Budgeting for High Risk Ideas

I've written before about how much I like the Report 103 Newsletter from the JPB Group.  Today's issue (check here in few days for the archived version) suggested implementing a High Risk Idea Budget:

Some radical new ideas are so obviously brilliant that you can implement them and watch the money roll in. But these ideas are few and far between. Most radical ideas are highly risky. If they work, they might put your company way ahead of the competition and establish your firm as a market leader; or they might slash 25% off your operational costs; or they might cost your company an arm and a leg. Unfortunately, a lot of companies do not implement their hottest ideas precisely for this risk factor. Although everyone in the company loves the idea, the CFO reviews the numbers and says it is just too risky to contemplate.

Clearly, of course, no company should put the entire enterprise at risk. However, every company can and should establish a high risk budget for implementing radical ideas. This might represent five percent of the operational budget or 25%. It depends on the company and the market.

By defining a part of the budget for risky projects, you give your company an opportunity to implement the most exciting ideas. Many will fail. But a few will work. And a small number will be real <!--D(["mb","winners that will repay your high risk ideas budget many times over.\
\
Moreover, granting an employee – or a team of employees - a portion\
of your high risk idea budget can be a powerful reward (see previous\
story on rewarding innovation).\
\
\JPB.COM\ BAD NEWS\
\
Unfortunately, the US dollar continues to fall against the Euro and\
we will almost certainly have to adjust our US pricing for Jenni idea\
management virtual software. Service subscription pricing currently\
starts at US$3.00 per user per month (probably less than you spend on\
coffee). Unless the US dollar suddenly increases in value against the\
Euro, basic pricing will have to increase to US$3.25 / user / month\
(still probably less than you spend on coffee). If you have been\
thinking about Idea Management – get in touch with me now. If you\
make a commitment before the end of the year, I can guarantee our\
current US$ price level even if you do not implement until 2005 – be\
sure to let me know you are a Report 103 subscriber.\
\
WHAT IS VIRTUAL SOFTWARE ANYWAY?\
\
You may have noticed that I refer to Jenni idea management and Sylvia\
Web BrainStormer as virtual software. This is our own term for what\
the software industry likes to call ASP (application service\
provider) solutions. But, we do not like jargon in general and most\
of us think that ASP is a particularly unfriendly bit of jargon.\
\
Virtual software, means you get the advantages of quality software\
without the disadvantages – such as costs and complications. Consider\
Jenni for instance. If you opt to implement Jenni idea management as\
the basis for your idea management programme, we install Jenni on a\
dedicated server we maintain on a server farm (a building with lots\
of web servers all carefully maintained, 24 hours a day, by a team of\
engineers). You and your colleagues operate Jenni via web pages on\
the Internet. There is no need to install anything.\
",1]);//-->winners that will repay your high risk ideas budget many times over.

Moreover, granting an employee – or a team of employees - a portion of your high risk idea budget can be a powerful reward (see previous story on rewarding innovation).

The primary point of resistance many firms seem to have to dumping the billable hour is that it may turn out to be unprofitable.  Why not set aside a certain number of clients (or an attorney or two) to implement some alternative billing strategies?