Category: Collaborative Age value production system

How to Simply Understand Machine Learning

I love this simple introduction to machine learning described in ‘Taking Stealing To The Next Level: Baseball And Machine Learning‘ and the YouTube video ‘I used machine learning to hack baseball‘. In a simple mundane context (secret signals players exchange during baseball games), the power of machine learning is demonstrated in a very simple educational manner. I encourage you to watch!

Even myself having no clue about baseball and discovering there are secret signs exchanged during the game managed to understand the AI approach to this problem, so don’t fear if you know nothing about this game.

One interesting point here is of course that AI can be applied to many interesting problems in our daily lives to give us breakthrough insights into many aspects that repeat sufficiently to provide a sufficiently broad set of data points. However as the example shows, AI will provide reasonable answers even after a reasonable sample.

We are probably just starting to identify all the mundane applications that AI could have!

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How Amazon Grew to Become So Central in the E-Economy

This interesting Bloomberg post ‘The Enormous Numbers Behind Amazon’s Market Reach‘ proposes a nice visual history of Amazon’s growth and reach. It also provides an interesting status report of the weight of the company across several markets.

It shows that Amazon is not entirely dominant (yet!) and that it depends a lot on the particular industry or products. In reality, “Despite being the largest e-commerce player, Amazon still accounts for roughly 1 percent of global retail. In the U.S., the company’s share of all retail sales is as high as 7.7 percent, including sales made by other retailers who sell on Amazon’s Marketplace. Absent that, Amazon itself accounts for less than 3 percent of U.S. retail sales, according to Euromonitor International.”

The most impressive is the market share in e-books thanks to the Kindle, where Amazon is really dominant.

The exponential growth is also linked to a disciplined re-investment of its surplus over time (hence almost no profit since the start), in a real entrepreneurial approach sustained over time. It has also been patient when trying to develop into new fields, failing long before reaching success.

The most amazing in this story finally is that the company was able to maintain a long-term view and a startup spirit all those years, together with a strict cost discipline. A feat clearly due to its founder and the management style he embodies. What about the sustainability of the enterprise if the founder departs?

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How Private Initiatives to Reach the Graal of Nuclear Fusion Show a Tipping Point in the Financing of Fundamental Science

I was not aware of so many initiatives in parallel to seek to master the energy of nuclear fusion. Beyond the international collaboration around ITER in the south of France there are also large investments made in China and through a private company in California, TAE technologies (here a Wikipedia article on TAE technologies).

This last initiative is very interesting in its form: it is the only such endeavors that I know of that is entirely private and in the form of a start-up financed by venture capitalists and large corporations from the internet industry.

The fact that such fundamental science can be financed entirely by private funds is quite new. Of course it may have industrial applications some day, but previously the standard institutional setup was that fundamental science and associated large scientific instruments would be financed publicly, and that private funds would only take over once the science would be sufficiently advanced to get to practical applications in a reasonable time-frame and with a reasonable probability.

This exceptional example shows that private companies have very deep pockets to be able to fund such fundamental science (and that they dream of being able to exploit such technology in a monopolistic manner!). And also that the industrial age public research institutions will need to reconfigure in the Collaborative Age, since the border between fundamental and applied science is definitely shifting.

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How We Need to Overcome Our Societies’ Over-Protection Tendency

Following on our previous post ‘How Over-Protection of University Students Is Spreading and May Be Due to a Generational Issue‘ I feel the need to expand on the issue of over-protection in our societies and the need to be exposed from time to time to situations that hurt. How could we all have learnt to ride a bicycle without falling from time to time? How could our immune system grow and be effective without getting exposed regularly to microbes?

It all comes down to the fact that we are living organisms with the ability to repair and evolve. And that our evolution is the result of our will and experience.

The situation would be of course different with an object: when it is damaged or broken it can’t repair itself (yet at least). But for living organisms, what does not kill us makes us progress and evolve.

And avoiding confrontation with potentially disturbing situations diminishes greatly our adaptability and versatility. Adaptability is the prime advantage in natural evolution for humans. Therefore, avoiding exposure to potentially disturbing ideas and situations puts us at disadvantage in the long term.

I fear that is what may happen to the most developed countries. Take for example a Singaporean that has lived all its life in an exceptionally safe country: he or she will be frightened and will have difficulty to adapt to cities like Paris, New York or Houston which are reasonably safe cities, where you need however to be a bit vigilant (that’s an example I have been witness to!). Over-protection makes it difficult to adapt and there is a risk that people will tend to stay in their comfortable environment – until it gets wished away by some greater external forces.

Making sure we are exposed from time to time to tough situations, different opinions and ideas is healthy. And if it does not happen we need to force ourselves. Simple tip: travel more, and expose yourself to unfamiliar environments and cultures!

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How the Value We Create Should be Measured Like Energy

This intriguing post ‘4 Questions with Peter Tunjic, Founder, DLMA Labs‘ touches on the issue of how to value on a comparative scale wealth, social interactions, infrastructures and other aspects creating value in our lives.

Peter Tunjic’s goal is to “create a program that would graphically represents flows of capitals within a corporation – financial, social, natural, etc. [He] had long recognized that capitals could be transformed from one form to another. ” – for example in a corporation.

The interesting part of his approach is that he concludes that money cannot be used as a way to reduce all forms of value. He rather compares value with a level of energy that can be transformed, like kinetic energy can be transformed in potential energy and vice-versa.

“What we should be doing in business is turning money into things with a greater value than money – human, intellectual and social capital. Put simply, the unique properties of these capitals mean they can bring about more positive change for longer.”

The approach is still not mature, but thinking about measuring value as some energy that can be transformed is a great idea that would have merit for being developed further. Maybe a future contender to replace GDP as a measure of value growth?

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How Access to University Campuses for Education Becomes a Luxury

In a different dimension but quite related to our previous post ‘How Human Contact is Becoming a Luxury‘, Seth Godin post ‘Toward abundant systems‘ takes the example of college admissions to show how the world moves from an Industrial Age’s world of scarcity into a Collaborative Age’s world of abundance. But is it the right example?

“Space on the Harvard campus is highly valued and also scarce. But if we can break education out of the campus/scarcity mindset and instead focus on learning, learning at scale, learning that happens despite status not because of it–then we can begin to shift many of the other power structures in our society.”

It is true that the availability of free or very cheap online courses is an opportunity to scale the acquisition of knowledge. Still, admission to renowned university campuses remains more competitive than ever (in part because it is now global). The reason is probably that a major value of university is the human connection and network – something not so easy to scale – and for which a limited group of students is more adapted as it creates a denser relationship network.

Alumni groups still play important roles in society and in the professional world. While globalization may diversify universities of origins, those social groups are still very influential because they remain limited in size. Therefore, while access to knowledge becomes abundant, access to the social connection of university campuses becomes increasingly a luxury.

This aspect is probably not accounted for sufficiently in the development of online education programs. Developing the community and the alumni group can also be done virtually but this requires a lot of effort and possibly some face-to-face real-life interactions. This will remain, and while this can be made more efficient, it will always be a limit to scalability for educational institutions.

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How Human Contact is Becoming a Luxury

In this great New-York Times article ‘Human Contact Is Now a Luxury Good‘, the issue of diminishing daily human interaction is addressed. “Screens used to be for the elite. Now avoiding them is a status symbol.”

Human check-in, a luxury?

Our lives and interactions are indeed increasingly held through screens; not mentioning upcoming AI applications that will make us increasingly interact with virtual entities.

Of course, replacing humans with screens is cheaper, and requires specifically much less maintenance and management. Screens don’t have free will and are much less complex to manage.

And the luxury is now to avoid screens and have a direct human interaction. Moreover, the very rich increasingly try to avoid screens – like for their children.

As the article mentions, this is a very swift change from the 1980s and 1990s when having screens was a luxury, to the opposite now that they have become cheap and ubiquitous.

I think human contact remains much needed, and we need to find ways to both benefit from the productivity and convenience provided by screens, while keeping the density of human interaction. The balance will not be easy to find, and there may be substantial differences in outcome depending on wealth. Definitely an issue to keep in mind moving into the Collaborative Age!

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How Easy Modern Technology Makes It For Spies

In this excellent Foreign Policy article ‘the Spycraft Revolution‘ (recommended read although a bit long) the changes in the world of espionnage are described, as well as the challenges faced by those involved in this activity to adapt.

Cover identities are now much harder to forge, as we leave many traces of our past on internet. Closed data societies such as China would seem to have an edge on open data societies like the western world (and authoritarian governments over liberal democracies that limit spying). Counterintelligence can leverage the internet to resist deception. Mobile phones are the most spy-friendly device that has ever been invented, it is an incredible tracking tool, and they can even listen to what’s happening remotely.

“The cloak of anonymity is steadily shrinking“. Still, western intelligence agencies are facing legal hurdles but they may have to be partly removed to allow competition with opponents that don’t have this type of issues. Which leaves society more open to intrusive spying. The right balance has not been defined yet.

“Most of us don’t want to live in a country […] where the intelligence and security agencies are at the heart of public life and political decision-making.” Still we need to be realistic enough to defend ourselves against undue foreign influence. This balance will take time to establish and there will be blunders along the way.

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How We Should Learn to Produce Scrappy

I love this post by Seth Godin ‘‘Scrappy’ is not the same as ‘crappy’‘. Seth is an advocate of shipping fast, as soon as it is presentable (a ‘minimum viable product’ approach of sorts). We should still not ship crappy stuff, but his view is that scrappy is good enough.

scrappy

“The only choice is to launch before you’re ready. Before it’s perfect. Before it’s 100% proven to be no risk to you.”

Seth then introduces the concept of scrappy: “Scrappy means that while it’s unpolished, it’s better than good enough.”

It is always tough to know whether what we put in the spotlight of public interest is good enough or whether we are spending too much time trying to polish it. I love the scrappy approach. Another measure to show to the world what you are doing earlier than what you thought.

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How Economic Recessions Are Actually Positive (on the Long Term)

There is a lot written these days about the upcoming recession. There has been already a very long cycle without a recession (the last one in 2008 has been particularly strong though). But is a recession necessarily a bad thing?

From my perspective I do observe currently in the economy some ‘irrational exuberance’ to use the term coined by Alan Greenspan in the 1990s. There is a lot of money thanks to low interest rates, and it is sometimes or even often invested in ventures of dubious success probability. I observe this effect for example in the start-up financing field.

A recession is nothing more than a readjustment of the economy, a clean-up that removes activities that are not any more adjusted to the requirements of new era, and a number of activities that are only just marginally profitable. And from my observation that is probably needed now in a number of economic fields.

Unfortunately, it would appear that the complex economy does not manage to run this clean-up effort more effectively than through an overall recession from time to time.

Of course, this economic clean-up has consequences on employment and on the perspectives of individuals if they are impacted. A strong social support net is needed to amortize the effects of a recession for the individuals. Recessions also tend to remove from employment those whose skills are not adapted any more to the economy, and there needs to be ways to upgrade those skills to give them a new role to play. It can thus be felt negatively across consumption.

All in all I tend to believe that recessions are rather inevitable, a good thing in the longer term and policies that aim to avoid or postpone them will only create stronger and harder recessions at the end.

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How the Increase of Asset Values Could be Linked to the Fourth Revolution Transformation

Following up from our previous post ‘How the Current Asset Over-valuation Changes Economic Behavior‘, the question is open whether this historical trend about historically extremely high asset prices and always lower interest rates since the 1980s (the Era of Big Balance Sheets) is a temporary situation, or if it could be representative of a shift created by the Fourth Revolution (a shift to the virtual, global economy).

In the research paper ‘Bubble or nothing‘, the enclosed graph and a few others remind us that there is currently overcapacity in terms of assets compared to the production capacity (this observation seems to apply to manufacturing as well as to offices or any class of asset supporting value production). This can be explained partly by the high value of assets but also by the fact that actual physical production does not increase any more and is disconnected from overall economic growth: the economy becomes increasingly virtual with the Fourth Revolution.

One of the reasons behind asset relative value increase could thus be that value being created virtually in the new economy drives up the value of the physical assets, which are in limited quantity. Therefore, an interpretation of the current overvaluation of assets could be the virtualisation and increased productivity of the Collaborative Age economy. This would be a bit similar to the Baumol effect explaining the relative increase in cost of less productive areas of the economy such as healthcare (see our post ‘How the Relative Increase of Cost for Education or Health Care Can be Explained‘). If that is the case, then we should not expect asset valuations to drop off anytime soon (independently from temporary recessions and readjustments).

I would be quite interested to see whether there has been some economic studies about the impact of the virtual economy on asset valuation. Please contact me if you know of any such study.

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How the Current Asset Over-valuation Changes Economic Behavior

I can only recommend to read this enlightening research paper ‘Bubble or nothing‘, produced by an American Think Tank. It may require some time to read, but I believe it is absolutely worthwhile to understand how the current economic situation differs from the 20th century economic situation – and how therefore, history can only be of limited value in understanding future economic behavior.

The point is that “The evolution of the economy’s aggregate financial structure [with a much higher value of assets compared to value production] has, over decades, altered the playing field for financial decision makers throughout the economy, increasingly skewing their available options toward higher risks, lower returns, or both.” Basically, the increase in asset value implies low interest rates. Those low interest rates are much below the return rates expected from financial players (such as retirement funds), and this leads them inevitably to take higher risks than they would have in the past.

The author calls the time since the mid-1980s the “era of the Big Balance Sheets”. According to him, this excessive risk-taking behavior explains situations as the one giving way to the 2008 financial crisis, which stemmed from the property market. “Each successive crisis, with more bloated balance sheets to stabilize, was more difficult to resolve and therefore required the government to engineer dramatic new lows in interest rates, heavy fiscal stimulus, and other measures to stabilize economic conditions. The measures eventually overcame recession and chronic weakness, but in doing so they necessarily caused further expansion of balance sheets relative to income.“

This current situation appears to be quite metastable, with excessive risk-taking happening since the early 2010s, and may lead to another hard recession with substantial asset value decrease. Whether this decrease will be temporary or more permanent is still open (previous recessions have not changed the excessive asset value on the long term).

As a summary, “The U.S. economy continues to face a bubble-or-nothing outlook. Participants in the economy and markets will keep increasing their financial risk until the expansion breaks down, and the bigger the balance sheets are relative to income, the more severe the breakdown is likely to be.”

Take some time to read this instructive analysis, as it provides an interesting explanation of the changes in our economy in the last decades.

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