Oracles: How Prediction Markets Turn Employees into Visionaries [Hardcover]

Donald N. Thompson (Author)

Book Description

Publication Date: October 1, 2012

From the selection of the new lead in a Broadway musical to forecasting congressional elections to the delivery delay of the Boeing 787 Dream liner, prediction markets have solved a fascinating range of problems by aggregating the socalled wisdom of crowds. For many companies, prediction markets have remained an interesting curiosity. But operating under the radar, a number of innovative organizations General Electric and Google, Motorola and Microsoft, HP and Eli Lilly, plus the Central Intelligence Agency have tapped employee insights and used markets to make better decisions and to allow employees to become visionaries.
In Oracles, Donald N. Thompson explains how these organizations use prediction markets to change how business gets done. The successes and failures of these organizations, along with the roadblocks they face and overcome, provide a road map for leaders brave enough to test their expertise against the collective wisdom of their employees and the market to the betterment of the bottom line.

Editorial Reviews

Review

“Donald Thompson shows that group predictions can help unveil hidden knowledge. They can replace market studies and even diminish the need for endless meetings and brainstorming sessions. Thompson provides numerous examples and urges business managers to test out the collective wisdom of their company ‘crowd.’” — Business Digest

“Oracles offers a fresh look at improving decision-making skills.” — CHOICE Magazine

“… there are enough examples of corporate successes for any executive to find use in this book, building on the notions of the wisdom of crowds and the value of open-book management.” — The Globe & Mail

ADVANCE PRAISE for Oracles

“Oracles is a fantastic blend of the visionary and the practical. Don analyzes both the transformational potential of prediction markets and the organizational complexities that make realizing this potential a challenge. A comprehensive history for anyone considering using prediction markets to change their organization.” — Leslie Fine, Chief Scientist, Crowdcast

“Thompson delivers a thorough but accessible survey of prediction markets, covering everything from their theoretical foundation to current best practices—a must-read.” — Jeff Severts, Chief Marketing and Services Officer, Best Buy Europe

“Oracles provides a comprehensive look at prediction markets and explores the extraordinary results and challenges of the early adapters and their providers. If you are considering a prediction market for your company, you need to read this book.” — Linda Rebrovick, CEO, Consensus Point

About the Author

Donald N. Thompson is a professor of marketing, emeritus, at the Schulich School of Business at York University. He is the author of ten books, most recently The 12 Million Stuffed Shark: The Curious Economics of Contemporary Art.

Product Details

• Hardcover: 261 pages
• Publisher: Harvard Business Publishing (October 1, 2012)
• Language: English
• ISBN-10: 1422183173
• ISBN-13: 978-1422183175
• Product Dimensions: 6.2 x 1 x 9.3 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 4.3 out of 5 stars  See all reviews (3 customer reviews)
• Amazon Best Sellers Rank: #150,041 in Books (See Top 100 in Books)
  • #60 in Books > Business & Investing > Management & Leadership > Planning & Forecasting

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Most Helpful Customer Reviews

4 of 4 people found the following review helpful

3.0 out of 5 stars Not essential reading August 5, 2012

By Colin E. Manning

Format:Hardcover

This is a very readable book. If you are interested in learning about prediction markets this book is not the best starting point. Managers interested in collaboration technologies should read James Surowiecki's The Wisdom of Crowds first. If you already know a bit about prediction markets, this book has some collected some useful examples, but doesn't add very much to the existing texts. For anyone planing on setting up a prediction market it does provide very useful insights on how one might deal with the cultural problems and institutional resistance that markets may face, and this book covers more of that ground than any other.

Readers might be confused by the author's very broad interpretation of the term "Prediction Market" and a title with "prediction" removed might be more accurate. The opening example used in the book describes a very interesting and very clever idea generation and development tool used by Rite-Solutions. However, this tool is not, strictly speaking, a prediction market. Elsewhere in the book, Google's PageRank algorithm is also described a prediction market. This is a bit of a stretch and may confuse rather than clarify the important points.

On occasion the author strays too far from the point. Chapter 17, that debunks the most impressive example used in Surowiecki's book, could have been summarized in a few paragraphs.

If you are a computer scientist or an engineer the MBA style of this book may frustrate you in places. And the assertion that the Y2K bug was an elaborate money-making hoax is sure to alienate software professionals....

For an in-depth discussion of Prediction Markets try Hahn & Tetlock's Information Markets: A New Way of Making Decisions. Sunstein's Infotopia: How Many Minds Produce Knowledge is also a better buy than this book.

All in all this is a welcome addition to the field, but not one of the core texts. Useful, but missable. Read more ›

2 of 2 people found the following review helpful

5.0 out of 5 stars Why and how "prediction market democracy" tends to make better decisions that, eventually, produce better results June 18, 2012

By Robert Morris HALL OF FAMETOP 100 REVIEWERVINE™ VOICE

Format:Hardcover

Donald Thompson is an advocate of "prediction market democracy" because a prediction market can "revolutionize the way companies operate." As I began to read his book, I was reminded of material in Judgment Calls, co-authored by Tom Davenport and Brooke Manville, in which they offer "an antidote for the Great Man theory of decision making and organizational performance": [begin italics] organizational judgment [end italics]. That is, "the collective capacity to make good calls and wise moves when the need for them exceeds the scope of any single leader's direct control."

I was surprised to learn that "the prediction market business" has a long history, dating back to ancient Greece and an oracle, Gaia, an earth goddess in residence at Delphi on the slopes of Mount Parnassus. According to Thompson "business organizations are bad at aggregating their employees' thinking on critical issues. Also, Gaia is no longer available. In the absence of divine revelation or assistance in lesser form, organizations are relying more heavily on what can be learned from successful prediction markets, those that meet four requirements: diversity of experience and talents among the human sources; an independent decision-making process that protects participants from external pressures (e.g. "bullying"); an effective way to aggregate information from various sources; and incentive(s) sufficient to get participants to "take the exercise seriously."

This book's subtitle refers to employees who can become "visionaries...." I am intrigued by the possibility of adding ophthalmology to a supervisor's core competencies, enabling her or him to improve direct reports' vision so that they can "see" better in two quite different ways: recognize what is often ignored because others deem it "unimportant," and, understand what is often dismissed because others deem it "insignificant."

Throughout his lively and eloquent narrative, Thompson provides a wealth of information, insights, and counsel with regard to dozens of major business situations and issues such as these:

o Why and how predications based on collective judgment are more reliable in sports, film, election, and estimation markets
o How "bottom-up" prediction markets have been of substantial benefit to Google, Best Buy, and Rite-Aid
o Lessons to be learned about prediction markets from Fortune Elkins, the "Technology Evangelist"
o James Collins, How the Mighty Fall, and board-initiated markets
o Predictive markets and anti-terrorism initiatives after 9/11
o How prediction markets can help to determine relative value of government policies
o When and how to use prediction markets to make long-term predictions
o The desirability of running markets in a high-risk organizational setting
o What to do (and not do) when an organization's leaders "really don't want to know"
o The importance of "exercising exercising skepticism when faced with the results of an opaque prediction market"
o How to avoid "unnecessarily bad decisions"

No brief commentary such as this could possibly do full justuce to the scope and depth of material that Donald Thompson provides in this book. While I re-read it, two key points became even clearer to me. First, it is imperative to create and then sustain an orgaiational culture within collective curiosity as well as mutual trust and respect drive effectuve communication, coopeperation, and c ollaboration. Also, prediction market methodology is more reliable than any other options I am aware of but it is by o means infallible. Paradoxically, its success is interdependent with its failure. Prediction market resulkts, indeed all predictions, Thompson notes, "have to be wrong sometyimes in orderv to be accurate. Unloess a predictionmarket says `100 percent' there is never certainty of the event happening. At 100 percent, there is no point in running the market." Read more ›

5.0 out of 5 stars Example-packed introduction to the benefits of prediction markets November 29, 2012

By Rolf Dobelli HALL OF FAMETOP 1000 REVIEWER

Format:Hardcover

What do casting a hit musical and predicting the space shuttle Challenger disaster have in common? Both endeavors demonstrate the value of prediction markets - a way to aggregate knowledge, hunches and crowd wisdom - for reaching the best decision or the correct answer in a fashion that resembles a stock market. Organizations use prediction markets, or similar tools, to find a variety of solutions, from deciding on product launches to predicting the winner of presidential elections. Economist Donald N. Thompson explains how these powerful but little-known (and even less-understood) processes can help you improve your business. His text is not a how-to manual but rather a collection of anecdotes, each of which teaches a lesson on how, when or why to use a prediction market. getAbstract finds his treatise to be an easy and surprisingly entertaining read, but what will aggregated reader reviews predict? Only the crowd knows.