Erin on what we do:

Consensus Point companies — clients include General Electric, Best Buy and Qualcomm — can post a question to the online market, such as whether a particular project will be completed on time. Participants then can answer the question, betting a certain number of points on an outcome depending on their confidence level. Correct answers return more points, lead to higher standings on the market’s leader board and possibly other rewards or incentives for the participants while helping executives more effectively manage the business.

And an excellent first Q&A:

How do prediction markets differ from other types of forecasting models or decision tools used in business today?

Traditionally, all these prediction models are algorithms that take historical patterns that say this is what happened in the past, and we’re going to extrapolate that this pattern will continue in the future. That’s how forecasting systems have worked forever. And they’re very successful when you have a historical pattern.

What they can’t do is detect early-warning indicators that, while this has always happened in the past, something’s changed. So that’s the power of what we have, the ability to be your eyes and ears on the ground  every minute, minute by minute. So as the leader of a company, I know I’ve got the facts as they stand today as I’m trying to make a decision.

Other good questions:

• What is the user experience like for market participants?
• What incentives do companies use to encourage participation and correct answers?
• Do you have any good examples of how a prediction market has helped one of your customers?

For Linda’s answers, go read the whole interview. But we’ll leave you with her thoughts on our local impact:

We’ve got to get more companies like this in Nashville. This is a traditional California company. The California [venture capitalists] understand these companies and put money behind them. The California companies network the executives and help each other get into other [opportunities]. We don’t yet have that here.

I was chair of the Nashville Technology Council, and I’m on the Nashville Entrepreneurship board. I’m trying to get us to become a hub of some sort as it relates to new and exciting innovative social media and enterprise 2.0 technology. This is the next wave, and we ought to have these companies in Nashville.

It’s fun to be at an exciting technology company with a great CEO! Especially fun because we have great customers. If you’d like to become a great customer, contact us.

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.

On Friday, Prediction Markets Cluster kicks off their Collective Intelligence Summit in Seattle. This year’s theme is “Leading Enterprise Social Media and Prediction Markets.” We attended last year’s summit in Chicago and enjoyed seeing one of our customers present.

This year, Christel Alvarez, our lead Account Executive, will be representing us to discuss prediction markets in the enterprise. Those who attend can expect to hear her discuss strategies for making prediction markets successful in enterprise applications through the rule of three: a combination of consultant, customer, and Foresight.

If you’re interested in the power of collective intelligence for competitive advantage, we hope to see you there!

“Integrating objective thinking from top industry leaders, innovators, and leading academics, as well as the Logica community of consulting experts to gain in-depth insight, will enable us to spot trends ahead of time for our clients. Providing them with a way to read the market will offer them an additional competitive advantage,” commented Amanda Mesler, Chief Client Officer, Logica. “Consensus Point brought us a technology platform and market-leading solution to create a dynamic collaborative forum.”

Logica FutureScope is the name of the Logica prediction market to guide the provocative and insightful observations regarding the ecosystem in order to enhance business growth and productivity. The predictions are focused around sustainability, future IT and cloud services, and security. You are invited to join us to offer your thoughts at www.logicafuturescope.com

“We are thrilled to be working with Logica on their thought leadership initiatives,” said Linda Rebrovick, Consensus Point’s CEO. “We are confident our unconventional capabilities will offer Logica and their customers a uniquely rapid and robust lens into the future, which could never be accomplished with traditional research methods. Prediction Markets are the new leader in modelling social intelligence-based perspectives on any degree – on any scale.”

About Consensus Point, LLC – Consensus Point, is the leading provider of enterprise prediction markets serving corporations and government. Consensus Point helps their customers tap into the intellectual capital of their most valuable assets, their employees and customers, to reduce the risk of uncertainty, improve revenue through accurate forecasts of products and services, and manage projects with immediate insight into future completion dates and budgets. For more info, please visit www.consensuspoint.com.

About Logica – Logica is a business and technology service company, employing 39,000 people. It provides business consulting, systems integration and outsourcing to clients around the world, including many of Europe’s largest businesses. Logica creates value for clients by successfully integrating people, business and technology. It is committed to long term collaboration, applying insight to create innovative answers to clients’ business needs.

Logica is listed on both the London Stock Exchange and Euronext (Amsterdam) (LSE: LOG; Euronext: LOG). More information is available at www.logica.com.

Contacts:
Linda Rebrovick
615-319-2034
linda@consensuspoint.com

Louise Fisk, Logica
+44 (0)7798 857770
louise.fisk@logica.com

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.

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!

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!

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.

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.