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The issue for us has not been allocating money, but in changing our mindset about innovation.
Traditionally, we come up with an idea, try to get it perfect, then launch. Kind of a medical mindset, where errors and failure are life-threatening. The problem is, this approach is slow, doesn't leave room for small experiments, and there's little real risk-taking.
With a few new projects, we're experimenting with the notion of perpetual beta: experiment with small ideas, change quickly and often. This takes some expectations management, but overall I think our members would be satisfied to know we're trying lots of stuff on their behalf.

Peter, consistent with Frank's comment, I always urge associations to set aside "internal venture capital" funds rather than R&D dollars. Simply put, your $50K will never be enough to sustain R&D on any project. Instead, you should be making many small bets ($500-$1000) on a portfolio of ideas along a contnuum of risk, and then managing the portfolio.

I would also recommend pushing decision-making around such investments to a level that is closer to the customer. CEOs and #2s will always have a say in the progress of ideas in their organizations, but the rest of the association's team will have a much deeper and richer understanding of what is going on within the membership. It is the staff below the level of senior management who should drive innovation. BTW, such an approach also has the added benefits of engaging talented employees you describe in your post.

Jeff, I'm interested in how pushing decision-making around such investments to a lower level in an organization would work, on a practical level.

Given that the association has a limited pot of money to divide up--$50,000--and a great many potential good ideas to pursue, don't they need someone to make final decisions on where the money will go? How would that work if the decisions were pushed out to the general staff level? Do you envision a new ventures panel of some kind to vet ideas, or do you have another mechanism in mind?

I appreciate the responses to my post. I wondered if what I had to say on the subject would resonate. Just a quick point of clarification regarding the money we give out from our Opportunity Fund. It tends to be in chunks of $5k, $10k and, infrequently, $20k.

I feel Frank Fortin's "pain" of working for an organization in which process and innovation and other organization mores can make innovation very, very challenging. At AIHA, when we first proposed this fund, it was not greeted with open arms by our leadership. Some among our leadership are, as with Frank's, somewhat skeptical of innovation. It took a lot of work on staff's part and other board members to help bring everyone along. The end result was worth our effort, though.

Thanks for the posts to my posts. Much appreciated.

Sorry to be late in adding comments to this important topic. Innovation and new product development are very important, I think. Hopefully there is some discussion energy still available on the topic.

At ASME we do several things to stimulate and support innovation and new development:

--We have a development fund that members contribute over and above their annual dues, at renewal time. These voluntary contributions total around $500k, or more annually.
--Our reserve fund target is 60% of the average of the trailing 3 years operational expenses. When and as we have a reserve surplus, our Committee on Finance and Investment makes a recommendation to our Board on how much should be allocated to our Strategic Prioirities Grant Fund, which exists to support our strategic initiatives and innovation. This year we have about $1.6 million in the fund, which is available on a grant basis.
--Finally, we have an annual program planning and sunsetting process in which each of our 5 operational Sector boards priortizes their Sector programs for the coming year, and identifies programs for sunset for the next year. The idea is that sunsetting will free up some resources that can be used in support of new programming and innovation.

Results to date are preliminary, since we have only been doing this for 1-2 years. Our Development Fund and SPGF Fund are becoming increasingly well-known and popular. Our sunsetting is not (yet?) successful--out of 130 +/-programs, we sunset 3-4 minor programs 2 years ago. More work is clearly needed.

Analysis: I think it is very hard for some of our engineers to become innovative and take risks--many are very risk adverse. Adding to this situations is that some of our active volunteers have become satisfied with their association interests, and simply want to preserve them, or increase their share of the pie. I think the old cultural more of associations existing to support (all) of the interests of their active volunteers helps to sustain this situation. ASAE's current push to "serve members" helps reinforce this "status quo" approach, I suspect. Thus, we have to work at finding constructive change agents in our membership to push the margins.

As for sunsetting, it's very difficult for one volunteer to tell another that their pet program's life cycle has expired. Members just seldom say no to other members. Thus, I think we may have to do a better job at first identifying appealing/compelling new ideas, and, second, identifying what we must sunset if the new ideas are to be implemented. Said differently, "if something new is to be added to the wagon, something old must be removed".

Hope this sparks further discussion. Cheers!

Lisa, I encourage associations to push decision-making responsibility to an Innovation Council composed entirely of non-senior management staff and, if desirable, members. Among other roles in support of innovation, an association's Innovation Council should solicit simple business plans for new ideas from anyone in the association. These simple biz plans (2 pages at most) should respond to specific criteria for venture capital investment in new ideas. These same criteria should be used in making sunsetting decisions on existing programs as well.

This approach actually will work better for associations with limited resources because it maximizes the organization's ability to identify the most promising ideas with its available funds. $50,000 is actually much more than most associations can allocate, but the value of any amount will be increased by allocating it in microchunks ($250-$1000) to prototypes, service tests and other experiments that reveal the potential of ideas, rather than making larger bets on just a few concepts. Only the best ideas will move forward to receive additional funding within the association's normal framework for resource allocation.

I question whether an all-knowing "someone," such as a CEO or other senior leader, can ever be in the best position to determine which ideas should move forward. The approach I recommend is one that focuses on leveraging the shared knowledge and experience of staff who interact with members/customers regularly in order to determine which ideas merit further exploration. The venture capital approach allows associations to liberate creativity by making many small bets that receive consideration in a more open and inclusive innovation process. It balances the freedom to experiment ideas with the need for discipline in the pursuit of innovation.

Thanks for the additional clarification, Jeff! Just so you know, by "someone" I meant some kind of decision maker, which could be an individual or could be a group. In your original comment it wasn't clear to me if there would be any kind of final authority or if individual staff would be making decisions on their own in a more decentralized way.

With the additional explanation, I find your idea to be a really interesting one. I bet that involvement in the Innovation Council and the projects it would launch would be a great way to help retain line staff as well.

Beginning in 2005, the Association Forum began setting aside funds for the development and enablement of new project and ideas. We call this the "Forum Promise Fund" and it is about $20,000 a year. We have used these funds for such things as podcasting (September 2005) and our latest effort, associationwiki.org. However, much more important than the fund is the mindset and culture. The leadership of the Forum intends for the organization to be a "Learning Laboratory" and encourages expeditionary and experimental activities. As CEO, I get to do just about anything that strikes us as possibly adding to our collective knowledge. We recognize that failing is as important as succeeding and not everything will work out. In the process, we uncover new ideas, accelerate learning for the community and explore things that would have gone unexplored. Most importantly, we have the sheer joy of trying new things. This is a truly liberating experience.