The inconvenient truth of a flat world

13 07 2010

The infamous gas pedal. Source: Wsj.com

I grew up in a small town lost in the French Pyrénées. The three or four drunks, bolted to their seats in the village’s only bar, were my first encounter with pundits. With all due respect to all the “real” pundits populating the mediasphere, I am just saying that strongly voicing your opinions on various subjects, some of which you barely understand, is ingrained in human nature. We inherently value people with strong opinions and resent the ones unable to provide a clear black/white answer – ask any climate scientist grilled during a congressional hearing! By saying this, I am also guilty of a black & white description of the world. There are of course a lot of exceptions to what I just said; but, underestimating how widespread this phenomenon is would be a great mistake.

Ask Toyota! Read the rest of this entry »

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The end of retail as we know it. A scenario of virtualization.

21 03 2010

Health toilet in Japan - Source: ideaconnection.com

It is always interesting to see how pushing some trends to the limit create challenging scenarios. While most people will agree about the existence of a trend, few will care to walk through the unintended consequences. Here is a great example of how our mental models if unchallenged can leave some gigantic blind spots in our understanding of what the future may hold.

Pr. Sanjay Sarma from MIT recently gave a presentation to an audience of supply chain executives on the state-of-the-art of sensing. Sensors are now ubiquitous: in you car, your house, your cell phone, etc. There is a clear consensus that this is just the beginning. More complex sensors are becoming more affordable everyday. The computing power and infrastructure to handle the data is also getting exponentially cheaper. With your IPhone, you can already scan the bar code of the product you want to buy, and search on the Internet where to find it at the cheapest price. We are just a couple of years away from sensing appliances in our homes. Your fridge will sense when you will be out of milk or Diet Coke and will signal it to you. The sensing toilet is a reality in Japan. After analyzing your “body fluids,” the toilet makes recommendations for your diet and will give you information that you used to only get through a blood test i.e. sugar level, etc.

Everybody in the audience bought into a future where sensing was omnipresent. The supply chain executives could already experience in their businesses how sensing has become a pervasive innovation – from GPS tracking to RFID tags. However, when asked about the potential implications in such a future, they quickly concluded that dynamic routing would be the most important impact in their respective industries. Sure, being able to reroute your fleet to avoid congestion will allow saving a lot of money. But, is it really the most dramatic impact you can think of for this type of technology? Read the rest of this entry »





The power of self-fulfilling stories in financial markets

26 02 2010

Soros, the new Citizen Kane? (Credits: mindfully.org)

On December 2009, the euro traded at $1.51. Today, it trades at $1.35. What can explain this 11% downfall in little bit more than 2 months? An avid reader of the Wall Street Journal or the Financial Times will eloquently explain that it just reflects the faster recovery of the US economy out of the crisis vs. Europe, amplified by fears that Greece may default on its sovereign debt. End of story? Not so fast. A closer look will reveal the perfect case study for the power of self-fulfilling stories in financial markets.

Deeply ingrained in our collective subconscious is the fear that we are getting manipulated by higher forces. Not so long ago, people questioned the power of mass media and how Rupert Murdoch or Silvio Berlusconi could bend reality with their editorial lines rather than reporting it. I will argue that hedge fund managers and other leading investment bankers have become the new Citizen Kane, shaping reality with powerful storytelling. Financial markets have slowly but surely built a very advanced language that now allow them to communicate and broadcast complex stories. Puts, call, credit-default swaps and other derivatives constitute the building blocks of their vocabulary. Traders have become the journalists that put those words together, following the editorial line dictated by their fund manager. The assets under management, the equivalent of circulation, provide more or less clout to the fund editorial line. Read the rest of this entry »