Prediction Markets in an R&D Organization
An area I have been interested in investigating further is metrics that can show the performance of a research organization. I put a lot of credence in the expression, “If you can’t measure it you can’t improve it”. As such metrics to measure the performance of a research and development organization would give the organization a better idea of where hold-ups are in the product development cycle.
One idea I would like to see implemented, which isn’t really a metric based system,but would give an organization an early warning system for projects would be a prediction market setup. In James Surowiecki’s book The Wisdom of Crowds and in case-studies of both Best Buy and Google the utility of prediction markets has been shown for use both in predicting events like sales as well as a project dashboard which can indicate a problem is occurring well before an official status report communicates the problem to the appropriate decision makers. The reason I say this isn’t a metric based system is because while individuals participate in the prediction market each uses different metrics and bits of knowledge to make a call on a particular project rather than everyone collecting the same metric.
A prediction market works similar to a stock market where you can buy or short a particular “stock”. That stock might be “Best Buy will open a store in Alaska by Jun 2015”. Market participants can then buy or short the stock thus giving a probability of perceived success. The beauty of a prediction market is the ability to aggregate large amounts of unfiltered data and communicate those results to key decision makers on a real-time basis.
If anyone has examples of this used at various companies I would be really interested in hearing about it. As always thoughts and comments are welcome!
Regards,
–dwb
3 Responses to “Prediction Markets in an R&D Organization”
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lesliefine on 11 Nov 2009 at 2:32 am #
David,
I am Chief Scientist at Crowdcast, a company dedicated to bringing prediction market technologies to bear in corporate settings. We count among our clients many of the Fortune 1000, including some key pharma companies. Prior to this, I was at HP Labs, running their prediction market initiative. It would be great to chat, and I can tell you about some of the prime (and not-so-prime) applications of our work.
Regards,
Leslie Fine
(leslie [at] crowdcast.com)
brocktice on 14 Nov 2009 at 1:08 pm #
David, I’m a fan of the related saying, “what gets measured gets managed.” I disagree that you can’t improve something if you can’t measure it, but it’s certainly harder to know whether the things that you’re doing are improving the situation.
Do you use any metrics for your day-to-day work?
David on 14 Nov 2009 at 4:06 pm #
I agree and maybe I should have said, if you can’t measure it you don’t know how much you have improved. Meaning you can give a qualitative description of the improvement but not really a quantitative measurement.
–dwb