Bet on It: Jump the Curve Strategy #5

In my new book, Jump the Curve, the fifth strategy I identify for helping companies innovate into the future was something I called “Bet On It.”

Here is what I wrote in the book:

In the summer of 2003, members of the United States Congress went apoplectic when news broke of the Defense Advanced Research Projects Agency’s (DARPA) program to help predict terrorist attacks and assassinations by allowing people to bet money on the likelihood of such events. (DARPA is the central research and development organization for the Department of Defense.) There is, of course, something unseemly about wagering on a tragedy, but what is ironic is that such systems have proven remarkably successful at predicting a variety of outcomes because people’s financial interests are appropriately aligned with accurately assessing the odds of the event occurring. Thus, properly used, the system could help prevent the very thing that Congress wanted to stop from happening.

What is unique about such systems is that managers receive a different type of information than they might ordinarily receive from their subordinates. For example, a few years ago a Microsoft business manager kept telling her boss that a product was on schedule to launch on time. When the boss inquired why so many of the manager’s own employees were betting that the product wouldn’t launch until the following year, the manager was forced to admit that the program had run into hurdles. As a result, additional resources were committed to the project and, while the project was still late, Microsoft was at least able to get it to the market faster than otherwise would have been the case because of the unique insight that the market-based system afforded company managers.

I mention this because just yesterday the New York Times had an interesting article entitled ”Google’s Lunchtime Betting Game” in which the company’s use of “predictive markets” was described.

What struck me from the article was the finding that workers who work in close proximity with one another tend to vote along the same lines. Surprisingly, Google sees this as good news because it confirms it belief that information moves fastest among people who are closest together. This finding, in turn, was seen as offering confirmation of the company’s “third rule for managing knowledge workers: pack them in.”

I, however, don’t think it is such good news because I don’t believe it is all that healthy for workers—especially at knowledge-based company—to all be thinking alike.

Now, I don’t actually believe that all Google employees do think alike, but I do think there is a real danger from the strategy of “packing them in” if it leads to Groupthink. Due to the accelerating pace of innovation, I am convinced that most change is going to come from outsiders—and people on the fringe. To tap into these innovative ideas, it is important to ensure your company has a means of accessing outside information and ideas. The reason is because even if everyone in your company agrees a certain product or idea is “a sure thing,” “sure things” sometimes have a way of exploding and, in the process, taking the whole company down with it.

The moral of story is that predictive markets can be a useful tool, but only a fool would bet the farm on its predicted outcomes—especially when most of the people doing the betting are like-minded.

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Jack Uldrich is a writer, futurist, public speaker and host of jumpthecurve.net. He is the author of seven books, including Jump the Curve and The Next Big Thing is Really Small: How Nanotechnology Will Change the Future of Your Business. He is also a frequent speaker on future technology and future trends, nanotechnology, innovation, change management and executive leadership to a variety of businesses, industries and non-profit organizations and trade associations.