Pros and cons
There are a few pros and cons that make that as an organization, you probably should not be encouraging innovation on a shoestring budget.
Low costs vs hidden costs
Innovation on a shoestring budget is perceived as cost-effective. You make use of existing tools and avoid spending much on the development.
However, what do you think costs more? The hours spent by employees on their innovation project or the cost of the IT tools that are used to develop initiatives like those mentioned by Jennifer and Holly?
In our experience, the employee costs by far exceed the cost of IT tools.
True, there is a difference. The costs of software are out-of-pocket costs, whereas salaries are often already accounted for. So there is a difference in how these costs are budgeted, but that does not impact the absolute costs.
Neither Holly or Jennifer kept track of the hours spent on their innovation projects. It was just a few hours or days of work in most cases, they shared.
However, we know from the teams that we support, that they spent approximately 2-4 hours per week on their projects in the early phases and up to 20-40 hours in the final phases. So, for most innovation projects we are talking easily about hundreds of hours to bring an idea to practice.
Small projects that make use of existing technology may take less time, but still, they cost manhours. Ignoring these costs doesn't make a project cheaper to execute, it just makes these costs invisible.
No budget needed vs investments in better or new services
As mentioned above, all innovation efforts cost money. So even if, per definition, a shoestring budget project does not require you to ask for a budget, it does not mean that such a project comes for free.
And asking for a budget is not necessarily a bad thing. It forces teams to think their project through from the start, focus on the customer needs, and the problem they plan to solve.
If not careful, innovation on a shoestring budget will resort to undisciplined endeavors and hobby projects because there are no checks and balances.
Self-starters vs no accountability
A great benefit of shoestring budget is that anyone can start. You only need the motivation to make something happen. So it offers a great opportunity for self-starters.
There is however a downside to that. In our experience, it is difficult to make innovators adhere to the innovation process. Why? Because if you execute an innovation project well, it takes time and diligent effort. It is not wise to cut corners.
Yet, inexperienced innovators love to cut corners. For example, they will start building stuff to show their ideas and solution, but without doing the required pre-work to make sure that they are building something that the client really wants, needs, and is willing to pay for. The results of cutting corners in the ideation phase are nearly always disastrous and it is one of the reasons so many innovation projects fail. Unnecessarily, I may add.
One way to make sure innovators adhere to the process and to hold them accountable for their project, is by making their funding contingent upon doing so. We know from experience, that it really makes a difference in the overall performance of your innovation activities.
No bureaucracy vs no oversight
With everyone being able to start a project, everyone will. In larger firms, that can easily lead to duplication of efforts. That is, two very similar projects may be going on in two different offices without each of them knowing about the other initiative.
Worse, often, these smaller projects fail to gain traction, because they are too small and too local. In other words, because no one is keeping track, you may be missing opportunities for which there firm wide support exists. Just because everyone is re-inventing the wheel locally.
Show results versus unnecessary failure
One of the things I like about innovators working on a small budget, is that the successful teams will find a way to prove their worth. That is, they scramble together their project and prove that it works before large investments are needed.
That is what innovation is all about.
However, if you make this path the only avenue for innovators to succeed, there may be a lot of projects that never see the daylight. Not because they were bad or expensive ideas, but because the innovators were too inexperienced to know how to pull off their project on a shoestring budget.
With that, I don't want to say that they need to spend more budget. Instead, I would suggest that you spend more money on the support of each team. It does not have to be much, but by teaching each team how to innovate, how to run low costs experiments, etc. you will ensure all projects are executed cost-effectively and you will avoid unnecessary failures.
Low costs vs sub-optimized costs
Lastly, when innovating on a shoestring budget the team will do everything on the cheap.
That can mean, that a solution is put together that was really cheap to build, but that is extremely expensive to maintain. In other words, the total costs of the solution are not considered when innovating on a shoestring budget, which can lead to sub-optimization of costs and huge expenses down the road.
