Ever realize just how much savvy information is available in your organization? Ever wonder just how far you could take your company as CEO if you could only tap it?
The latest McKinsey Quarterly (requires subscription) has a useful primer and group discussion on a practice known as “prediction markets.” Simply put, the theory involves getting to various people far down in your company who actually deal directly with customers, product development and marketing and have a a rare and rich aggregate of knowledge. True, outside experts can help, but they can be expensive and often can’t provide much more information than your own people who could be right at your own fingertips.
One way companies can tap this treasure trove of intelligence is to use the Web or an Intranet so that employees can post anonymous opinions on a specific topic. According to McKinsey, the topics must be written precisely, initiators must be comfortable with results and legal and regulatory considerations must be addressed. Firms could actually get into trouble with the Securities & Exchange Commission if they push too much confidential and privileged information down the chain.
Yet the results can be encouraging. In the discussion posted on the McKinsey website, Jeff Severts, vice president and general manager of Geek Squad, said that in one case, his company sent hundreds of e-mails to employees asking what they thought sales levels would be for a product in February 2005. Responses were 99.5 percent accurate, a full five percentage points better than the outside experts the firm had hired to do the same analysis.
Severts said he was motivated by a book, “The Wisdom of Crowds,“ by New Yorker business writer James Surowiecki, who participated in the talk. Other participants include Todd Henderson, assistant professor at the University of Chicago Law School and Bo Cowgill, product manager at Google.
Their discussion is a good, quick read and could inspire executive. Check it out.
