It has been suggested that EPMs have helped Best Buy getting it right on the ‘HD-DVD versus Blu-Ray’ issue. It’s a boatload of bullsh*t. I know a lot about technology intelligence. It should be done by a smart and curious operator. There is no need of enterprise prediction markets to do this task. The tools you need consist of a bunch of IT news aggregators and a good search engine. Consider this:

The Inevitable Move Of iTunes To The Cloud

In the ‘cloud’ piece above, there are facts and there are speculations. You’ve got much more technology intelligence reading the ‘cloud’ piece above than you would get from a crude, plain and simple prediction market. Gimme a break with EPMs. Make no sense at all.

Contrast EPMs (which are costly) with public prediction markets (a la InTrade or BetFair), where probabilistic predictions are offered for free. That makes all the difference for the reason that the added accuracy brought by prediction markets is very small. Market-generated odds are handed out for free to journalists —still, few of them take the bait. The market-powered crystal ball is worth peanuts.

The reason CEOs are paid millions is that only a small percent of the population of business administration managers has the ability to cut through the non-sense and the balls to cut the cost of the non-sense. It is a rare skill. I am calling on CEOs to end EPMs. Right now.

This blog is not geared toward the existing Prediction Market intelligentsia. While I would be honored to have fellow enthusiasts read and critique this blog, I’m not writing this for them, specifically.

I’m writing for a general business audience, decision makers in particular. The discussion will be geared toward people who may have never heard of Prediction Markets, may be minimally aware and curious, may be knowledgeable but still skeptical, or who may be interested but need help engaging others within their organization.

Dawn Tevekelian Keller’s goal is to evangelize enterprise prediction markets:

This simple but powerful truth is why Prediction Markets could potentially change the course of events for Boeing and its Dreamliner jet. By enabling the company to swiftly and accurately tap its own collective knowledge, [prediction] markets create an intelligence engine with infinite application and shelf life.

All this is gentle, she capitalizes “Prediction Markets” in her posts to make it more respectable, but where is the scientific evidence? The name of her blog “the answer is in the crowd” suggests that she believes that collective forecasting brings a giant-size added accuracy, which is not the case, in fact. People who evangelizes collective intelligence should make modest and humble claims.

UPDATE: They have just brought the Best Buy quote down.

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One short video:

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One long video:

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APPENDIX: A good blog post on enterprise prediction markets

Brought to you by Koleman Strumpf (circa November 2007):

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Henry Berg, Microsoft <slides>
Discussant: Robin Hanson (George Mason Department of Economics) <slides>
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Christina Ann LaComb, GE (The Imagination Market; abstract is free, text is gated) <slides>
Discussant: Marco Ottaviani (Kellogg School of Management, Management and Strategy) <slides>
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Dawn Keller, Best Buy (Best Buy’s TAGTRADE Market) <slides>
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Bo Cowgill, Google (Putting Crowd Wisdom to Work) <slides>
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Jim Lavoie, Co-Founder and CEO, Rite-Solutions <slides>
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David Perry, Co-Founder and President, Consensus Point <slides>
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Mat Fogarty, Founder and CEO, Xpree Inc <slides>

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Tom W. Bell, Chapman University School of Law <slides>

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James Surowiecki: The premise is that under the right circumstances, the collective judgment of a large group of people will generally provide a better picture of what the future might look like than anything one expert or even a small group of experts will come up with. [...]

James Surowiecki: The Wisdom of Crowds is not an argument against experts. It is saying that you shouldn’t rely wholly on the judgment of one person or even a very small group of people. But for a crowd to be smart, it needs to satisfy certain criteria. It needs to be diverse, so that people are bringing different pieces of information to the table. It needs to be decentralized, so that no one at the top is dictating the crowd’s answer. It needs to summarize people’s opinions into one collective verdict. And the people in the crowd need to be independent, so that they pay attention mostly to their own information and don’t worry about what everyone around them thinks.

James Surowiecki: [...] One shortcoming is that a lot of people inside organizations don’t find the market mechanism intuitive or easily understood. They find it very challenging to use, which limits the pool of people who participate.

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On James Surowiecki’s last remark, I would say that Robin Hanson’s MSR technology (which powers most enterprise prediction exchanges but Google’s one) brought much needed simplification to trading.

Overall, a good roundup, but the conference speakers should have mentioned Robin Hanson‘s pioneering work, and McKinsey should have invited him. He would have towered anybody and given great insights.

See Jed Christiansen for other remarks.

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As an aside, I’d say I prefer the sketch that is supposed to represent Bo rather than the real photo. The sketch makes him look like he is subtitle, charming, smiling, humble, and modest —quite a quantum leap.

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Bo Cowgill – Economics at Google

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• PhotoShop designers improve the look of models on glossy magazine covers.
• Sketchy artists improve the look of testosteroned, ultra-serious, ambitious, young business managers.

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Previously: Do Google’s enterprise prediction markets work?

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With Bo Cowgill (Google) and James Surowiecki (The Wisdom Of Crowds).

Registration needed.

This is the transcript of the roundtable of the recent McKinsey conference at Dubai, United Arab Emirates.

I’ll excerpt this document, tomorrow. I don’t have time right now; I have to go.

You can put comments, just below, in the meantime, of course.

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Image Credit: Chris Gash for the New York Times

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Adam Siegel of Inkling Markets is also out with a post on that NYT article, but it is of no intellectual interest. Maybe Adam should blog less quickly and eat more fish.

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I forgot to tell you, the other day, that Best Buy is a Consensus Point client, but you knew that already.

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Previously: The New York Times is telling the business world that enterprise prediction markets are an essential management tool.

[Via Xpree]

Previously: Do Google’s enterprise prediction markets work?

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