Transformative economist Arthur Laffer, inventor of the Laffer Curve, has joined the board of directors of Nashville-based Consensus Point, creators of the Foresight prediction markets and social predictive analytics platform.

“Dr. Laffer’s insights have had a profound effect on fiscal and economic policy over the past decades,” said Consensus Point CEO Linda Rebrovick. “And we’re profoundly excited to have someone of his stature bring his wisdom to bear on this exciting technology and its related opportunities.”

“I’ve been intrigued by the broad applications of prediction markets since I first became familiar with the concept,” said Laffer. “The power of markets has shaped my thinking and the world, and I’m delighted to be able to advise Consensus Point and help enterprise find greater efficiencies and thus greater profits through the use of a powerful prediction markets platform.”

About Arthur Laffer: Dr. Laffer is the founder and chairman of Laffer Associates, an economic research firm that provides global investment research services to institutional asset managers, pension funds, financial institutions, and corporations. Previously, he was a founding member of the Congressional Policy Advisory Board (105th-107th Congresses), a member of President Reagan’s Economic Policy Advisory Board (1981-1989), and was the first Chief Economist at the Office of Management and Budget (1970-1972).

Laffer currently sits on the board of directors or board of advisors of a number of companies, including Alpha Theory, Armor Concepts, Atrevida Partners, BAP Power, BridgeHealth Medical, Cubit, Dataium, Executive Trading Solutions, HealthEdge Partners, LifePics, and Pillar Data Systems.

About Consensus Point: Consensus Point, a Nashville-based company, offers Foresight, a leading social predictive analytics solution providing forward-looking indicators to identify real-time emerging risks and trends in demand management, innovation management, and major initiatives.

Consensus Point is proud to serve some of the world’s leading companies from our Nashville headquarters. Last week, we announced our partnership with the Nashville Entrepreneur Center to create Startup Exchange. Now, we’re pleased and proud to have been named to Nashville Post’s Fast 50.

From the envelope:

This email is to notify you that your company will appear on Nashville Post magazine’s first ever list of the 50 fast growing, emerging companies to watch in Middle Tennessee.

Selection was based on numerous factors, ranging from revenue and employee growth to growth over a period of years, growth as compared to industry average, projected growth and projected pitfalls, among other criteria. But selection of the list also involved editorial judgment. Many of the companies selected applied to be considered for the list, but many were also chosen by the editorial staff at Nashville Post based on awareness of a company’s success or references from knowledgeable sources about area companies performing well. A handful are even selected for their promise of near-term growth, which, combined with their stories, snugly fit the list’s mission to identify “hot” companies.

And this is how Nashville Post describes the group:

Nashville Post’s Fast 50 is our annual look at Middle Tennessee companies on a roll. Fast-growing, emerging or, in some cases, simply brimming with promise, they represent some of the best the Nashville area has to offer in terms of entrepreneurial vision and growth.

From startups gaining their financial legs to more established companies whose mature growth is remarkable, this array of companies — big and small, highly profitable and increasingly profitable, full of dreams or realizing their dreams — is perhaps best described as a list of ‘companies to watch.’

It is our goal, every day, to be a company to watch.

We are pleased to be partners with the Nashville Entrepreneur Center in launching their Startup Exchange (ECX). ECX is a marketplace for investors and participants to simulate buying and selling startups affiliated with the Entrepreneur Center. And, of course, it’s powered by Foresight.

Trades in the market will reflect the confidence of investors in a startup’s ability to hit milestones including funding, pitches, and product launch. The EC Exchange also acts as a forum for dialogue and feedback between startups and the community excited by what they’re doing.

The Entrepreneur Center serves as the “Front Door” of Nashville for entrepreneurs. It serves as a gateway that fuses training, relationships, and resources to cultivate economic development and drive Nashville’s future as the epicenter of entrepreneurial endeavors.

For more information on ECX, just ask.

We were excited to read an excellent white paper we recently downloaded from our friends at Moxie Software (formerly nGenera). Called “Building the Collaborative Enterprise,”iIt includes 10 questions to ask about business opportunities through collaboration. Question #8 out of 10 stood out to us: “Are we pooling our judgments to obtain the best possible forecasts and predictions?” The ensuing discussion is all about prediction markets.

Prediction markets are an emerging way to aggregate individual opinions and insights into remarkably accurate forecasts. In a prediction market, participants trade “contracts,” essentially bets on future events, such as the outcome of an election or success of a new movie. The system is very similar to stock and futures exchanges, where participants buy and sell contracts based on their expectations. Contract values are proxies for the underlying probability that an outcome will occur, as expected by the market participants.

Effectively used by companies such as Hewlett-Packard, Google and Yahoo!, prediction markets are being implemented in a growing number of organizations. Common business questions include: What are sales for a given product going to be next quarter? Will the price of a particular raw material be higher or lower in three months? How many customer complaints are we going to receive by a particular date?

Prediction markets provide an innovative and efficient way to mine and aggregate otherwise buried information and insight. They offer a powerful new way to harness collective intelligence – turning unspoken views and tacit knowledge into tangible, quantitative predictions about the future. While the structure of these markets may vary, they all share the same goal: better information revelation. The assumption is that with the right motivation, large numbers of diverse participants can do a better job of predicting future events than the smartest individual.

This is a nice summary of the concept of prediction markets, including wonderful examples of the kinds of questions that emerge in successful implementations. We’d contend, though, that prediction markets are no longer “emerging”; they’re in the field and yielding success. Just ask our customers, many of whom are experiencing improved forecasting guidance by getting collective answers to questions similar to those provided as examples by Moxie.

In the process of getting to a more collaborative enterprise, our Foresight platform can build much stronger capacity for pooling judgments. As Moxie notes, in this series called Boardroom Imperatives, the business outcome is accurate business forecasts. If this outcome appeals to you, let us know.

I read this article about leveraging employee ideas in The Wall Street Journal a few months ago that accentuates the value of employee input for successful innovation. It stuck with me because I’ve been thinking about how our innovation management platform automates their concept.

The WSJ piece floats the idea of innovation communities:

Companies that have successfully made innovation part of their regular continuing strategy did so by harnessing the creative energies and the insights of their employees across functions and ranks. That’s easy to say. But how, exactly, did they do it? One powerful answer, we found, is in what we like to call innovation communities.

Every company does it a little differently, but innovation communities typically grow from a seed planted by senior management—a desire for a new product, market or business process. A forum of employees then work together to make desire a reality.

Innovation communities tackle projects too big, too risky and too expensive to be pursued by individual operating units. They can be created with little additional cost, because no consultants are needed. After all, those in the midst of the fray already know most of the details relevant to the project.

We think innovation communities are a neat concept, but we also think you don’t need management overhead to create an innovation community; they already exist! Prediction markets provide another way to tap into innovative ideas from employees. Our Foresight platform has helped a number of customers create organization-wide innovation communities who participate in a prediction market, prioritizing ideas and then driving the best ones to the top of the list.

And this is what social predictive analytics is all about. Our platform unleashes employees in an already social environment and produces analytics provide forecasting guidance. Executives wind up with forward-looking indicators helping to identify real-time emerging risks and trends in demand management, innovation management, and major initiatives. And that’s why we have so many satisfied customers.

We suspect you’ve already got an innovation community. When you’re ready to deploy Foresight to harness social predictive analytics, let us know.

Consensus Point CEO Linda Rebrovick announced today that Brian Hogue has joined the enterprise software company as Vice President of Products. “With dozens of leading companies having achieved success with Foresight, we’re confident in our technology as a platform,” said Rebrovick. “We’re delighted that we’re joined by someone with Brian’s skills and experience to leverage the opportunities for proven predictive analytics products.”

Brian has over 15 years of experience delivering technology solutions. He has held a range of technology leadership positions in health care, public policy and digital publishing. Most recently he played a significant leadership role in developing Ingram Digital’s industry leading eBook asset management and distribution platform.

Hogue’s primary responsibilities will be to guide product strategy, drive product innovation from concept through general release, to oversee the software as a service (SaaS) implementation environments, and to lead interface development and integration with Consensus Point customers and partners. Foresight, the prediction markets and social analytics platform created by Consensus Point, is in its sixth major release. Hogue will oversee the launch of the seventh major release, which is currently in development.
 
About Consensus Point: Consensus Point, a Nashville-based company, offers Foresight, a leading social predictive analytics solution providing forward-looking indicators to identify real-time emerging risks and trends in demand management, innovation management, and major initiatives.

Because we hang out with smart people like our Chief Scientist Robin Hanson, we’re sometimes inspired to read scholarly publications relevant to our work. Earlier this year, a Masters Thesis came out of Erasmus School of Economics with an intriguing title: “The Relevancy of Group Expertise for the Accuracy of a Prediction Market.” Danielle Almeida’s prose hooked us from the first page…

First of all, Almeida provides a pithy description of prediction markets:

A prediction market is a futures market in which a large group of people can express their opinion about the out coming of a certain event by buying shares from the answer that – according to the participant – is most likely to be correct. Prediction markets are increasingly implemented in enterprise environments.

The author then makes a list that reminds us of our own list of dos and don’ts:

• Invite as many participants as possible to the company’s prediction market: there is no relevance with regard to the accuracy of the out coming of the prediction market.
• In general, employees that have more knowledge on the subject need less explanation why you want them to participate. Also, more knowledgeable employees are more likely to keep participating when related questions are asked consecutive. This means that non-experts might need an extra stimulation to participate.
• Be aware of the ‘contradictory effect of the prediction market’ that might occur when non-experts are involved. It seems that they have different approaches to come to their decisions. While experts merely buy the shares of the answer they believe is most likely to be right, some non-experts tend to play a more strategic game.

You’ve been hearing us talk about the efficacy of prediction markets for a while, but what we offer is much more than just a platform. We know the platform, and we know how to make it effective in the enterprise. Which is why we offer extensive consultative services, from implementation through monitoring and management.

Finally, we hate spoilers, but we’re going to go ahead and give away the ending because we can’t help it:

Based on this research, we would like to recommend all companies to consider implementing a prediction market to support their decision making process in case predictions are a necessary part of the decision making process. We have proven with this research that – based on several data – a group of experts is not capable of making significant better predictions than non-experts.

Especially companies that have hired expensive experts to make forecasts about future events – such as turnover and product innovation – can save a lot of money, by just asking employees, suppliers and customers to make these forecasts for them. Even on a larger scale than previously researched, experts do not outperform non- experts significantly when using a prediction market to forecast.

If you’re an executive who needs better forecasting guidance, you don’t need an expert; you need experts in implementing prediction markets like Foresight. Our expert advice: call us.

Regular readers of this blog know that we’re fans of James Surowiecki and the popularization of the concept of crowdsourcing. And as creators of an innovation management platform—Foresight—we also monitor rich sources of innovation like TED. This year, Chris Anderson introduced us to the concept of crowd accelerated innovation.

Seth Godin has nicely summarized and extended the thesis of Chris’s talk:

The idea is one of those big ones, a simple one that will stick with you for a long time… Online video radically changes the reach and speed of the improvement cycle. Things like dance, snowboarding and TED talks keep getting better, and faster, because artists see the best and improve on it. Even more than that, it requires you to top what’s out there, or you’ll be ignored.

Now it’s our turn because we have a slightly different take. Chris’s talk focuses on how web video is accelerating the interpretive and creative process for people the world over. His examples are strong enough that we’re inclined to agree, but it’s not just video; it’s ideas. YouTube provided a remarkable interactive market for web video. Uploading and viewing were just the beginning. Now video is being recut, reedited, and remixed to create new movie trailers, music videos, and tutorials.

Our Foresight platform provides the same, fully participatory experience for our customers who leverage it. The crowds of employees who become participants in our customers’ markets are getting better at their jobs, sometimes because of the extent of web video. They’re digesting and communicating ideas all the time. And there’s no way that a single manager or even a top management team can possibly distill from the creative energy the best ideas with enough guidance to know what’s best, when it should be applied, and how soon it will work without help. Foresight is that help. It’s an example of managed crowd accelerated innovation.

After you’ve honed your dance skills from YouTube (in your office with the door closed, presumably) and you want to accelerate innovation in the enterprise, you’ll want to contact us.

We were reading a recent article in the McKinsey Quarterly, and there’s no reason to restate their kickoff question; better to repeat it verbatim: Are you doing all that you can to enhance the productivity of your knowledge workers? According to the authors, Eric Matson and Laurence Prusak, few executives have a good answer.

Some of the issues involved in knowledge work and knowledge worker productivity caught our eye:

• knowledge workers are those “… whose jobs consist primarily of interactions”
• knowledge work “involves more diverse and amorphous tasks”
• “performance metrics are hard to come by in knowledge work”
• “knowledge workers spend half their time on interactions”
• “complex interactions often require contact with people in other departments or divisions, making it hard for workers to asses a colleague’s level of expertise or apply the advice they may receive

A few of the solutions mentioned by the authors include creating “communities of practice,” leveraging online tools and social networking tools to supplement occasional in-person meetings for the purpose of building relationships. Another was technical forums where specialists can learn about one another’s work with the goal of building trust.

We couldn’t help but think of another: Foresight. Our platform naturally creates communities in an organization and contributes to building trust through person-to-person interaction within the framework of a highly interactive market. Many of our customers report that their employees enjoy participation in an implementation of our platform, and the results they achieve speak to the productivity and efficiency gains enjoyed.

If you’d like a better answer to the question of how well you’re managing the productivity of your knowledge workers, we suggest you contact us.

Last week, Robin and I presented to a group of Chicago-based knowledge managers on the topic of enterprise prediction markets. We were focused on efficacy in the enterprise: what makes markets work in a business environment and why. Of course, the first thing that makes them work is selecting the right platform. We also tried to provide some background on market theory, as well as applied lessons.

We think the reasons markets work for forecasting guidance are fascinating, and we’re perpetually fascinated by Robin and his research. We’re continually impressed by customer success, too. We did our best to ensure that the talk included a mix of theory and applied material drawn directly from those customer successes.

Here are a few lessons from the talk on how to operate an enterprise prediction market with ongoing success:

Do:

• Integrate
 into
 enterprise
 processes
• Nurture executive sponsorship
• Make accessible to all
• Customize to your business
• Make it part of your value proposition

Don’t:

• Run a 30-day pilot
• Use a similar group of participants
• Run a market without promoting it
• Assume leaders will act on insights

If you’d like to dig deeper into the why of the do and don’t, we’ve posted the slides from our talk. And if you’d like to engage our services, we hope you’ll contact us.