© 2015 mitch & morgan inc. all rights reserved 1 mitch & morgan prediction markets the...
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© 2015 MITCH & MORGAN INC. ALL RIGHTS RESERVED1
MITCH & MORGAN PREDICTION MARKETST H E S C I E N C E B E H I N D T U R K E Y S , TA X I D R I V E R S A N D
P R E D I C T I O N M A R K E T S
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WHAT IT DOESWHATPrediction markets allow you to identify business-critical events, anticipate most likely outcomes and mitigate credit, market and operational risks and thus drive return on investment.
“OUR VALUE PROPOSITION”
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VALUE ADDING PREDICTION SCHEMA
Identify events & predict KPIs
Anticipate slippage in business metrics
Mitigate operational, market, and credit risks
The three main value drivers of prediction markets are identification, anticipation and mitigation of events and associated risks
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MARKET EXPERTS100+ bitcoin investors
participate in the market topredict the bitcoin prices
for the next three month
PRICESThe users with the most
accurate predictionsreceive bitcoins at the
end of each cycle
VOTESAll users place votesweekly and all data
is aggregated againstthe intended timeline, here:
quarterly
BITCOIN PRICESIn order to take hardware
investments that are remunerated in bitcoins – at least in part – investorswant to know where the
prices will be in the future
BITCOIN USE CASE: HOW TO TIME HARDWARE INVESTMENTS
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OPEN VOTES100 bitcoin investors place weekly
votes which are then aggregated to a 12 week average as investors’
hardware investments largely depend on the expected bitcoin prices
PREDICTION PROGRESSIONAll weekly predictions show the vote development over time, charts can be grouped against any timeline
BOTTOM-LINE IMPACT: BITCOIN USE CASE
Bitcoin Price at 3/22/15
Prediction Vs. Actual Value:
100,5 Vs. 99
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EKOMI USE CASE: HOW OCCUPANCY RATE OPTIMIZATION INCREASED ROI
$98kRevenue added through managing occupancy rates in
correct languages and SLAs effectively
#1Question: How many
reviews in what language & SLA will
we need to manage?
$261KAnnual losses
through under-fulfilled occupancy rates in the
feedback managm. dptmt
116Votes to predict the
KPI “incoming reviews”
By anticipating KPIs prior to dead-lines, necessary steps
can be undertaken to mitigate adverse outcomes and the
associated risks. You can get back on track early enough -
even exceeding expectations
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BOTTOM-LINE IMPACT: EKOMI USE CASE
12. Jan, 9:55Prediction: 291.695 30th Jan,
291.20012th Jan,
291.695
A rating agency case: With a VARIANCE OF 0,17% of predicted vs. actual values, the PREDICTION ACCURACY was 99,83%
PREDICTED VALUEOn January, 12th the market participants predicted 291.695 incoming ratings for the end of the month.
ACTUAL VALUEThe end-result on January, 30th was 291.200 incoming ratings against the predicted 291.695 ratings.
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THE EKOMI CASE: PAYROLL SAVINGS
INCOMING REVIEW STREAMS• Prediction of incoming review streams per month &
quarter• Break-down by positive/negative reviews, time
zones/countries, languages, SLAs, feature requests
WORKFORCE SCHEDULE• Scheduling customer feedback managers in
respective languages and time zones with feature-related skill-levels
• Safeguard to stay compliant with Service Level Agreements
MAXIMUM OCCUPANCY RATE• Optimal occupancy in terms of review language, time
zone, SLA and feature requirements• High payroll savings due to maximum efficient
occupancy
P r e d i c t i n g i n c o m i n g r e v i e w s t r e a m a l l o w s f o r m a x i m u m o c c u p a n c y r a t e p l a n n i n g
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VARIANCEWith a variance to median of 90% the variance of the prediction against the
actual value amounts only to1,52%, which is highly accurate considering
the small sample size of only 19 participants.
PREDICTION Vs. ACTUAL VALUEWith a predicted value of 100,5 scheduled BW applications against the actual number of 99 application run the prediction accuracy is 98,48%.
BOTTOM-LINE IMPACT: BASF USE CASE
1,52%
Number of BW Applications? According to the normal distribution, it becomes evident that private information holders outweighed incorrect forecasts through precise votes with high stakes in the market. Total votes resulted in a most accurate prediction against the median.
Prediction Vs. Actual Value:
100,5 Vs. 99
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THE BASF CASE: APPLICATION MANAGEMENT
BW APPLICATIONS• Prediction of anticipated number of run BW applications per
week• Accurate prediction of total weekly BW applications run
helped optimizing server management
SCHEDULING DOWNTIME AND MAINTAINENCE• Depending on the anticipated number of applications run,
BASF adapted downtime and maintenance schedules• Maintenance sessions were postponed when large projects
with significant application processing required 100% uptime
MAXIMIZING UPTIME• Being able to plan server occupancy, it allowed BASF to
ensure application uptime for important projects • By minimizing downtime BASF generated significant cost savings in terms of saving time and thus increase production efficiency
P l a n n i n g d a t a w a r e h o u s e s e r v e r o c c u p a n c y a n d s c h e d u l e m a i n t e n a n c e s e s s i o n s
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HEDGING BUSINESS RISKS – AN EXAMPLE
E.g. are we going to hit
our Real Revenue Growth target?
1. Binary: Yes/No
Real Revenue Growth (COGS)
2. Range: % of
fulfillment
Real Revenue Growth (COGS)
3. Multivariate: Asking why
Decrease in pricing
Increase in costs
Decrease in costs
Increase in pricing
A typical cadence would be to ask the market, 1. whethera KPI target will be hit or missed, then 2. asking for an anticipated fulfillment rate & proceed to 3. multivariateoptions of as to why the metrics will be under-fulfilled or outperformed.
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A FINANCE EXAMPLE: PREDICTING CLAIMS FOR NEW PRODUCTS
IDENTIFY PROSPECT & CONSULTANCY RISKS • Financial consultants know the risks that stem from newly
created products• Identify the potential risks through asking your staff that
handles those products every day in customer meetings
PLAN PROVISIONS AND UPDATE PROSPECTS• Every new product carries certain risks• Prediction markets allow you to plan provisions and identify
potential risks stemming from product prospects and consultancy
MITIGATE RISKS FROM LIABILITIES• By identifying prospect risks and the potential number of
claims, issuers can plan and mitigate associated risks by understanding them earlier and acting on the insights the market provides
• Information that is not available anywhere else
P r e d i c t i n g p o t e n t i a l c l a i m s , s e t t l e m e n t s a n d l i a b i l i t i e s f r o m n e w p r o d u c t s
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HOW IT WORKSHOW
Prediction markets generate information that is not available anywhere else by leveraging collective social intelligence. People engage in your market to anticipate most likely outcomes of business events and receive incentives depending on their prediction accuracy.
“YOUR STOCK MARKET FOR INFORMATION”
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INGREDIENTS OF A PREDICTION MARKETIn order to present private information in a market people need to be
• anonymous, • require incentives and • a format of delivery.
Prediction markets provide all of the above. The market generates signals based on peoples’ predictions. You receive insights that are not available anywhere else.
OUR PREDICTION MARKETS HAVE A SUCCESS RECIPE
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3 STEPS TO YOUR OWN PREDICTION MARKET
1.Market Setup
2. Participant Selection
3. Engagement
& Insights
After an initial workshop you are good to go within one and a half hours and no implementation!
• Designing scale & scope: the market mechanics
• Defining question sets
• Build incentive structures
• Deploy engagement model
• Identify private information holders
• Invitiation to participate
• Market engagement• Signal generation
and payout structure
• Flaging of critical signals
• Aggregation of insights
• Central access in dashboard
• User engagement in communication center
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WHAT THE DIFFERENT PARTS LOOK LIKE
A stock market for information that delivers
most accurate insights
People hold private
information and present it when given the right
format of delivery
The market retrieves the
private information
through a trading mechanism
The early warning system flags all business-critical
predictions in the central dashboard
All insights are aggregated and can be drilled down in the
communication center
Put your money where your
mouth is
One dashboard for allinsights at your
fingertips
Anonymous insights, yet you
commuicate with the people
PREDICTION MARKET
VOTES, BETS or TRADES
EARLY WARNING SYSTEM
COMMUNICATION CENTER
EOPLE ARKET ASHBOARD NSIGHTSP M D I
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INCENTIVE STRUCTURES IN PREDICTION MARKETS
Proper incentive schemes ensure maximum engagement. the most accurate predictions receive the highest payout
AWARDS
PRIZES
SPIFs
PAYROLL
USER ENGAGEMENT
Integration into payroll structures with cash payouts
Monetary incentive schemes based on bonus agreements
Ranging from brand new cars to theater tickets
With recognition, accolades and company-wide awards
Global rankings determine the winners based on the accuracy of their predictions
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THE PRODUCTMitch & Morgan gives you an executive level prediction market solution that is easy-to-use, highly scalable, cost effective, instantly set up, integrates seamlessly with your existing data and leverages information that you do not get from anywhere else.
“No gimmicks, just insights”
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OUR APPROACH TO A MARKET ROLL-OUTWe design the story around your prediction market for your organization ad deploy it for you.
We define the kick-off storyline aligned with
your philosophy, values and programs.
01 THE STORY
Participants are privileged to be invited – you trust them to hold
valuable private information. We ensure maximum user
engagement in order to generate the most accurate results in your
prediction market.
02 THE STRATEGY
The central dashboard enables you to evaluate results at all times and address business-critical events and forecasts in real-time.
03 THE RESULTS
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4. Insights AggregationAggregation of all information, the insights are bundled in one dashboard.
3. User EngagementThe right incentives drive maximum participant engagement.
2. Market SetupDesign of the mechanics & tying existing successful programs.
FOUR STEPS TO YOUR PREDICTION MARKET
1. Expert WorkshopSelect users, define incentive structures and engagement models.
Our Process WorksAcross our existing success cases we achieve +90% prediction accuracy with all KPIs, even with small sample sizes, meaning only a small number of users were invited & voted in the market.
And we make it work for youWe design all market mechanics, provide best practices, adapt engagement models, define incentive structures and tie them in to your existing company plans & programs.
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s
1.5
hours after the initial kick-off we go live with your prediction market – you start generating insights right away
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Place Vote, Bet Or Trade
You chose the terminology – we
use it
Range & WagerHigher stakes
in the market & precise forecasts result in higher
potential payouts
PREDICTION TRENDThe market moves as users are voting on events and pivot when forecasts are most accurate
How much revenue are we going to hit?
Posting questions to the market
Every question can target and engage
different user groups
107%
Place Bet
-149 – 182%
USER INTERFACE “VOTE” - black
Current PredictionPredictions come in form of:
• Ranges• Binary options (y/n)• Multiple choices
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OUTLIERSSignificant outliers are
flagged as signals by the early warning system
and application owners are notified in real-time in
the central dashboardRANGE & WAGERDepending on the stake in the market and how precise the prediction is, the potential payout is adjusted accordingly
107% (23,01%) users:171 votes:226 KEY STATSAll key statistics for every question are publicly available, in detail stats are only visible to the application owner in the central dashboard
What percentage of forecasts will we achieve?
QUESTIONSIn every question set there is one key question and several follow-on questions that drill down on critical events and risks
USER INTERFACE “VOTE” - white
OVERVIEWUsers only have limited
access to public tabs: My Assessments, Ranking &
Rewards, and Open Votes.
The application owner can access all votes, rankings, the central
dashboard and communication center
My Assessments
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RANKINGSThe users with the most
accurate predictions rank highest and usually
receive the incentives
PRIZESM&M implements incentive structure according to your company's programs and bonus schemes
USER INTERFACE “RANKING” - white
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MITCH & MORGANPREDICTION MARKETSA easy-to-use, one stop solution that is
scalable, cost effective, fast to set up and generates insights for you that are
not available anywhere else.
Integrates with your existing data
Easily set up – plug’n’play
Cloud-based
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OUR SOLUTION AT A GLANCEEXISTING DATAWe seamlessly integrate with your existing data, information is exchanged via API
RETURN ON INVESTGenerating ROI requires metrics. We forecast KPIs to increase fulfillment and decrease risks.
TOTAL COSTSAfter defining scale and scope it is straight forward: a retainer and a user-based fee
IMPLEMENTATIONWe are fully cloud-based and do not require any installation, unless you want our solution operated on your servers
SCALABILITYWe are fully scalable from 100 to 10.000 users – for larger project we simply add resources
Prediction Markets
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Talk to us now!
MITCH & MORGANContact
W: www.mitch-morgan.com
P (US): +1 424 666 3284
P (DE): +49 30 2000 444 219