Have you seen your 401k lately?  What started out as a good idea - helping expand home ownership - has turned out to be a nightmare.  The creation of innovative loan products coupled with Wall Streets own innovations on how to invest in these financial vehicles has had an impact across the world.  The lesson?  Not every idea is a good idea.  Contrary to what is often said at the beginning of many brainstorming meetings - 'every idea is a good idea' - there are in fact bad ideas. 

In this case the initial thought was a good one.  Get more people into homes.  The resulting out of control innovation that followed has resulted in more damage than good.  This is sort of 'innovation gone wild.'  How innovative have things become?  It is almost impossible to find someone who can explain this mess in terms everyone can understand.  It has become that complicated.

The purpose of this entry is not to point blame.  There is enough of that to go around.  The goal here is underline the importance of having processes in place that can ensure that the ideas that are being generated don't cause harm when implemented.  While no one has a crystal ball and can predict the future, maybe it would have been good if someone asked, 'what if people start defaulting on these loans in mass numbers?'

So, don't stifle the idea when it is presented, just be sure to go at it with the discipline and rigor needed to make a sound decision as the idea becomes closer to being implemented.  Everyone would agree having more people own homes is a great idea.  I am not so sure everyone thinks the idea of the US government having to spend trillions of dollars to try and prevent a global financial meltdown is what anyone wanted.

 

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