I recently had the opportunity to discuss Prediction Markets with John T. Maloney of Colabria. The KM and Colabria Clusters® are open, federated action/research networks - you can find more about them here .
[Background about Prediction Markets: Wikipedia reference , confab.yahoo event on PMs , Chris Masse vortal]
Here are some excerpts from our conversation:
Q - Let me start with a basic question. Why should companies be interested in Prediction Markets? What's in it for them?
JTM - Better decision making, improved knowledge management, dramatic cost savings via far better forecasting.
Q - So let's say that I'm convinced that my company should set up some PMs to improve prediction accuracy and tease out common (but hidden) knowledge - how do I convince higher-level management of that?
JTM - Well, you need to make a fairly routine business case. This is the heart of the issue, and the main reason for crafting an industry consortium, the PM Cluster . So far, PMs have been interesting research tools for scholars, academics and corporate research scientists. These particular populations are not equipped to make compelling business cases to management, to create 'best practices', hence the consortium.
Q - How do you quantify the benefits of the Prediction Market?
JTM - I do not assign these sort of qualitative measures, rather, it is just
part of the toolkit. Tools are heavily dependent on context. What is
accurate in one setting may collapse in another. This has been the
problem since time immemorial -- the flawed focus on tools rather than
context. The tricky part is
finding the right 'contract' or future. The Web based tools are simple,
easy. You need to 'find the pain' like anything else.
Examples are Microsoft and their rather bogus
release schedules, Intel and where/when to make a new chip foundry or
HP on how much memory to buy in a month... These are billion dollar questions.
Q - Once you get a prediction market going - how do you maintain/increase participation?
JTM - Focus on intangible benefits, reputation, experience, outcomes.
Q - Could you expand on that?
JTM - Yes, people are motivated and support what they create, value, which isn't always apparent or measurable. They operate in complex social value networks that are hard to see or understand with a conventional mindset... it is why value network analysis is rising so fast. Prediction markets and intangible value are closely linked but only a few have discovered it yet.
Q - What are the best applications initially, within a company, for a Prediction Market? Sales forecasting? Project planning? Supply chain predictions?
JTM - Yes, yes, yes. Competitive intelligence and feature function analysis are HOT too.
Q - Is 2007 the the year PMs will hit the broader public consciousness? With confab.yahoo, blog articles and so on, on the rise ...
JTM - Note that the The AEI-Brookings Joint Center is sponsoring the worldwide Prediction Markets Conference in Washington DC on January 18, 2007. This is an important, seminal development.
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Posted by: Wholesale Electronics | November 23, 2010 at 11:31 PM