White paper on The Ingenix Prediction Market by Ingenix

The Ingenix Prediction Market provides a platform for understanding the psychology that drives people’s actions.

Executive Summary

If your organization offers health care benefits, understanding members’ health conditions and hidden risks is fundamental to eliminating excess spending. But you also need to know who will respond to your messages, what actions they’ll take based on the options you provide, and the timing of those actions:

Clinical Data (A) + Predicted Actions (B) = Elimination of Excess Spending

Many organizations offer clinical data. Where do you obtain the knowledge needed to predict human behavior?

Organizational decision makers in every market need to understand the psychology of their members in order to predict their actions. In the changing landscape of health care—with historical data offering few clues to the future—predicting behaviors related to health care options is the crucial challenge.

Knowledge, attitudes, and beliefs are directly related to behaviors. Understanding these factors is an issue for health care providers, researchers, insurers, pharmaceutical companies, businesses that offer health care benefits, and the employees who use health care. Fortunately, we need look no further than this diverse set of individuals to overcome the obstacles and get a clear vision of the future.

Retail organizations have successfully harnessed prediction markets to quantify the actions their employees and stakeholders will take and improve revenue forecasting as much as 70 percent over traditional forecasting methods.1 Best Buy, General Electric, and Hewlett-Packard—to name a few corporations that use prediction markets—have discovered a way to understand the behavior of their employees and stakeholders. This allows the companies to not only reduce the risk of bad decisions, but to accelerate innovation.

Now, the Ingenix Prediction Market brings this unique and reliable forecasting method to the health care sector, at exactly the moment when predicting reactions and driving innovation are desperately needed.

A More Accurate Approach to Research

A prediction market improves on traditional research methods by:

-       Providing a quantitative method to capture the attitudes and beliefs that influence behavior

-       Adjusting for respondents’ confidence and historical accuracy

-       Incentivizing respondents to reveal what they will do

-       Focusing on what groups of respondents will do rather than what an individual thinks

Predicting an Uncertain Future

A prediction market, also called a “decision market,” poses questions to a group of stakeholders, who respond with opinions of what is most likely to happen in the future. The stronger the opinion, the greater the number of points stakeholders allocate to their position. This can be done anonymously to ensure a candid response. Within a company, this means executive decision makers have access to opinions from the entire workforce, who otherwise might be reluctant or unable to share what they know.

 “The overarching problem every company faces is uncertainty,” says Ron Hoffner, Ingenix associate, “and they try a variety of ways to decrease that uncertainty.” The traditional approach is market research, using historical data, surveys, focus groups, and polls. “Each one of these methods has problems,” says Hoffner, “and the problems are accelerated in the rapidly changing world of health care. Using historical data is especially risky because the fundamental assumption is that the past will predict the future. In light of changing legislation, for instance, we cannot make that assumption.”

Focus groups, surveys, and polls present challenges, particularly within organizations, where individuals are not rewarded for delivering bad news. Multiple layers separate the people who have good information from the decision makers. A prediction market improves communication flow—within an organization or across an entire market.

Unlike polling and surveying, prediction markets are designed to predict the actions a population will take and illuminate the attitudes driving this behavior. Questions are designed in such a way that participants’ answers predict behavior; and participants are incentivized by earning points for disclosing the true attitudes of the population toward the topic. According to Hoffner, “When you want a way to summarize multiple points of view into actionable metrics, the appropriate question can gather those views and predict the likeliest outcome.”

Rev Up Your Research Engine

If you’ve done a Google search, you’ve participated in a prediction market. Based on a search of three billion possibilities, the Google search engine quickly predicts what web pages will be most useful to you. Google continuously improves its accuracy by calculating which sites are chosen most often.

Internally, Google uses prediction markets to determine whether or not product launch dates will be hit, new office openings, and other strategically important events.2 The Iowa Electronics Market (IEM) is a prediction market that was founded in 1988 as a way of predicting the outcome of political elections as measured by how individuals would vote. The IEM has proven more reliable than major national polls, even months in advance of an election. Similar markets have been created for other fields. The film industry has the Hollywood Stock Exchange, to predict Oscar winners and box-office results.

Until the Ingenix Prediction Market was unveiled, there were relatively few applications in health care. Pharmaceutical companies use them to improve awareness of project performance and for marketing. The Iowa Health Prediction Market calls on health care workers to help predict the spread of infectious diseases, such as the H1N1 flu. And now, in collaboration with Consensus Point, a leading provider of enterprise prediction markets, Ingenix has created a prediction market for the health care sector.

According to Robin Hanson, chief scientist for Consensus Point, prediction markets eliminate information bias by tapping diverse minds. Even intelligent individuals, says Hanson, are subject to the groupthink of peers. “Because we often disagree with other groups, we band together and end up agreeing too much with our own teams. No single leader can overcome such biases and data gaps to predict with certainty whether an action will succeed or fail.” Prediction markets produce forecasted behaviors that incorporate more information, run continuously, and tap the minds of those who otherwise would not provide opinions.

Collective intelligence is more reliable than any individual expert opinion. Expert or not, an individual can be wrong. In a prediction market, however, when all the responses are collected, the correct answer is remarkably close to the average of the responses. This has proven true in case after case, giving prediction markets a strong advantage over other forecasting tools.

How can a group of people have the right answer even when many individuals in the group are incorrect? In his book The Wisdom of Crowds, James Surowiecki explains: “If you ask a large enough group of diverse, independent people to make a prediction or estimate a probability and then average those estimates, the errors each of them makes in coming up with an answer will cancel each other out. Each person’s guess, you might say, has two components: information and error. Subtract the error, and you’re left with information.”

The Power of the Ingenix Prediction Market

The Ingenix Prediction Market is the first comprehensive market focused on health care. Ingenix’s strategic partner, Consensus Point, has helped a diverse array of clients improve their ability to make market-based predictions. Best Buy, CNBC, General Electric, General Mills, Motorola, and the Department of Defense have benefited from Consensus Point prediction markets that are tailored to their needs, utilizing the vast intellectual capital of employees and other stakeholders. The Ingenix Prediction Market is available online, with members of the health care sector participating and paying close attention to this constantly updated source of information. Ingenix can further customize this model to enable an organization to make market-based predictions about the actions of its unique member population.

“In the Ingenix Prediction Market, we give participants points that they can assign to the different questions based on their views,” says Hoffner. “The questions are tied to health care events and programs that may or may not be implemented. The more confidence the participant has in his or her opinion, the more points can be applied, because an individual can answer the same question multiple times.However, it costs a certain number of points to answer each time, and you can answer until you run out of points. Thus, individuals who are more confident in their view have more influence. In turn, participants are rewarded for being right by earning more points. The resulting value is a real-time indicator of the attitudes of a population, the actions they will take, and what is driving those decisions.”

Employers Use Prediction Market to Take Swift Action

Q: How will employees respond to a new health care payer?
A large research organization is switching to a new health care payer. Management needs to predict enrollment in each of the three new plans and to gauge members’ satisfaction with the new payer. Historical data and surveys can’t predict enrollment in new plans. Traditional methods take too much time, restricting the organization’s ability to take corrective action to resolve member satisfaction issues.

A: By using a customized Ingenix Prediction Market, management is able to obtain an early and accurate forecast of benefit plan enrollment numbers, and get a real-time read of employee satisfaction with the new plan.

Q: What can be done now to improve employees’ health and cut costs?
An employer needs an in-depth analysis of employees’ health needs, but also to identify what actions employees would be willing to take immediately regarding health issues such as obesity, alcohol use, and smoking.

A: Ingenix pairs a traditional survey with a Prediction Market. In four months, the survey provides an in-depth analysis of employees’ attitudes and health needs. However, in just two weeks, the Prediction Market reveals what actions employees are willing to take today to improve their health—allowing a potentially life-saving three-month jump on better health and lower costs.

For Information: 800.765.6696 | insight@ingenix.com Ingenix, Inc. | 12125 Technology Dr. | Eden Prairie, MN 55344 

Conclusion

While no one can be certain what the future of health care will look like, the need for strategic planning and sound decision making remains. The valuable information provided by Ingenix Prediction Market allows for innovative and proactive planning by policymakers, researchers, health care providers, and any organization whose business operations are affected by the issue of health care.

 “Everyone benefits by participating and sharing information,” says Hoffner. In addition to weighing in with opinions and gathering accurate, real-time information, participants in the Ingenix Prediction Market can pose their own questions. To explore how the Prediction Market works, visit www.ingenixpm.com and become a participant. If you’re interested in creating a customized prediction market for your organization, call 800-765-6089. 

About the Company

Ingenix is a global health care information, technology and consulting leader. We serve a diverse customer base within the health care community, including payers, physicians and hospitals, employers, pharmaceutical companies, consumers, property and casualty insurers, and government agencies. The number of ways that we improve health care is growing every day. Many of the most impactful innovations in health care are taking shape at Ingenix. We are applying the power of information to make the future healthier for everyone. 

Resources
www.consensuspoint.com 
1 Consensus Point Blog, April 9, 2008. Accessed July 30, 2009. Available at: www.consensuspoint.com/prediction-markets-blog/betting-to-improve-the-odds. 

Kunz, Ben, “Prediction Markets Meet Wall Street,” BusinessWeek, Oct. 14, 2008. Available at www.businessweek.com/technology/content/oct2008/tc20081013_033687.htm.

Surowiecki, James, The Wisdom of Crowds, New York: Random House, 2005.

The information in this document is subject to change without notice. This documentation contains proprietary information, which is protected by U.S. and international copyright. All rights are reserved. No part of this document may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without the express written permission of Ingenix, Inc. Copyright 2009 Ingenix, Inc.

On November 5 in Chicago, Dr. Robin Hanson, Chief Scientist of Consensus Point, and Rami Levy of Motorola, will be discussing the most effective applications of prediction and idea markets in business and government organizations at a lunch hosted by Consensus Point. Idea and prediction markets will become part of the internal DNA of the best organizations, as these solutions link human capital to organization results by providing leading indicators for the most important initiatives. Rami Levy of Motorola will share the business objectives and specific results of Motorola’s Thinktank Idea Exchange.  Dr. Hanson will share some specific approaches to structuring effective markets.

Robin Hanson, PhD., Associate Professor of Economics, George Mason University and Chief Scientist, Consensus Point

Rami Levy, Technical Lead and Manager, Open Source Technologies team, and distinguished member of Motorola’s technical staff, Motorola, Inc.

For more information, contact Consensus Point at info@consensuspoint.com.

Consensus Point and Our Customers, such as Best Buy and Ingenix, follow a proven enterprise methodology to yield maximum return and value from our prediction markets.  The major organizational best practices include:

1)   Define Business Problem that prediction markets solve and articulate value that could be derived with market insights; develop projected outcomes and track progress that prediction markets solve and articulate value that could be derived with market insights; develop projected outcomes and track progress  

2)    Determine Executive Sponsor and Prediction Market Leader – two different roles, Executive Sponsor guides market strategy and decision acceleration and Prediction Market Leader provides day to day leadership; incorporate prediction market reviews into existing steering committee structures

3)    Begin with a subset of participants, internal first, and validate accuracy through comparisons to baselines; run a market for minimum 90 days, then gather proof points and expand further to other employees, partners, and potentially customers

4)    Align incentives with company culture- and provide multiple rewards that include influence and career development incentives

5)    Determine mix of participants from several functional groups, with a minimum of 30-50 participants; the broader the participant base, the more liquidity for the market

6)   Be Transparent: communicate early and often about market success and decisions that are made from market insights; employee engagement will likely increase from hearing the actions being taken as a result of the market predictions

EXAMINING TRADER BEHAVIOR IN IDEA MARKETS
An implementation of GE’s Imagination Markets

Brian Spears
GE Hitachi Nuclear Energy

Christina LaComb
John Interrante
Janet Barnett
Deniz Senturk-Dogonaksoy
GE Global Research Center

ABSTRACT
We present the outcome of an idea market run for one of GE Energy’s sub-businesses in July and August of 2006. GE Energy used this market to elicit and rank-order technology and product ideas from across the sub-business. In this experiment, we examine the behavior of traders that have submitted the ideas on the market and their influence on the market’s outcome. An idea’s submitter is clearly motivated to have his idea valued highly by the market, both by the funding given to the top idea as well as smaller prizes given to the top three ideas. In general, founders tended to buy their suggested ideas at prices above the volume-weighted-average price (VWAP) in significant volumes. We discuss the implications and mitigation strategies. A survey of market participants yielded mixed results regarding the market’s effectiveness at ranking ideas but very positive results regarding the quality of ideas proposed. 

Click here to read the full paper.

The Journal of Prediction Markets (2009) 3,1 17-39

Consensus Point releases enhancements to the leading Forecast, Strategy and Project
Prediction Market allowing Executives to Accelerate Decisions

Nashville, TN (August 22, 2009) – Consensus Point LLC, a leading provider of prediction market software and services, announces the release of the 6th generation platform of the Foresight On-Demand software as a service (SaaS) Solution.  Based on customer feedback, Release 6 includes many new features to improve the administration and user interfaces, such as additional reports, group and category capabilities, enhanced idea and prediction descriptors, graphic images, and rich text editing.  These enhancements increase the breadth of early warning and leading indicators to improve forecasts, strategic decisions, and critical initiatives. 

Brian Jaedike, manager of prediction markets at Best Buy who participated in requirements and quality assurance testing, said “Version 6 of the Admin tool saves me time and allows me even more flexibility to add and edit stocks and traders.  The participants like the user experience and professional interface of the main site because it makes them feel they are part of an actual exchange.” 

“Our customers now have the most advanced interfaces to efficiently and effectively use and manage their prediction market with the release of the sixth generation of our Foresight Solution”, commented Brad Wilson, VP, Services and Customer Support, Consensus Point.  “Our comprehensive and proven solution, including the Consensus Point Foresight software, services and support, allow organizations to rapidly launch and realize the significant benefits of an idea or prediction market.”

About Consensus Point

Consensus Point, a Nashville, Tennessee company, is the leading provider of enterprise prediction and idea markets serving corporations and government.  With over 15 years of experience providing prediction markets, Consensus Point offers a comprehensive collective intelligence solution, including Software as a Service (SaaS) with on-demand or on-site licenses, consulting services, and support. The company helps customers increase innovation, reduce the risk of uncertainty, improve revenue insight through accurate forecasts of products and services, and manage projects with a dynamic pulse into future completion dates and budgets.

Prediction Market Reveals Answer Well Ahead of Results

April 28, 2009 – Ingenix.com - Ingenix Thought Leadership – When trying to determine whether a product is priced right, a project will launch on schedule or the impact proposed health reforms will have, health care entities are considering a methodology that relies less on expert opinions and more on the intelligence of hundreds of people with diverse vantage points.

To determine the results of a key question – what will the employee engagement index be? — on an employee survey, Ingenix used the Prediction Market to gauge the outcome well in advance of the survey results being published. Within one day, the Prediction Market accurately forecasted the index.  Prediction markets provides Ingenix’s clients with early and accurate quantitative data points on future events.

This methodology, known as “collective intelligence,” uses a “prediction market” to “unleash the collective wisdom of organizations and helps them gain a more accurate picture of what is going on in their organization and the industry,” according to Ron Hoffner, associate, Ingenix Consulting.

Prediction markets, defined in a recent BusinessWeek article as “bets on ideas,” ask groups of stakeholders the following question: “What do you think something is worth, and more important, what will it be worth tomorrow?”¹ The groups’ answers have proven to be accurate most of the time, the article goes on to say. “When groups of people bet on something, their combined intelligence is often remarkably prescient.”²

Hoffner agrees. “There is an old Japanese proverb that states ‘None of us is as smart as all of us,’ and we are finding more and more that this is true,” he said. Recent academic research has shown that using a market to forecast demand results in a significant improvement in forecast accuracy when compared to traditional methods.³ The result, Ingenix believes, is that health care programs can better predict which programs are the most likely to succeed.

Another area where prediction markets can add significant value is providing quantitative data on the impact proposed health reforms will have on the industry. “What we are doing is asking a variety of people with different perspectives – who traditionally have not been included in the discussion – for their input,” Hoffner said, “For really the first time, we are going to have quantitative data on the impact of these proposed health reforms that participating organizations can use for planning.”  

Prediction markets harness viewpoints, intelligence

One of the flaws of traditional forecasting is that it generally relies on historical data to make predictions about upcoming events and results. Many years ago, a wise man once said, “You can never plan the future by the past.”⁴ Indeed, Hoffner asserted, using historical data to determine the future assumes that the environment stays the same. However, the health care environment is rapidly changing and traditional methods that use historical data do not account for these changes. The result is forecasts with greater uncertainty.

“To illustrate this point,” Hoffner said, “let’s assume historical data shows two variables are related, such as gas prices and sports utility vehicle (SUV) sales. When gas prices go up, the sales of SUVs go down; conversely, when gas prices go down, SUV sales should pick up. However, they haven’t, so the forecast of SUV sales ended up being higher than the actual SUV sales results. It is clear that how variables are related in the future can change.” These changes can come from a variety of sources, such as social changes or government regulations, he explained.

Prediction markets also may be more reliable because they aggregate and consolidate data “from many individuals, often widely dispersed, each with access to small, idiosyncratic bits of relevant information.”⁵ In a prediction market, companies ask stakeholders from across the spectrum to voice their opinions about future events and milestones by buying “stock” or using points to register their “vote,” according to Hoffner.

“Let’s say a company wants to determine how many people will sign up for their four health plans and if a new wellness program will decrease absenteeism. This is their prediction market. They give stakeholders points to assign to the different questions in the market based on their own views,” he said. “If they have a lot of confidence in the issue, they will assign more points to their answer, so instead of just a  ‘yes’ or ‘no’  answer from a survey where everyone has equal influence, people with more confidence in their view have more influence by assigning more points in the market.” 

Another improvement prediction markets offer over traditional surveys is that participants are rewarded for being right. The result of answering a question right is the participant earning points. At the end of a quarter, for example, those with the highest number of points would receive an award. This results in participants seeking information on programs, which leads to increased awareness of them. 

Further, because the information derived from these diverse sources is contributed on an anonymous basis, the data collected also may be more truthful than if solicited in person. A lower-level employee with relevant exposure to an issue being carefully tracked by the company likely would not feel comfortable telling – or even be invited to tell — his or her boss’ boss about existing problems that might affect forecasts. However, that employee likely would honestly report an experience-based lack of confidence in meeting a future target date in the prediction markets setting.

“Prediction market data fills a lot of information holes, especially when there are many unknown variables, because the diversity of ‘players’ leads to different views and different perspectives that can help reduce uncertainty,” Hoffner suggested. “It lets management know how confident people are in a given forecast while still retaining control over the final decision.”

Expanding use, value of prediction markets

Ingenix believes that prediction markets can help health care entities bridge data gaps so they can “see more and do more,” Hoffner said, so it has forged an exclusive partnership with prediction market pioneer Consensus Point to offer prediction market services to Ingenix clients. These clients either pose questions to an Ingenix prediction market or consult with Ingenix experts to build or improve a prediction market of their own.

“Although collective intelligence is not new, today we are taking that intelligence to the next level, where more value can be derived from it,” Hoffner explained. Ingenix Prediction Markets will combine prospective data from employers, brokers, consultants, providers, payers and academics with longitudinal data from Ingenix’s repositories of patient claims and consumer surveys to provide industry-leading market forecasts of how trends, such as health care reform efforts, will impact the health care industry.”

Prediction markets give Ingenix “the ability to let our clients know what’s out there and what’s coming down the road – in a way that is more accurate than any other trends method – so they can better manage their business,” Hoffner concluded. “Our approach to prediction markets is that Ingenix is providing clients with real-time focus groups that we are calling a ‘living leadership forum.’ Any changes in the views of the group and the marketplace are quickly detected, which means businesses are rarely caught off guard.”

¹ Kunz, Ben, “Prediction Markets Meet Wall Street,” BusinessWeek (Oct. 14, 2008)
² Id.
³Consensus Point
⁴ Burke, Edmund (1729-1797).
⁵ Consensus Point, “What is a Prediction Market?” (Web site accessed April 1, 2009). ,” uses a “prediction market” to “unleash the collective wisdom of organizations and helps them gain a more accurate picture of what is going on in their organization and the industry,” according to Ron Hoffner, associate, Ingenix Consulting.

 License Agreement Provides Access to Successful GE Imagination Market, Comprehensive Innovation Management Process 

Nashville, TN – Consensus Point LLC, a leading provider of prediction market software and services announced the addition of Rebecca Whitehead Munn to the leadership team and a license agreement with General Electric (“GE”).   Through the GE relationship, Consensus Point customers can have access to the proven GE Imagination Market process and benefit by identifying the most promising ideas for business growth.  GE’s Imagination Markets help answer tough business questions such as “what new technology ideas should we be investing in” and “what new products should we develop”. Market participants can submit their own ideas for entry into the market, and they can buy and sell shares of any idea in the market based on how well they believe the idea will contribute to the market’s objectives. At the end of the market, the business leader has a rank-ordered list of ideas.

GE has implemented the Consensus Point solution for idea management in over 10 GE businesses since 2006. The GE Imagination Market has uncovered innovative ideas based upon a variety of business-designated criteria. By licensing and integrating the GE “Imagination Market” technology process, Consensus Point provides a proven, comprehensive design and solution leveraging the prediction market expertise of Consensus Point and the business innovation leadership of GE.  In the recent GE-wide Imagination Market, over 1,400 employees from 170 business segments representing 42 countries suggested over 220 business model innovation ideas. GE Imagination Markets provide a fun way to engage people globally in new idea generation and result in an abundance of relevant ideas that can aid in setting future strategic directions.

Rebecca Munn joined the Consensus Point team as Senior Vice President of Sales. She brings over 22 years of proven experience in strategic planning, sales and marketing leadership, business unit operations, and services delivery. At Consensus Point, Ms. Munn is leading sales, sales operations, marketing, and customer relationships. She has held leadership positions with several global service and technology companies, most recently as the Vice President of Sales Operations of Healthways.  Ms. Munn also held several leadership roles at Cisco Systems, including the former Director of the Services Division, Connected Health Vertical, and principal in the Internet Business Solutions Group. She was the co-founder of The Arbora Group, a retail and wholesale operations start-up, in 2001. Ms. Munn is a former board member of the Nashville Technology Council. She earned an executive MBA from the University of Colorado and a BBA in marketing from the University of Texas at Austin.

“Our customers now have access to GE’s global experience in innovation management and proven design for the Imagination Market, commented Linda Rebrovick, CEO, Consensus Point.  “This fully integrated solution, including the Consensus Point Foresight software and GE Imagination Market process, allows organizations to rapidly launch and realize the significant benefits of an idea and innovation market. Some of our customers have cut the time to process ideas in half through using idea markets. In addition to the GE partnership, we are pleased to announce the continued growth of our company with the addition of Rebecca Munn to our leadership team.” 

Employees use prediction markets to vote up product ideas and productivity improvements they think should be selected for development

April 27, 2009 — CIO.com — The project: Deploy a prediction market to aggregate new business ideas suggested by Motorola employees and assess their viability. A prediction market is a system for forecasting the outcome of projects or events based on how willing individuals are to buy “stock” in them. Users buy shares to vote items up. Each item is evaluated based on how much it is “worth”: the higher the value, the more popular the idea.

The business case: Motorola sought to allow any employee the opportunity to propose ideas for new products, upgrades to current products, productivity improvements or cycle-time reductions, says Rami Levy, distinguished member of Motorola’s technical staff and a member of its open-source technology team, which manages the prediction markets for the company. In 2003, Motorola had built a system to collect ideas, called ThinkTank. But when thousands of suggestions poured in, the teams that were supposed to weed through them were overwhelmed.

Using prediction market technology, Motorola could engage employees in the selection process by letting them vote for the ideas they thought had the best business potential. The most popular ideas could then be selected for further study and eventually be developed.

First steps: Levy and his team worked with a variety of director-level managers, including senior VPs, to secure buy-in for the project. “ThinkTank was already being sponsored by an SVP,” he says, but they needed support from others who would have to produce the business-case and user scenarios for new product ideas. That sponsorship was crucial to obtaining cross-organizational participation and funding for the tool.

Once Levy’s team secured management support, they integrated prediction software from Consensus Point (called ThinkTank Idea eXchange, or TIX, internally), with its existing ThinkTank application. In a six-month pilot during 2007, they experimented with market parameters, such as how long to keep ideas in play and how to finance participants’ purchases.

Today, employees submit ideas to ThinkTank, where anyone within Motorola can vote on them. Ideas that receive at least five votes are eligible for TIX, where each idea is initially valued at $10 per share. Anyone who wants to participate gets $100,000 to start with to buy the stock of the ideas they like best. As employees buy or sell shares, the value of the idea rises—or not. After 30 days, an idea review team determines which of the top-valued ideas to pursue. Winners are judged based on their stock performance, and participants who hold stock in winning ideas get a bonus.

It typically takes 18 months to develop a product at Motorola, so the first product ideas vetted through TIX are expected to come to market this year, Levy says.

What to watch out for: Market parameters that work in one circumstance won’t necessarily work in another, says Levy. You have to fine-tune your system to your environment. Motorola decided to limit an idea to a month in TIX to ensure new ideas were always entering the market. Meanwhile, even though employees find participating fun, you need to get them involved and keep them engaged. Levy’s team ran ads on the company’s intranet, conducted user satisfaction surveys and incorporated social media into the system. “Socialize the experience,” he recommends, “by integrating user comments, tagging, recommendations and links to other information.”

By Kristin Burnham © 2008 CXO Media Inc.