Paying for the first phase from their own unit's budget, and giving up something visible to do it, shows a sponsor's conviction and makes the later request for central money easier to grant.
An example
Drone mapping could cut site preparation time on every project, or so the president of the southern region at a commercial construction company believed. The capital committee had turned down a company-wide program twice. She paid for a six-month trial from her region's budget and, to fund it, dropped the office renovation her staff had been promised. She told the committee what she was doing and why. Over six months the region mapped fourteen sites by drone, cut site measurement time by two-thirds, and caught grading errors that would have cost about three hundred thousand dollars on two projects. When she went back to the committee, she brought the results and a note that her region had already paid for the first phase. The committee approved a company-wide program, and two other regional presidents asked to be in the first wave.
Why it works
Asking for money for an unproven idea gives a committee little reason to believe the conviction behind it. Paying for the first phase from one's own budget, especially by giving up something visible, sends a signal that is costly to fake: a sponsor who did not believe in the idea would not pay for it. The proposal looks better because the conviction is credible, and approving the next phase is easier because the sponsor carried the risk of the first. It depends on a sponsor with a budget and something real to give up, and on honest results.
The thinking behind it
A. Michael Spence Spence's Job Market Signaling (1973) shows that when one side cannot observe a quality directly, the other can communicate it through a costly action, provided the action costs less for those who really have the quality. A sponsor who gives up a promised renovation to fund a trial sends such a signal. It is cheaper for someone confident the idea will pay off than for someone who doubts it, so the committee can read conviction from it.
When it fits
It needs a sponsor with budget authority of their own, a proposal that has been turned down at the center, and a first phase affordable at the unit level. It also needs a sacrifice colleagues will recognize as real and results that can be measured.
How to use it well
Fund the first phase from your own budget, and make the trade-off visible: say what you are giving up to pay for it.
- Tell the central committee what you are doing and why.
- Define the results that will justify the next phase.
- Measure them honestly and report them, including failures.
- Go back to the committee with the results and the record of what your unit paid.
Choose a sacrifice your own people will accept, and explain it to them before anyone else hears. A sacrifice that hurts your team without their understanding costs more than it signals.
What it costs and where it backfires
You carry the risk of the first phase alone. If it fails, the cost and the sacrifice fall on your unit, and colleagues may read it as poor judgment. Your own staff may resent giving up something they were promised. The sacrifice has to be real and honestly reported. Claiming to have funded something your unit did not pay for, or inflating what it cost, turns the signal into a deception.
When it is used on you
Judge the results on their merits when a peer funds a first phase from their own budget and then asks for central money. If you are competing for the same funds, ask what the first phase really cost and whether its results will carry over to other units.