Different divisions, different goals
March 4th, 2007When trying to build support for a series of prediction markets in a business, one fact must be understood: different divisions have different goals. This matters because each function within a business should have prediction markets pitched to them individually, with a focus on how their needs can be met.
For example, I have posted before about the three types of markets that are ideal for prediction markets in the corporate sector. They include project management, quantifying an industry, and quantifying risk.
Let’s think about a company that really needs predictions markets, one that requires massive research and development work before a product is released, and think about what divisions of that company requires.
One set of stakeholders that need to promote prediction markets are the research and development directors, project managers, or whatever title is appropriate. What they need to know is progress against targets for their project, ie, the project management prediction markets. This could be a delicate situation; the project manager may be surprised by a result showing their project months behind! In the long run, having this forecast is far better for the company, as decisions can be made much earlier to control costs and damage from slipped projects. If a company is banking their Q4 results on a product in the pipeline, when would they prefer to know that the product is going to slip to Q1? (Before or after they’ve put marketing cash behind it and discussed it with industry analysts?) Project managers and company leadership will be very interested in the results from project management markets.
Another important set of stakeholders is the sales/marketing divisions in a company. They are interested in sales, so the prediction markets regarding sales predictions are clearly ideal for this audience. These might be sales for next quarter, sales across the next year, or other time periods. The same kind of markets can be used to help determine which products to put marketing muscle behind, or even fund in the first place. (This was the focus of a New York Times article on prediction markets in a company called Rite-Solutions.) Prediction markets that inform key marketing decisions should be the focus of any efforts to pitch a project to the sales/marketing divisions.
Finally, any number of divisions in a company could be interested in a pitch that quantifies risk. A metric on product quality (as measured by known software bugs, service outages, or any other hard data) would impact both development personnel like engineers, the marketing division, and potentially company leadership at the top. These data points are important measures on the entire company’s performance, and therefore touch many functions throughout the organisation.
So just as different types of markets answer different kinds of questions, the benefits of the specific markets should be pitched differently within a company. Each function deals with different problems, and those should be identified and benefits from the appropriate type of prediction market promoted separately. This support will help ensure the widespread adoption and eventual success of your organisation’s prediction markets project.
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