Future Now
The IFTF Blog
Idea Management & Prediction Markets
When I first joined the Institute four years ago, I spent much of 2006 looking at the prospects of prediction markets for long-range forecasting. For the 5-10 year time range that IFTF typical does forecasting for, prediction markets were of limited use. People just didn't have the patience to make long-term bets.
But in the meantime, prediction markets have taken hold as short-range business forecasting tools, along the lines of the earliest experiments conducted by Bernardo Huberman and his colleagues at HP Labs to help that company do a better job at forecasting volatile DRAM prices, a critical input into PC and laptop manufacturing.
Given the spread of prediction markets as a general business forecasting tool, and the growth of prediction market solution providers, it's really interesting to see one of the leaders Crowdcast teaming up with Brightidea, a company I interviewed last year for IFTF's report on the Future of Lightweight Innovation. By combining idea management tools with prediction market tools, I expect this partnership to deliver sophisticated but fun ways of quickly gathering and evaluating the potential of new business innovations.
More importantly, the combination of these tools opens the door for disrupting innovation systems inside companies in ways that allow lightweight innovation to happen earlier. As I wrote a few years ago, one of the novel characteristics of prediction markets within organizations is that it allows senior leaders to directly ask questions of and listen to what the entire organization is thinking, without having it filtered through middle managers. That is an incredibly disruptive shift in information flows.
Why is this exciting? Because it means that little ideas that could be quickly prototyped using lightweight models - fast, capital efficient, and end-user engaged - won't get filtered out through multiple levels of management. Senior leaders will be able to see the constellation of ideas and innovations rather than just the filtered picks of breakthrough ideas. In my mind, that's the first step to driving organizations towards a model of fast, incremental innovation and away from a Quixotic quest for blockbuster ideas.