Smart Economy

How to predict the future with over 90% accuracy? use Bayesian Game Theory

I've been compiling a list of qualitative and quantitative foresight (prediction) methods and the total has passed over 50.

New Scientist magazine this week reviews one quantitative method called Bayesian Game Theory, in surprisingly quite an understandable fashion, that even a lay person like me can understand...well maybe not all the math details but the overall workings are quite clear.

Ever wonder what methods the CIA uses to predict complex geopolitical events?

They turn to Bruce Bueno de Mesquita, a professor of politics at New York University, who back in 1979 developed a game theory based prediction model, which he calls predictioneering. He says" I can predict events and decisions that involve negotiations, coercion (lies, bluffing, reneging on promises), cooperation or bullying." The model predicts what people will do in "strategic  situations" where the outcome also depends on other people's decisions ie domestic politics, foreign policy, geopolitical conflicts, business decisions and social interactions.  

New Scientist writes: "

"Over the past 30 years, Bueno de Mesquita has made thousands of predictions about hundreds of issues from geopolitics to personal problems. Overall, he claims, his hit rate is about 90 per cent. So how does he do it?

Examples: Terrorism & Climate Change

Terrorism:

"Bueno de Mesquita recently used it to make a prediction on the political situation in Pakistan. Working with a group of students, he asked how willing the Pakistani government would be to pursue Al-Qaida and Taliban militants in its territory, and how the US government could exert influence on their decision."

In January 2008 the students fed in data on all the players, including the US, Pakistan's then president Pervez Musharraf and other leading Pakistani politicans. Their assumption was that the US would offer foreign aid to persuade Pakistan's leaders to target the terrorists, and Pakistan would try to extract the maximum amount of aid possible from the US.

The model predicted that to get maximum cooperation from Pakistan, the US would need to donate at least $1.5 billion in 2009, double the projected 2008 figure. In return for this Pakistan would pursue the terrorists on a scale of 80 out of 100, but no more. In other words, the leadership would make considerable effort to reduce the terrorist threat but not to completely eliminate it. "The Pakistani government are no fools," explains Bueno de Mesquita. "They know that the money will dry up if Al-Qaida and the Taliban are destroyed. So they will rein the threat in and reduce it, but not utterly destroy it."

The outcome? According to Bueno de Mesquita, the US government authorised $1.5 billion in foreign aid to Pakistan in 2009, and the Pakistani leadership sustained pursuit of the militants at that level. "We have done very well," says Bueno de Mesquita.

Climate Change:

So what of the future? Another of Bueno de Mesquita's recent predictions addresses the future of climate change negotiations up to 2050. Depressingly, he predicts that although the world will negotiate tougher greenhouse gas reductions than in the Kyoto protocol, in practise these are likely to be abandoned as Brazil, India and China rise in power in relation to the European Union and the US."

See: The Man who sees the Future, New Scientist Volume 250 No 2752 March 20,2010,  pg 42 

Walter Derzko

Deciding if the glass is half full or half empty ? Are you a optimist or pessimist?

 

A brand new issue, an uncertain ambiguous item or an unexpected discovery falls on your desk on Monday morning. You need to quickly decide if it’s an immediate threat or opportunity for your organization that requires some type of action or if it’s a non-issue that can be ignored for the time being.

How do managers or entrepreneurs decide  that? Are there tradeoffs? People often use the half full or half empty glass visual as a metaphor to distinguish between the optimists (opportunity seekers) and pessimists (threat-focused or threat  avoiders). But it’s not as easy as it may seem at first. To decide which side of the ledger you fall under, try the following three steps

 

1) Trust your gut feel

Trust you initial gut feel. You will find that you are usually right. How do you feel about issue X? What does your instinct tell you about this new or emerging  issue or situation? Is it an opportunity or threat? Or possibly both?  In the Opportunity Clinic we typically observe four different responses:

-I feel positive and optimistic about this issue

-I sense a queasy feeling in the pit of your stomach. I’m  mostly negative and pessimistic about this. 

-or are you simply Indifferent or  passive?  I don’t see any current or future impacts on my business.

-or are you uncertain? It could be both a threat or challenge or an opportunity, depending on changing or uncertain circumstances

What’s your gut answer? __________________________

 

2) Try a more rational, critical analytical approach

Run through the list of 31 attributes and opposite matching pairs below in Table 1. On each line, circle an attribute (with a solid line) either on the left or right hand side of the table depending on how you view an issue. If you are unsure, draw a circle with a dotted line, to remind you to look for more information to reinforce your decision.

Count up the number of circles in each column to tell you if you view the issue as a threat or opportunity or possibly both.

Has you view changed from your gut feel decision in step 1 or has it been reinforced?

 

3) Repeat step 1 and 2 with others

Repeat step 1 and 2 with others in your department, division or other parts of the organization. What do external stakeholders say? What’s the general consensus on an emerging issue?

 

Table 1-How do you view an emerging issue? Attributes to tell you if the glass is half full or half empty?

	Opportunity	Threat
1	Positive	Negative
2	May gain, won’t lose	May lose,  won’t gain
3	Have means to resolve	Others constrain your actions
4	Qualified to act	Under-qualified to act
5	Have Autonomy	Resolution initiated by others
6	Resolution is likely	Resolution unlikely
7	Have choice whether to act	Must act, pressured
8	Future focused	Embedded in the past
9	Benefits come from acting vs inaction	Action brings no benefits
10	Stimulating
11	Can gain personal advantage	Personal loss from acting
12	Want association	Desire no association
13	Have responsibility	Not responsible
14	Issue is visible	Issue is visible
15	Many solutions vs one solution	One solution
16	Unique
17	Agree how to resolve	Conflict about  how to resolve; Resolution will be by chance
18	Easy to resolve	Difficult to resolve
19	Obvious Solution
20	Not crisis	Crisis
21	Urgent	Urgent; Not urgent
22		Neutral;  won’t loose or gain much
23	Future better if issue resolved	Future no better when resolved
24	Enduring vs Temporary
25	Pressure, vs No pressure
26	Stress-full	Stress-full
27	Success or failure visible	Success or failure visible
28	High priority	Ambiguous priorities
29	Consequences / implications for the future	Consequences / implications for the future
30	Challenge	Challenge
31	In direct competition with other opportunities

From the Opportunity Clinic © 1985-2009  (adapted from Discerning Threats and Opportunities from Jackson and Dutton 1988)

 

 

Walter Derzko,

Smart Economy, Toronto

 

 

 

 

 

Author of the soon-to-be published book- Opportunity 45 Scenarios to Drive Your Business in Challenging Times,  published by J. Wiley and Sons

ISBN13: 978-0-470-73761-3

ISBN10: 0-470-73761-1

Contact us about the Opportunity Clinic workshop and to invite Walter Derzko as a keynote speaker at your next event 

 

The Opportunity Clinic-28 Tactics for managing your Business in a Recession; Part 15 of 28 Drop problem-solving and adopt opportunity surfing

Why problem-solving, Total Quality Management (TQM), Continuous Improvement (CI), Value Network Analysis (VNA) etc is not good enough in a recession…..you  need to be totally focused on designing and /or finding novel  opportunities. These tools have their place, but it's usually in the upswing part of the business cycle to improve efficiencies of existing operations, but not now.

Many companies are still applying the pre-recession, boom-time mentality to today’s totally changed and novel business environment. Driven by existing business models, mindsets and existing ongoing relationships with  consultants, experts, suppliers and vendors, who are desperately trying to maintain their sales numbers and quotas, companies are continuing to do more of the same…what seemed to worked for them in good  times..lets' work in the same box. What we need is not "out of the box thinking" [I hate that expressionm becuase it shows that you don't understand cognition and how the brain patterns information], but to design brand new "boxes".  

 

The recession is not a problem to be solved, it’s a crisis to be avoided. And you  can only do that in one way. NOW, you need to be totally opportunity-focused and opportunity-receptive and less problem-focused and preoccupied with incremental change. Radical ideas and concepts, (and not accruemental solutions to old problems, unless they lead to novel opportunity spaces) are in order, along with resulting new business models (which we often forget to explore and redesign ), that will help companies thrive and not just survive in a recession.

 

See the cartoon in this week's New Yorker....We're still the same great company we've always been, only we've ceased to exist.  I bet they were great problem-solvers at the tactical, operational level, but poor opportunity surfers at the strategic level.

 

Walter Derzko

Smart Economy,

Toronto;

Author of the soon-to-be-released book: Hard Times Golden Opportunities.. about opportunity recognition in a recession/ depression features 45 opportunity scenarios.

 

When will the recession / depression end? Part 21 Darker days ahead , but not for all

(Credit: This prophetic cartoon on the right appeared in one of the fall 2008 issues of the New Yorker magazine. It delivers several important messages from negative (depression, gloom and doom) to Positive (i.e what's the silver lining behind every cloud, or the opportunity behind every threat;  resilience, and make do with what you got!)

I was reminded of it after reading this morning's news from Canada’s  Globe and Mail newspaper-Dark(er) Days Ahead

The quarterly C-Suite survey was conducted for The Globe and Mail; Report on Business and Business News Network by Gandalf Group, and sponsored by KPMG. The survey interviewed 150 executives between Jan. 29 and Feb. 12. Respondents represent ROB 1000 companies from across Canada.

Here's a summary:

• 90 per cent of executives expect the economy to decline in the next 12 months                     (Now here is the flaw with most survey methodologies....They never tell me exactly what I really want to know...I always wonder about the extreme outliers. What do the other 10% think and Why? Why don't surveys ever focus on this "left behind" group?...Their ideas are far more significant then the majority. Are they more optimistic, expecting a quicker turnround? Will the economy  be flat or in neutral gear, anemic but not growing or dropping much? Are they just in counter-cyclical business or industry, that's level or even  growing  in a recession or have they just surfaced new opportunities that the majority of us don't see or can't even imagine yet? Are they just plain contrarians or are they still in the denial stage? or Are they doing something creative / innovative that the other 90 % don’t know about? Do they just see more Opportunity Windows, then the rest of us, because they are now more vigilant for new "opportunity spaces" and "opportunity sensitive areas"? and less gloomy? Are they more Opportunity Savvy then the rest of the other 90%. and more personally, who should I be targeting with the Opportunity Clinic workshops? the 10% who already get it or the 90% who don't and may turn out to be a recession/ depression casaulty?) see Opportunity Clinic  

• Half think it will be more than a year before growth returns ie 2010 

• Two-thirds say it is now more difficult than ever to access credit

• Two-thirds say the economy has forced them to focus on the short-term at the expense of long-term growth plans, 

• (significantly) Half are more concerned about corporate survival than they were six months ago.

• Hunkering down for survival now seems to be top of mind for many executives

• The key, said on exec, is to conserve cash and be ready to expand when the economy improves. But he does not expect a turnaround at least until 2010. (N.B.the concensus used to be end of 2009)

• The goal, for everyone, is to ensure survival.

• "If there is an upside to the recession, it is that some competitors will be "weeded out," said one C-suite exec. There might also be deals that can be arranged with landlords who will be willing to offer better prices on available retail space.

• All companies have to ensure they come out of the recession healthy enough to exploit those opportunities..(see the Opportunity Clinic)

Do you agree? (out of 150 c-suite execs)

• I'm confident our company will weather this downturn: 97% agree

• This is the worst economic environment in my time: 82% agree

• The economy has forced us to focus on short-term at the expense of long-term growth: 67% agree

• I am more concerned about our company's survival than I was six months ago: 53% agree

See survey story here>> 

 

Walter Derzko

Smart Economy

Toronto

Author of the soon-to-be-released book: Hard Times Golden Opportunities.. about opportunity recognition in a recession/ depression features 45 opportunity scenarios.

Related Recession / Depression Posts

When will the recession / depression end? Part 20 The Dog that Didn't Bark; Economists say don't pay attention to us

When will the recession / depression end? Part 19 Put Infrastructure Where it's Needed; Ontario on the Move

When will the recession/ depression end? Part 18 Hormones and Boom and Bust Cycles

When will the recession / depression end ? Part 17 Recap from the World Economic Forum in Davos

When will the recession end? Part 16 It's all over, well sort of.

When will the recession end? Part 15 Year-end predictions for 2009 starting to come true

When will the recession end? Part 14 Four options for America's race to the bottom

When will the recession end? Part 13 Thirteen economic questions that economists can't answer

When will the recession end? Part 12 Bad times are good times for startups

When will the recession end? Part 11 Bank of Canada optimism

When will the recession end? Part 10, The Conformity Trap or Don't count on your economist for advise

When will the recession end? Part 9 Humor will signal recession /depression bottom

When will the recession end? Part 8 Lessons Learned from the last Post 9/11 recession; designing brilliant winning business models

When will the recession end? Part 7 False signals of recovery

When will this recession end? Part 6 The USA Paradox; Cheer vs Fear vs Transformation

When will the recession end? Part 5 Stop Auto Industry Bailouts, start buying Electric

When will the recession end? Part 4 The double dip housing crash in the USA

When will the recession end? Part 3 The coming collapse of the American Middle Class into an Underclass

When will this recession end ? Part 2 Do you listen to the Optimists or the Pessimists in 2009?

When will this recession end?

82 Signposts to the current Recession Depression Summary from 2008

 

 

The Opportunity Clinic - 28 Tactics for Managing Your Business in a Recession Part 8 of 28 Industry Architecture Opportunities

Most entrepreneurs regardless of whether they are struggling novel start-ups, seasoned serial entrepreneurs or veteran industry incumbents don’t pay enough attention to their own business models or evolutionary shifts in their sector or industry structure, (or what some are calling industry architecture), as an opportunity space to exploit.. When I mention the two terms and ask: Is your business model aligned to the downturn or is your industry architecture changing and are you taking advantage of the shift or driving the shift? I often get a blank stare.  Their eyes usually glaze over, until I provide them with one or two examples. Then the usual response is…(pause) ….(wheels turning in their head, followed by tacit acknowledgment )…good point…..(another pause) …well frankly, I never even thought of that.”

Michael G. Jacobides, who is associate professor of strategic and international management at London Business School, illustrates my point succinctly in a recent Financial Times story.

"Over the past few decades, economic theories have become increasingly sophisticated, borrowing analytical tools from theoretical physics and mathematics. Financial tools have become vastly more complex. Regulators have created sophisticated rules to govern the economy, particularly banks.

So why did we not see this coming?  [some did, but most economists were in denial or played their role as cheer leaders and not objective analysts—Walter Derzko]

And how did last year’s “strong incentives” and “profit-driven behavior” become today’s “reckless profiteering” and “abuse of the system”? [Natural evolution according to one of the effects of Marsal McLuhan's Tetrad model -- "flip or reversal"--Walter Derzko]

The reason is that we neglected basic economic facts and failed to appreciate the evolving structure of arand sectors. In the past decade, what I term the “industry architecture” – the rules and roles that govern how participants do business – in financial services changed the financial world dramatically, but almost nobody noticed. Most economists did not bother – for them, industry structure (in particular, the business models operating in the sector) is of secondary interest – and they stuck to the mantra that “markets regulate themselves”. Regulators ignored the monumental changes in how money was made, concentrating instead on fine-tuning rules that focused on an ever-decreasing part of the business world. Academics busied themselves with models that had less and less to do with reality, helping to create structures so complicated that they were bound to implode. And management gurus did not want to spoil the party by suggesting that there were no solid foundations for this brave new world.”

Industry architecture will change dramatically in many sectors during this re / depression, and business that can anticipate this or drive the change in the direction that favors their products, platforms or services will be the big winners, leaving others behind in their dust.

 

Walter Derzko

Smart Economy

Toronto

Author of the soon-to-be-released book: Hard Times Golden Opportunities.. about opportunity recognition in a recession/ depression features 45 opportunity scenarios.

Related posts in this series:

The Opportunity Clinic - 28 Tactics for managing your business in a recession Part 7 of 28  Geopolitical Opportunities;

The Opportunity Clinic; 28 Tactics for managing your Business in a recession Part 6 of 28 What's in your Recession Playbook?

The Opportunity Clinic; 28 Tactics for Managing your Business in a Recession Part 5 of 28 Category Killer Innovation-India's $10 laptop

The Opportunity Clinic - 28 Tactics for Managing Your Business in a Recession Part 4 of 28 “Left Behind “Opportunities- Go Green & Go Slow

The Opportunity Clinic - 28 Tactics for Managing Your Business in a Recession Part 3 of 28 Design Opportunities- Hope or Nostalgia

The Opportunity Clinic - 28 Tactics for Managing Your Business in a Recession Part 2 of 28 Innovation or Efficiency?

The Opportunity Clinic - 28 Tactics for Managing Your Business (& surviving and thriving) in a Recession Part 1of 28

Related Posts over that past year:

·         Opportunity Recognition in Difficult Times

·         Recession - Proofing your Business - Spotting & Designing Opportunities in a Downturn

·         Recession - Proofing your Business - Spotting & Designing Opportunities in a Downturn – June 25, 2008, Ontario College of Art Design, Toronto, ON

·         Recession-Proofing your Business-Strategies and Tactics for smoother sailing in turbulent seas

·         Master Class in Opportunity Recognition for entrepreneurs and intrapreneurs> May 30th 2008> University of Toronto

·         Turning Misery into Opportunity

·         Vacuum leaves pullout opportunities;

·         How will baby boomers handle the recession? Zoomers, Doomers, Gloomers, Opportuneurs

·         Recession, Depression and Shortages as Opportunities

·         Restructuring of American Business-A New Business Model?

·         Using New Yorker Cartoons for Opportunity Recognition /Sense-making & Pattern Recognition

·         Text Mining for S&T Scouting, Foresight and Opportunity Recognition

·         The Opportunity Clinic-swapping opportunity scenarios 08-002

© 2005-2009

Walter Derzko -"Changing the world, one idea at a time"©

Expert, Consultant and Keynote Speaker on Emerging Smart Technologies, Innovation, Strategic Foresight, Business Development, Lateral Creative Thinking and author of an upcoming book on the Smart Economy "

The Smart Technology Blog: The Smart Economy -- Read, enjoy, explore, speculate, comment !!

To arrange for an in house presentation or briefing on smart technology see here

To explore the opportunities and threats of any new smart technology in your industry - Contact Me or explore how we can work together

• ".....Strategy without action is a day-dream; action without strategy is a nightmare"-old Japanese proverb
• ".......Ours is the age that is proud of machines that think and suspicious of men who try to." -- H. Mumford Jones
• ".......Without changing our patterns of thought, we will not be able to solve the problems we created with our current pattern of thought."  --A. Einstein
• ".......Change is difficult, but complacency and stagnation are surefire showstoppers..." --Walter Derzko

• ".......Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has."  -- Margaret Mead

• ".......Small minds discuss people; Average minds discuss events; Great minds discuss ideas; --Anon

P. S. if this is your first visit to my blog, please go to our Welcome page

When will the Recession / Depression end ? Part 17 Recap from the World Economic Forum in Davos

Economists Nassim Taleb and Nouriel Roubini were popular speakers at the World Economic Forum in Davos last week, mainly because they were in the minority of economists that predicted the recession/depression well in advance...( as opposed to most other mainstream economists who were in total denial as late as the fall of 2008.)

A blog post on Seeking Alpha called Fresh From Davos: Taleb and Roubini Summarize Their Warnings captures the key points made by these two speakers about the current re/depression.

Nassim Taleb

1. The same people who did not see the financial crisis coming are still in charge. The same bankers who got us in trouble, are being given more (taxpayer) money. They all need to be thrown out and replaced by people who saw the crisis coming. (He nominated Roubini!)
2. Banks will need to be nationalized.
3. The financial system needs to be more robust against "black swans, discontinuities or wild cards." This will require living with less debt.
4. We need to eliminate the socialization of risk, privatization of profits.
5. Taleb is 100-200% in cash (so he has some shorts), so he can pick up the pieces when opportunity arrives.
6. Taleb believes deleveraging has just begun. There are 4-5 years to go because of the massive deleveraging still required.
7. We should get out of the mentality that we need to build debt on top of housing to drive the economy.
8. Investors should deleverage portfolios. Instead of dedicating 2x to equity, keep more cash and allocate a small portion to out-of-the-money options since you never know what is going to soar (or crash I imagine).

Nouriel Roubini

(note that he tried to shed the nickname Dr. Doom)

1. The condition in labor markets is crucial (in other words, unemployment numbers are NOT lagging indicators right now).
2. We need to resolve problems in the financial system: nationalize insolvent banks, clean them up, and sell them back to the private sector.
3. We need to invest in real (productive) physical and human capital (in other words, stop misallocating so much capital to housing).
4. Going forward, the economic news will be worse than expected. This produces about 20% further downside risk in the stock market.
5. Investors should stay in cash until about 12 months from now.
6. About $3.6 trillion in write-downs are needed to get through this crisis. We are through $1 trillion so far.

Walter Derzko, Smart Economy, Toronto

Author of the soon-to-be-released book: Hard Times Golden Opportunities.. about opportunity recognition in a recession/ depression features 45 opportunity scenarios.

Related Recession / Depression Posts

When will the recession / depression end ? Part 17 Recap from the World Economic Forum in Davos

When will the recession end? Part 16 It's all over, well sort of.

When will the recession end? Part 15 Year-end predictions for 2009 starting to come true

When will the recession end? Part 14 Four options for America's race to the bottom

When will the recession end? Part 13 Thirteen economic questions that economists can't answer

When will the recession end? Part 12 Bad times are good times for startups

When will the recession end? Part 11 Bank of Canada optimism

When will the recession end? Part 10, The Conformity Trap or Don't count on your economist for advise

When will the recession end? Part 9 Humor will signal recession /depression bottom

When will the recession end? Part 8 Lessons Learned from the last Post 9/11 recession; designing brilliant winning business models

When will the recession end? Part 7 False signals of recovery

When will this recession end? Part 6 The USA Paradox; Cheer vs Fear vs Transformation

When will the recession end? Part 5 Stop Auto Industry Bailouts, start buying Electric

When will the recession end? Part 4 The double dip housing crash in the USA

When will the recession end? Part 3 The coming collapse of the American Middle Class into an Underclass

When will this recession end ? Part 2 Do you listen to the Optimists or the Pessimists in 2009?

When will this recession end?

82 Signposts to the current Recession Depression Summary from 2008

© 2005-2009

Walter Derzko -"Changing the world, one idea at a time"©

Author of the soon-to-be-released book: Hard Times Golden Opportunities.. about opportunity recognition in a recession/ depression features 45 opportunity scenarios.

Expert, Consultant and Keynote Speaker on Emerging Smart Technologies, Innovation, Strategic Foresight, Business Development, Lateral Creative Thinking and author of an upcoming book on the Smart Economy "

The Smart Technology Blog: The Smart Economy -- Read, enjoy, explore, speculate, comment !!

To arrange for an in house presentation or briefing on smart technology see here

To explore the opportunities and threats of any new smart technology in your industry - Contact Me or explore how we can work together

• ".....Strategy without action is a day-dream; action without strategy is a nightmare"-old Japanese proverb
• ".......Ours is the age that is proud of machines that think and suspicious of men who try to." -- H. Mumford Jones
• ".......Without changing our patterns of thought, we will not be able to solve the problems we created with our current pattern of thought."  --A. Einstein
• ".......Change is difficult, but complacency and stagnation are surefire showstoppers..." --Walter Derzko

• ".......Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has."  -- Margaret Mead

• ".......Small minds discuss people; Average minds discuss events; Great minds discuss ideas; --Anon

P. S. if this is your first visit to my blog, please go to our Welcome page

82 Signposts to the current Recession Depression Summary from 2008

When will the recession end? Part 8 Lessons Learned from the last Post 9/11 recession; designing brilliant winning business models

  There’s an old saying…”the best time to start a new business is the day after the recession ends.” The $64K  question is not when will the recession end but what will the recovery look like? Will it be V-shaped, U-shaped, W-shaped, v-W-shaped,  J-shaped, L-shaped or extended L-shaped? Which of these seven scenarios will play out?  UPDATE: see cartoon on the right from March 2009

To anticipate this, we have to look at what tools do managers and entrepreneurs have to help them predict, track and measure where they and the economy are heading?

 

I dusted off some old notes, slides  and workshop handout materials from just after post 9/11 as the economy topped out and in hindsight, was headed into a recession, triggered by the terrorist attacks on New York city and Washington. The materials were from a set of  experimental workshops that I designed for Andrew Maxwell, who at the time was at the incubator / accelerator at  the Innovations Foundation at the University of Toronto, when they were still located on 243 College Street, before moving into the new MaRS facility.

One workshop was on Designing Winning Business Models and the second was called 12 Tools and Techniques for Surviving Thriving and Managing in a Volatile and Turbulent Business Climate.

Could some of these same  principles and lessons learned from these workshops apply to today’s recessionary / depressionary climate? Most certainly!!

 

Designing a robust and adaptive business model could determine if you dive, merely survive or thrive in a recession.

Some of the key points and questions from the Designing Winning Business Models workshop include the following points:

• What were/are  the traditional business models/ revenue models in my industry and what can I learn from them?

• What are the prevailing business models/ revenue models in my industry today?

• What can I learn from mapping my current business landscape?

• What’s my current business model look like and what are all the components?

• What are the assumptions (tacit and explicit) behind my current business model and are they still valid? robust under changing conditions? various recovery scenarios ?  (V-shaped, U-shaped, W-shaped, v-W-shaped,  J-shaped, L-shaped or extended L-shaped? )

• What are the changing consumer or business values, attitudes and behaviors and are they reflected or aligned with my current business model

• What changes, trends, driving factors and issues are forcing me to rethink my current business model?

• How do I surface assumptions about the current and near-future business climate?

• What’s broken in my existing business model and how do I mitigate the faults and defects?

• How do I design a new viable system using scenario planning, systems dynamics and viable systems modeling?

• How do I model potential major discontinuities, wild cards, disruptions into my revenue model and business model?

• What were the lessons learned from the dot.com bubble, e-commerce failures and the collapse of the “green tech” and alternative energy markets? How do I mitigate that in the future from new emerging technologies.

• What cognitive thinking skills do I need to deploy to come up with novel and difficult to copy concepts for a brilliant new business model?

Tomorrow we’ll look at the 12 predictive  tools that should be in your managerial or entrepreneurial toolkit to help you predict and design opportunity windows for both the downward leg of the recession and the upward leg of the recovery.

 

Walter Derzko

Smart Economy

Toronto

Author of the soon-to-be-released book: Hard Times Golden Opportunities.. about opportunity recognition in a recession/ depression featuring 45 opportunity scenarios.

 

Related posts:

 

82 Signposts to the current Recession Depression Summary from 2008

When will this recession end?

When will this recession end ? Part 2 Do you listen to the Optimists or the Pessimists in 2009?

When will the recession end? Part 3 The coming collapse of the American Middle Class into an Underclass

When will the recession end? Part 4 The double dip housing crash in the USA

When will the recession end? Part 5 Stop Auto Industry Bailouts, start buying Electric

 

When will this recession end? Part 6 The USA Paradox; Cheer vs Fear vs Transformation

 

When will the recession end? Part 7 False signals of recovery

 

When will the recession end? Part 8 Lessons Learned from the last Post 9/11 recession; designing brilliant winning business models

 

© 2005-2009

Walter Derzko -"Changing the world, one idea at a time"©

Expert, Consultant and Keynote Speaker on Emerging Smart Technologies, Innovation, Strategic Foresight, Business Development, Lateral Creative Thinking and author of an upcoming book on the Smart Economy "

The Smart Technology Blog: The Smart Economy -- Read, enjoy, explore, speculate, comment !!

To arrange for an in house presentation or briefing on smart technology see here

To explore the opportunities and threats of any new smart technology in your industry - Contact Me or explore how we can work together

• ".....Strategy without action is a day-dream; action without strategy is a nightmare"-old Japanese proverb
• ".......Ours is the age that is proud of machines that think and suspicious of men who try to." -- H. Mumford Jones
• ".......Without changing our patterns of thought, we will not be able to solve the problems we created with our current pattern of thought."  --A. Einstein
• ".......Change is difficult, but complacency and stagnation are surefire showstoppers..." --Walter Derzko

• ".......Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has."  -- Margaret Mead

• ".......Small minds discuss people; Average minds discuss events; Great minds discuss ideas; --Anon

P. S. if this is your first visit to my blog, please go to our Welcome page

Smart Sustainability Showcase for Toronto and Canada

From: Walter Derzko

Sent: Friday, July 11, 2008 12:19 AM

To: undisclosed list

Subject: re Smart Sustainability ShowCase for Toronto and Canada.

Importance: High

Dear Colleagues

I’d like to plant an idea with you – after speaking with a number of designers and vendors, I’m exploring the idea for a sustainability showcase that would feature theme based exhibits with smart technologies from Canadian and international sources-the best from Ontario, nationally and from around the world.

The launch would be 2010, The timing for this seems right.  The target audience would be Canadian business, consumers and school children

I’m writing a book on smart technologies and this would be a logical extension of the concept.

Two years ago I talked to Samantha Sannella and Poala Polletto at the Design Exchange (DX) in Toronto and with several people at the Ont Science Center.  Both groups expressed interest but said that we would need to find sponsors for the project

My business model for this would be three pronged -vendor based revenue, corporate based sponsor revenue and municipality based sponsorship ie city of Toronto or Mississauga and possibly the province of Ontario who may wish to promote sustainable manufacturing.

This concept would be a Canadian, in fact a North American first.

I have a list of 150 potential vendors, and designers from around the world who are working on smart technologies that we can start to approach.

The exhibits would be theme based, --the sustainable kitchen, the sustainable office, the sustainable retail shelf, the sustainable workspace, the sustainable community, the sustainable city etc and would be updated with new technologies every 3-5 years and have a 1-5 year forward focus. (what's commercially available now or in the very near future.

For other exhibits, there can be a regional or national focus ie smart sustainable technology from the UK, Finland, Germany (Fraunhofer Inst), China, Ukraine, Russia, or Singapore, Hong Kong etc

Corporate sponsors might include: Walmart, Rona, Home Deport, Canadian Tire, Loblaws, Sears, Imperial Oil, the banks (RBC, TD, RBC BMO) etc.

The Sustainability Showcase could be housed in a physical location, or it could tour from location to location around the city or province or be mobile ( on a bus the way the Japanese and Korean do- a display bus turned into a demo center that tours from school to school or to fairs and exhibitions.

OCAD students and staff and Beal senior fellows could play a hand in designing exhibit spaces and sourcing new vendors and sustainable technologies.

Several other revenue opportunities could spin off from this as well

Here’s just a few examples of what can be showcased

1) Environmentally sensible packaging such as Mercury-Absorbant NanoSponge packaging for broken compact fluorescent lamps (CFL's) http://smarteconomy.typepad.com/smart_economy/2008/06/mercury-absorba.html

2) Concrete Wood (from the example I mentioned June 2 at OCAD, when Bob Logan was bemoaning the lack of durability of pressboard shelving from Ikea.  See Concrete Wood from lodgepole pine trees destroyed by pine beetles (kills two birds with one stone) http://smarteconomy.typepad.com/smart_economy/2007/11/concrete-wood.html

3) End of Traditional Heating and Air conditioning Thin-film version of Active Building Envelope (ABE) systems could make conventional air conditioning and heating equipment obsolete http://smarteconomy.typepad.com/smart_economy/2006/07/thinfilm_versio.html

4) OLEDs New High efficiency flat light source OLEDs > Almost any surface in a home, whether flat or curved, could become a light source: walls, curtains, ceilings, cabinets, shelves or tables.  Http://smarteconomy.typepad.com/smart_economy/2006/04/new_high_effici.html

Lots more like these

For anyone who is interested in exploring the idea of a Smart Sustainability Showcase for Toronto, we are having a meeting on Tuesday July 22 at 11 am at the Ontario College of Art & Design (OCAD), Beal Institute for Strategic Creativity, room 600, 6th floor , 100 McCaul St, Toronto just south of the Ont Art Gallery.

Please RSVP, so we know how many people are coming

I have had some positive feedback from several organizations, & I’d like to push the concept forward

I'm sending this nationally and internationally in  case you are aware of any designers, vendors, manufacturers or research centers who have interesting cutting edge smart sustainable technology to showcase.

Contact me by email

----Walter  Derzko; Senior Fellow Beal Institute for Strategic Creativity, OCAD 

© 2005-2008 Walter Derzko -"Changing the world, one idea at a time"©

Expert, Consultant, Keynote Speaker and Lecturer on Emerging Smart Technologies, Innovation, Entrepreneurship, Strategic Foresight, Business Development, Lateral Creative Thinking and author of an upcoming book on the Smart Economy

The Smart Technology Blog: The Smart Economy -- Read, enjoy, explore, speculate, comment !!

To arrange for an in house presentation or briefing on smart technology see here

To explore the opportunities and threats of any new smart technology in your industry - Contact Me or explore how we can work together

CfP's The New Genetics: Implications for Technology Strategy and Business Ethics (ie self modifying software) 07-067

CALL FOR PAPERS: SPECIAL ISSUE OF TECHNOLOGICAL FORECASTING & SOCIAL CHANGE The New Genetics: Implications for Technology Strategy and Business Ethics

Advances in genetics indicate the notion of natural selection, in its Darwinian version, has to be replaced by something of much greater complexity.  The special issue will explore the implications for technology strategy and forecasting.  Before Darwin, it was recognized that species change over time.  Darwin and Mendel provided the first scientific frameworks for how this change happens.  The later and still-unfolding understanding of the molecular basis of genetics opened richer possibilities for explaining evolution.  An example is the recognition of pleiotropy, which affects both genetic expression and mutation. 

In a process comparable to self-modifying software, a single gene activates additional genes to express a large number of phenotypical traits.  In experiments, one gene has been observed to affect the expression of hundreds of other genes; it is believed that a sensitive measurement could show a single gene affecting every element of the genome.  A mutation’s survivability then depends on the gene’s low degree of connectedness; a changed gene that cascades large changes in the expression many other genes may well kill the organism. 

Co-evolution, the mutual adaptation of environment and organisms, is also now recognized.  We can no longer draw a straight and unidirectional line between environmental change, change in a gene, and change in the physiology of an organism. 

By the same token, industry structure cannot be explained by simple competition between firms in a fixed environment; political lobbying is just one means by which firms try to change their environment.  It is not known what kinds of models will soon augment or replace Mendel’s picture of heredity and Darwin’s construction of natural selection. 

For decades, evolution has been the central metaphor of many disciplines, from ecology and cosmology to computer science.  We now have a metaphor without a mechanism.  This development in biology poses a problem for managers who have relied on competitive selection as a way of comprehending business strategy, technology development, entrepreneurship, and ethics. 

The editors invite researchers in genetics, technology strategy, and ethics, as well as other sciences affected by this development, to submit papers that clarify the meaning of the new genetics and begin to explore the needed re-thinking of our policy and management paradigms – with special reference to the scientific worldview, technology strategy and forecasting, corporate strategy and competition, and social change. 

Authors should note that the special issue will focus on new views of the mechanism by which evolution occurs – not on the rejection of evolution as a fact or metaphor.  Submissions should not represent efforts to advance creationist or metaphysical views.

Submissions may address questions such as:

• What can game theory, sociology, organizational behavior and other fields tell us about the benefits of cooperation versus competition within organizations or between economies? 
• Genetic algorithms” are used for everything from operations analysis to classroom scheduling and product/engineering design.  How can they be brought “up to date”? 
• Should we reconceptualize “market niches,” “technology standards,” “industrial ecology,” and other management notions that implicitly or explicitly depend on evolutionary/ecological metaphors? 
• Does the complexity of genetic expression and change in organisms suggest the increased use of complexity theory and/or computational approaches in technological forecasting? 
• Have new developments in genetics spurred advances in mathematics and informatics that could benefit other disciplines, specifically technology strategy and forecasting? 
• How far can current bio-mimetic technologies progress in the absence of a guiding theory?
• What is the future of “social Darwinism” as a popular concept?

Abstracts are due July 1, 2007, and final papers must be submitted by December 1, 2007, with the names of potential reviewers. 

Abstracts and papers may be sent to either editor. 

Guest Editors: Fred Phillips, Alliant International University and Maastricht School of Management ([email protected]), and Yu-Shan Su, University of Texas at Dallas and  Chang Jung Christian University ([email protected])

© 2005-2007

Walter Derzko

Expert, Consultant and Keynote Speaker on Emerging Smart Technologies, Innovation, Strategic Foresight, Business Development, Lateral Creative Thinking and author of an upcoming book on the Smart Economy "

The Smart Technology Blog: The Smart Economy -- Read, enjoy, explore, speculate, comment !!

To arrange for an in house presentation or briefing on smart technology see here

To explore the opportunities and threats of any new smart technology in your industry - Contact Me or explore how we can work together

.....Strategy without action is a day-dream; action without strategy is a nightmare"- old Japanese proverb

".......Ours is the age that is proud of machines that think and suspicious of men who try to." - H. Mumford Jones

"Without changing our patterns of thought, we will not be able to solve the problems we created with our current pattern of thought."  A. Einstein

"Change is difficult, but complacency and stagnation are showstoppers..." Walter Derzko

"Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has."  - Margaret Mead

P. S. if this is your first visit to my blog, please go to our Welcome page

Do you know how to spot or design new business opportunities? 07-053

Several people have called me in the past week asking how I could help them create or spot new opportunities in their businesses. "Chance favors the prepared mind", so the saying goes. So, it follows that if you had a repertoire of examples of different generic opportunity windows, you can use them as a templates for either 1) designing opportunity windows for your business or 2) as a checklist for scanning to spot unique opportunity scenarios when the circumstances present themselves.

I've actually developed a workshop on that topic that I call the Opportunity Clinic (c) & here's an overview and example

The Opportunity Clinic is a robust methodology and framework bundled into a two day workshop that I developed in the 1980’s and 1990’s that helps companies, large and small explore their emerging “opportunity space”. I got the idea from Aultshuller's TRIZ model, which are essentially invention formula's or invention algorithms developed from his search of patents in the former Soviet Union (FSU). He came up with 40 principles. Why can't the same be done for opportunity examples and ideas? It's like taking an opportunity window and asking yourself: What's that an example of? or What's the underlying concept or principle here? and how do I transfer that concept from one application area (where it's common) to another, where it's novel or foreign?

It’s applicable to individual products or services, clusters of products or services, or industry verticals. It can be used at any point in the product life cycle and works at any time of the business cycle from downturns and depression to market upswings. (Hint: downswings actual produce the most new opportunity windows, but most companies are in too much of a panic to recognise them)

The Opportunity Clinic  helps companies answer such basic questions about opportunity windows as: Could it Happen? Will it Happen? How will it Happen? Should it Happen?   and align their opportunity windows with the best time to launch them in their product /service life cycle or business life cycle.

The Opportunity Clinic can focus on up to 20 “vectors” to look for or design opportunity windows, but usually we just concentrat on one or two in a session, ie, designing or creating opportunity windows for marketing, sales, branding, R&D, new products etc. While most useful in business setting, the Opportunity Clinic can also be used by the not-for-profit sector and government ministries and agencies

The actual process is a fairly simple 7 step excercise, done over two or more days, as part of a strategy retreat.

I work with a client to:

1) identify what an opportunity window is and develop a list of the current opportunity scenarios  that the organization takes advantage of now, or will in the near future

2) map out their current cluster of opportunity windows/scenarios  and populate the Generic Opportunity Map.

3) move forward; we then focus on the white spaces, the cells on the Generic Opportunity Map that are blank and ask why?

4) design new opportunity windows; depending on where the client’s products/services are in their life cycle, we then work with a client to ‘co-design” new concepts for opportunity windows using lateral thinking skills (based on the work I did as Director of the Idea Lab at the Design Exchange in Toronto)

5) compare tactics from unrelated industry verticals; alternatively we resort to selected examples from a list of over 250 generic opportunity windows from various industries that we have in our database (see example below)

6) prioritize ideas; working with a client’s existing stage /gate process we help a client prioritize their list of novel opportunity windows, based on selected criteria and requirements

7)farm out low priority opportunity windows; if good opportunity windows are designed that don’t fit into the client’s strategic mix, we explore creative ways to farm out these opportunity windows to other third  parties and still benefit from the ideas.

Here's an example from our Generic Opportunity Windows Database

[…]

3.0 Operating Asset Opportunities Via Concept Challenge (how do we do things)

3.1 The Business Model Opportunity Window

3.1.1 Steady fixed pricing Opportunity Window vs Dynamic pricing Opportunity Window

3.1.1.1  Time-based dynamic pricing Opportunity Window

a retail outlet in Rochester drops prices on men’s and women’s clothes; the longer that clothes sit on the rack the steeper the price drop, till it hits the wholesale floor level price

3.1.1.2 Demand-based dynamic pricing Opportunity Window

the new Coke Vending machines change pricing based on weather and demand for the product

3.1.1.3 Dynamic volume-discounting Opportunity Window

LetsBuyIt.com a Dutch European e-tailer operated with an innovative twist on the standard e-tail business model: as more users requested a product, bulk-buying discounts were passed on to customers and the price comes down. Its shopping site offered more than 50,000 products and services this way, notably consumer electronics from makers such as Aiwa, Logitech, Nikon and Pentax. Source: TechWeb Jan 1,2001 http://www.techweb.com/wire/story/TWB20010101S0001

Want to learn more? Call or email me asking about the Opportunity Clinic for your organization

© 2005-2007

Walter Derzko

Expert, Consultant and Keynote Speaker on Emerging Smart Technologies, Innovation, Strategic Foresight, Business Development, Lateral Creative Thinking and author of an upcoming book on the Smart Economy "

The Smart Technology Blog: The Smart Economy -- Read, enjoy, explore, speculate, comment !!

To arrange for an in house presentation or briefing on smart technology see here

To explore the opportunities and threats of any new smart technology in your industry - Contact Me or explore how we can work together

.....Strategy without action is a day-dream; action without strategy is a nightmare"- old Japanese proverb

".......Ours is the age that is proud of machines that think and suspicious of men who try to." - H. Mumford Jones

"Without changing our patterns of thought, we will not be able to solve the problems we created with our current pattern of thought."  A. Einstein

"Change is difficult, but complacency and stagnation are showstoppers..." Walter Derzko

"Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has."  - Margaret Mead

P. S. if this is your first visit to my blog, please go to our Welcome page