Prediction Markets as an Innovative Way to Manage R&D Portfolios

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R&D portfolio management is a critical task with which the majority of the large companies are confronted. Despite its wide implementation in companies there are no widely accepted and used methods to perform this task. Each company uses its own mix of various qualitative and quantitative methods to achieve its goal. The objective of this thesis is to explore the adequacy and the design issues to use a prediction market for supporting the R&D portfolio management process. We chose prediction markets to perform this task since their aggregation mechanisms and information discovery process seems to solve most of the current issues of the R&D portfolio management process.

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Prediction Markets as an Innovative Way to Manage R&D Portfolios

  1. 1. CAISE DC 2008 - Montpellier Prediction Markets as an Innovative Way to Manage R&D Portfolios Cédric Gaspoz, Faculty of Business and Economics
  2. 2. R&D Portfolio Management Process « Theperiodic  activity thatselection at a R&D project portfolio aims is optimizing the research effort of the company, while enabling it to select a portfolio, which corresponds to its strategic  objectives and without exceeding the resources available. »  17th June 2008 2 Cedric.Gaspoz@unil.ch | CAiSE Doctoral Consortium 2008
  3. 3. R&D Portfolio Management Process Framework 1 2 3 Maximizing Achieving a Building the value of balanced strategy into the portfolio portfolio the portfolio ● Financial ● Technology ● Bubble Models (NPV, Roadmaps Diagrams ECV, PI, ...) ● Strategic ● Portfolio Maps ● Scoring Models Buckets 17th June 2008 3 Cedric.Gaspoz@unil.ch | CAiSE Doctoral Consortium 2008
  4. 4. R&D Portfolio Management Issues Main issues of traditional  quantitative approaches: ● Selecting the right criteria ● Collecting the data ● Negotiating the portfolio 17th June 2008 4 Cedric.Gaspoz@unil.ch | CAiSE Doctoral Consortium 2008
  5. 5. Prediction Markets Principles 1 More than How many of us will 2 Price Qty BUY 35 63% be assistant profes- shares at €70 80 sors at the end of €66 €66 35 EU start 2012? SELL 35 €60 53 € 63 shares at new IS €57 12 project €66 4 3 Market settlement 31.12.2012 @ €68 EU Price Qty project € 66 €70 80 35 * 68 = 2'380 35 * 66 = 2'310 - 35 * 66 = 2'310 - 35 * 68 = 2'380 €60 53 €57 12 €70 -€70 35@€66 -35@€66 17th June 2008 5 Cedric.Gaspoz@unil.ch | CAiSE Doctoral Consortium 2008
  6. 6. Prediction Markets Applications Prediction Markets in Fortune 500 Companies Predicting the Choosing the Forecasting Predicting the number of bugs best new microchip prices date of product in new software research ideas launches 17th June 2008 6 Cedric.Gaspoz@unil.ch | CAiSE Doctoral Consortium 2008
  7. 7. Research Methodology PM for R&D portfolio mngt Design Appropriateness • IT artefact • Case study in R&D community • Claim ontology • Interviews • Conceptual model • Comparison with other tools Relevance Rigor Develop / Build Business Needs Applicable Knowledge Assess Refine Environment Knowledge Justify / Evaluate Base Application in the Environment Additions to the Knowledge Base ● New DSS for R&D portfolio mngt ● Design propositions and mechanisms ● Guidelines to use PM in corporate ● Appropriateness of PM to manage R&D environment portfolios 17th June 2008 7 Cedric.Gaspoz@unil.ch | CAiSE Doctoral Consortium 2008
  8. 8. The research presented in this slideshow is available as a research paper on the website of the author: http://www.hec.unil.ch/cgaspoz/en/publications.html Cédric Gaspoz University of Lausanne Faculty of Business and Economics Information Systems Institute CH-1015 Lausanne cedric.gaspoz@unil.ch Cédric Gaspoz's research focuses on information aggregation, primarily to support decision making. He explores ways of aggregating disseminated information to structure it and increase it's significance. His research covers a broad range of topics like prediction markets, group decision support systems (GDSS), negotiation support systems (NSS), semantic search and Mashup. His actual focus is on using prediction markets to support portfolio management of research projects in mobile information and communication systems. 17th June 2008 8 Cedric.Gaspoz@unil.ch | CAiSE Doctoral Consortium 2008

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