Monday, December 14, 2015

Magic in machine learning

I have had the opportunity to work in data-driven analytics across a number of industries, the most advanced ones being the finance and investment folks.  Now, I am in the oil and gas sector, where advanced data-driven analytics is starting to find a foot hold though there are skeptics a-plenty.  This includes folks to whom a Microsoft Excel is the ultimate analytics tool, and scientists who believe that complex physics cannot be complemented (and in some cases as I believe replaced) by machine learning driven, continuously evolving models.

"… the distinguished differential geometer Eugenio Calabi volunteered to me his tongue-in-cheek distinction between pure and applied mathematicians. A pure mathematician, when stuck on the problem under study, often decides to narrow the problem further and so avoid the obstruction. An applied mathematician interprets being stuck as an indication that it is time to learn more mathematics and find better tools."

Dr. Ingrid Daubechies writes an delightful article in the Wired here, "Machine Learning Works Great — Mathematicians Just Don’t Know Why".  She discusses supervised and unsupervised machine learning, with a nod to a bit of magic in machine learning that is still not understood.

Tuesday, December 1, 2015

Highs and lows of O&G, new models

"KKR & Co led a buyout of Samson in 2011 for $7.2 billion. The company estimated its value at less than $1.5 billion for its prearranged bankruptcy plan.

Dune Energy valued its assets, including about 15.52 million barrels of oil equivalent of reserves, at $229 million in September 2014. The company auctioned them during its bankruptcy for $19 million in July.

Houston-based BPZ Resources fetched less than $10 million for its assets in July, which included licenses to explore for oil and gas covering 1.9 million acres (7,690 square kilometers) in Peru. Last year it valued the assets at $291 million."

How long will it continue? A few good things will come out of this prolonged downturn in oil and gas, including cleansing of the sector from the bottom dwellers, injection of technology to do the same tasks in significantly different ways, new techniques of financial engineering both productive and detrimental (MBAs always have a place upturn or downturn), etc.

Yet, I have not seen any of the significant players in the oil and gas sector come up with novel business models.  Here is an opportunity to (1) copy successful methods from other industrial sectors that have worked, (2) leverage advanced information technology, from gaming to analytics (this requires top tier leadership with experiential knowledge), (3) and the most important of them all is to avoid popular definition of insanity: "Doing the same thing over and over again and expecting different results."

With today's West Texas Intermediate around $41, the article's prediction is ominous:

"Becky Roof of AlixPartners, who advises distressed energy companies, said the experience with energy bankruptcies so far partly reflects the type of companies filing: weak, with far too much debt. She said stronger companies will fail next year if energy prices remain low."

I recently wrote about M&A in oil and gas here.  Read the complete article at Reuters here.

Thursday, November 19, 2015

Whose data analysis is correct?

We in advanced data-driven analytics believe that the patterns in the data do not lie.  Yet, our biases drive what features we feel should be key to the interpretation of data, pick the pattern that invokes the anomaly we want to detect, etc.  This experiment detailed in the Nature here by Dr. Raphael Silberzahn, Assistant Professor, Department of Managing People in Organizations, IESE Business School, Barcelona, Spain (bio and research here) and Dr. Eric L. Uhlmann, Associate Professor, Organizational Behavior, INSEAD, Singapore (bio and research here), highlights that today accuracy in data analytics must comprehend more than one method and more importantly group of data scientists before drawing conclusions.

"The experiment Last year, we recruited 29 teams of researchers and asked them to answer the same research question with the same data set. Teams approached the data with a wide array of analytical techniques, and obtained highly varied results. Next, we organized rounds of peer feedback, technique refinement and joint discussion to see whether the initial variety could be channelled into a joint conclusion. We found that the overall group consensus was much more tentative than would be expected from a single-team analysis."

In the near future, I hope that machines will simply consume data, and extract and raise the anomaly above the noise.  Though, we make the machine, so will the machine be biased?

The data set:

"All teams were given the same large data set collected by a sports-statistics firm across four major football leagues. It included referee calls, counts of how often referees encountered each player, and player demographics including team position, height and weight. It also included a rating of players' skin colour. As in most such studies, this ranking was performed manually: two independent coders sorted photographs of players into five categories ranging from 'very light' to 'very dark' skin tone."

The article concluded:

"Of the 29 teams, 20 found a statistically significant correlation between skin colour and red cards (see 'One data set, many analysts'). The median result was that dark-skinned players were 1.3 times more likely than light-skinned players to receive red cards. But findings varied enormously, from a slight (and non-significant) tendency for referees to give more red cards to light-skinned players to a strong trend of giving more red cards to dark-skinned players. After reviewing each other's reports, most team leaders concluded that a correlation between a player having darker skin and the tendency to be given a red card was present in the data."

Khosla on IT today

Via good friend Mr. Vish Mishra, article in the Business Insider, "Billionaire investor Vinod Khosla: IBM and Dell haven't had 'one new idea over the last 30 years'".

I had an awesome time in late 80s and all through the nineties building computer systems, writing software and firmware, building enterprise systems that scaled to 100s of millions of users... till the early 2000s. At that point I left IT because it was commoditized in every sector I stepped in.  Some sectors leveraged advanced Information Technology well, such as Finance and Banking, Consumer Product Goods and Retail, while some were adopting it slowly like Healthcare and Utilities.

Today I work in a Oil and Gas sector where I find myself fascinated by the inability (on average) to comprehend the power of advanced IT, let's pick one thing, the cloud.  Some of the players look like they reside in a mud hut with candle lights in comparison to other sectors, the most entertaining of (nonsensical) common wisdom being that the cloud is unsecured.  Another area is advanced data-driven analytics.  O&G is a deeply physics based sector, yet data analytics is able to drive solutions in places where physics needs complementation, where physics cannot be applied, or where complete system understanding does not exist to apply physics.  Yet, the stolid mindsets persist.

And this is where the opportunity for exceptional growth and next level of productivity exits.  Mr. Vinod Khosla's comments are a foresight as I translate them for O&G that it could look to the IT future being created by Google and Amazon to solve problems in new ways.

"Speaking of Dell, EMC, and IBM, he said, "They've not introduced what I consider one new idea over the last 30 years....Mostly they've spent their last few years engineering financials.""

"So what is Khosla looking for when he invests? "Who's inventing the future that's dramatically changes the world.""

Read the article here.

Saturday, November 14, 2015

Globalization and the Middle East

I have always found it interesting how regions East of Europe are branded, more akin to the storied regions of Lord of the Rings; Near East, Middle East, and Far East.  Schumpeter of The Economist writes an excellent piece; discussing the facts of doing business in and with Middle East and companies there, respectively, to realities of ethinicity; from areas of growth in Middle East based on commodities to the region's multinationals attempting Western style management for productivity and efficiency.  Schumpeter states:

"... the problems are mind-boggling—and they are not the sort that an MBA course prepares you for. It is one thing to study “political risk”. ..."

Read the complete article here.

Thursday, November 12, 2015

Oil and gas has $500 billion for M&A

I recently wrote an article on how large firms continue to grow through M&A here.  A recent article in World Oil reinforces my claim that this is the season for M&A:

"Exxon Mobil Corp. tops the list with a total of $320 billion for potential acquisitions. Chevron is next with $65 billion in cash and its own shares tucked away, followed by BP Plc with $53 billion, according to data from corporate filings compiled by Bloomberg."

Read the complete article here.

Sunday, November 8, 2015

Rethinking power generation

Excellent article on reinventing generators for using ocean currents for power generation here.

Tuesday, November 3, 2015

Next generation multinationals

Schumpeter in The Economist states, "The golden age of the Western corporation may be coming to an end."

"The golden age of the Western corporation, [McKinsey Global Institute] argue, was the product of two benign developments: the globalisation of markets and, as a result, the reduction of costs. The global labour force has expanded by some 1.2 billion since 1980, with the new workers largely coming from emerging economies. Corporate-tax rates across the OECD, a club of mostly rich countries, have fallen by as much as half in that period. And the price of most commodities is down in real terms."

The world is flattened a la Mr. Thomas Friedman. The results have been corporate growth of existing multinationals to new ones from emerging markets growing fast:

"Two things in particular are shaking up the comfortable world of the old imperial multinationals. The first is the rise of emerging-market competitors. The share of Fortune 500 companies based in emerging markets has increased from 5% in 1980-2000 to 26% today."

The power of technology, and its democratization has been the other significant change:

"The second factor is the rise of high-tech companies in both the West and the East. These firms have acquired large numbers of customers in the blink of an eye."

The article offers a solution for the current multinationals, based on the concept that all innovation is preceded by invention:

"How can Western companies navigate these threats to their rule? MGI advises them to focus on the one realm where they continue to have a comparative advantage—the realm of ideas. Many companies in labour- and capital-intensive industries have been slaughtered by foreign competitors, whereas idea-intensive firms—not just companies in obvious markets such as the media, finance and pharmaceuticals, but in areas such as logistics and luxury cars—continue to flourish. The “idea sector”, as MGI defines it, accounts for 31% of profits generated by Western companies, compared with 17% in 1999."

Unfortunately, the larger the corporation, the lesser it is capable of creating and nurturing "ideas".  Ideas require a desire "to be something" more in the future, and then nurturing them, allowing them to fail.  Rare is a corporate that is capable of such, handcuffed to quarterly earnings.  Tools of the corporations to capture innovations versus "creating" via M&A, divestures for streamlining and growing the balance sheet, etc.

Yet, does a new model emerge for the ones who will last?

"The cult of quarterly earnings may lose more of its following. A striking number of the new corporate champions have dominant owners in the form of powerful founders. They are willing to eschew short-term results in order to build a durable business, such as Mark Zuckerberg at Facebook, the Mahindras and other assiduous families in India, and private-equity firms. Gibbon’s great work was a tale of decline and fall, as classical civilisation gave way to barbarism and self-indulgence. With luck, the tale of the relative decline of the Western corporation will also be a tale of the reinvention of capitalism as new forms of companies arise to seize opportunities from the old."

Monday, November 2, 2015

National productivity

From The Economist:

"The productivity gap, an indicator of a country’s output capabilities, is the ratio between the productivity of a benchmark country (such as the United States) and that of a less developed economy. The latest Latin America Outlook from the OECD, a think-tank, compared the productivity gaps of selected countries in the region with those of economies in Asia. In general, productivity gaps in Asian countries have narrowed significantly over the past three decades. America’s productivity in 1980 was 125 times that of China; by 2011 the gulf had come down to 17 times. In Latin America and the Caribbean, however, not only was there a much smaller reduction, in many cases the gap had grown."

Saturday, October 31, 2015

Corporate partnerships with non-profits

"Partnerships between the two have become like off-site team-building exercises: they were once slightly exotic, but now no self-respecting firm does without them. A survey of European multinationals and British charities by C&E Advisory Services found that over a third of the firms invest £10m or more in their charitable alliances and almost two-thirds classify the partnerships as “strategic” (whatever that means)."

States the article "The butterfly effect" in The Economist. Non-profit engagements for multinationals today are windows into perspectives and insights that enable them to comprehend the globe from a cultural and social, to a education and scientific perspective, if they choose to. Though:

"But these are partnerships of opposites. Businesses tend to think they discharge their duty to society by obeying the law. Charities want to do the right thing. Indeed, charities like rights in general: the right to food, the right to clean water, and so on. Businesses think in terms of markets, not rights.

The gap is widening. The share of firms that told C&E they are “very confident” that their partnership with NGOs will meet its aims has fallen by nearly half over the past year. Only 40% of NGOs say partnerships have changed companies’ behaviour for the better—down ten points in a year.

Read the complete article here.

Saturday, October 24, 2015

Corporate and scale

The season for mergers, and acquisitions is in full swing.  Economics of current time and markets are forcing it.  The Economist states in "Land of the corporate giants":

"Some things only get bigger. From boats and planes to skyscrapers and shopping malls, size records are routinely broken. Companies are operating at record scale, too. But if the trend towards growing ever larger is clear, the economics of bigness are far murkier. In some cases, like boats, greater size still promises greater efficiency, as fixed costs are spread over higher output. In others, like buildings, the gains from scale may be running out. Where do firms lie on this spectrum?"

The article states two key realities:

"If size does not keep driving down costs, why do big firms keep expanding? One possibility is that they are seeking to boost profits not by driving down costs but by raising prices. Buying up rivals softens competition and enables firms to charge more. American antitrust regulators recently looked back at past health-care mergers, and found that prices rose significantly after some deals. Another view is that mergers are driven by something other than profit. The “empire-building” theory holds that managers are out to increase the scale of their business whatever the cost in terms of creeping inefficiencies."

"A 2011 paper by Federal Reserve staff supports this conclusion, suggesting banks pay a premium to merge if the tie-up gives them “too-big-to-fail” status."

Read the complete article here.

Friday, October 23, 2015

Advice for the entreprenuer from Mr. Amarillo Slim

While reading the obituary of Mr. Amarillo Slim in The Economist here, the following paragraph on how to play poker from Mr. Slim seems like good advice for an entrepreneur as well:

"... Play the players, not the cards, he would say. Watch them from the minute you sit down. Play fast in a slow game, slow in a fast one. Never get out when you're winning. Look for the sucker and, if you can't see one, get up and leave, because the sucker is you."

And the translation is:

  • Beat the competition not the market.
  • Attack the competition from day one.
  • When generating revenue, keep generating revenue (you won't be able to time the market anyways).
  • When everyone is evaluating, go on the offensive (grab the customers, talent, funding, new pricing of goods, etc.), and when everyone attacks, step back (go in after the malay, remember supply and demand?).
  • If everyone in your area of business seems to be doing great, much better than you (in generating revenue), there is a problem with your company (you should be the one with the most revenue generation).
My question is: Is being an entrepreneur like playing poker?!

Thursday, October 22, 2015

Combating poverty: Analytical approach

Dr. Esther Duflo, detailed information on her background here, is a well known figure in data-driven analysis of poverty.  See her TED Talk on the impact of anti-poverty efforts, their unintended consequences, and what can be learned to create the desired actions.

Tuesday, October 20, 2015

Electricity and radio waves

From Dr. Colleen Barton, in The Telegraph, "Electricity harvested from radio waves could power the smart home of the future"

"A new method of harvesting electricity from unused radio frequency waves has been unveiled today by Lord Paul Drayson, the former minister for science and chief executive of Drayson Technologies, at The Royal Institution in London.

The patented technology, known as Freevolt, turns ambient radio frequency waves into usable electricity to charge low-power electronic devices, such as sensors and beacons used in smart connected homes, wearable devices like the Fitbit or Jawbone UP, and the broader "internet of things"."

Read the complete article here.

Monday, October 19, 2015

Six rules of departure for CEOs

Schumpeter's article "The last 90 days" in The Economist "... [drafts] six rules to govern bosses' departures":
  1. The wise executive is neither tardy nor rushed. Sometimes he has no choice in the matter. Hopeless bosses may be forced out fast. Great leaders may be ambushed by fate. ... for those with the luxury of choosing when to go, timing is everything.

  2. Whether wicked or glorious, all leaders must steel themselves for the emotional shock of their abdication. This is the second rule and the most easily ignored. The unlucky will find that investors cheer.

  3. ... resolute executives are as unsentimental in their last 90 days as in their first. They retain the counsel of trusted outsiders and focus on the important things, especially themselves. They obey the third rule; to keep a beady eye on their compensation.

  4. Glory is just as important as treasure and so the fourth rule is to create a narrative about the future and past. Leaders must be seen to be leaving for another great and noble task, and must mythologise their legacy.

  5. The wise chief will grit his teeth and commit to the fifth rule: do not make big decisions in the last 90 days.

  6. Their legend secure and treasure-chest full, cunning leaders should obey a final rule: ensuring that the next occupant of the job does not outshine them.
Read the complete article here.

Sunday, October 18, 2015

Impact of education on individual beliefs

The Economist put me onto "Compulsory schooling laws and formation of beliefs: education, religion and superstition", by Nanci Mocan and Luiza Pogorelova, published in the National Bureau of Economic Research, October 2014.  The magazine's article "Falling away" states:

"Just one extra year of schooling makes someone 10% less likely to attend a church, mosque or temple, pray alone or describe himself as religious, concludes a paper* published on October 6th that looks at the relationship between religiosity and the length of time spent in school. It uses changes in the compulsory school-leaving age in 11 European countries between 1960 and 1985 to tease out the impact of time spent in school on belief and practice among respondents to the European Social Survey, a long-running research project."

The paper is an interesting read from the perspective of the impacts of education on the transformation of societies for the future, how they behalf and how they will evolve culturally.  This is of value to consumer driven organizations.

You can download the copy of the above mentioned paper here.

Saturday, October 17, 2015

PE & Africa

"In the rich world private equity is often accused of enriching investors at the expense of the firms they buy. In Africa, the reverse seems to hold."

States The Economist in "Climbing aboard the African train".  Private equity like any other for revenue investment looks to maximize value, hopefully both through productivity and top line growth.  Turning a profit is an essential ingredient of all capitalist ventures.  For Africa, it seems to have been a good thing so far:

"Consider the example of Umeme, which runs Uganda’s power-distribution grid. When Actis, a British investment firm, bought a stake, power losses consumed 40% of the electricity generated. By making some simple changes, such as replacing old insulators on its cables and reducing the theft of electricity by dismantling illegal connections, it has cut those losses in half."

Yet, the returns for the PE firms remains in low two digit percentages versus the factors they expect in the emerging markets:

"In the ten years to September 2014, South African private-equity firms, for instance, delivered returns that, although seemingly juicy at 18.5% a year (in local currency), were less than their investors would have earned simply by betting on stockmarkets.

Data on other firms and other countries are sparse, but industry insiders reckon that African deals had annual returns of only about 11% for the decade to 2012."

Read the complete article here.

Saturday, June 20, 2015

Oil & Gas: Technology Opportunities

Please see an exceptional panel discussion highlighting the opportunities for technology and its applications in the oil and gas sector. I am confident that this was one of a handful of panel discussions to date that was candid, and cut out the noise to provide the facts.

This panel was conducted at TIECON 2015, which I moderated.  The panelist were:
  • Issam Dairanieh (Managing Director, BP Ventures)
  • Kemal Farid (Founder and CEO, Farid Ventures) 
  • Neal Dikeman (Senior Venture Principal, Shell Technology Ventures) 
  • Ricardo Angel (Managing Director, GE Ventures) 
  • Shantanu Agarwal (Partner, Energy Ventures) 

The main topics covered as they apply to oil and gas included big data, predictive analytics, communications, internet of things, sensors, and processing.

Sunday, March 15, 2015

Creative destruction: Self-driving cars

Fast Company article "Self-Driving Cars Will Be The Biggest Auto Safety Innovation Ever" here states:

"… autonomous vehicles could reduce traffic accidents by 90%, according to a new report from McKinsey. In the process, our new robot cars will save us $190 billion in wrecked cars, broken bones, and other costs incurred by plowing into things with our current fleet of brain-driven cars."

Large corporations are incremental improvement bound.  Let's remember that the self-driving car did not emerge from any of the large automotive companies.  I am looking forward to the automotive future.  It will disrupt the complete supply chain associated with automotive.  Schumpeter's Creative Destruction will manifest itself here rather quickly.

Thursday, March 12, 2015

Airlines: Customer service matters

US airlines when compared to their international rivals lag so significantly that one dares not put up a comparison chart.  As an international traveler, I always opt for one of the airlines from the (Persian) Gulf countries, give it a try once to experience what air travel should be like.

The USA Today article "U.S. airlines contend Gulf rivals are subsidized unfairly" here discusses a report by the big three US Airlines that contends subsidies to the Gulf airlines to the tune of $42 billion.  As a customer, I want good service and a comfortable flight, and I am willing to pay for it.

Just for fun, have a look at the 2014 World's Top 100 Airlines ratings on SKYTRAX here.  First US airlines Delta shows up at no. 45.  When you are so far down, simple subsidies are not the only reason.

Wednesday, March 11, 2015

Nuclear power and the US

One educated as a Nuclear Engineer and having to leave it for its speed in implementation, design, regulatory oversight, lack of innovation, etc., the article on Fox Business "Delays for SC nuclear plant further pressure industryhere, further highlights how the US continues to lag the rest of the world.

Nuclear will be an essential ingredient in the success of energy for all.  The article on WSJ details the various concerns here.

Monday, March 9, 2015

Google and robotics

Google had removed the company Schaft, Inc. it had bought in late 2013 from the DARPA Robotics Challenge, details on the Challenge here.  Details on Schraft on BBC here, and for a perspective see WSJ article on the topic here.

Friday, February 13, 2015

Opposing behaviors deliver reality?

Ms. Julie Beck of The Atlantic ponders - "Could it be that none of us are who we think we are?" in her article Faking it here.

The article is a packed full of study of studies, worth a read, reinforcing Dr. Dan Ariely's claim that we are Predictably Irrational beings.

Wednesday, February 11, 2015

Indirect pollution from EVs

The reality of electric vehicles is a bit stark today, though it will continuously improve with technological progress.  A study by Dr. Christopher Tessuma, Dr. Jason Hill, and Dr. Julian Marshall of University of Minnesota published in the Proceedings of the National Academy of Sciences analyzes the complete life cycle of electric vehicles and compares it to more traditional ICE.  Note that life cycle implies inclusion of all that went into making the EV to its daily use and charging.

The report's abstract states:

"Commonly considered strategies for reducing the environmental impact of light-duty transportation include using alternative fuels and improving vehicle fuel economy. We evaluate the air quality-related human health impacts of 10 such options, including the use of liquid biofuels, diesel, and compressed natural gas (CNG) in internal combustion engines; the use of electricity from a range of conventional and renewable sources to power electric vehicles (EVs); and the use of hybrid EV technology. Our approach combines spatially, temporally, and chemically detailed life cycle emission inventories; comprehensive, fine-scale state-of-the-science chemical transport modeling; and exposure, concentration–response, and economic health impact modeling for ozone (O3) and fine particulate matter (PM2.5). We find that powering vehicles with corn ethanol or with coal-based or “grid average” electricity increases monetized environmental health impacts by 80% or more relative to using conventional gasoline. Conversely, EVs powered by low-emitting electricity from natural gas, wind, water, or solar power reduce environmental health impacts by 50% or more. Consideration of potential climate change impacts alongside the human health outcomes described here further reinforces the environmental preferability of EVs powered by low-emitting electricity relative to gasoline vehicles."

"Air quality health impacts in the United States for each scenario: attributable increases in annual mortality (upper scale) and the resulting monetized health impacts (lower scale)."
legend - 03: Ozone, PM2.5: Fine particulate matter

Enjoy the complete analysis here

Sunday, February 8, 2015

The Atlantic - "All advertising is manipulation"

Mr. Derek Thompson's article "Turning customers into cultists" in The Atlantic states: "… all advertising is manipulation".

What is a brand? "… to economists, the definition is simple: a brand is a signal, good or bad, that influences a consumer’s decision to buy a product."

This is an interesting article with a plethora of perspectives, yet leaving the amorphous concept brand as it is.

I believe that a brand is a singularity deposited in an individuals mind at a specific point in time in their lives based on their socio-demo-econo-graphic status, and cultural influences.  Excellent examples exist among immigrants to the United States who have had brand images imprinted on their minds and when they can afford it, buy the imprint, no matter how lousy the product.

Marketing is the realization of the singularity with products focused on specific segments of the brand's competition field.  Advertising is a means to market.  According to the article:

"Advertising thrives in markets where consumers are essentially clueless, often because quality is hard to assess before you buy the product (medicine, mattresses, wine). But on sites like Amazon or eBay, and across social media, information from other sources—ratings, reviews, comments from friends—is abundant. We’re more likely to trust these signals precisely because they aren’t beamed from corporate headquarters."

What about the cult of brand's personality:

"In 1984, the British sociologist Eileen Barker published The Making of a Moonie, a seven-year investigation of the Unification Church, based on interviews with members of one of America’s most popular cults. While many cults are portrayed as preying on the poor and uneducated, and particularly people from broken homes, Barker discovered that Moonies tended to be middle-class, with college degrees and stable families. The cult inculcated new members through simple techniques: weekend retreats, deep conversations, shared meals, and, most seductive, an environment of love and support."

And regarding Apple:

"From its famous hammer-smashing “1984” ad against IBM to its 1998 commercial “Crazy Ones,” Apple has been deliberate in reinforcing an us-against-the-world ethos. The fact that it has preserved its devoted following while becoming larger than its opponents “shows that culting is useful, even when it’s misleading,” Escalas says."

I believe the answer is well discovered and articulated by Mr. Douglas Atkin, author of The Culting of Brands:

"“The common belief is that people join cults to conform,” Atkin wrote. “Actually, the very opposite is true. They join to become more individual.”"

What other brands in the world have a cult following, empowering the individual to feel … "empowered"!?

Enjoy the article here.

Sunday, January 25, 2015

Killing a breakthrough opportunity?

"... [FAA] appears keen to protect special interests, including established aircraft manufacturers and pilot unions."

States The World in 2015 from the Economist in the article "A bumpy take-off".

Consumer focused, and at times consumer driven invention to innovation has been the driver for bigger breakthroughs.  Automation and controlled automation in flight, and what I would call micro-flyers, domain of the enthusiasts to begin with has opened up a new arena of opportunity for application of technology.

"Drones also bring improvements and cost-cutting to film-making, news-gathering, search and rescue, forensic photography, firefighting, archaeological surveying, smokestack inspection and the monitoring of pipelines, volcanoes, pollution and wildlife. The benefits to an economy like America’s could be worth $27m a day, says the Association for Unmanned Vehicle Systems International (AUVSI) in Arlington, Virginia."

Yet, one way leap frog opportunities have been thwarted is regulation, which is overbearing and at times non-sensical.  To highlight the extent of it, the article states:

"… in June the FAA issued a “tremendously rigid” policy interpretation that even expands the definition of aircraft it has the authority to regulate to include boomerangs, frisbees and hand-tossed balsa gliders, says Paul Voss, an engineering professor at Smith College in Massachusetts."

Will the growth of this sector emerge outside of the US due to the constraints being put upon the creativity?  I will be watching these developments closely.  It reminds me of the onerous regulations the Nuclear Regulatory Commission put in place making it cost prohibitive to do anything nuclear in the USA.  For now:

"All this suggests that the FAA’s future rules will not bring America economic benefits on the scale some countries are starting to see, says Brendan Schulman of Kramer Levin Naftalis & Frankel. In August the New York law firm filed three suits against the FAA for regulatory over-reach. The way things are heading, he says, the FAA might require a drone to be flown by two licensed operators with medical certificates who keep it within sight. This would be costly, and might outlaw flights around a leafy tree. Until the autumn of 2015 the issue will remain, unlike the drones themselves, up in the air."

Friday, January 23, 2015

Ghost in the machine

"Phones turn into mind readers."
"This technology is going to be everywhere."

To think on behalf of a smart device's owner, to guide, to suggest, to recommend, to predict, has been the holy grail for marketers such as Procter & Gamble and Unilever for over a century.  The World in 2015 by the Economist declares that this is the year when it all will hit mainstream. And as all marketers know, when a human mind does not have an analogy for a situation, providing a suggestion to ground the mind, and then recommending based on rating is an ideal way to make the consumer an advocate of the recommended product or service.

According to the article:

"… tension between usefulness and creepiness will intensify in 2015 as anticipatory-computing systems extend their reach in three ways."

"First, they will start drawing on more sources of data, beyond the current analysis of browsing history, e-mail, calendar and location."

"… the second area of expansion, as anticipatory computing spreads, like other consumer technologies before it, into the workplace."

"Third, anticipatory computing will move beyond the smartphone to other devices."

Where will be discovery, ability to be lost and learn?  Will this in the end take away the human ability to anticipate and predict, develop deeper experience based neural net?  Only the future will tell.  For now, the inevitability of anticipatory computing is here.

The complete article here concludes:

"Companies will let users decide what to share “and try their best not to cross the digital creepiness line”, says Mr Yamnitsky (Forrester, a consultancy). You might, for example, wish to exclude access to your browsing history or your children’s personal details. “But the issue is you risk being a second-class citizen if you don’t have the tools other people have,” says Mr Tuttle (chief executive of Expect Labs, a startup)."

Tuesday, January 20, 2015

Middle East: Recipe for a state's health and prosperity

The World in 2015 by the Economist provides insights and foresights for the Middle Eastern countries in its article "It's not all bad" here.

One perspective:

"… the misery of others helps some to thrive. So it is with Dubai. Although the Gulf emirate’s rulers have worked long and hard to make the city-state a better place to live and work, the failure of other regional governments has also driven Dubai’s phenomenal success. Whenever Saudi Arabia or Iran hurl more dissidents in jail, whenever India or Pakistan overtax business, whenever wars and revolutions erupt nearby, entrepreneurial talent and capital gush into Dubai."

Another perspective:

"Since it joined the OECD in 2010, Israel has outperformed the rest of the rich-country club on many measures. GDP per person matched Italy’s in 2013. After decades of reliance on foreign aid, Israel now has a healthy trade balance as well as a stock of some $80 billion in investment overseas. Energy dependence is also a thing of the past: Israel has been quick to exploit abundant offshore gas reserves, which already fuel most electricity generation. Meanwhile a virtuous circle involving high-quality universities, strong government backing and dynamic entrepreneurs generates continued innovation and success in the high-tech sector, exemplified in 2014 by Intel’s decision to expand its already large manufacturing presence with an additional $6 billion microchip factory."

Let's see how 2015 unfolds.

Saturday, January 17, 2015

Africa: Entrepreneurs driving growth, yes?

"Young entrepreneurs and those they inspire are the lifeblood of Africa’s rise."

I have long held the belief that an entrepreneur is different from a businessman or a business woman.  I also believe that entrepreneurs cannot be trained, and through experiential learning become who they are.

Mr. Tony Elumelu, chairman of Heirs Holdings states as much and ties Africa's success, if it is to be, with the entrepreneurial lot, in an article here from The World in 2015 by the Economist.  Following is a keen insight from him:

"… we are already seeing how entrepreneurship is transforming Africa. But in Africa, business growth alone is not the full story. It is perhaps not even the most important part. Entrepreneurship matters especially for its potential to transform society."

The only point I disagree with Mr. Elumelu is that though young entrepreneurs do buck the trend, and redefine and create new business models through shear risk taking, Africa's entrepreneurism must also rely on the middle aged and old for their deep and rich experience of Africa's cultural and commercial history.

An economically healthy and growing Africa is a need for the world today, was yesterday, and must be tomorrow.

Wednesday, January 14, 2015

Real estate: The young of the US and Europe

"In 2012 a whopping 36% of Americans aged 18-31 were living in their parents’ homes, up from 32% in 2007. Several things will prompt them to pack their bags in 2015."

States The World in 2015 from the Economist.  And why would it be so for the United States?

"First, the job market will improve. Unemployment has tumbled from around 10% after the financial crisis to 6% in 2014, and it will fall further in 2015."

"Second, the cost of housing will remain reasonable in America, except in crazy places like New York and San Francisco. The ratio of house prices to average incomes has crept up recently, but is far below its peak in 2006."

"Third, many young Americans who live with their parents will no longer be able to stand it any more."

And what about Europe:

"Parents in Europe may not be so lucky, alas. Nearly half of European 18- to 30-year-olds still live with their parents, thanks to sky-high youth unemployment in some countries. In Italy four-fifths of young adults live at home. Many young Italian men like having mamma cooking and cleaning for them but cannot persuade a wife to sign up for the same arrangement. Funny, that."

Enjoy the complete article here.

Monday, January 12, 2015

Human population distribution

No conclusions here, simply The World in 2015 by the Economist highlights the distribution of human population from now till 2060.  Based on your experiences and inclinations, you will glean interestingl insights. See the complete article here.

Saturday, January 10, 2015

Land Rover Defender: In praise of an icon at an end

"Airbags, low emissions, all seats facing forward and pedestrians’ rights do not fit easily into the Land Rover ethos. They are blamed for delivering the coup de grĂ¢ce."

Bemoans an article in The World in 2015 by the Economist regarding the Land Rover Defender here.  Having had the privilege to have driven one into a rice paddy filled with water at the age of 12 and then having driven it out, washing it down at a friend's "tube well", my uncle the owner none the wiser of anything happening, I can attest to the Defender's abilities.  It is sad to hear that this icon will be concluding its life shortly.  The picture reproduced from the the magazine here speaks volumes!  Given of course you know who the driver is.

Land Rover Defender, RIP!

Thursday, January 8, 2015

Oil production: US v Saudi Arabia?

An excellent talk by Dr. Vinod Khosla demystified and threw away expert forecasts on oil pricing in his keynote at TIECON 2011, see here on YouTube at time index 7:30.

With that in mind below is a forecast of oil production as presented in The World in 2015 by the Economist.  What do you think?

See other interesting "eye-catching statistical landmarks" in the complete article here.  Note that the article claims:

"The way people think about the world will undergo a radical change in 2015, as assumptions that have held steady for years are overturned."

Tuesday, January 6, 2015

India and education - the conundrum continues

I wrote about the poor quality of graduates available for hire in India in 2010 here.  Having had personal experience to validate the above, while the only globally top tier Indian academic strength I have worked with have been the India Institute of Technologies and perhaps couple more technology and scientific institutes at most.  Four years on from my blog in 2010, the academic capitalism in India continues to further dilute the already poor pool of capable Indian educated candidates for hire.  See my blog on what I term as academic capitalism here.

The World in 2015 by the Economist's laments:

"If your five-year-old starts school in India in 2015 she will be ready to enrol at university in 2028. That is also the year when India’s population should pass 1.45 billion and become the world’s largest. By then, will there be enough high-quality graduates to ensure the country’s prosperity? No chance—unless a rotten education system is fixed first."

For a country with aspirations for the future, the prospects given current numbers are bleak for sustained economic growth.  The US's economic growth's backbone has been its universities that have defined what scientific research and development, and its engineering applications through education can create.  20th Century is full of these examples.  More poignant is the inflow of talent from across the globe to reinforce this trend.

"Varun Aggarwal of Aspiring Minds, a company that surveys student capabilities, estimates that if university exams were run properly, 70% of students would fail. Of 700,000 engineering graduates in India each year, he reckons only 3% are employable without many months of post-recruitment training. Only 15% of computer-engineering graduates could complete a basic task set in one assessment, he says. Language and other “soft” skills are often poor."

Is India starting to follow the education's commercialization trends I spoke about here what I termed as copy and paste knowledge creation?

As my good friend Dr. Farrokh Mistree emphasizes and I agree, generally speaking of higher education, so does the article conclude for India:

"But still there is no serious funding for research. Only when that is in place will an Indian university make it into a global top 200. Not in 2015, but with luck before 2028."

Sunday, January 4, 2015

Next decade and low interest rates

United States' Federal Reserve wields a significant influence on capital and its availability across the globe.  Leverage has been a necessary part of economic growth for companies and nations.  What does the future look like in which monetary policies are able to drive economic growth, and what are the unintended consequences?

The Economist's The World in 2015 has a few interesting thoughts based on the following premise:

"… over time long-term interest rates are highly correlated to long-term growth (see chart), and growth looks likely to be much lower in the coming decade than in the recent past."

I believe calling the chart below "highly" correlated is a going too far.  If it were highly correlated, then the prediction of economic downturns would have been significantly easier and that is not the case.

The big question is why would the above statement be true?  Here are a few viable comments from the article I agree with:

"… the world has a glut of savings and a dearth of investment, and it is the job of interest rates to bring the two into balance. Before the crisis the oversupply of savings could be traced to emerging markets, in particular China. Domestic savings in emerging markets rose from 24% of GDP in the 1990s to above 33% by 2008—and stayed there. That is more than enough to meet the (steep) investment needs of those countries, so they ploughed the excess into rich-country bond markets, pushing down interest rates. China’s current-account surplus has since shrunk, but the euro zone, bludgeoned by austerity, tight credit and weak investment in Germany, has taken its place: its current-account surplus in 2015 will exceed China’s. The global savings glut will put a lid on interest rates."

If the above represents thoughts on emerging economies driven capital movement, here is perspective on developed markets:

"A slower-growing economy needs fewer stores, factories and offices, depresses the return on capital and thus leads to lower investment. Slower-growing productivity holds back incomes and discourages consumer borrowing."

And so going against conventional wisdom upon which many an investors have been hedging their bets, the Economist states their claim:

"… the end of the Fed’s monetary morphine will not spell the end of low interest rates."

Read the complete article here.  I am looking forward to seeing how things play out in 2016 and further out.

Thursday, January 1, 2015

Silicon Valley in 2015 and onwards: A new technology decade on its way

I have been working with Silicon Valley for the past 20 years off and on.  I have been living here for the past year, running a research and innovation center.

For the first decade of this millennia, I noticed a trend which was well articulated by Dr. Gordon Moore that "… corporate R&D is moving away from the kind of fundamental research that wins Nobel Prizes and toward a narrow focus on business goals."  See my blog on the topic here.

I start this year with the hope and I see it as well in the past couple of years that things are making a shift in Silicon Valley from Dr. Moore's concern.  In The World in 2015 from the Economist, my favorite columnist Mr. Adrian Wooldridge, writes:

"In 2015 the buzz (and the money that goes with it) will shift from social media to intelligent devices. … The most successful companies will focus on connecting the virtual and physical worlds. … The year’s buzzword will be “wearables”: for example, medical gadgets that keep a constant watch on your blood pressure, glucose level and food intake, and tell you if trouble is on the way."

Remembering the days of craze about social media in the first half of 2000s, and software doing more than automation in the 1990s, and personal computer like devices in the 1980s, the craze already has established the buzz word IOT (Internet of Things).  Makes me smile as I have never heard such an amorphous term in technology before, perhaps IOT will trump the word innovation in the coming years!  I digress.

What is absolutely thrilling and exciting for me is:

"The rise of intelligent devices will allow the Valley to rediscover its roots as an engineering centre. This Valley was briefly sidelined by the social-networking revolution. But engineers are returning to reclaim their own. Tesla is making cars in Palo Alto. BMW, Mercedes, Samsung, Nissan and General Electric have all established research and design laboratories. Medical-device companies are flocking in."

The types of business that are emerging interestingly all have one specific aspect in common, or essential to their success, data and its analysis for value extraction.  A different technology decade is beginning in the valley.

"Intelligent devices will provide the Valley with a new-found seriousness. Social-media companies essentially dealt with virtual candy-floss: nice to have but, for the most part, hardly essential. The new generation of entrepreneurs will deal in devices that can save lives. Truly, all that is airy will become solid."

Read the complete article here.

Forecast for Energy in 2015

Reproducing the Energy outlook from The World in 2015 by the Economist below.  This will be one I will follow closely to see if reality will match the Economist's predictions.

Interesting to note below is how China continues to focus on nuclear.

"As the global economy ticks up in 2015, overall energy consumption will climb by about 3%, outpacing crude-oil demand, which will creep up by 2%, to 94m barrels a day. After years of splurging, most Western super-majors are aiming for better returns on smaller investments—though Chevron will outspend its far bigger rival, Exxon Mobil, investing $40bn. Big Oil’s success will depend partly on riding the boom in oil caught in American shale rock. Thanks to that, global supplies look very comfortable and the average annual oil price will fall, geopolitical ructions notwithstanding.

A parallel shale-gas “revolution” will spawn a batch of American plants for exporting liquefied natural gas (LNG): the first, Sabine Pass in Louisiana, should start up in 2015. Import terminals in Poland and Lithuania will also begin operations as eastern Europe seeks to slip the yoke of Russian supply.

Strong Asian demand, above all, will help gas producers, as dirty coal loses share to somewhat cleaner gas. China’s attempts to tap its own, vast shale-gas reserves will be hampered by geological barriers and technological shortcomings; the country will speed up in pursuit of a 2015 production target of 6.5bn cubic metres—though to just a fraction of American levels. Given its energy-supply shortfall, Chinese reactor-building will proceed: its first “third generation” AP1000 nuclear plant could clear safety checks by late 2015. Controversially, Japan’s own reactors are also set to start returning to life.

To watch: Sea change. Shipping hasn’t attracted nearly the attention motor vehicles have from proponents of pollution abatement. No longer. From January 1st 2015, sulphur standards affecting ships along European and North American coastlines will tighten considerably. Maritime companies will demand less high-sulphur fuel oil and more gas oil. Eventually, vessels burning LNG could become popular.