We recently read an interesting article in Forbes’s CMO Network about the apparent pitfalls of crowdsourcing:

Several weeks ago, the CMO of a company I am involved with in Europe sent me a note pointing out that an agency was offering “hundreds of marketing ideas” to help the company build its business for only $25,000. “Surely we can’t lose; it’s worth a shot,” he said. Two days later, back in the U.S., I found myself discussing the merits of the “executive creative director versus the crowd” with the head of an advertising agency and a journalist.

What are the facts? Well, there are literally hundreds of companies on the Web and in the real world that wield the power of the crowd. The idea is relatively simple: Usually the process involves issuing a brief, which is then submitted to the “crowd,” which then offers ideas for free. Each person who contributes hope that his or her idea will be used. The winner takes all, (in most cases a relatively low fee) and for the client: an idea. Maybe my colleague is right: It would appear the buyer couldn’t lose.

Jez Frampton, the author, then presents what appears to be a cautionary tale about the crowd:

It is the ability to select and profitably execute an idea that delivers greatest value to the organization. This supports the old adage that success is 5% inspiration, and 95% perspiration. It is a strong argument for the ‘editor’ otherwise known as the creative director, and for a well-managed and controlled process. These happen to be two things that are notably absent from crowd-based approaches.

Our guess is that Mr. Frampton is possibly not aware of the potential for crowd-driven idea management. Maybe he hasn’t seen a demo of Foresight, our prediction market platform that is capable of comprehensive idea management.

Experience so far would suggest that the crowd can certainly speed the “exploration” of an idea. It can add richness and context. it can create fast and efficient stimulus for consumer research and could (if my creative director friend gets it right) become a useful “extra head” in the room. It could certainly change the shape (and the operating approach) of the creative side of the marketing sector, but will it replace the need for the expert partner? That remains to be seen.

We’ve seen it. Because we have Foresight. And so does Motorola, where we’ve been helping them manage ideas with great success (which CFO.com recently noticed).

Mr. Frampton ought to send his CMO friend our way. We could help him out with idea management as his “expert partner.”

We don’t see a lot of need for prefatory material here.

He [Rami Levy, a technologist with the Motorola's mobile devices business] says the combined revenue from product-based ideas and cost savings from internal innovations is “conservatively” 5 to 10 times TIX administration costs, which largely involve two to three dedicated employees. The cost to purchase and implement prediction-market software — called Foresight Server, from Consensus Point — was “under $100,000,” he says.

CFO.com has an extensive write-up of the customer success we’ve had with Motorola, and we are impressed with Mr. Levy’s ability to concisely identify the bottom line value that our Foresight prediction markets platform is capable of delivering to the enterprise.

Further, the article is an elegant case study of the sort of business scenario that is a perfect opportunity for the use of prediction markets, the path to implementation, and the ultimate value.

What we like best about the article, in fact, and consider a true success for Motorola’s implementation of our solution, is that the value goes beyond raw consideration of the bottom line:

But additional, softer benefits were key goals for the program, too. These have been realized through collaboration forums that allow employees to see and comment on others’ ideas, which are thus improved by the crowd’s input. The forums facilitate people from disparate regions and company organizations forming relationships, working together on ideas, and avoiding duplication of effort, Levy says. Motorola actually introduced the forums in 2005 along with the voting mechanism, but participation spiked after TIX was introduced and continues to rise.

The bottom line, says Levy: “TIX has proved to be an excellent conduit for enabling collaborative innovation and creating new value for Motorola in a fun and enjoyable way that encourages participation at a minimal cost.”

When was the last time you implemented something for the enterprise that not only created cost-effective value but was also fun?

You can read the full CFO.com article here, and you can contact us about Foresight here. We predict customer success if you do.

We’ve been reading Harvard Business Review blogger and MIT Center for Digital Business researcher Andrew McAfee’s excellent book, Enterprise 2.0, which is full of valuable lessons for the enterprise, including that prediction markets are a very useful collaborative tool.

For instance, here’s an interesting discovery from the Google Prediction Markets, originally proposed internally in December 2004:

Analyses … revealed that at every point in time, even as much as ten weeks away from the closing date of the market, the most expensive outcome was the one most likely to actually occur. It seemed that GPM’s markets, in other words, could quickly and accurately distinguish among possible outcomes, identify the one most likely to occur, and attach a high price to that outcome.

This is exactly what our Foresight platform does on a regular basis for our customers.

Regular readers might remember a few months back when we cross-posted one of his posts from the Harvard Business Review blog. You might also recall when we posted a presentation that Linda Rebrovick (our CEO) gave in Chicago at the Prediction Markets Cluster conference in Chicago last November.

Linda noted the following best practice examples in her presentation:

• integrate into enterprise processes
• nurture executive sponsorship
• go big or go home
• make accessible to all
• customize to your business
• make it part of your value proposition

We were struck how similar these examples were to the Six Organizational Strategies identified by McAfee:

• Determine Desired Results
• Prepare for the Long Haul
• Communicate, Educate, and Evangelize
• Move into the Flow
• Measure Progress, not ROI
• Show That Enterprise 2.0 Is Valued

Coming back to the commentary on GPM, McAfee continues:

Google’s prediction markets shared with all markets a fundamental property: the ability to generate highly valuable information by bringing people together who have little or nothing in common.

Okay, we don’t actually know how different Linda and Andrew are, but we’re pleased that our executive leadership understood key lessons before an interested commentator went to press with his book. It’s almost… predictive.