Don't Make Us Hate You

I got my first racing bicycle with the age of 13. And I like to bicycle since then - when I was younger I cycled thousands of km a year. In the "best" time, my wife and I filled a light backpack with the must-have 5kg each and rode 3 weeks through Umbria, Abruzzo, Latio, Toscany...

I like to watch the major racing events: Giro, Tour, Vuelta and other Classics, on TV. Due to good reasons (doping) they are shown only at a few TV stations now. One is devoted to sports. With a German arm.

High pressure promotion

Vuelta (Tour of Spain) 2014. One of the German reporters could not resist to mention a great German sprinter (JD) each 5 minute in each of the stage transmissions. Even in a climbing sector, where JD fell back minutes, he enthusiastically mentioned that JD is such a great champion. Contador and Froome fighting for a victory in over 2000m altitude, but he talks of JD maybe winning the sprint title. OK it's thought enjoying the German audience, raising the audience for winning better promotion contracts from more renowned companies, but...

Unintended consequence

JD is possibly the nicest rider of the whole professional cycling circus, but I started to hate him. And to hate the TV station and the brands promoted?  In fact, since then I only click that station, if I do not see any "alternative". I even watch less cycling.

OK, hate is a too strong word. It's more "annoying". But when clients choose a brand, it's not so much about features. It's about trust. Trust that I get what they promise. But also trust that they understand that I understand. Brands need to find ways to add serenity and comfort, not intrusion and confusion. Marketers, who think they're smart when treating consumers like goofs, fail.

It is my strong believe that this is also true for innovative offerings.

Don't make me hate you.

This post has been inspired by this post in the Six Pixels of Separation Blog (that I frequently read).

Made With UnRisk - A Solution and Development System in One

A consequence of the ongoing financial crisis: the financial system will have to ride a big wave of standardization.

Big regulatory wave

Regulatory bodies often use "standards" to designate principles and rules of financial regulation and supervision for the general and detailed business processes in the financial sector.

But, it seems regulation has become a synonym for centralization? It comes like a big wave and causes big changes of financial business principles, far beyond core capital rules, risk management requirements, …

It redefines game rules in pricing.

Standardization is good

No doubt, without standardization we'd have no powerful interfaces that transform one world into another.

In factory automation, ww standardized. If you don't have standard machine elements, function complexes, mechanisms, ... you need to make everything yourself from scratch. Even languages that are understood by machine, robot, vehicle, ... controls need to be standardized. Our high level task-oriented offline programming languages were compiled to standardized control code.

But we realized quickly: complex automated manufacturing tasks cannot be centrally supervized, they need to be organized as interplay of systems with local intelligence. The bottom-up fashion.

I am still for standardization but have reservations about strict supervision and  centralization.

In banking, standards consolidate transactions, rationalize accounts. integrate payment environments and what have you.

But what about the impact of central counter parties? 

Unintended consequences?

The impact of, say, central clearing? On the higher-level view it is reducing counter party exposure but may be resulting in an increase in liquidity risk. Such kind of centralization may drive a marginal cost regime with margin compression (OTC revenue reduction) ….

One of the rationales: Deloitte's Central Clearing for OTC Derivatives ...

Technology providers, will not be able to influence the rules, but

Individualize with UnRisk

We, at UnRisk, will put our best efforts to support small and medium-sized clients to evaluate the revenue impact and maybe refine product and sales strategies to their business strength.

Quants will become even more important as partners. Instruments will become less complex but the valuation space will become massive. Market dynamics will change basic rates more frequently. Consequently, the methodology to price a simple swap changes fundamentally, portfolio optimization gets another meaning, …

We offer the methodologies for these new regimes to be managed in our UnRisk Financial Language in combination with the UnRisk FACTORY Data Framework supporting the corresponding financial objects and data.

Designed to enable quants building systems for better trading decisions and risk-informed sales strategies under the new regime.

It was possible to provide it so quickly, because we have designed technologies and products orthogonally and designed a language that allows for describing other languages. 

5 Ways To Make System Changes More Effective

Innovators want to change the underlying systems that are causing major problems of our time..

What makes radical innovation more systemic?

It's more strategic than operational

1.  Analyze the system you want to change - but not too much

If you dive into the current system too much and understand every detail, you tend to optimize instead of changing it. You don't need to be a passive recipient of a history.

2. Prototype and experiment - expect to be wrong

You gain insight with trial and error - tinkering is not a bad idea if you want to make something new, but radical experimentation and tinkering are not necessarily twins.

3. Organize a feed back cycle  - and learn

Changing is hard work, but if you do not present its interim results you will be unlikely successful. Presenting also helps you to understand what you did.

4. Don't do it alone - cooperate. cooperate. cooperate.

If you want to change, you need connections and alliances. This goes far beyond the agile development and reflection cycles.

5. Make it resilient - to recover quickly from difficulties

You want to do the difficult work and master all complexity. This may let you forget that there are traps, side effects, external influences, unintended consequences …

On the software development side there are a few approaches that help:
  • develop the bottom up fashion and use a symbolic declarative language (used to describe other languages) - that drives evolutionary prototyping and explorative, constructive learning. 
  • for resilience organize objets, models and methods orthogonally and build engines that implement your languages 
  • with computable documents you can make convincing presentations
  • provide a framework for data and a universal deployment system.
Remark: If your idea is so agreeable that everybody is going to support it immediately, it's not going to change ….