Friday, May 15. 2015
Andrew McAfee in the FT explaining to the FT audience what has long been blindingly obvious to most everyone else who is living through it - if you automate away the high value jobs and all thats left is low value low skill jobs, average wages and living standards fall, and inequality rises.
He uses the though experiment of a 2 industry economy, one with hi tech, high wage manufacturing and low tech, low wage dog grooming. Over time the high tech labour gets displaced by automation and more people become dog groomers, so average wages in the population fall, those left in manufacturing get richer, inequality widens etc etc. He then observes, as if its a massive revelation, that:
This example is obviously trivial and contrived, but it does include some trends that we see in the actual economy — lots of jobs growth in the low-productivity service sector, sluggish overall demand growth and lots of automation in manufacturing. It also helps explain why corporate profits are so high these days: the factories, after all, have maintained their revenues while halving their payrolls.
No shit, Sherlock!
I guess what's really sad is you probably do have to use a 2 industry model-as-parable to explain it to FT reading, degree educated, often economist types. Piketty tried it the big data way but to little impact. They analyse the trees to death, but all too often cannot see the woods.
Now, why not do a little sociohistorical analysis too, and look at what happens when unemployment and wages fall and inequality rises, and a large section of a population is discontented and feels it has no future. Guess what - the economic environment stops being like the one we have at present.
Here's a hint - start with France, 1789, and continue reading about "transformational change", mob revolt style ....the Deus is ex the Machine Age.
Thursday, May 14. 2015
Article from The Economist echoes something I've been thinking increasingly - there's not a lot of new stuff coming out of guruland these days. I thought it was just me getting old and cynical, as increasingly everything "New" just seemed to be a rehash of something from 2 decades ago or more. I had started assumed New Gurus (Gurii?) were mining old, out of print books and rehashing old whines into new booklets.
The Economist has noticed the same, and is looking for reasons why - they think that:
Ah, so its a generational fin-de-siecle then.The Economist also argues that its becoming harder to mint new Gurus now as (i) the world is more interested in Big Data than Big Ideas, and (ii) there are a million Mini-Gurus blooming in the blogosphere. Also companies are increasingly trying to be their own Thought Leader.
To sum up, they note that the Guru industry itself is not exactly behaving like one of these fast moving, always changing, disruptive modern industries that the Gurus bang on about:
...considering the resources that are devoted to thinking about management, it is remarkable how much virgin territory remains. There are still no Chinese management gurus to challenge the leadership of the ageing Indian establishment. There are still no serious books on what the internet economy means for the boundaries of the firm or markets for talent. The guru industry seems ripe for disruptive innovation.
I did read a study several years back, some Swedish researchers looked at what makes a Guru - and one of their major conclusions was that a Guru is selected and anointed by kingmakers, just being smart and original isn't enough. In the old days these kingmakers were usually publishing houses who would then market the cr*p out of said Guru's tome/s . But, as with the music industry, that media model is largely gone - there just isn't the ROI to hugely promote modern Gurus. There is an analogy with the Music industry, where being an original talent also was never enough, the game was always about getting the A&R - and so the oldies in Guruland and Musicland keep a high mindshare as the total cumulative spend on their PR dwarfs the trifling modern amounts spent so the Old Guard have the bg billings, the best new talent gets as far as it can without the Old Skool PR $ into specific verticals, and the Long Tail's output is largely irrelelevant (or gets mined by the better known).
Wednesday, May 6. 2015
Do you remember all the predictions that "email will die" and that social tools will replace it with "ambient intimacy" or similar?
Turns out that not only is it very unlikely email will ever die (see my argument re Riepl's Law on that score) but is also highly likely to grow, not shrink.
The reason for this is due to
(i) The sheer volume of comms on the new systems has just reproduced email's problem - ANY system, email included, is effective when the volume of messages is manageable, and overload looks the same on all of them. Except email has better timestamping, search and storage as its been around longer.
(ii) But email as the new killer app is die to the proliferation of all the social tools delivering said Ambient Intimacy, and thus fragmentation of the medium. There are now so many of them, that the Ambience is broken up into a veritable Tower of Babel of different protocols. The requirement is increasingly for one system to find them, rule them all, and in the darkness (of the communications server farm) bind them.
And guess which system is the most ubiquitous, flexible, integrateable, multi-capable to do this?
So that inbox of yours that overfloweth - the net effect of all these new social tools will just be to make it worse.
You heard it here first...
(by the way, you can subscribe to get Broadstuff via email....)
Thursday, April 30. 2015
Everywhere you turn there is this focus on the "Attention Economy", defined by Wikipedia as follows:
..content has grown increasingly abundant and immediately available, attention becomes the limiting factor in the consumption of information. Attention economics applies insights from other areas of economic theory to enable content consumers, producers, and intermediaries to better mediate and manage the flow of information in light of the scarcity of consumer attention
Which is all very well, but what has really occurred is an arms race between various service providers to divert your attention to their new new thing, rather than any others, and certainly not to the (slightly dull) thing you probably really should be doing.
I call this the Distraction Economy, and its really an anti-economic effect as:
Taking these in turn:
Accrete no or very little Value
There is an infinite array of diversions seeking to distract you. The internet is always wrong, there is always one more interesting tweet-link to read, one more comment for someone's Facebook wall, one more go on the game du jour. And what are you losing - they are all free, right? Well that is the billion dollar question. What is the value of your time spent on these distraction? There are two ways of measuring this:
Problem is that, for the average joe (or josephine) in the New Digital Economy the Conversion Value is near zero, as is the Conversion Rate, so this is an essentially zero-value accretion. So the +ve value is near zero
However, there is a negative opportunity cost - chances are most distractions reduce your own time and effectiveness actually spent on valuable tasks - i.e. unless you have zero valuable tasks to do, paying attention to the "attention economy"'s products is going to cost you (see part 3 below)
First came the idea of the Great User Experience, then when that arms race was tailing off came Gamification, now that is reaching its limits there is Addictification - the best and brightest minds of a generation are being used to try and ensure that people will pay attention to non essentials. Neuroscience, behavioural science, mathematics and a fistfull of 'ologies are being used to try and make this or that piece of digital bubblegum register in people's attention-span and grab that 15 minutes of fame.
As noted above, time being diverted is very unlikely to be accretive in itself, and is highly likely value destructive as:
(i) Less time being spent on valuable tasks - that has to have an opportunity cost impact in the medium and long term
(ii) It has been shown, in study after study, that distracting yourself from a task reduces your efficiency in performing that task, plus also imposes a "setup" and "teardown" time penalty as your brain switches over from task A to task B. The worrying thin about the distraction economy is that it feels like you are more effective, when in fact the hard metrics show the opposite.
What's the answer?
Firstly, it is to recognise that most of the bright shiny products of the "attention economy" are not there to make you money, they are there to make money out of you.
Secondly, to recognise there is an entire industry out there trying to make these grab your attention, with a miniscule industry building antidotes.
So the only real solution is to time-limit the channels - turn off ambient alerts, make a time to do emails/twitter/facebook etc, and keep to it.
Wednesday, April 15. 2015
TS Eliot wrote that the world ends not with a bang, but a whimper. It is our observation that the worlds of most monopolies effectively end with regulation of some sort or other, either breaking them up , forcing access, or regulating away super-profits (or some combination). And now, after several years of rumblings, the EU has finally started to look at Google. Today Margrethe Vestager, the European Union competition commissioner, announced an investigation into Google's practices for favouring its own shopping sites in guiding searches - NYT:
Google has been accused of these things for quite a few years, and there have been rumblings of EU action for some time so the only question in our minds is "why now". The NYT notes that:
“The decision by the commission to position itself as the lead competition authority for the digital age may trigger anger among some U.S. politicians
It also allows the EU, currently embattled by internal accusations of being sclerotic, unrepresentative, comatose etc etc to actually look like it is taking a lead in Doing Something in an area of considerable concern to EU technology firms.
The EU is also considering looking at Google's practice with Android:
The European Commission also said on Wednesday that it was stepping up a separate investigation into whether phone makers that agree to use Android — and that also want Google applications like YouTube — face contractual requirements to place those applications and other Google-branded applications in prominent positions on a mobile device.
If these are proven true, it will be clear that Google, a noisy advocate of net netrality on others' platforms, does not practice net neutrality on it's own.
Throubles usually come in threes, they say - any bets on an EU investigation into tax avoidance practices by US multinationals in Europe soon?
Tuesday, April 14. 2015
Fascinating chart in HBR (above) on the relative change in valuation of Brands and Customers since the emerge of Digital monitoring and social media as it becomes easier to measure customer behaviour and brand impact, and to know which half of advertising works:
And the results...
Oh dear - the demise of Brand Marketing will no doubt fill millions with gloom......
Monday, April 13. 2015
Went to Chinwag's Fintech event last Thursday to catch up on what's going on, well in Fintech really, looked like an interesting variety of speakers. Notes follow below:
To kick it off, Cass Professor Gianvito Lanzolla set the secene with a discussion of the current structure of technology change in Finance, he looked at the drivers of change
1. Tech drivers in the near future
Dave Birch of Consult Hyperion followed up with his view on what people are doing today
Tech in banking is a "William Gibson" time (aka future is here, just unevenly distributed). The Meme of the Moment is around "mobile", but what that seems to mean in practice is contactless mobile devices - which is hardly disruptive. Dave introduced the concept of "Chromewash" e.g. - Apple Pay (today's darling) runs on "yesterday's rails", i.e. merely a continuance of what has come before but overlaid with New New hype.
He looked at revenues from European banks - c 50% comes from Interest, Transactions c 30 %, Fees c 10%, Other c 10%. The raft of Fintech innovators are already in most obvious spaces of stuff banks do, so profit pools most at risk are the large ones - loan areas (Interest revenue) and Transaction disaggregation - he pointed Braintree as an example of a startup and to an Anthony Jenkins FT article last week, noting that the pressure is on to end universal banking:
We shall see....Dave also made the point that you can't dissociate Tech pressures from regulatory pressures (not new news - cf Carlota Perez et al), Regulation drives tech to huge degree eg regulations forcing direct API access to customer accounts means that banks can't compete on regulated API anyomre, so must compete on other "added value" (to whom areas:
- non regulated
His view is that a major area of disruption will be Identity, it's a mess and identity theft is out of control, opens field to players from other industries. Endgame is Amazonisation of banks, banks are no longer where we store money, they are where you store identity.
The Panel session had the above people plus Jonathan Kramer, Sales Director of per-to-peer lender Zopa and Mutaz Qubbaj, CEO & Co-founder of Squirrel, moderated by Ben Rooney, co-Editor in Chief at startup Informilo, ex WSJ - who quipped that Chair is journo who has just started up - quip "you know you're in a bubble when journalists leave good jobs to form startups"
The main Panel Discussion issue was "where are the opportunities in the near future? These broke down into:
Working with banks
- KYC, CTF, AML (and other incremental improvement of all TLA technologies....)
Competing with banks
- where banks do things inefficiently eg consumer and SME lending
Banks are hugely vertically and horizontally integrated, tend to ossify and can be outmanouvred. But banks always have 1st option on trust and first mover advantage - though are everywhere slow and reluctantly trusted, much less liked (even less than RyanAir apparently).
Then came the issue of Innovation vs. Regulation:
Regulation not bad per se, but is usually poorly done/enforced (and typically regulating the stable where the horse has already bolted).
There is very little startup activity that is better (from a major's point of view) than can be gained than by playing a regulatory arbitrage game that only big boys can play ("Too big to fail" being the zenith of this issue).
Any truly radical new, small play, if it gets too big gets regulated (ie Zopa can scale, but how big does it get before regulation comes in). Zopa said it now wants peer to peer lending to be regulated (to be safe from high risk-adopting new entrants who would force tighter regulation, I presume). Another example, Funding Circle who make loans to small companies, is not regulated yet - but what happens if this market grows - there is always going to be a rotten apple/major incident and brings in tighter refulation. (Ditto Crowdfunding.... )
And finally - The obligatory Bitcoin question!
I think Dave Birch had this one down best - bitcoin itself is not particularly interesting, but blockchain is interesting as it allows trading without settlements. This is not just for currency, but for all sorts of 3rd party transactions like managing dishwasher guarantees, and also has a strong intersection with IoT
Anyway, to a large extent it showed that change will probably be slower than the enthusiasts think, as startups have a hard time plus negative inducements in growing too large and/or too fast, and regulation can often be used by incumbents to protect positions to a very high degree.
My "Note to self" was to look again at mobile payments in Africa and what else is being done on these platforms, as there are no legacy systems and typically that is where "next gen" disruptive technologies prove themselves.
Thursday, April 9. 2015
Now this is interesting - Wired:
We've wondered aloud on this blog several times about:
Its all a very murky area, as we have noted quite a few times over the years, and really needs case law to sort it out. Now it's starting:
The lawsuit, which will be heard for the first time at a civil court in Vienna on 9 April, has technically been brought against Facebook's European office in Dublin, through which all of its non-US and Canadian accounts are registered. Launched in August 2014, the lawsuit quickly attracted huge numbers of people wanting to participate and claim their share of any damages, which are being sought at a "token level" of €500 (£360) per claimant. While 25,000 users are involved in the first stage of the lawsuit, another 55,000 have registered to participate in a second round if proceedings develop as Schrems hopes.
In essence, the case alleges Facebook is in contravention of EU data protection laws and is in effect pushing the EU to face up to it and apply the law. The case also alleges Facebook was involved in the PRISM spying program that Edward Snowden blew open. It is expected that Facebook will argue the case is inadmissible in Austrian law.
One to watch.....this strikes at the heart of the business model of nearly every "for free" web and app service going today, including most of the so called "Unicorns" ($1bn+ valuation social business companies).
Tuesday, April 7. 2015
Yes, its 2015, and yes this is still news to many, if the twitter response an article in The Economist is anything to go by (and remember, The Economist is writing for the more enquiring minds in society....).
Anyway, the article is about Bruce Schneier, who has put out a book stating this obvious, albeit inconvenient truth, essential reading along with Jaron Lanier's analysis of "Siren Servers" in 2013. Schneier writes that:
Many smartphone apps can afford to be free because the companies that develop them sell the users’ personal data, something barely explained in the terms and conditions. If the service is free, then you’re the product, goes an old saw in Silicon Valley.
You may wish to read our papers from 2008 explaining this - in essence, if you ain't paying, you ain't the customer - start here).
Mr Schneier points out something else that everyone playing with Social Networks has known for (at least) a decade too
..people do not need to disclose their details directly. Such information can also be inferred from patterns of behaviour and social networks, and the many harms that this can cause go beyond creepiness. It can mean higher online shopping prices if algorithms predict that an individual may pay them, and even racial discrimination if algorithms profile a person, by noting postcodes or answers to questions that are imperfectly tied to race. With few rules and little transparency, worse is possible.
Of course, The Economist does not like some of his solutions that make this snooping harder, being the good free trading economics mag they are:
But he also argues for stronger rules to prevent companies from collecting so much data in the first place; this would quite likely curtail unanticipated but valuable uses, like the Google Flu Trends programme
That is similar to the arguments that all your medical data should be "open" - as some good, somewhere may come of it (never mentioning that you, of course, will be exposed to every bit of malfeasance that comes from it, with no redress - see our explanation on that starting here). But at least they accept that many of the journos pontificating in this area don't have a clue
Some recent books on digital privacy have been written by journalists, with an emphasis on sugary narrative instead of original analysis. This one comes from a practitioner, and offers a deep but accessible look at surveillance in the post-Snowden, big-data era.
Which is why Schneier, Lanier et al (and us) are far more sceptical of the Wondeful New Future. And you haven't seen anything yet, just wait till the Internet of Snooping Things gets going. But nothing must spoil the relentless Good News Story....
Friday, April 3. 2015
Two rather interesting snippets on the veracity of Big Data analytics. Firstly, from HBR, this finding (summarised below):
Researchers recruited 61 analysts (mostly academics) and asked them to assess whether soccer referees were more likely to give red cards to players with darker skin tones. The analysts split up into 29 teams, and were given a dataset that included numerous variables about both players and referees.
With 29 teams and 29 slightly different results, it is clear that any analytical depends on somewhat subjective decisions about the best approach to use and which variables should be included. After another round of debate, the analysts "converged toward agreement that there is a small, statistically significant relationship between player skin tone and receiving red cards, the cause of which is unknown".
The second is also from HBR, again by Walter Frick (who wrote the above article), with research showing that even if the algorithm was right, most people tend to prefer their gut feeling, even more so if they have seen an algorithm fail, even a little bit. And they’re harder on algorithms in this way than they are on other people:
Initially this looks like irrational behaviour, but of course if you juxtapose it with the above research that shows that one should probably not trust any one algorithm, it makes sense.
Apparently most people, when asked why they trusted human judgement, felt that humans were better at learning over several iterations (this is not demonstrably true, by the way).
I recall being told 30 years ago when starting out with complex simulation modelling that "people would rather stick with a problem they can't solve than a solution they can't understand".
Interestingly, in a forthcoming paper, the same researchers found that people are significantly more willing to trust and use algorithms if they’re allowed to tweak the output a little bit. If, say, the algorithm predicted a student would perform in the top 10% of their MBA class, participants would have the chance to revise that prediction up or down by a few points. This made them more likely to bet on the algorithm
Which brings us back to 29 teams with 29 different models.....
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