made available to all the other employees after the processing by the caseworker, the caseworker has a preferential position and a unique chance to further develop the idea. Such an elaboration might lead to a % share in the profit derived from the idea.  
Cheating with the personal information in the database in order to be chosen more often as caseworker, can be avoided by the idea originators right (following the compulsory feed back from the caseworker) to forward his idea to a person higher in the organisational hierarchy, whereupon possible inadequacy of the first caseworker is exposed. As the caseworker primarily is an employee such cheating will have consequences for his position/career.  

The further selection of developable ideas.

Those ideas that are made available for the whole staff and has become part of the pool of ideas can be made subject to an internal “prediction market” where all the employees can participate in choosing the winner ideas or initiatives. The best way to make such a “prediction market” function optimally is to allow the staff to invest real money. Either these employee investments can be micro payments giving them tickets in a lottery, or it can be real investments in the development of the idea, giving them a stake in the eventual gains. The investment price can be decided by the financial department, thereby making some ideas more expensive to invest in. By allowing the staff to invest in the development of ideas the whole staff is energized and the corporate culture is strengthened considerably. If such new idea projects are partially financed by the staff, much more ideas will be developed as the risk taken by the company and the draw on the company’s economic recourses are reduced.


The content of the three basic A Market for Ideas functions.

The Idea-originator.

The first step is naturally the emergence of the idea, weather it comes as an intuitive or another form of expression from the sub conscious or it is an impulse from the outside world which only needs minor modifications.
Preliminary investigation concerning the novelty of the idea to the firm. (PC contact with the data bank of the Clearing Centre).
Development of the idea as far as the idea-originators own intellectual and technical recourses permit.
Cataloguing into one or more categories within a formalised system (e.g. using the official international cataloguing system of the patent authorities)
Registration within the Clearing Centre with the necessary information expressed as clearly and formalised as possible.
Naming the desired target level/group/person within the organisation. 
"Payment" for registration and valuation of the idea on said level.

The Clearing Centre.

The function described under this heading may be executed by a single body, or they can be executed by separate bodies. Bodies that either are part of the firm/organisation or can be maintained by separate consultancy firms.
The functions are:
To register ideas and investigate whether or not the ideas are novel to the firm and the level in question. (If the idea is not described on the level in question prior to the idea originators registration, the idea is to be regarded as new!)
To clear (to be exchange and filtering organ) between the idea-originator and the firm/idea consumer.
To collect "points" from the idea-originators. To collect the percentage of the economic surplus, from the firm/organisation, allotted to the Clearing Centre and the idea-originator/idea-elaborators.
To decide how much of the royalty is going to the idea-originator and how much to eventual idea-elaborators. (an internal juridical system might be necessary here!)
To forward the proceeds to the idea-originator/idea-elaborators.
To register and legally protect on behalf of the idea-originator and firm/idea user alike (patent filing etc.) what it may be possible to protect through the established legal system.
Although it is the firm/idea user who has to deliver the necessary data for valuation of the economic benefits of the idea, it is the Clearing Centre that, as intermediate between the idea originator and the firm, does the actual valuation.
The fundamental principle for the functioning of this/these bodies are that the idea-originator/idea-elaborators are economically awarded proportionate to the economic benefit the firm/organisation/idea-consumer reaps from the novel idea over a period of several years.
It is not the task of the Clearing Centre to judge the feasibility or presumed value of the implementation of the idea.

The idea-consumer/firm/organisation.

The idea-consumer/firm receives the idea from the Clearing Centre and forwards it to the destined level/group/person in the organisation.
          If the employee(s) on the destined level just contribute with the skills to which he is hired, his contribution has been paid for through his salary, but if the employee contribute with new supplementing ideas that contribution can be filed and registered in the Clearing Centre and he will then be entitled to a part of that percentage that are allocated to the idea-originator and perhaps other idea-elaborators.
          When the destined level/group/person forwards the material to another department/level, or give up or reject the idea, it will be obligatory at the same time to forward a report of the findings to the Clearing Centre. The report must contain a judgement of the idea and an evaluation of the work which has been done by the group/employee in question. Subsequently the Clearing Centre automatically forwards the judgement and report to the idea-originator and those idea-elaborators that are part in the project, so that they can follow the development. If, following a rejection, anyone of the idea-contributors (idea-originator and idea-elaborators alike) is dissatisfied with the judgement by the case worker, they are free to file the project for a higher level and pay for a new thorough investigation of the idea on that level.
          The idea-consumer/firm develops the idea/project and makes all data available to the semi-independent or independent Clearing Centre, so that the centre gets optimal possibilities to estimate the economic consequences of the idea.

Horisontal implementation
In order to effectively convert new ideas into processes or new products, it is important that the new ideas not only are forwarded upwards in the organisation as already described. A mechanism must also insure that all departments, irrespective of level have an incentive to take new ideas into account. One way to achieve this would be to reward the individual who introduces new profitable ideas to his own department, even if the new idea or process already has been filed by another person in the Clearing Centre. Another possibility would be to let the staff of the department collectively share a % of the gain derived from implementation of new ideas or processes in the department.

Creating on demand.

When the above system has been implemented the process can naturally also be turned on its head meaning that persons in the firm can internally publish a problem which needs a solution and stipulate the economic possibilities the creation of a solution will give. As solving the problem will generate a % income to the one who solves the problem, other employees will use not only their working hours but also their private time to find a functional solution to the problem.

General optimization of the information flow.

Although A Market for Ideas can be implemented alongside all other existing organisational structures, the dynamics of A Market for Ideas will gradually influence all the other organisational structures in a firm. Gradually more and more functions will be channelled through A Market for Ideas thereby injecting other organisational functions with the same creativity, initiative and dynamics as the exchange of novel ideas.
In order to put these possible changes into perspective we can look at a hypothetical case involving the FBI.
During the run up to the “September 11th” disaster some agents forwarded reports of young Arabic men who were taking flying lessons in Texas. These reports were not given high priority and that contributed to the disaster.
If A Market for Ideas had at that time been implemented in the FBI organisation the local field agent in Texas would have been able to express the importance of his report by “paying” for a higher priority.
Following the evaluation of the (hopefully prevented) disaster and of the consequences of the report being given higher priority, the local field agent would be paid a bonus proportional to his reports value to the actual events, disaster or no disaster.
If the caseworker handling the field agents report (with the higher priority) did not handle it optimally, A Market for Ideas contain the possibility of the field agent “paying” for a new evaluation on a higher level (upon receiving compulsory feedback from the caseworker). This way the caseworkers work might be scrutinized by a higher level, and just the possibility of this will incite the caseworker to do his work best possible.
Does a field agent wrongly aim his report too high in the organization the following evaluation might result in the field agent having to pay a fine because he misjudged the importance of the information.
One might think that this system will result in the processing of too much information, but it is only the information which has been paid for to transgress the ordinary reporting procedures that is scrutinized. A further reduction can be obtained if either the field agent or the receiver of the report subsequently has specifically to ask for an economic evaluation.

As demonstrated with the above example it is not only the exchange of ideas that can be optimized by the implementation of A Market for Ideas, the system has the potential of a general optimization of the information flow in larger organizations.

Whereas other software products just generate income by the sale of the product and perhaps by servicing the product, A Market for Ideas will also generate income through the running of the Clearing Centre. One of the dynamic mechanisms of the Clearing Centre is to obtain a small percentage of the royalty generated by successful ideas. The firm managing the Clearing Centre function will receive a micro payment every time an idea is cleared. Provided many transactions take place, such micro payments might generate a big income.

In small newly started firms it is the closeness between the top and the bottom of the firm which ensures that the creative individuals are credited for their extraordinary achievements, the result is a positive spiralling and dynamic effect. A Market for Ideas ensures that creative and dynamic individuals in large firms and corporations are likewise rewarded and credited for their achievements.
A Market for Ideas is founded on the fundamental human drive to optimize every living situation, and it is the effective utilization of this fundamental human quality that makes it possible to fulfil the claim that large organizations by implementing the above described system can be made as efficient, dynamic and creative as only small newly started firms are today.

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