Moneyball Algorithms Inside
Houston, We Have a Problem!
On September 23, 1999, NASA’s $300 million Mars Orbiter entered Mars atmosphere at the wrong angle and destroyed itself in the process. Later, NASA discovered the cause of the calamity. Someone, somewhere, failed to convert units from metric to English. The same thing happens in new-venture design. One person is using one ontology or set of models and someone else is using another ontology and model set. What’s worse is they don’t even realize they are doing it. Consequently, there is no connection, no understanding, and no progress. They somehow build their product, but they never align or assess correctly the underlying assumptions. How could they? Different ontologies and models are used, and no one is even aware it is going on. Result—a lot of time and money is spent during product and market development, and inevitably the team and its investors discover, “Houston, we have problem.”
Ventureland, We Have a Problem!
New ventures and new-growth initiatives fail 80% of the time. Our Company accepted the challenge 15 years ago to determine “why” new venture failure rate is 80% and do something to fix it. See “The Formula“ and “What we have Developed.” Our research covered the fields of finance, management, leadership, technology evolution, innovation practices, design, and psychology. When it was all synthesized, one factor stood out as both the “problem” and “solution”—theory. The problem we found was new venture theory-making has been driven by “tacit” theory models (below the level of awareness) held by “founders” and “investors” operating off their own experiences, assumptions, and stories (picture the Mars Orbiter). This “gut feeling” theory making is like “art” or “alchemy.” This alchemy is pervasive and perverse. It’s given us what we got—80% failure rate. Now, the evolution of alchemy-based innovation to chemistry-based innovation is at hand. In this new view, the front end of venture innovation requires the use of the scientific method (learn more). Unfortunately, step one of the scientific method requires a hypothesis which in turn requires a “theory of success” for a venture idea. Our firm has codified venture theory.
The Importance of Rules Engines
Former Google CEO Eric Schmidt describes the role of rules engines, like our framework and rules engine:
2020 will be a period known as the third decade of the web (Web 3.0). Experts agree that the missing piece in the Web 3.0 infrastructure will be the rules engine that enable BI, AI, semantic search, recommendation agents and machine learning and collaboration technologies to finally have a chance to deliver on their long awaited promises.
Our algorithms and rules engine is embedded in every method, tool and conversation. Our unique ontology permeates every design process of a business model tactic, task or logistic. See “The Formula“ and “What we have Developed.” In effect, our rules engine is to venture conception process what an operating system is to computation. To summarize the “pay-off” of using our models: new venture concept stage work, PredictionWorks’ way, is never a “garbage-in” and “garbage-out” process like it is, although unknowingly, for all the invention shops, incubators, accelerators, and applied research labs around the world.
“Our firm is a venture firm. We spent two days at PredictionWorks powering through one tough issue after another. I’m a believer—this is the way to work big, fast and creative.”
“The existing structures and processes that together form an organization’s operating system need an additional element. The solution is a second operating system, devoted to business model design and implementation…”
Harvard Professor, Author Leading Change and Accelerate
“What the computer was to the 20th Century the conceptor will be to the 21st Century.”
Nomura Research Institute
Strategy for Creation Project
“PredictionWorks deployed just two models with us. Our team made a breakthrough in a business model design that was invisible to us for quite some time.”
Investor Life Services
Venture Predictive Analytics in the News
MONEYBALL FOR VENTURE
SAN DIEGO • AUSTIN • DALLAS
We are a technology and investment firm that increases above industry standards the accuracy (9.5x) and acceleration (30x) of venture conception by using a proven scientific-based proprietary predictive analytic system.
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