I have decided to try to take over control of my blogging future and set up my own hosted site at www.ishouldgetoutmore.com.
I will copy things here for a while but if you are one of the few people following me - other than my sister - please note the new address above.
Thank you.
Wednesday, 29 February 2012
Tuesday, 11 October 2011
Risk, unlike insurance, is no pig; an introduction to gamification
I understand why people get excited when Facebook makes a change. Here is a good set of examples. Quite apart from some changes - like default privacy settings - having been extremely poorly conceived and others poorly implemented, some people just don't like change.
But it is a testament to Facebook's success that their many changes - and they change things a lot and often - have generally been readily accepted, if not without initial 'sound and fury'. And I like the fact that Facebook changes a lot. Indeed, I suspect Facebook would be much less successful without frequent change.
Why is lots of change so important?
I certainly enjoy sharing my friends and relatives lives and doings on Facebook; for me and almost everyone else this is, of course, Facebook's primary feature. But let's be honest, much of what we read about some of our friends and family is less than scintillating, so the sharing process itself has to be engaging. Facebook isn't successful simply because it allows us to connect with people we know who are otherwise too far away to see and hear from everyday; nor is it successful just because it is an application we all enjoy using - an enjoyment that is kept fresh by change. I think it is the combination of the connections and the process - in different proportions for different people - that explains Facebook's success.
It is as much the medium as the message that engages us. Another day, I might ponder on what I see as Facebook's biggest challenge for its future - how it maintains an engaging process in the face of plans to become a utility, at least as that word is traditionally understood, and in the face of the "seen that, got the tee-shirt, move along" attitude towards sharing others' lives - but for now, that is a digression.
What I am curious about now, and what I see as offering significant potential to the risk and insurance industries, is a process I am seeing mentioned more and more often; 'gamification' - the use of game design techniques to engage audiences. This post (by Confused of Calcutta) is a good discussion of the topic. This TED video is good too.
Change is the biggest gamification example of them all - "a new game every week" - and Wikipedia lists the following further gamification examples:
He is talking about the fact that, if an underlying subject or process is fundamentally dull, no amount of gaming layered on top is going to make the slightest difference. He is specifically talking about work - he now works for salesforce.com - and rather candidly suggesting, I think, that just sticking a salesforce platform under a dull business won't make it any less dull - but I am getting back to the medium and the message again and away from my point.
Gamification won't make the process of buying (or selling) insurance any more "fun" but it will be one of the tactics used to encourage people to share their knowledge about uncertainty - something I believe people are genuinely interested and concerned about, and which has nothing to do with insurance, right?
So, to the extent uncertainty about particular things (for example, activities {like driving}, events {a party for example} or processes {like banking}) is one core feature of the more general term "risk", I expect gamification will be a key element used to encourage people to start sharing knowledge about specific uncertainties. Such collaborative processes will begin to cause reductions in some specific uncertainties, and lead all of us to be able to start thinking differently about risk generally, and produce new ideas for dealing with it.
And risk, unlike insurance, is no pig.
But it is a testament to Facebook's success that their many changes - and they change things a lot and often - have generally been readily accepted, if not without initial 'sound and fury'. And I like the fact that Facebook changes a lot. Indeed, I suspect Facebook would be much less successful without frequent change.
Why is lots of change so important?
I certainly enjoy sharing my friends and relatives lives and doings on Facebook; for me and almost everyone else this is, of course, Facebook's primary feature. But let's be honest, much of what we read about some of our friends and family is less than scintillating, so the sharing process itself has to be engaging. Facebook isn't successful simply because it allows us to connect with people we know who are otherwise too far away to see and hear from everyday; nor is it successful just because it is an application we all enjoy using - an enjoyment that is kept fresh by change. I think it is the combination of the connections and the process - in different proportions for different people - that explains Facebook's success.
It is as much the medium as the message that engages us. Another day, I might ponder on what I see as Facebook's biggest challenge for its future - how it maintains an engaging process in the face of plans to become a utility, at least as that word is traditionally understood, and in the face of the "seen that, got the tee-shirt, move along" attitude towards sharing others' lives - but for now, that is a digression.
What I am curious about now, and what I see as offering significant potential to the risk and insurance industries, is a process I am seeing mentioned more and more often; 'gamification' - the use of game design techniques to engage audiences. This post (by Confused of Calcutta) is a good discussion of the topic. This TED video is good too.
Change is the biggest gamification example of them all - "a new game every week" - and Wikipedia lists the following further gamification examples:
Back to the Confused of Calcutta link above, and where this all hopefully starts to make sense when it concerns risk, JP suggests something along the lines of: gamification used on its own is like "putting lipstick on a pig"...
- achievement "badges"
- achievement levels
- "leader boards"
- a progress bar or other visual meter to indicate how close people are to completing a task a company is trying to encourage, such as completing a social networking profile or earning a frequent shopper loyalty award.
- systems for awarding, redeeming, trading, gifting, and otherwise exchanging points
- challenges between users
- embedding small casual games within other activities.
He is talking about the fact that, if an underlying subject or process is fundamentally dull, no amount of gaming layered on top is going to make the slightest difference. He is specifically talking about work - he now works for salesforce.com - and rather candidly suggesting, I think, that just sticking a salesforce platform under a dull business won't make it any less dull - but I am getting back to the medium and the message again and away from my point.
Gamification won't make the process of buying (or selling) insurance any more "fun" but it will be one of the tactics used to encourage people to share their knowledge about uncertainty - something I believe people are genuinely interested and concerned about, and which has nothing to do with insurance, right?
So, to the extent uncertainty about particular things (for example, activities {like driving}, events {a party for example} or processes {like banking}) is one core feature of the more general term "risk", I expect gamification will be a key element used to encourage people to start sharing knowledge about specific uncertainties. Such collaborative processes will begin to cause reductions in some specific uncertainties, and lead all of us to be able to start thinking differently about risk generally, and produce new ideas for dealing with it.
And risk, unlike insurance, is no pig.
Monday, 10 October 2011
Banking really is a lottery!
You couldn't make this up...
The Halifax, a subsidiary of the 43% UK Government owned Lloyd's Banking Group has announced a savers lottery - with 3 guaranteed winners of £100,000 every month.
I thought the UK Health Lottery was tacky until I saw this...
As a marketing ploy, I am sure someone at the Halifax had a wonderfully plausible steaming great pile of MBA style bullshit showing why this was a good idea. I imagine it included market segmentation showing how many savers would move funds to Halifax given the possibility of a £100,000 lottery win if only they save just £5,000. I am sure the research suggested people would happily confuse headlines about gambling bankers with the chance to gamble with their banking too.
Now, as far as I am concerned, Halifax is quite at liberty to waste money however its shareholders let it but there will be others who will wail and gnash their teeth in all sorts of colourful ways. Some will scream about taxpayers money being wasted on providing lottery wins to the already well-enough-off (to have £5,000 in savings) and others will talk sonorously about the small business loans that are foregone by this action.
Whatever...
I am just mildly surprised, when the very future of banking is being debated, including at the heart of the debate, how the risks of banking should be shared between customers, bankers, shareholders and taxpayers (to name most of those vying for the chance to fund banking losses), I can't help thinking that setting up a savings lottery is not the cleverest idea...
The Halifax, a subsidiary of the 43% UK Government owned Lloyd's Banking Group has announced a savers lottery - with 3 guaranteed winners of £100,000 every month.
I thought the UK Health Lottery was tacky until I saw this...
Because we think saving should be rewarded with more than interest, every month we're giving three savers £100,000 in our new Halifax Savers Prize Draw.
And, over a thousand other customers will win smaller prizes. All you have to do is hold £5,000 in qualifying savings accounts each calendar month and register.
As a marketing ploy, I am sure someone at the Halifax had a wonderfully plausible steaming great pile of MBA style bullshit showing why this was a good idea. I imagine it included market segmentation showing how many savers would move funds to Halifax given the possibility of a £100,000 lottery win if only they save just £5,000. I am sure the research suggested people would happily confuse headlines about gambling bankers with the chance to gamble with their banking too.
Now, as far as I am concerned, Halifax is quite at liberty to waste money however its shareholders let it but there will be others who will wail and gnash their teeth in all sorts of colourful ways. Some will scream about taxpayers money being wasted on providing lottery wins to the already well-enough-off (to have £5,000 in savings) and others will talk sonorously about the small business loans that are foregone by this action.
Whatever...
I am just mildly surprised, when the very future of banking is being debated, including at the heart of the debate, how the risks of banking should be shared between customers, bankers, shareholders and taxpayers (to name most of those vying for the chance to fund banking losses), I can't help thinking that setting up a savings lottery is not the cleverest idea...
Thursday, 6 October 2011
UBS fraud up-date; risk management systems almost bound to fail
I don't know why UBS risk managers ignored risk and operational systems that detected unauthorised or unexplained activity by Kweku Adoboli. I don't know why they didn't investigate the signals or why appropriate action (whatever that means) wasn't taken to ensure their existing controls were fully enforced. According to this Reuters report however, UBS's own internal report indicates all these things did - or rather didn't - happen
I am not surprised. There are countless reasons why action might not have been taken, ranging from failure to understand the signals to a positive decision to ignore them. But underpinning all the possible reasons is the fact that how risk management systems successfully monitor human/system (e.g. trading) interaction - never mind how humans successfully interact with risk management systems - has yet to be successfully worked out.
One challenge is motivation. When we wrote this Basel II report, my co-author and I spent a lot of time trying to think through what it was about man-made systems that made them different from natural ones in the context of risk. We were particularly trying to think about the modelling and pricing implications for transferring operational risk under Basel II - of which Adoboli's 'alleged' fraud is a prime example.
At that time, ten years ago, we came to a number of conclusions - some of which we might think about differently today (but not much). One was that in a natural system (a tree for example), the system's agents (earth, sun and water for example) can be identified and their interactions (photosynthesis for example) observed, leading to the possibility of successfully inferring its objective (to mature and propagate).
In a human system like a bank however, its overall objective (to grow and make a profit) is formally established (rather than inferred) as part of its design. The agents (for example, people and capital) are brought together and rules introduced to govern their interactions, aimed at the achievement of the objective. The problem is that how those agents actually interact is difficult to observe and cannot safely be inferred because the motivations of different agents can differ so considerably from the formally established objective.
In understanding this difficulty, we believed (and I continue to believe) that a key to understanding the true nature of risk in many human systems is to try to understand the true nature of power and influence relationships within organisations and the importance of the organisation's culture in determining the nature of those relationships. Today, we would think in terms of a social graph but that wasn't possible ten years ago.
One recent book that rather supports one of our concerns with risk in banks - as I have very briefly outlined it above - is Delivering Happiness by Tony Hsieh. One of the key points of the book is that a vital ingredient of a firm's culture is that the firm itself have a purpose beyond simply growing or making a profit.
That's always going to be a tough sell in a bank, not because banks don't have purpose; after all, intermediation is absolutely critical for a capitalist economy to function. But I wonder if it is the very importance of intermediation that means the profit banks can generate can be so high that profit blinds bankers to their genuinely valuable purpose - amongst other things...
I am not surprised. There are countless reasons why action might not have been taken, ranging from failure to understand the signals to a positive decision to ignore them. But underpinning all the possible reasons is the fact that how risk management systems successfully monitor human/system (e.g. trading) interaction - never mind how humans successfully interact with risk management systems - has yet to be successfully worked out.
One challenge is motivation. When we wrote this Basel II report, my co-author and I spent a lot of time trying to think through what it was about man-made systems that made them different from natural ones in the context of risk. We were particularly trying to think about the modelling and pricing implications for transferring operational risk under Basel II - of which Adoboli's 'alleged' fraud is a prime example.
At that time, ten years ago, we came to a number of conclusions - some of which we might think about differently today (but not much). One was that in a natural system (a tree for example), the system's agents (earth, sun and water for example) can be identified and their interactions (photosynthesis for example) observed, leading to the possibility of successfully inferring its objective (to mature and propagate).
In a human system like a bank however, its overall objective (to grow and make a profit) is formally established (rather than inferred) as part of its design. The agents (for example, people and capital) are brought together and rules introduced to govern their interactions, aimed at the achievement of the objective. The problem is that how those agents actually interact is difficult to observe and cannot safely be inferred because the motivations of different agents can differ so considerably from the formally established objective.
In understanding this difficulty, we believed (and I continue to believe) that a key to understanding the true nature of risk in many human systems is to try to understand the true nature of power and influence relationships within organisations and the importance of the organisation's culture in determining the nature of those relationships. Today, we would think in terms of a social graph but that wasn't possible ten years ago.
One recent book that rather supports one of our concerns with risk in banks - as I have very briefly outlined it above - is Delivering Happiness by Tony Hsieh. One of the key points of the book is that a vital ingredient of a firm's culture is that the firm itself have a purpose beyond simply growing or making a profit.
That's always going to be a tough sell in a bank, not because banks don't have purpose; after all, intermediation is absolutely critical for a capitalist economy to function. But I wonder if it is the very importance of intermediation that means the profit banks can generate can be so high that profit blinds bankers to their genuinely valuable purpose - amongst other things...
Wednesday, 5 October 2011
Data exchange rate; what's your's worth?
On Sunday, I commented about plans that Facebook may have to sell data about our activities as endorsements to our friends and family. I expressed the concern that something I read (or listen to or watch or whatever) but don't necessarily 'like', is taken in and of itself as an endorsement by me to my friends of either the content of the item or of the publisher of the item or both.
I also said that I have no major objection to friends seeing most of what I do online but there are times when I would prefer they didn't. It is not just that there may be sites I prefer they didn't see I had visited for embarrassment reasons (like Doctor Who, for example) but there are also competitive reasons why I would prefer my approach to knowledge gathering not be disclosed to everyone who knows me digitally. Since Sunday, I have refined my thinking a bit
My clarified concerns - if Facebook implements this plan - are divided between the credibility of endorsement and its value.
So first, it doesn't seem to matter whether I actually 'like' something; apparently I can still endorse it. That just doesn't sound credible and I think my friends will see through such endorsements.
Second, if I endorse something, I want to be clear what it is I am endorsing and why. If I really want to endorse something to my friends, I want the endorsement to be helpful to them.
Third, isn't what and how I endorse something quite personal? Not private maybe, but personal. I am not sure it can be done by proxy.
Finally, and most obviously, endorsement has value - or Facebook couldn't sell it. But, is whatever Facebook gets for my endorsement (over and above what it already gets for my other data) still within the overall value of Facebook to me? Looked at another way, as Facebook earns more and more out of my data/data about me (delete as you think fit), do I get a corresponding increase in value out of Facebook?
I am not sure I know the answer or even that I have the faintest idea now how or even if it can be calculated; I am also not sure that I will spend too much time thinking about it but I suspect it is the kind of equation we may all need to think more about in the future. Platforms like Facebook - and this clearly isn't just a Facebook issue - will come up with ever-more creative ways of 'monetizing' user data and we will need clearer ideas of what we think that data is worth to us.
Data is like a currency without an easily calculable exchange rate; what's yours worth?
Data is like a currency without an easily calculable exchange rate; what's yours worth?
Tuesday, 4 October 2011
California Book Reader Privacy Law; so this is what they mean by a 'sectoral' approach
If you wondered about the difference between the US sectoral approach to privacy law and the EU's 'broad principles' based approach, this new law - that establishes privacy protections for e-book purchases - exemplifies the sectoral approach; in spades.
Sunday, 2 October 2011
Facebook sharing should not mean endorsing
Sometime ago I reconciled myself to the fact that Facebook would make money - and so save me the cost of their service - by selling data about me to advertisers. I understand the bargain; I get Facebook's tremendous value 'for free' and get adverts targeted to me, that I can ignore or not.
This story (from the Financial Times) takes things a lot further though. It suggests Facebook is considering using everything I do online that is captured by the apps newly linked to Facebook (like Spotify) to make me an endorser of whatever it is I happened to have read/listened to/watched/written...
I am happy with the earlier bargain but I am not so sure about this. Being the passive recipient of adverts targeted to me is very different to being an active part of a third party's ad campaign to my friends and family.
Sounds a bit like one of those terrible sweat shop jobs where people are forced to phone friends and family to flog stuff they know the friends wouldn't otherwise buy in a million years.
Anyone remember what they used to think of friends that did that? Exactly.
This story (from the Financial Times) takes things a lot further though. It suggests Facebook is considering using everything I do online that is captured by the apps newly linked to Facebook (like Spotify) to make me an endorser of whatever it is I happened to have read/listened to/watched/written...
I am happy with the earlier bargain but I am not so sure about this. Being the passive recipient of adverts targeted to me is very different to being an active part of a third party's ad campaign to my friends and family.
Sounds a bit like one of those terrible sweat shop jobs where people are forced to phone friends and family to flog stuff they know the friends wouldn't otherwise buy in a million years.
Anyone remember what they used to think of friends that did that? Exactly.
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