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.

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.

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.

The Prediction Market Clusters in collaboration with Aurora WDC, Consensus Point, University of Chicago Gleacher Executive Center and many others announces the Prediction Markets Summit and Collective Intelligence Cluster Friday 6 November 2009 in Chicago, Illinois, USA.

San Francisco, CA (PRWEB) May 31, 2009 — The Prediction Market Clusters in collaboration with Aurora WDC, Consensus Point, University of Chicago Gleacher Executive Center and many others announces the Prediction Markets Summit and Collective Intelligence Cluster Friday 6 November 2009 in Chicago, Illinois, USA.

Prediction Markets Summit and Collective Intelligence Cluster The venue is the stunning University of Chicago Gleacher Executive Center in Chicago, Illinois, USA. 

Learn how prediction markets, social media and collective intelligence networks are fundamentally altering the enterprise landscape. New forecasting techniques and technologies are driving executive decision making, leading collaborative forecasting and optimizing supply chain management. Engage with experts in knowledge markets that are reshaping all practices of knowledge management (KM), advancing innovation and propelling enterprise knowledge ecologies of the future.

“There is not much that any of us do that is more important than telling the company what we know.” Jeff Severts, EVP, Best Buy

We are thrilled several key scholars and thought leaders will join your cluster including:
Robin Hanson, Professor, Economist, Polymath, George Mason University
George Neumann, George Daly Professor of Economics, University of Iowa

In 2004 James Surowiecki published his now-famous book, The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations. For many this milestone introduced the era of collective intelligence for people, business, institutions, the environment and civil society.

“Thanks for organizing an extremely useful and informative workshop!” – Professor Tom Malone, MIT Center for Collective Intelligence

Testimonials

New ways to share, trade and aggregate information using Internet-based markets are exploding. These powerful Web 2.0 social media and network knowledge markets help companies, schools, governments and individuals to acquire and master ever-growing bodies of knowledge. These prediction market capabilities achieve mastery knowledge management (KM) and collective intelligence with stunning speed, efficiency and accuracy.

“Prediction markets are brutally honest and uncannily accurate.” – Geoffrey Colvin, Fortune Magazine

New collaborative market mechanisms and social innovations are driving collective intelligence networks. They resolve questions of science, technology, management, strategy, planning and policy far better than experts or management.

Collective intelligence inhabits the ceaseless flurry of self-correcting social exchanges, social networks and collective knowledge markets. They cover everything from politics and business plans to sports and new product features. Enormously potent, these social networks and markets generate new ideas and amass and refine knowledge and collective wisdom with blinding speed, low cost and accuracy.

Collective intelligence networks and knowledge markets have become commonplace in the enterprise. Top firms using prediction markets are Best Buy, Google, Microsoft, Eli Lilly, Abbott Laboratories and Yahoo! to name a few. Major analysts firms declare prediction markets critical to Enterprise 2.0 information and knowledge management portfolios.

“A company that can predict the future is a company that is going to win.” – Bernardo Huberman, PhD, Senior HP Fellow, HP Labs

Cluster sessions are focused, practical and conversational. They are for executives, directors, mangers, users and practitioners having immediate needs to apply collective intelligence networks and market mechanisms to advance enterprise business outcomes through mastery of collective wisdom.

Pricing and Availability

Registration for the Collective Intelligence Cluster is open and available now. All are welcome. The event participant tuition, including full-day experience, meals, refreshments, books, reception and materials is $399.00 Secure online event check-in and registration in advance required. Early-bird registration ($299.00) is open until 30 September 2009.

Prediction Markets Summit and Collective Intelligence Cluster

Collective Intelligence Cluster Sponsors

Sponsors of the Collective Intelligence Cluster are the world’s leading producers of prediction market software, services, exchanges and expertise. They supply continuous innovation in prediction markets and collective intelligence networks. They include Aurora WDC, ConsensusPoint, Mercury-RAC, Prediction Market Clusters and many others.

About Prediction Market Clusters

The Prediction Market Clusters, founded in 2004, are the global industry commons and open community for prediction markets and collective intelligence networks worldwide. The open, agnostic network is a focused collaboration of vendors, academia, traders, users, developers, markets, regulators and stakeholders. The goal is to provide awareness, diffusion, adoption and pull-through for enterprise, institutional and consumer prediction markets. The Prediction Markets Cluster is the worldwide Next Practices leadership network for collective intelligence networks practices, tools and theories. For more information, please visit Prediction Markets Cluster.

For more information, discounts and to sponsor the Collective Intelligence Cluster, please contact Jennifer Hulett, Tel: 714-458-3826 Fax: 714-572-3742, for details.

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.