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Jenny Ambrozek reflects on prediction markets on her blog after attending the PM Cluster Summit last week in Chicago. Below is an excerpt from Amzbrozek’s blog.
Have Prediction Markets arrived as an Enterprise Knowledge Sharing & Innovation Platform?
A small and really smart group of people convened by John Maloney (at the Gleacher Executive Center in Chicago), on November 6 to explore the latest developments in collective intelligence and use of prediction markets.
For those new to prediction markets finding a public prediction market to explore is increasingly easy, for example see the Industry Standard and CFO Magazine. Andrew McAfee lists prediction markets as part of Enterprise 2.0. This Inside Knowledge Prediction Markets Masterclass (co-authored with colleague Victoria Axelrod) describes the prediction market landscape in 2008.
Why did I leave Chicago thinking that enterprise use of prediction markets to tap grassroots employee knowledge for forecasting, and in support of innovation is about to blossom?
Three reasons:
1. High Profile Proven Enterprise Prediction Market Applications
Exemplifying the time for new ideas and technology to find their way into widespread adoption first use of an enterprise prediction market is credited to Robin Hanson (George Mason University professor and Consensus Point prediction market platform provider Chief Scientist) and dates to 1990.
The wider adoption of prediction markets by companies from Google to Best Buy, Cisco Systems, GE Healthcare, General Mills, Qualcomm and ArcelorMittal, is widely reported including in this New York Times articles. Friday Rami Levy, added to the list in explaining Motorola’s evolved use of a prediction market to filter ideas and speed innovation.
2. Technology Evolution
As a pioneering prediction market provider since 1994, Chicago Cluster sponsor Consensus Point hosts high profile clients Best Buy, Motorola and Qualcomm among others.
Each provider is carving out a niche and extending enterprise prediction market applications. In the process platforms are evolving, made easier to use and integrate into day-to-day business processes.
3. Growing Enterprise Understanding
The case has been made for the business value that comes from reaching out and engaging more diverse minds to solve business problems and co-create new opportunities. A host of books from James Surowiecki’s Wisdom of the Crowds (2004) to Yochai Benkler’s Wealth of Networks (2006), Dan Tapscott’s Wikinomics (2006) and Clara Shih’s Facebook Era (2009) detail the trend.
While enterprise prediction markets have been the province of innovative companies, the Chicago participants pointed to a diverse and expanding array of new applications.
Putting prediction markets to work in enterprises demands a wide array of skills from technical understanding for making markets perform within the culture of an organization, to relationship building to engage participants and encourage contribution. Quantitative skills + tie to business strategy + relationship building + technology are all essential.
