21st Century Organization

Prediction Markets: Connecting Intelligence in Organizations

The prospects for wider adoption of prediction markets in organizations have intrigued me since attending the New York Prediction Markets Cluster event early 2006. Searching for prediction market applications to reference in our recent article a 2005 Bo Cowgill piece on Google's use was the most readily accessible. 

The Consensus Point hosted Prediction Market Conference September 24 in New York revealed I was clearly not looking in the right places.  Hats off to David Perry and Ken Kittlitz for a rich gathering and update on the prediction markets landscape. You answered my questions and more about what companies are using, for what business objectives, and why prediction markets are not more visible.  Following are some highlights.

1.  Hearing Robin Hanson Speak

It's interesting knowing about a tool and then discovering oneself in a room talking with the person credited with being the "the first to set up and run a corporate prediction exchange —at Xanadu, Inc., in April 1989". Robin Hanson is an "associate professor of economics at George Mason University, and a research associate at the Future of Humanity Institute of Oxford University." His presentation is laced with graphs and focuses on how value is created. Devoting time to exploring his presentations is recommended.

2. Getting Insight into How Leading Companies are Applying Prediction Markets

Hearing the experiences of companies the caliber of GE Research, Misys Banking Systems, NBC Universal, Best Buy and Qualcomm using prediction markets to improve decision-making and project management is attention getting. That answered my question about what companies are adopting.  Learning Consensus Point serves companies that do not reveal prediction market applications for data sensitivity and competitive intelligence reasons helps understand why this tool doesn't have a higher profile.

3.  Hearing from "The Wisdom of Crowds" Author James Surowiecki About Challenges 

Essentially implementing prediction markets challenges traditional hierarchical organizational structures, notions of power, and mindsets, "the deep seated impulse to find the one person with the right answer."  I heard Surowiecki say:

"Prediction markets are not just about improving decision-making. Also about transforming organizations as a whole."

4. Listening to Jed Christiansen and being Reminded of the Growing Demands for Analytical Skills in Organization

Jed presented his London School of Economics thesis study results investigating prediction markets to group forecast rowing race winners. (His Mercury's Blog includes video presentations explaining prediction markets and how they can help companies.)

Listening to Jed talk about calibration, accuracy measures, scoring rules, trader distributions, data scatter, linear best fit, and probabilities you cannot escape recognizing the increasingly quantitative talent demands of 21st century business.

5.  Noting the People Connecting Impact of Prediction Market Initiatives

A thread among the presenters was how prediction markets expand people connections in organizations.  Through market participation employees from disparate parts of organizations discover unknown people with similar interests and unexpected talents.  Market activity becomes a thread in employee conversations. Previously unrecognized expertise emerges through successful trading and listing on leader boards.

Smart companies are exploring use and adopting prediction markets to connect intelligences and improve decision-making and forecasting. But doing so demands leadership that is not threatened by discovering what the collective wisdom can tell them, especially when the information shared is not what they want to hear.

Considering Robin Hanson's first corporate prediction exchange dates to 1989, and Ken Kittlitz has been developing exchanges for fourteen years, gives some insight into the realities of putting prediction markets to work in organizations.  Has their time come?

~ Jenny Ambrozek

 

Fast Company Masters of Design

The 2007 Fast Company piece makes fascinating browsing as it explores the "intersection of business and design".

The slide show is here.

Sam Lucente, HP's first ever VP of Design's observations about the value of design across the organization caught my attention, right down to a "Design Capability Index".

An interesting theme is the rise of environmental responsibility in design and architect/interior designer Phillipe Starck's focus on "good":

"The style of tomorrow will be the freedom and recognition of difference. We must replace the name 'beautiful' by the name 'good.' Beautiful means nothing."

~ Jenny Ambrozek

Thinking YOU can Ignore Facebook? Lessons from Revolution Health & A Space

     Not sure how it is for you but for me it seems everywhere I go, there is Facebook. TIME Magazine has pronounced "Why Facebook Is the Future".  The Financial Times under a headline "Route to social success" interviews Facebook founder Mark Zuckerberg about his plans for Facebook and reports backers "think it is worth $8bn-$10bn".

     The New Zealand Herald is focused on the productivity issues with employees devoting work hours to Facebook costing companies billions. The New York Times reports a successful viral consumer campaign started in Facebook that has Cadbury Schweppes bringing back the Wispa chocolate bar on a test basis. Martha Stewart has a Facebook profile.

     Already in July Scoble and Calcanis were discussing "Facebook fatigue".  Edge technology users in my circle are already abandoning Facebook because it's too many clicks.  It will be REAL interesting seeing whether the member and site activity growth since Facebook opened their platform to developers May 24 can continue.

      Online all aspects of Facebook are dissected ranging from the privacy issues associated with Facebook exposing member profiles to search engines to whether the arrival of the older crowd will deter founding college student members from using Facebook. A flurry of Facebook Groups trying to figure out Facebook for doing business have emerged.

      What's occupying me however are recent conversations with people who think they can ignore Facebook. Thanks to Mark Meaney, a new found Facebook friend, this past weekend I discovered Revolution Health's use of Facebook Groups to reach their audiences.  Smart I thought.  Knowing Revolution Health's CEO is AOL founder Steve Case, I'm paying attention.

       Then through Valids Krebs Network Weaving blog a fascinating post on A Space, a  social networking platform for the intelligence industry the Financial Times reports is being  developed by the U.S. Director of National Intelligence.

       For me whether or not Facebook emerges as THE social networking platform for business is still to be decided. I don't know but I'm betting, (based on industry history), that leading enterprise platform providers like Microsoft and IBM, as well as startups we are yet to learn about, have developers working away to claim that space.  Hopefully they are also working on providing automated activity data collection for group administrators.  In my view if Facebook wants to be a serious contender for business networking, metrics are essential.   

        Meantime rather than ignore Facebook I'd encourage all organizations to experiment and see how a Facebook type platform might create value for your business.  And the main reason is what Valdis Krebs highlights in his assessment of whether A Space will succeed:

"IMHO, just putting social web technology into a strong culture, averse to sharing and connecting, will not change how things get done. MySpace and Facebook worked because they were dropped into cultures eager to connect. The IC needs to get the sociology right before they support a new culture with new technology."      

Making successful use of a Facebook like platform is not about the technology. It involves new mindsets and openness that in my experience seriously stretch traditional organizations.

~ Jenny Ambrozek