In recent years, corporations have seen the value of turning to the public for open innovation through idea campaigns and other forms of crowdsourcing. South Korea’s LG Display is one of them, going a step further to capture outside collective intelligence that their leadership can use to build smarter corporate strategy.
In its first ever public forecasting tournament, which ended in April 2018, the world’s largest LCD panel maker openly asked people to predict influential trends in their industry, such as future price of panels and supported products like TVs and smartphones, industry profit margins, and competitive new product sales and launches. Over a six month period, consultants, designers, engineers, gamers, and hobbyists from 31 countries - including students from Cornell, Northwestern’s Kellogg School of Business and University of Wisconsin - joined forces to arrive at the best predictions.
Cultivate Labs ran the tournament, recruited and managed the online community. Using Cultivate Forecasts, our prediction market platform, individuals made ongoing probabilistic predictions that were simultaneously aggregated to produce a crowd consensus. At any given time, LG Display leaders had hard data they could use as part of their day-to-day strategic decision making. People also left rationales about their predictions and discussed their points of view openly through comment threads, giving a more complete picture about the predictive results.
Prediction markets are a form of crowdsourcing, and anonymously aggregate forecasts from individual participants to a probability of an event happening in the future. Participants can update their forecasts at any time and are evaluated on how they forecast in a given question.
LG Display’s experiment with crowdsourced predictions proved to be a valuable information source for decision makers, who are already in talks to run another tournament this summer. Not only was it a way for LG Display to engage with and create a public community, but they leveraged the tournament to involve employees in harnessing their predictive and analytical skills. Employees participated alongside the general public and contributed to discussion forums.
Highlights of the tournament include:
2,014 crowd predictions to supplement traditional forecasting efforts within the company
2,558 comments gave context around why people predicted a certain way
342 participants made predictions, including many self-identified LG customers
27 questions posed for collecting predictions, covering a variety of areas including competitive intelligence gathering
$10,000+ awarded in prize money to participants, including the choice of $1,500 or a 55-inch LG OLED TV to a first place winner
Over the last decade, crowdsourced predictions have been used and tested to predict things like global elections and geopolitical events (even now, the U.S. Intelligence Community is running its own tournament). The idea is that tapping into the “wisdom of the crowd” as an additional measuring stick to inform decisions will enhance expert judgment by eliminating blind spots and existing biases.
Even when the crowd’s predictions don’t hit the mark, that is in itself typically a sign that there isn’t enough information in the market, or contradictory information, that makes for an unexpected outcome. For example, LG Display Tournament participants inaccurately overestimated the price of the Samsung Galaxy S9 when it released after the iPhone X, but at a $720 retail price it shocked industry analysts alike. In contrast, participants most accurately predicted the average price of a 55-inch LCD panel three months out, which demonstrates the power of crowdsourcing when it comes to questions that might even seem “harder” or require more niche industry knowledge.
Leadership met at least once per month to review the outputs from the tournament, which Cultivate Labs consolidated into custom executive reports. Since predictions were updated real-time, the tournament helped give LG Display an “early warning signal” when it came to the different questions they had the audience predict. For example, whether the U.S. government would impose tariffs on TVs from South Korea or China.
LG Display is no stranger to prediction markets and has utilized this forecasting method with employees in their marketing and insights group for the past few years. By having the general public participate in a tournament, the company will be able to compare predictions from outside their walls to those from employees, and continuously calibrate and refine overall business forecasting. With future tournaments, the goals is for LG Display to have a re-usable pool of people whom they can engage to provide on-demand collective intelligence.
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