For the past two years, Google has operated a very successful internal crowdsourcing project open only to its employees. The project forecasts product launch dates, new office openings, and other strategic corporate decisions. Google’s employees have accurately predicted the probability of more than 200 separate events, which might be one of the reasons Google is able to gain and maintain such wide competitive margins.

Crowdsourcing at your service
Several software development firms make it easier for companies to engage in predictive markets by selling or leasing a hosted, turnkey version of predictive market software. Two such companies are Inkling and Predictify.

Inkling has developed a product called Inkling Markets that helps customers tap the collective wisdom of partners, employees, and customers.

“In most companies, people work in one department, and although they have been ‘narrowcasted’ to focus on one position, they probably have a good idea of what’s going on in other areas of the company," says Adam Siegel, CEO and co-founder of Inkling. "And they probably have informed opinions about all sorts of topics. Before prediction markets, there wasn’t really a good way to capture the collective intelligence within a corporation.”

ABC7, the San Francisco affiliate of the ABC network, has implemented Inkling Markets on the station’s Web site in the ABC7 Futures Market. ABC7 asks its viewers questions about local and international news items to generate both short- and long-range predictions. Some questions range from “Who will be Barbara Walters’ most fascinating person of 2007?” to “Will the price of oil top $100 a barrel in 2007?”

Ellen Conlan, vice president of station marketing and research at ABC7, says, “We refer to the prediction market results in our newscasts. It performs the function of a poll, but it gives us a better indication not of what the predictors want to happen -- as is the case with a poll -- but rather what they think is most likely to happen. So it tends to be very accurate.”

Predictify offers the same type of service, except that, in addition to working with companies, it opens its prediction markets to the public. Anyone can pose a question to the market at any time.

“We also collect demographic information about those users, and we allow the question-askers to filter the data based on those demographic attributes. So you can understand not just what the crowd is saying but who they are, which allows you to see that women are more optimistic than men about a certain topic, and evaluate what that means for you,” says Parker Barrile, co-founder and CEO of Predictify.

Aggregation and scarcity in predictive markets
Predictive markets are known to be extremely effective in forecasting political elections. They also help candidates see which issues they lead on, as well as the areas where their messaging needs work.

Smaller civic organizations can also benefit. The University of Iowa's on-campus club the University of Iowa Democrats -- the largest Democratic club in the state of Iowa -- uses Predictify’s tool to pull greater insights out of political public opinion polls.

Atul Nakhasi, a junior at the University of Iowa and president of the University of Iowa Democrats, is amazed at the insights.