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Prediction is very difficult, especially when it comes to the future.

From scenario planning to polling and futures trading, accurately assessing future outcomes is the holy grail of businesses and governments everywhere. But there are new methods emerging that can help us be more accurate in our predictions than ever before. A recent experiment by the Guardian newspaper provides a telling example. It asked its readers to vote on the likely specifications of the (then unreleased) Apple ‘iTablet’ in January 2010. From size and weight to features and name, over 10,000 people submitted their best guess on the year’s most highly anticipated product launch. The results? In more than half the voting categories, the crowd accurately predicted what Steve Jobs would announce later that month – including the name ‘iPad’.

This is a simple example of harnessing crowd wisdom to assess future outcomes. But things start to get really interesting when you use sophisticated market mechanisms to help crowds predict future events. The most compelling potential lies in ‘prediction markets’ – virtual stock exchanges that allow traders to buy and sell shares in a future event or idea. In this context, the monetary value of a futures contract on an event – its price – reflects the probability that that event will actually occur. From the Iowa Electronic Markets, which has out-predicted pollsters on the results of presidential and gubernatorial elections in the United States, to the Hollywood Stock Exchange, which is one of the most accurate indicators of box office takings on new film releases, the results are starting to speak for themselves.

In fact, prediction markets might be the most effective application of crowd-sourcing available to us in brand and business planning. James Surowiecki, author of ‘The Wisdom of Crowds’, argues that they work effectively because the people involved are diverse, independent, decentralized and incentivized. As a result, they overcome ‘groupthink’ and herd mentality, reducing the chance that the crowd will be a homogenous, lowest common denominator source of biased preference. The guiding principle of the market is that traders have no incentive other than making the right prediction, and the best indicator of a future outcome in any situation is the one with the highest price.

If we apply this potential to brand and innovation strategy, it will help us look into the future of categories, markets and brands, forecasting the winners, losers and key forces driving change in the world. What better mechanism for developing strategies to yield the next generation of growth?

It is an article of faith at FutureBrand that successful brands don’t enter the future, they create it. Prediction markets might just make you a little more creative than the rest…