In my quest to write hypothetical case studies on companies & organizations that need Prediction Markets, I've admittedly missed many easy opportunities. Just a quick mental scan of this summer's headlines produced several ripe candidates: The Yahoo!-Microsoft Deal, post-bankruptcy General Motors, the "closing" of Guantanamo Bay, the Cash for Clunkers program, etc. All are business or political endeavors whose fate is (or was) unknown, but whose future could have been predicted, potentially, by the proverbial crowd. If only the crowd had a Prediction Market, that is.
A Prediction Market is a crowd-sourcing tool that organizations can use for improved decision intelligence. Employees play the market ... executives get better information. These internal markets can be (and are being) used for forecasting, new product development, capital investments, and increasingly, project management.
But instead of jumping on these summer headlines and blogging up a storm, I got caught up with my own project management woes. Too many things to do, not enough time, yadda yadda.
In my case, there's no real cost to delaying my next blog post. But in the case of major initiatives in Corporate America or our government, there is plenty at stake. The costs of missed deadlines, inaccurate sales forecasts, budget shortfalls, marketing flops, rejected legislation, or failed mergers are significant, and scary. Which is why the relatively simple and inexpensive prediction market solution is so compelling.
As I've written before, Prediction Markets can't solve everything. But they can provide information that decision makers just can't get anywhere else. They can ask Yahoo! and MSFT employees for individual prognoses on the partnership, then aggregate it into actionable data. They can ask GM dealers across the country how many customers will return cars under the 60-day guarantee, ensuring the benefits exceed the costs. They can ask government officials from disparate branches the likelihood of Gitmo closing on schedule, uncovering hurdles and loopholes.
When the answers to these big questions can't be found among the usual experts or with the usual tools ... wise companies are beginning to trust the wisdom of the crowd. They're experimenting with prediction markets, wiki's, open innovation models, and the like. They're trusting the insights and ideas of their various stakeholders, not just their executives.
But many companies aren't. Many companies look at Prediction Markets and similar cutting-edge tools as unnecessary costs without guaranteed returns. This sounds interesting, but what's the ROI? That, the quintessential business question, can't be shunned. But it only takes a brief contemplation of the costs associated with big business blunders to entertain a new form of the question:
What is the cost of not doing?