Multiple Choice Buying?

Regulations shift revenues from banks to Central Counterparties.  Shall banks adopt a kind of "collaborative filtering algorithms"...successfully used by the online retail sector…to pitch new products to clients?

What's a collaborative filtering algorithm?

It's a method of making automated predictions about the interests of a user by collecting preferences from many users. If one shares a taste with others its more likely that she shares another taste too.

If you listen too much to main stream, you create mainstream

Collaborative filtering needs enough samples, it looks into the past…so, although collaborate filtering can claim to achieve good diversity and independence, it may work the other way around in unpredictable cases - if you listen too much to mainstream, you create mainstream.

Good for gadget buyers is not necessarily good for corporate treasurers

The traditional role of, say, a corporate treasury embraces core functions…corporate finance, cash management, liquidity planning and control, procurement of financial investments…and increasingly important: management of interest, currency and commodity risk…and marginal functions that are extremely company specific.

Senior management and board seek greater visibility to liquidity and risk exposures and better monitoring financial metrics on critical projects…this requires finding new ways to leverage treasury skills and technologies…maybe use things that are not in stock.

Quant finance

Without using algorithms, you can't understand values and risk and engineer new financial instruments. But the success of treasury departments may need also quantitative methods to validate the major instruments they need…far beyond collaborative filtering.

A treasurer's role may need to shift from being an asset guardian to a value creator…set the stage for successful investment and risk management, leverage technology and build quant finance skills.

It's one example how indispensable quant innovation can become...

Turn Techies Into Founders

The usual scenario: investors look for startups with business plans, designs…and teams in place. There are other ways of supporting startups that all have in common: they need to understand whether an innovation will work and sell.

Don't find them - build them

Today, I read here (Wired UK, July issue) about building startups in-house. It's putting innovation into higher context. Tech will help leverage the developments and deployments, but in its core it's a bottom up approach of developing businesses around people.

A company builder for innovation builders

A company builder begins pre-idea, pre-team…Their approach is evolutionary in the sense that they encourage and support people to do groundbreaking things. They finance the try at a low level already. The ability to support cross-overs, selection and mutation enable the company builder to finance along a profile of optimal market risk for the startups and of their own.

I like this approach, because it creates real options for both the company and the innovation builder…and it provides constructive learning on a higher level…also for both.

This is what I wrote two years ago about startups. Don't do it alone gets another dimension when working with a company builder…

You're A Genius

Is there a magic behind creative thinking?

Innovation makes our species different

Behavioral neurologists may say: yes, there are talents, but the neurological principles of creative behavior are the same among us - we all have creative minds. I agree. Creativity is a special class of problem-solving…characterized by difficulty, unconventionality, novelty…but it needs competency. Can you buy competency? Yes.

Wheels aren't hard to reinvent, are they? 

Original thinkers often look for adventure and start thinking not reading (eschewing algorithmic and technological fruits available). This is great for explorative learning, but it may reduce the value of the innovation?

The innovative spiral drives faster if you push new, validated theorems, models...into the knowledge base and use them in a next turn.

What makes quant innovations work?

What are the units of quant innovations and what are their generic building blocks? Remember, the basic units are functions, the most important units are tasks. Functions create tasks, tasks create workflows, workflows create subsystems and subsystems create the quant innovation.

A quant innovation does only work, if it's developed the bottom up fashion and each unit has building blocks that are constructors, progressive problem managers and solvers.

Functions tune the mechanics of tasks, workflows, subsystems...the system. They are the media of actors. They define the coverage and the depth of the system. Their programming style shall be symbolic, functional…but their implementations shall combine symbolic and numerical computation.

Tasks have usually a time dimension and they move objects and actors. Tasks shall offer a clear shift throughout their flows. Tasks may be: data selection, curation and import...model validation…model across scenario evaluations…back and stress tests…result analytics and aggregation.

Workflows may deal with the analysis, prediction or control of processes…in workflows we may use generic tasks like, "Create", "Select", "Apply"…Data, Objects, Models, Parameters, Valuation Methods, Scenarios, Factors

Subsystems and the system are created by workflows…subsystems are add-ons if they're built atop another subsystem (a platform).

Build your technology stack (and share it?)

Develop a cascade of innovations that work and empower yourself unfolding creativity based on a growing stack of technologies. A Task-oriented Language, Engines that implement it, Communication Services, Data Services, A Computation Factory…Provide the same stack to other innovators. Build insight partnerships.

Clouds and contextual front-ends help partners to develop and deploy jointly…innovations that may become the classic of the future. Work of geniuses.

How Is Tech Changing...?

One innovation: clouds helping cooperation between authors and producers, say, in Music. Writing. Educating. Building...Or in Software itself. New contextual front-ends will support the cloud controlling a kind of creation-experimentation-creation…spiral.

We know this from maths, where creation uses abstraction that is driven by the evaluation of examples…

Tech has changed…

integrated and put into workflows: writing, capturing, refining, adapting, marketing, deploying, sharing…and exploring. Good tech offers rich functionality but lets creativity lead…and it shall at the same time lower the barrier to making and deploying...

Creators can find producers and fans..and define projects that they want to work on together…Sharing isn't restricted to ideas, resources…it's related to projects, businesses…

If you can't get purpose and profit at the same time - it doesn't matter much. It's connecting smart things for creation, deployment and services under the framework of multi-level sharing.

And it will work especially well in fields that we find the most difficult: like quant innovations...

How To Win

I've worked on the diagnosis tool for quant innovations and thinking more about it, I became more interested in a higher context: politics.  And it became even clearer to me: innovators need to push their innovations into a higher context…

The long breath of contextual thinking

But even developing or writing, interacting with my core partners frequently is the driver leveraging new inspirations…

Today, I update your information about how UnRisk continued transforming ideas and knowledge into margins. The story-of-being-lucky began with the decision to develop technologies without context in order to develop contextual products fit for purposes swiftly and adaptive. If we were a taylor we'd say: made-to-measure.

And then we decided to unleash the programming power behind UnRisk. And partners helped us understanding new uses and users…and consequently contexts.

This is my reference: UnRiskOmega. It has one controlling idea: enable experts and non experts to manage complex financial deals. In different environments but with the identical cores.

Everything we ever had in mind…its cumulated in the reference. It's context technology in the core and in the front ends…and consequently, it's made-to-measure itself. It has the many faces of a navigator through the regulatory cliffs, a client profiler, a portfolio optimizer, a product risk classifier…

It's the amazing result of a great cooperation: MathConsult-Multilateral-uni software plus…


You win developing technologies and products orthogonally, rely on open innovation and collaborate. Sounds easy? It's not. It has a few traps...


I haven't posted for a while. I've worked on my Quant Politics concept and decided to release it in book-form. Everything is written, but it's still much work to do getting it into the form I've in mind. It will be in German (first).

Learning by writing

I always learned when writing. But there's this autodidact's dilemma:

I've never learned any political theories. I've no theoretical background in social and economic sciences…I analyzed various socio-economic and political systems, but not too much…there're great books and the blogosphere is really rich of great ideas…see my As Read At list.

But where to begin is a personal choice and the emergence of progressive problems force you to dive deeper into a particular discipline….along the writing.

About a political system that may fix what it eventually broke - Innovation

That is an usual objective of innovation. And my simple idea is: it must be adaptive - more computational. Quant Politics. So, one of the controlling idea is to apply my knowledge on how to make innovation not only working but attractive enough to be integrated…

It must be adaptive because of the complexity of the economy and labor. They must develop in a coevolution. It's radical innovation, but to make it acceptable it needs to use existing tools and instruments. Our money system. Taxes. Transfer Payments. Hard- and Soft-Infrastructure. Financial Instruments…but differently set up and applied.

It's required to be much more quantitative

Its foundation is the philosophy of Speculative Realism, where new contexts are written into blank socioeconomic spaces. To understand whether a theory is possible we need Constructors. And politics need to surf at the waves of reality and adapt its decisions by recalibrating its models…

It shall help avoiding the no-problem problem

That is what politics impresses: the constant peeking for danger allows no no-problem phases and the soporific we-are-doing-so-well often leads to a crisis.
Hiding the chances of risk breeds fear - hiding the dangers of risk creates disasters and crises
We need policies against exaggerated fear and recklessness.  Consequently, a new political system needs to work with quantitative support. It must be interactive. Evolutionary. It has to work with simple models and tools. It must support explorative and experimental political learning enabling much more direct democratic elements.

To integrate it quickly we need to accelerate the change process

I recommend to run through the following phases of the promotion process: Reaction according to the principle of chemical reactions between groups with different philosophical beliefs, cultures, social systems, economies, stages of development, educational standards…Circulation by a kind convection at the boundaries of different political segments with different expectations, knowledge and skills...Diffusion by concentric dissemination of information and frameworks.

Integrate it by projects

It needs projects to understand the required behavior changes, how much it contradicts world views, culture, social systems, economy. Projects shall tell us how it is accepted, how much explanatory support it needs and how quickly it gets stuck without direct intervention and how it spreads with the help of early adopters and multipliers.

A politics of open innovation and sharing

Taking the complexity economy and labor of the future and the technological evolution and combine them, I come to a few conclusions:
  • Our money system should be programmable and implementable in a kind of Internet of Money. Implementing a book that is not owned by anybody, but everybody. It would most probably enable the implementation of a much more dynamic book keeping system
  • New methodologies and technology could empower a politics with much more direct democratic elements
  • A better understanding of property rights, use rights and copyrights could open the possibilities of privately offered semi-properties enhancing the usual hard- ind soft-infrastructures provided by the public sector…emphasizing on the stimulation of innovation
  • The Main Street could benefit more from the innovations of the Wall Street without suffering from the downsides
  • To help turning automation into augmentation the progressive tax system shall be extended from wages to total income and a basic income should be implemented stepwise according to the future of work…tax systems and transfer payments shall be adaptive
  • The general direction of the system design: as decentralized as possible - as centralized as required
The big picture: make a political system that becomes stronger when stressed

I'm not megalomanic…thinking that my book will convince authorities to make the changes...but I hope that one or the other idea will attract experts to transform them into concrete projects.

I've looked into politics through the lens of an innovator and innovation marketer.