Me On UnRiskInsight - A Roundup

What has touched me…from economics, finance and technology…

There's no such thing as an abstract program…is the major idea of the Constructor Theory - A New Fundamental Theory of Physics…about impossible tasks because of computational limits.

New promises of the Artificial Intelligence community…Cognitize - The Future of AI?…as AIs develop, as extension of IQs, we need to keep them consciousness-free.

Standardization is great, but it can have unintended consequences…Don't Ride the Waves of Standardization Blind…on the regulatory regime of central clearing of derivatives and its market impact.

More about traps of centralization and standardization…The Antifragile System Concept…about decentralization, agility, diversification, trust…options

About the big joke of big data…5 Reasons Why It's Hard Working In The Data Salt Mines…don't build business intelligence system by data driven methods only.

Think hybrid

We've fantastic technologies, frameworks and tools at hand, but we seem to love one-size-fits-all selections.

But solving complex problems need often more: hybrid approaches. Constructive and evolutionary methodologies, models intelligently combined with data driven methods, symbolic and numerical computation, hybrid programming in languages that are fit or the purpose.

Technology trends influence the business principles of innovators. Their market risk is determined by many exogenous end endogenous factors…an individual compass is indispensable.

What We Can Learn From Great Book Editors And Authors

You may have been wondering that I frequently read Shawn Coyne's great blog The Story Grid. Ok, I read quite a lot fiction books, but the motivation here is inspiration. I want to get out of my comfort zone of innovation assessment.

Shawn's work brought me into another world of thoughts related to creative work description. What is called "genres" in arts, I call "types" in innovation. And of course, the subtypes fit better to soft innovations than hard innovation.


Let me go back a little: beginning in 1946 in Russia a tool has been developed on a foundation of extensive research covering hundreds of thousands inventions (patents). TRIZ - in English it would be called "the Theory of Inventive Problem Solving".  The theory includes a methodology, a tool set, a knowledge base and a model base. TRIZ was applied to create and improve products, services and systems. Quite a lot "old" firms: Ford, Boeing, Xerox, Kodak, Proctor…used it in some projects.

One of the principles was "aggregate state change" - like, if something is broadcasted via cable, why not through the air…or the other way around.

But this is a technical view. I believe, an innovation does not exist, before it is built and used.

I often hear product-, process- and marketing-innovation. But does this say much?

Types should be foundations of innovation to wrap its users (buyers!) minds around (Shawn's words).

Let me again fall back a little: the school of strategic marketing


When I was part of an expert pool assessing innovation projects of the European Commission under its framework programs, I tried to convince us reviewers to not only assess innovativeness, project issues…but look through the lens of CATWOE

Clients - possible buyers
Actors - possible users
Transformation - knowledge, methodologies, technologies…(hopefully) into margins
Worldview - arming the leaders or small market participants…provide systems or know-how packages…
Owners - who owns the innovation
Environment - economic, political, competitive arena..

(I assessed about 500 projects in 10 years)

But there's a better way

Five Innovation Types

It starts with Genre's Five Leaf Clover. And surprisingly enough they inspired me to a similar "Typology Clover".

TIME TYPES - related to the runtime
REALITY TYPES - from factual replication to speculative simulation
STYLE TYPES - the ways we experience a quantitative systems…referring to front-end styles, interaction patterns...
STRUCTURE TYPES - related to the workflows…from linearly sequenced to complexly nested
MATTER TYPES - divided into Purpose and Realization Types

I emphasize on quantitative theories and innovations. The types fit well, because quantitative systems often provide instantiated computational objects, but also a programming environment to manipulate them. Actors write...

I will use the type building as methodology to understand the opportunities better. And I give it a name

The Innovation Mesh

In quant theories a mesh is often built to discretize a parameter space for better quantification of properties. A Finite Element Mesh is for calculating stress, heat, diffusion…

Consequently, I called it "mesh".

I am fully aware that I will not be able to quantify over all types. But the picture will help me to assess project values better.  And I want economic feasibility.

I've "backtested" the type tool in previous projects, where I know the great, but also bad values. It fits well.

Thanks, Shawn!

BTW, there is something else that we can learn from great editors and authors. They make things that let feel the other person engaged. And they do not compete - they do not eliminate others books from the shelf. They know: more reading is better. It's the genres that distinguishes…

Why I like this tool so much: it sells while it describes.

Wolfram Technology Seminar 2014 Austria

I just returned from a great event.

This was the announcement and schedule. This was the fantastic venue. An impressive wooden cupola hall.

80+ people came to learn about the latest version of a great technology stack for knowledge-based development. The technology is described here.

The speakers told the great story about the Wolfram technologies as enablers of cascades of technology and product development…culminating in a great solution for a real multi physics system modeled in a drag-and-drop environment with comprehensive simulation capabilities.

The technology stack provides symbolic computation, numerics, semantic data frameworks, machine learning, dynamic visualization…techniques for transformative development.

Summarizing, the event was about task oriented, domain specific, declarative…development the bottom-up fashion.

I recall my factory automation time…I could have made much better systems much swifter…and saved enormous money. Only, if I think of the new geometric modeling system combining constructive solid geometry, bounded geometry, mesh generation…

It was never so easy to innovate technically.

Is This The Best I Can Do?

In search of perfection, we often ask ourself "Is it the best our team can do?" -  and usually the answer is "yes", but it would be stupid to think we were done and settle. No, we need to disrupt ourselves ...

But, what about myself? I am not a soloist, but my responsibility is business development, strategic marketing, marketing and promotion mix development... I ask this quite often, but I cannot give the answer myself.

My personal motivations and attitudes:

Committing to honest communication - this is the only way to start business partnerships. It includes makers, clients, re-marketing partners. My fear of shifting the status quo is bigger than the inconvenience of addressing a "challenge" to potential buyers, partners and friends.

Put energy in conversation - makers are passionate about their methodologies and technologies. Why should we just tell what we do and hide how we do it?

Listen to clients and focus group orientations - but not be a slave. We like to make deadlines of our clients, but not to continuously make the urgent before the important.

Develop and maintain a culture  - I want to be clear about what is important, where we are good at and what we do not like or cannot do. It is indispensable for knowing how we want to shift our business borders.

Our products and services shall tell a story about us.

My Fiction Book Picks of 2014

I've been reading great fiction books this year and I want to share my picks  (not ranked)…although there are still great books to come out this year. I read in German

When the doves disappeared, Sofi Oksanen

Outlaws, Javier Cercas

Both reviewed here

What Horses Are Those Who Make Shadow On The Sea, Antonio Lobo Antunes

Colorless Tsukuru Tazaki, Haruki Murakami

The Goldfinch, Donna Tartt

The three reviewed here

Americanah, Chimamanda Ngozi Adiche

Reviewed here

Don't Overcrowd the Pan

My wife, Eveline, is a good cook (some say a brilliant...). She's a recipe creator and writer. If someone offers a great food product, say, spices, oils, fish, organic vegetables…and wants to publish its transformation into compelling dishes she creates, cooks and photographs it…write a little story…examples can be found here.

Since we started up Exner GmbH, we run independent units. But the intersection set between cooking and innovation is not empty. BTW, I am a lousy cook but a talented eater.

When we go out for dinner we observe now and then that even celebrated chefs seem to be overwhelmed by their enthusiasm on "exotic" ingredients and their deep knowledge how to compose (configure?) them into dishes. And if its only one thing…it can ruin the whole course when not the meal. The extra scallop, or shrimp on top…the asparagus…the Alba truffle! exotic spice… Some even misunderstand tasty from complex, luxurious, exquisite…

And then we talk about's the same principle…the eager seller's trap. Doing the extra thing that confuses the users, like treating rare, when not pathologic, cases…in order to emphasize on a wide coverage…let users turn a lot of screws, like precision vs performance parameters, giving a false comfort about the flexibility of a system…

Simplify. Impute. Focus

Apple's keys to success has many factors, but there's one thing I am quite sure about: they do not offer features that experienced computer tamers find indispensable.

If you have a few "uncooked" technological ingredients left, think twice to put them into the "pan" additionally. They may ruin your great product.

Simplification is the real sophistication, Leonardo da Vinci (paraphrased). It enables you to take responsibility "end to end" - to focus on users and not become a slave to focus groups.

It's not easy to not do it.

Algorithms Can Ruin Lives

I've just decided to introduce a new topic: "telegrams"…to address my opinion on things that touch me, spontaneously.

I read this article in Wired and want to add (after 25 years first hand machine learning and second hand inverse problems experience): inverse problems, like any "recognition" problem are ill-posed. Trying to extract structured information from a "flat" representation is very difficult - from model to picture is easy, from picture to model not at all.

It's not that algorithms need to be "flawed"

This is the reason, why I never applied even the most clever machine learning algorithm to analyze human data. Never. In technical, a little misinterpretation may have technical, economic...consequences. It's a risk: we need to solve inverse problems there, otherwise we could not calibrate and recalibrate our models but be careful with extracting models from data (context free).

Algorithms are great in so many fields, but don't analyze human data for "identity" or "behavior recognition" automatically. Once an algorithm will misinterpret the analyzers...

It's Been Done Before?

Of course it's done before. Most of the successful projects start with a replication.

It matters where it goes to

The Swiss film director Jean-Luc Godard said once: It's not where you take things from - It's where you take things to. You may take a model and implement it by a much better method, or take a method and apply it in another field…

No one's asking you to be the originator of everything. We're asking you, to do things that matter for those who care. The terms for the transfer of innovations is technology transfer (to other users) and technology validation (to other usages). Both are addressing new exploitation opportunities.

Can rewriting be innovative?

The first thing I did in my first job in the mid 70s: migrate an APT system from the IBM mainframe to a General Automation mini computer - the first world-wide.

APT a high-level programming tool used to generate instructions for numerically controlled machine tools.

It was clear to me that each APT program needs to run on the GA as on the IBM. My APT compilers, interpreters and post processors were written in FORTRAN and different from those used in the IBM APT (because of limited resources on the GA, but also to apply my own ideas of geometric modeling…).

Was it innovative?

Later, I introduced a new language that was much more feature and task oriented…

The paradox of copying

Jorge Louis Borges, wrote a great short story "Pierre Menard, Author of the Quixote". Menard, a fictive character, did not compose another "Quixote", he produced a version that is re-written word by word. In this story, irony and paradox generate ambivalence. Menard's copy is not a mechanical transcription, it coincides with Miguel Cervantes' Quixote…

(Borges, Quixote) is different from (Menard, Quixote), because of "knowledge". I think Borges states through the paradox of Menard: all texts are a kind of rewriting other texts. Literature is composed of versions? The paradox of Menard is pushing the limits to the absurd and impossible, but it is about the principles of writing...

However, Menard's version would become more "different" if he offered a complete thorough Quixote course, a reading tour, a blog, a magazine, "how to write Quixote alike books" workouts…

Package know-how for me

It's a package of your products, services. How you dissemination that makes the innovativeness. Sure, it has been done before, but not by you and not for me.

Five Paradigms of Market Risk Management

Market risk is a term of the financial sector. Wikipedia: market risk is the risk of losses in positions arising from movements in market prices. Risk factors are equity risk, interest rate risk, exchange rate risk, commodity risk, inflation risk…Other risk categories are credit risk, liquidity risk, operational risk, volatility risk, reputation risk, counter party risk…

For better financial risk management I recommend Aaron Brown's great book: Red-Blooded Risk.

Any business that transforms knowledge, products, services…into margins face (market) risks. The big difference to finance: most of the instruments used to manage it are usually not tradable.

Does everyone know what risk is?

Everyone talks about risk, but only a few give serious thought to what it is. It is two-sided - with opportunities and danger. Although, danger and opportunities are often not quantifiable, optimizing risk means arranging things that make opportunities and danger a positive contribution.

Optimal risk of cross country skiing

I love skating on diverse tracks through a beautiful winter land.

In seeking the optimal risk I select duration and speed to have fun but avoid hazardous actions. The preferred tracks are not the most difficult ones, but their profile look like a smoothed trajectory of a, say, stock price time series. Ups and downs follow quite frequently and arhythmic.

I need to decide: how fast do I go down to get enough momentum saving energy when skating up the following uphill section without falling. And how fast do I skate uphill to reserve enough power to make the final step powerful enough to get the right speed for the following downhill part.

Running the same tracks more often I become more experienced and find the optimum easier. But it becomes boring...

In business you know your abilities quite well and they are even quantifiable, but what about the market? Innovation usually means riding the waves of a market behavior you don't know well. And this is where the headache begins.

Five paradigms of market risk management

Duality - in your analysis, be aware that you have two parts: the known and the unexpected
Boundaries - try to find boundaries that distinguish situations where markets behave "normal" from the rest. Boundaries based on cost of risk should work.
Optimization - Risk optimization only works inside the boundaries.
Evolution - business is often co-evolution. Not surprisingly genetic programming is a general way to optimize
Game Theory - a mathematical study of uncertainty caused by actions of others

IMO, important is Duality, Boundaries and Optimization.

Market risk optimization is the key: it's an instrument of enterprise development and control. Real options are one tool…Indispensable for Innovators.

The Trick Is To Represent The Project

I am a marketer at heart. But my trick is not to present the innovator, the maker, the client or the re-marketing partner, I represent the project. I may be called "worldwide business developer", but I speak for the project.

Projects…things to be created, financed and shipped. Sometimes they influence a life, other times, they fade.

Projects, not positions, mark my career.

UnRisk - an exciting project

In the last quarter of the 90s I helped creating a project for the, now UnRisk, team…you can read about the history and achievements here.

Lucky for me, cooperation shifted from one time delivery to long-term affiliation in an exciting project.

It's different building a consortium from conducting someone else's project - you get the idea, see an outcome, share a vision, build the technology, build the tools, plant the seeds for growth, you are selected or rejected, your clients shape you and your ideas, the tools build you, you identify your "dream client"and "dream partner",  you refine your brand promise,  you stop listening to focus groups only, you know the financial impact of your decisions, you get the cash flow right…you reinvent your technologies and tools…

This is UnRisk. I'm proud that it matters, that it's different in many aspects, that we got out of the niche, that it has a bright future…I'm part of the project.

Over time, the project world has changed. Tools make development, deployment and marketing of products that are based on quantitative theories and technologies cheaper. But, because it's now easier to get (everybody) straight to market, we need to find our own internal compass…

The trick is to represent the project.