By Chris Taylor, MIT Technology Review
The need to predict the future, as exciting as it sounds, crops up in corporate life in terribly mundane ways. Case in point: large videogame companies need to know where to put their marketing dollars many months before they complete their games. Inevitably, some games will be stinkers, hardly worth the investment of an ad campaign. But how do you know which ones?
Here's how one very large videogame company used to guess the answer: its marketing people would predict the score their games in progress would garner on the website Metacritic, which aggregates game reviews. But why would the marketing people know more than the game's developers?
Three years ago, a startup called Crowdcast suggested a different tactic. Why not take hundreds of your lowliest employees, the ones in the trenches who are actually making and testing these games, and ask them what they think the Metacritic scores will be? Better yet, why not give them each $10,000 in play money and ask them to bet on the outcome? Let them accumulate a pot of pretend wealth if they're right. Turn game marketing prediction into, well, a game.<!-- more -->
To the executives' delight, the employees' Metacritic predictions turned out to be 32 percent more accurate. More disturbingly, their accuracy was inversely proportional to their place in the hierarchy. The closer you got to the C-suites, the less of a clue you had—and the lower your pretend wealth in Crowdcast's game.
That embarrassing factoid might explain why this particular videogame company, like many Crowdcast customers, wants such stories to remain anonymous. "It's kind of experimental," explains Mat Fogarty, Crowdcast's sardonic British CEO, "and it may undermine the credibility of their awesome management."
Indeed, anonymity and uncomfortable revelations in the boardroom are Crowdcast's stock-in-trade. The San Francisco startup already boasts clients and partners as diverse as Hallmark, Hershey's, and Harvard Business School. It is built on the back of years of research into how internal prediction markets work. In such a market, managers ask employees questions about the future of their product and let them bet on the answers, without knowing who bet what. The results can be scarily accurate.