Marketing PMs to Business

Another thing that Ken Kittlitz eloquently notes, and Mike Linksvayer echoes, is this:

"...the accuracy of these markets may not be their prime attraction to organizations. Rather, the fact that they help make people aware of differences of opinion, and forge a community that can discuss such differences, may be their strongest feature."

Well put, Ken. I've believed for some time that debate about the usefulness of PMs has focused too much on a strawman of perfect predictive precision at the expense of their ability to improve on what are often broken mechanisms for organizational alignment and cross-silo/cross-functional learning and norming. (KM gurus, are you listening?) Or as an old colleague of mine used to put it in reference to designing and facilitating strategic planning processes: "It's the discussion, stupid."

All of which raises the open question (riffing off the Michael Porter quote in my last post): In the minds of prospective PM buyers, what are prediction/decision markets meant to replace?

My own take is that they're starting to be seen by some large organizations as a supplement to many things (e.g., market research, supply chain forecasting, capacity allocation, product development). But there aren't yet any good public examples of true substitution in the sense of dropping the old and wholly trusting the new. (Please chime in if you know of any examples I'm not aware of.) As I've noted before (as have others), the mechanics of how PMs (and markets in general, for that matter) reach equilibrium are too 'black box' and suspect for many managers to stomach, especially when big decisions and careers are riding on what looks like an overly simplistic numerical result.

As with any demonstrably worthwhile new technology or method, clearing the hurdle of institutional risk aversion is only a matter of time. And with true substitution (as opposed to marginal experimentation), the budget floodgates will finally open. That's my prediction, and I'm sticking to it.

Comments

[Suzanne Shu]

One of the big factors that influences whether any piece of information is utilized in an organizational decision is how "justifiable" or defensible it feels. I think prediction markets are still at a point where executives don't feel comfortable justifying their decisions to managers or stakeholders as "we did it because the market said this was the right answer". As the use of PMs accelerates in other areas, like politics and trading markets, and as books like Surowiecki's are more widely read, then using PMs as inputs to organizational decisions will be a more accepted practice.

Your point about the value of the discussion, rather than just the final result, is incredibly important. I agree that this is where the real value of these tools come into play. Your earlier post(s) on corporate blogging and its intersection with PMs captures this idea as well... I've often thought that one area where corporate blogs could be really useful is in generating conversations around strategic planning or scenarios, almost like Delphi or other methods provide. The real key for any organization is going to be having the right person who can launch the conversations in a way that generates the necessary enthusiasm and leads the discussion in the right direction.