Foresight, our enterprise prediction market platform, is a product under constant and steady development, based in large part on customer input and feedback. Between major releases, we frequently provide feature releases to get new developments and requests in the hands of our customers as soon as possible. We’re pleased to announce our June 2010 release of Foresight.

Our goals with this release are:

• continuing to make the user experience flexible to specific business situations and needs, as well as user preferences
• improving management analytics reports by turning data into information for business leadership

And here’s what’s new:

User Interface Updates

New Confidence Interface — For both point and stock metaphor markets, participants will have a new way to increase or decrease confidence in any question or stock, streamlined from the previous process. The entire participant interaction may now be done via a bidirectional slider that allows users to increase or decrease confidence and see the resulting consensus. The interface also dynamically provides feedback to the user on the impact of their vote in addition to their maximum payout or value potential assuming they are moving the consensus in the correct direction.

The Advanced option allows participants to enter a number of units/points directly. For stock metaphor markets, this is also where limit orders may be placed. Once the answer is submitted, the participant has the opportunity to enter a private comment regarding their trade.

Security Enhancements — System security has been enhanced with additional encryptions. As a result, users will no longer be able to retrieve their forgotten password, but rather will be asked to ‘reset’ their password.

Decision Dashboards — As part of additional reporting and analytics capability enhancements in the administrator application, specific users may be granted access to enterprise dashboards. The dashboards provide a snapshot view of the market’s activity, trends, associated business value, and comments.

Administrator Updates

Custom Fields — Administrators may now create and manage custom fields of information for traders, stocks and categories. These custom fields may store additional information beyond what is standard in the application. For example, a ‘Department’ field might be created to track which department the trader belongs to in the organization. The management of custom fields is located under the ‘Settings’ area of the admin application.

The addition of custom fields is important because now business leaders can run a range of reports on aggregated bits of business intelligence.

Reporting enhancements — Additional reports have been added to the reporting section in the admin application. To accommodate the additional reports, the reporting navigation has also been modified. The additional reports include the ability to view the data along several dimensions, including any custom fields that have been defined in the market.

This release is now generally available with the Foresight platform and will be deployed to existing customer markets within 30 days.

We recently created a partnership with Brightidea, the global leader in on-demand innovation management, to integrate WebStorm as a social front end to the Foresight platform. In combination with Brightidea’s Switchboard for idea and investment evaluation, this partnership offers a complete end-to-end crowdsourcing solution.

As organizations move through later phases of the innovation process, costs and risks increase. Our Foresight platform can help mitigate risks in these later innovation phases and enable your crowd to efficiently and quickly prioritize the best investments that will yield the highest return for your company. In a later stage of Brightidea’s crowdsourcing solution, the ability to accelerate innovation provides a key competitive advantage.

We’re excited about having a successful case study of our open API for Foresight, and we’re also excited about partnering with an industry leader to be able to offer a comprehensive solution to an important customer need in an increasingly complex world, where successfully managing ideas is more important than ever. If you’re as excited as we are, we hope you’ll want to know more.

Last week, we attended the Front End of Innovation conference in Boston. We went in part because the agenda looked interesting but also because we were pleased and proud to see two of our customers—Tina Brown-Stevenson of Ingenix and Rami Levy of Motorola—as presenters/panelists.

We enjoyed Tina’s presentation on prediction markets, and we’re glad that someone reported back to the FEI blog about her presentation:

In a solid FEI Champions presentation to complement James Surowiecki’s keynote address, practitioner Tina Brown-Stevenson, Sr. VP Innovation and Information Group at Ingenix, talked through the implementation of a prediction market at Ingenix. As a lead-in to the details of the specific practical application developed at Ingenix, Ms. Brown-Stevenson drew upon examples from Mr. Surowiecki’s book The Wisdom of Crowds to outline the foundational philosophical elements for Ingenix’s overall approach.

We won’t complain when a neutral third party favorably compares us to Surowiecki. Tina shared some findings from several prediction market uses and confirmed that the size of the crowd is not what is important— as markets can be accurate with as few as 24 participants. Tina confirmed what Surowiecki talks about in his book— it is the independence and diversity of the crowd that enables prediction markets to be on average more accurate than a subject matter expert. Tina also shared the Ingenix approach to adjusting the interface to their constituent needs. While many public companies, such as Best Buy and Motorola, have found the traditional stock metaphor to be adopted well within their cultures, we adjusted the Ingenix interface to something easily understandable for Ingenix participants, both internal and external. Demonstrates the flexibility of our Foresight platform!

For Rami’s presentation, he shared his notes with us from the panel on innovation adoption. He described Motorola’s idea collection system and explained why an idea market was needed: to identify the best ideas by leveraging the “crowd.”

For Motorola, the value of our Foresight platform boils down to three ‘Rs’ in the enterprise:

• rewards: mostly intrinsic, e.g., collaboration, helping the company, helping others, forming relationships, learning)
• recognition: via leader boards in the market and built-in social media tools
• recreation: fun, like a game; easy to use with low barriers to entry; competition; social media access to enable “viral” messaging.

If you’d like a sense of the kind of bottom line value these three Rs offered Motorola, CFO.com has covered that topic.

We’re glad we went to the conference, and we’re glad that two of our customers are on the front end of innovation through their use of Foresight.

We’ve been corresponding with Per Mengshoel, the Head of Technology Groups at BEKK Consulting, who is pursuing an MBA at the University of California Berkeley’s Haas School of Business. For his thesis project, he has been comparing information gathering via a prediction market with BEKK’s existing process for predicting technology trends in the Norwegian market. Specifically, he’s looking at the use of prediction market tools as an alternative to existing decision making processes (typically expert-based or based on input from a small number of people) in a small- to medium-sized business. In addition to looking at the decision making process, Mengshoel is studying how use of prediction markets affects employee involvement. For his research, we provided him access to our Foresight platform.

His thesis is in progress, but he’s already revealed these findings:

• Prediction markets gather more information and more diverse information compared with BEKK’s existing processes.
• While BEKK’s existing process typically gets information for senior employees and top management only, prediction markets also allow junior employees to express their opinions.
• Prediction markets give feedback from a more diverse set of employees than the existing process.
• Prediction markets seem to be a a good supplement to the existing process — and a lot faster.

We’re excited that our platform can support academic work of this nature, suitable for immediate application in the enterprise. Best of luck to Per on completing his thesis!

Deloitte, a global leader in financial advisory and risk management services, has a variety of resources for global executives, including a publication called CFO Insights. They recently published an article entitled, “Social analytics: Tapping prediction markets for foresight.” It’s an elegant summary of how a Chief Financial Officer can leverage prediction markets in the enterprise to gain foresight.

They start with a helpful description of prediction markets:

Prediction markets are online markets that build on the principle that markets serve to aggregate the beliefs of multiple traders to generate a forecast. For example, at any given time, a stock price is the aggregate collective belief of the traders of the company’s expected future earnings allocated to the share. Like the stock market serves to assign a price to the future estimated earnings of a stock, “prediction markets” assign a value to a belief about the future or a prediction.

The author of the article, Dr. Ajit Kambil, Global Research Director of Deloitte’s CFO program, quickly gets into how and why this concept can be of tremendous value to CFOs:

CFOs can use prediction markets to reduce uncertainty. Begin by considering the greatest areas of uncertainty that affect your organization. Is it the sales forecasts in a particular business segment? Is it the differences in sales across regions? Is it the cost of a critical resource such as oil? Is it the timely completion of a particular project? Is it uncertainly about whether a project will be within budget; and the variance if it is not?

More:

The first issue CFOs should consider is the value of resolv- ing a particular uncertainty. Can, for example, knowing the delay of a project enable cost savings or other benefits? Can having better sales forecasts enable the company to confidently pay down debt? Rank-ordering uncertainties that need to be resolved, based on the value of resolu- tion, identifies a priority list of potential prediction market applications.

Frankly, we’d encourage CFOs and even board members or other C-level executives to read the whole thing [PDF].

Dr. Kambil cautions:

The technology is easy and widely available. The design of a program with incentives, recruitment of participants, good forecasting questions, and alignment to a company’s culture may not be easy to achieve. While many prediction market vendors are probably too ready to sell you their market and technology as a solution, what is really important is their capacity to support the organizational acceptance of the technology.

We, of course, offer comprehensive services with our Foresight platform, as well as robust support.

Linda Rebrovick, our CEO, was happy to share her experience with Ajit as he prepared the article.

If you’d like us to share our experiences with prediction markets and foresight, just ask!

Though we’ve done our best to try to help people understand how prediction markets can drive business value, we’re always excited to discover when others explain it in a straightforward way. In this case, we found a helpful description of the “binary option” model of prediction markets in the CAPS community at Fool.com. I.e., the mechanics of how trading works in a prediction market.

So what are prediction markets? Prediction markets generally involve the trading of binary options. You may know what options are (the right but not the obligation to purchase a given thing), and the benefits of using them (nonlinear payoff profile i.e. fixed premium/cost vs variable profit). But binary options work a little differently, the standard binary option pays $1 if a specified event occurs by or on a specified date – otherwise it pays $0.

For example ipredict has a contract on the US Fed increasing interest rates by November (here): “FED.INCR.NOV10”. This contract pays $1 if the Fed increases interest rates on or before the 4th of November 2010.

You can both sell and buy binary options. So using the previous example, if you believe the probability of the US Fed increasing rates on or before the 4th of November is greater than 0 then you would buy contracts (e.g. if you bought a contract at $0.50 and the Fed increased rates before expiry you would receive $1).

Likewise if you believed that there was no way the Fed would lift rates this year then you could sell short the contract. So for example if it were trading at $0.50 then you would sell a contract for $0.50 and on expiry if the event did not happen you would get to keep the $0.50. But of course the converse is true, if the event did occur then you would have to pay $1 to the holder of the contract, but this would be offset by the $0.50 you sold it for.

If you want to participate in a public prediction market driven by our Foresight platform, check out Logica’s FutureScope project.

The CAPS model itself, based on predictions in the financial markets, is pretty interesting.

Recently I found an application which both offers a very elegant interface as well as a different way of approaching forecasting. ~Shaun Snapp

Aw shucks, Shaun. You’re making us blush.

Shaun Snapp of Forecast Systems just put together a positive review of our Foresight prediction markets platform interface. This is especially flattering, considering that he wrote recently about the difficulty of designing good forecasting interfaces.

We stack up well against the competition in part because of the power of prediction markets to refine collective forecasting:

Consensus Point not only brings a very appealing interface, but brings the collaborative concept. Unlike SAP DP, where collaboration is more of an afterthought, Consensus Point is actually designed around collaboration. The software is different from other product based forecasting systems I have had exposure to and that should not be surprising as in its heritage is from financial trading rather than from statistics. The software is backed up by academic work in the field of predictive markets.

Thanks, Shaun, for taking a look at Foresight. If you’ve read Shaun’s review, need an enterprise forecasting solution, and want to learn how to leverage collaboration through software, you might want to contact us.

We’re very excited to have been selected to power Logica’s new predictive market, called FutureScope. Foresight, our prediction markets platform, is the underlying technology. Just as exciting to us is the inclusion of the principal partners in the project, Big Think and The Economist.

Milt Capps, who covers the local venture beat with enthusiasm, covered the new partnership in a wide-ranging profile of Consensus Point earlier today:

[Consensus Point CEO Linda] Rebrovick told VNC the Logica connection creates “a global footprint for Consensus Point,” in that Logica is believed to be the “first example of a global business service company offering a public insight and prediction market,” open to 40,000 Logica employees, Logica clients, subject-matter experts and most others who register at the FutureScope site launched earlier today.

Logica will initially use the FutureScope market to support clients exploring an array of “sustainability” issues and themes. Logica’s global information technology and business services are offered to enable clients to pursue the opportunities and problems they discover.

Logica just completed a rebranding initiative that involved an overhaul of their website. We’re impressed by both the breadth and depth of their thinking that has gone into their vision for themselves in the future, and we’re excited to see what the power of a high-profile predictive market might reveal more broadly.

Stay tuned to this space for more information in the near future. In the meantime, contact us if you’ve recently discovered the power of prediction markets and want to leverage the power of Foresight.

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.