Les Jones

E-commerce > Futures Markets Inside the Corporation

Tuesday E-commerce Report #16

Marginal Revolutions blogs about the use of simulated futures markets as decision-making tools inside corporations:

When trading stopped, the scenario behind the highest-priced stock was the one the market deemed most likely. The traders got to keep their profits and won an additional dollar for every share of "stock" they owned that turned out to be the right sales range. Result: while HP's official forecast, which was generated by a marketing manager, was off 13%, the stock market was off only 6%. In further trials, the market beat official forecasts 75% of the time.

It took me two seconds to think of an application for simulated futures markets at work. We have to decide which new product lines to carry, out of hundreds offered to us every year. Using the futures concept, we may be able to do a better job determining which new lines we should add, and which existing lines we should keep or drop.

Another application would be dividing territories and client lists among salespeople.

So there's the idea, but software would help implementation. Can anyone recommend this kind of futures software? I'm thinking of software along the lines of BlogShares. (Come to think of it, I can see BlogShares being turned into a commercial product for these kinds of internal corporate futures markets.)

For an easy squeezy version of this, one could use an auction format. For instance, take the second idea above and have salespeople bid on clients using either voice auction or silent auction. Each salesperson would start with a fixed amount on Monopoly money they could use for bidding on clients.