The latest cover story in BusinessWeek, The Power Of Us, is about using the Internet to harness the power of decentralized talent — from web services to let small merchants build big stores, to aggregating marketing information fragmented across engineers, salespeople, and customers using markets.

It also quoted two of the contributors to our recent workshop at Supernova 2005!

On Prediction Markets:

Eli Lilly & Co., Hewlett-Packard Co., and others are running “prediction markets” that extract collective wisdom from online crowds, which help gauge whether the government will approve a drug or how well a product will sell. …

Corporate planners are even starting to use the wisdom of online crowds to predict the future, forecasting profits and sales more precisely. Prediction markets let people essentially buy shares in various forecasts, often with real money. Most famously, they’ve been employed in the University of Iowa’s experimental Iowa Electronic Markets to determine, with remarkable accuracy, the most likely winner of the Presidential election. The ease of organizing groups on the Net has caused an explosion in their use, says Emile Servan-Schreiber, CEO of NewsFutures Inc., a consultant that has run 40,000 prediction markets for companies and publications.

Hewlett-Packard Co.’s services division was having trouble a few years ago with forecasts in the first month of a quarter. So Bernardo A. Huberman, director of HP Labs’ Information Dynamics Lab, set up a market with 15 finance people not normally involved in such planning. They bought and sold virtual stock that represented a range of forecasts at, above, and below the official company forecast. Their collective bets yielded a 50% improvement in operating-profit predictability over conventional forecasts by individual managers.

On Amazon Web Services (AWS):

At, thousands of volunteers write buyer’s guides and lists of favorite products. Amazon also lets thousands of merchants, from Target Stores to individuals, sell on Amazon pages.

What’s more, Amazon is opening up the technology behind product databases, payment services, and more to 65,000 software developers. They’re creating new services, such as the ability to compare brick-and-mortar store prices with Amazon’s by scanning a bar code into a cell phone. Thanks in part to such moves, the company is solidly profitable on $6.9 billion in sales last year. “We’re all building this thing together — Amazon itself, outside developers, associates, and customers,” says Jeff Barr, Amazon’s Web services evangelist.

“… an economy of the people, by the people, for the people”

At the same time, peer power presents difficult challenges for anyone invested in the status quo. Corporations, those citadels of command-and-control, may be in for the biggest jolt. Increasingly, they will have to contend with ad hoc groups of customers who have the power to join forces online to get what they want. Indeed, customers are creating what they want themselves — designing their own software with colleagues, for instance, and declaring their opinions via blogs instead of waiting for newspapers to print their letters. “It’s the democratization of industry,” says C.K. Prahalad, a University of Michigan Stephen M. Ross School of Business professor and co-author of the 2004 book The Future of Competition: Co-Creating Unique Value with Customers. “We are seeing the emergence of an economy of the people, by the people, for the people.”

The Million-Monkey Money Manager:

One investment-management firm, Marketocracy Inc., even runs a sort of stock market rotisserie league for 70,000 virtual traders. It skims the cream of the best-performing portfolios to buy and sell real stocks for its $60 million mutual fund.