Options, Innovation and Silicon Valley.

Posted by: Bruce Nussbaum on September 11, 2006

I always thought that options were a terrific incentive for promoting innovation, startups, growth, wealth, mobility and all those good things that make our society better and richer. Actually, I still do. By and large, options were used effectively and efficiently in the 90s in the New Economy—they were spread around from top to bottom—and they helped create lots of new companies. By and large, options were not used effectively in the Old Economy—they were given disproportionately to a tiny number of top execs, and they didn’t act as an incentive to innovation. In the end, option abuses, mostly in the Old Economy, led to a change in the accounting rules for options and pretty much killed them as a financial incentive to growth. This was one reform that hurt innovation.

Now we have a wild hunt for back-dated options from the booming 90s. Certainly there were abuses—and some in Silicon Valley. But we have top tech execs spending huge amounts of time and money dealing with the past rather than the challenges of the future. Yes, the egregrious bad folks should pay big penalties. But please, let’s not be crippled by the past in moving forward.

 

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Want to stop talking about innovation and learn how to make it work for you? Bruce Nussbaum takes you deep into the latest thinking about innovation and design with daily scoops, provocative perspectives and case studies. Nussbaum is at the center of a global conversation on the growing discipline of innovation and the deepening field of design thinking. Read him to discover what social networking works—and what doesn’t. Discover where service innovation is going and how experience design is shaping up. Learn which schools are graduating the most creative talent and which consulting firms are the hottest. And get his take on what the smartest companies are doing in the U.S., Asia and Europe, far ahead of the pack.

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