The augmented human-technology dilemma

Artificial Intelligence is gaining traction as many parts of the traditional banking process get automated with intelligent algorithms. Machine Learning is often seen as a different area of research in the field of AI, but realistically the entire machine intelligence world is exploding.

On Machine Learning: We might see supervised, unsupervised and re-enforcement learning as the current world, but new algorithms are created that bring big data, artificial intelligence and computational capacity into focus. This drive towards more accurate and predictive machine behaviors, leave us debating the role of humans and the interface with technology. We’re seeing that banking processes are automated and AI assisted by allowing for better ways to on-board customers, more predictive sales approaches, recommendations on transactions, credit score automation, fraud detection, behavior based marketing, etc.

I postulate that we can break this up into three stages namely; basic machine intelligence, response to learning, and augmented machine-human environments. Firstly, machine learning and other parts of artificial intelligence related fields have been implemented in various forms in banking including risk management, detecting fraudulent transactions, etc. All these approaches require the use of large data sets and complex algorithm training environments. Secondly, we’re seeing the focus shifting towards self-correcting and learning approaches where the purpose is to find a combination of algorithms that can behave like humans. This requires access to large, but more reliable, data sets, where the focus is on prediction and automated responses to effectively replace humans in key banking processes. As customers use more digital channels including mobile phones, we find that the need for certain roles disappear entirely in the banking service delivery channel. Thirdly, we are in pursuit of the most profitable interface between human and machine behavior. With a rapidly changing technology landscape comes the new world of redrawing boundaries of where humans are most likely to operate, opening the field of computationally enabled social science. Finding the optimal augmented view of work to be done requires an approach where different classes of algorithms can be used. Infusing these algorithms with human-error, a representation of social behavior, will push us into a new competitive AI ecosystem.

With these inventions moving multiple disciplines into automation, finding your place in this complex ecosystem will be an ongoing challenge.

The reason most innovation companies just don’t get services industries…

For those that have followed this blog over the years know that I’m a proponent of open, collaborative and more social approaches to innovation. But only the ones that simplify our lives. What got me here?

We are exposed to industrial methods of innovation through most of the popular press. Even some of the books I recently reviewed on innovation in banking propose a highly disciplined, governed, and organized approach to innovation. Don’t get me wrong; there is probably nothing wrong with the content of these books, it’s just that we just don’t see any of these ever being implemented successfully. There is a critical question about approaches in the services related industries that play out very differently in financial services and services companies in general. In one of my previous entries Reshaping open innovation for service industries, I focused on unpacking the issues behind open innovation, see this as a continuation on that theme.

I see that financial institutions have a very specific set of conditions under which they operate, and with the latest developments in the industry, these conditions are very different to manufacturing for example. Employing thirty thousand something people in an organization where “invention” is not the focus, but “innovation” is the driver, makes for different thinking. Your measure of innovation success is often not the patent or the product, but the benefits that can be derived from mobilizing thousands of ideas through implementation.

Most idea and innovation platforms are great at managing the innovation process with all the bells and whistles. In services organizations (especially banks and insurance companies) already heavily loaded with compliance, governance, risk, operational, decision, escalation, and many more, processes that direct the execution of work; where do I slot in my “new ideas” platform and approach? New ideas are developed all the time across the various lines of business in the face of the customer, in operations, and other parts of the business on an ongoing basis. So, do I really require another heavily loaded workflow, form capture, escalation based, resource hungry innovation platform?

In an average sized financial services organization you sit with some nine hundred technology systems that automate in fragmented and in most cases with overlap in functionality, large parts of the organization. Adding another platform based on the “brain wave” of the internal technical person that attends a course and reads a book or two on innovation, just won’t cut it. On the other hand, taking a heavy duty and feature rich platform from a vendor that caters for each and every eventuality of how a process of innovation will differ between companies definitely will not survive in the large service organization.

Simplicity, accessibility, fit-for-purpose, light-weight process, to name a few characteristics, are the more modern approaches needed to make innovation platforms work. Some points to ponder for services companies on the approaches to innovation:
– simplify the process to no more than three steps
– only record the essence of the idea and then socialize
– leverage existing budget and funding cycles and adapt where needed
– drop the great ideas into existing project management approaches and operating models
– derive benefits alongside the multitude of outputs already in motion
– if it’s radical, externalize and then rehabilitate later
– allow for the “adoption” of ideas across the business as relevance is everything
– never award great ideas, reward the people that want to make great ideas work
– focus on telling your people that their contributions are the only thing that matters

When you are explained that your innovation company is going to supply you with the all encompassing innovation approach, always ensure that you understand how it’s going to fit. Otherwise it will become another short-lived and irrelevant initiative like many others in large organizations…

System rationalization and legacy migration is an impossible mission in banking, where is the silver lining?

If you have a business process that has been developed over many years, the people using the process and the people defining the process all get integrated into the technology that automates parts of it. Interfaces into the technology platforms are defined and developed based on business processes that require automated flow of information and add to the complexity of making the business operate. So, for example if you have a project to rationalize for example “customer management” or “pricing and billing” you will see that both are spread across the organization and have become imbedded in many forms into the current business operating model.

Making an assumption that the onboarding of customers/clients are the same across the bank, you can decide to start the rationalization program. Freeze all the existing customer processes and technologies that support these processes, buy or build new technology; and then the fun starts. Unless you understand the existing business system with all its related operating rules including people’s roles, skills and processes they execute, supporting technologies including E-mail and the like, and the governance structures that assist with managing risks and escalation related activity; you will not have a successful platform migration program.

While this is going on, you start by making a decision to either buy or build based on some attributes that will make sense to the business and technology people alike. If you decide that the process can be standardized across the bank you might buy a technology that supports some or even most of your requirements. It probably never happens that you can squeeze a standardized automated process into the organization and expect people to function effectively. This then gets you to think about the build option that raises an entirely different set of challenges. Maybe you decide to change or customize the “standard” solution you bought and then the real problem starts. So, back to our example of customer management; do we want to have different processes when customers interact with card, home loans, investment products, etc or do we want a common and lowest denominator approach?

All this happens while the business moves ahead with changes in business models, processes, governance structures, people move on and you are left as an executive with some really tough decisions. Do I shut it all down, rethink my approach and restart with new energy or continue the drive to get my new rationalized platform implemented? We’ve seen in our latest innovation surveys that banking customers think that “they are all the same”, banks that are, and that there are no real differentiation as banks copy each other’s approaches and models. Maybe we are entering an era of rethinking the complexity behind “tooling” in financial services and with this comes a new way of driving successful “re-tooling”.

We’ve seen an interesting interrelationship between business innovation that drives new processes and governance models that drive new architectures and technologies resulting in major and costly change programs going off the rails. Business model operating model innovations to assist with the understanding of “commonality” (process and technology) in banking present particular opportunities. Due to the integrated nature of the various elements that make businesses successful, the entire organization needs to participate in making these large scale changes successful. The “variability” elements, meaning the actual things that make different business units and banking services different from each other, are not really well understood. This is no fault of the people in the business as we see more dynamic and agile approaches emerging just adding to the complexity.

Enough of this, the idea was to give you a (grossly simplified and generic) picture of some recent challenges we’ve been working on across the world. So if you think that “strategy” is going to help you, think again. This problem is much bigger than using some external body to define another roadmap. You need an integrated view of innovation (all the new ways of doing things and automate those), strategic intent and key competitive focus areas (eg customer centricity), operating model efficiency, people deployment, etc.

My final comment is that banking innovation is entering a new era where the disciplines of business strategy, innovative services, business and technology architecture, processes, governance, and technology automation are redefining its interfaces.

What should a great innovation software product look like?

We have been working with innovation related projects for many years now – and observed many different approaches work. This creates a challenge in that “innovation practices” are still emerging. The approaches followed are almost as diverse as the number of books published on the subject. There are however a number of common things that need to be looked at; some of these include:
– focus on understanding your approach first
– commit to the approach and work on embedding it into your culture
– get people energized to apply the newly acquired knowledge
– let ideas emerge (similarly to the way you’ve always done it)
– work on one change at a time and move forward from there
– reward successes and ensure that company measures are not undermined
– make it a long-term journey…

Based on some of these heuristics, innovation software products should contain some(or all) of these features as a minimum:

Manage ideation, innovation and adoption cycles:
– create observations (general learnings, market scans, landscaping)
– create ideas (as result of individual genius, workshopping, creative sessions, etc)
– create innovations (as result of reviewing ideas, etc)
– create projects (decide to spend money on realizing the ideas/innovations)

Staged idea/innovation capture:
– basic idea recording mechanisms (to simplify the process)
– deadlines, and other time based information
– investment needed and other monetary related information
– process and staged based information collection (especially for clients with stage-gate based approaches)

Project management integration:
– realize ideas through creating projects from the selected ideas

Setting of challenges and prizes:
– set a challenge on an idea with deadline, prize, and intended outcome

Define innovation campaigns based on strategic initiatives:
– define innovation campaigns based on context setting approaches
– target innovators to participate
– set challenges
– reward winners and achievers

Invite specialists:
– invite specialists to assist with developing your ideas (maybe through tribes?)
– create “call for review” notifications to elicit feedback
– create innovation workshops with directed purpose statements to facilitate specialized input

Define key measures for dashboarding:
– have the basic measures on dashboard depending on your position in the org structure or social network
– produce an automated innovation portfolio based on key measures
– have “socially aware” ideas move to the top automatically
– have “socially inept” ideas move sideways into “please review”

Integrate with NPD (new product development):
– define product and service targets (which to get ideas for)
– have idea approval and grouping by version/release/platform numbers for products
– integrate with legal process especially for trade marks, patents, copyrights, company secrets

Idea value analysis:
– group ideas by external and internal related criteria
– value the market potential of ideas for external use
– value ideas based on cost saving etc for internal use
– define portfolio balancing criteria

Knowledge management platform:
– integrate patent portfolio and other legal innovation constructs
– integrate field knowledge acquired throughout field testing and trials
– get information from various sources through mash-ups
– flag ideas as “company secrets” or secret ideas
– initiate prototypes, etc

Idea evaluation analysis:
– ideas that are discovered and copied
– entirely new ideas
– science based processes, etc

Idea and innovation clustering:
– search for like ideas and relate together with reason code
– allow idea consolidation

Idea and innovation workshop manager:
– define workshop purpose and objectives
– collect many ideas; but don;t “commit” to them
– review the collected ideas and produce an approved set
– measure effectiveness of session
– get participants involved electronically by viewing ideas on-line in real-time
– map ideas onto the Opportunity/Capability or other innovation models

Innovation e-learning integration:
– get access to all basic innovation terminology
– allow for brief learning sessions before ideas are captured
– track learning on the dashboard

Innovation tracking and energizing:
– track and monitor innovation “energy”
– understand who are creating ideas and at what pace
– automatically generate “innovation stimulation” activity for eg. e-mails, SMS’s etc

– structural and social based community collaboration to be allowed
– allow customers to see certain ideas and capture their own
– allow certain external intellectual and other providers to participate in the innovation process
– allow your legal firm access to key legal challenges

This is by no means a complete list of the features needed to manage automated idea management approaches in organziations, but it provides some insight into some of the important features. The simpler the approach the more effective the adoption will be.

Have a look at

A brief view on Idea and Innovation Management Software

Idea management and the associated innovation processes to realize ideas are concepts now well implemented across many different global organizations. It is quite a cluttered landscape as organizations implement their own systems whilst others buy products. A few leading products have emerged with highly functional and comprehensive solutions. There is a shift in this landscape as these vendors try to capture SaaS (Software as a Service) value by offering various on-demand delivery options.

The SystemicLogic team is working on a report that will show the differences between these companies. An initial report should be available by January 2009. Consider this list of companies…

Brain bank
Mindmatters Technologies inc.
Idea scale
Kickstart Pro
Accept software
Planning innovation (power planning)
Axiom (Idearesevoir)
Inventionmachine (goldfire)

Something to say for Return on Innovation (RoI)

We all have been looking at Apple as it transformed itself over the last few years. But how much of a turnaround has it been? And, and what point will an Apple, Google and alliance pose a threat to Microsoft where full replacement technologies are a reality?
Looking at the financial crises globally, we’ve returned to “cash is king”. Apple has $25billion, Google has $14.4billion and Microsoft has $21billion in cash reserves. Microsoft’s deal with Yahoo is still lingering, but for how long (or is it now finally over)? Revenue growth for the quarter is looking pretty good where Apple has shown 27% growth, Google at 31% and Microsoft at 18%.

If the network is becoming the computer (as initially promoted by Sun) how long before the world stop using desktop operating systems and applications all together? We are seeing massive growth in telecommunications infrastructure and broad-band upgrade projects around the globe. Companies like MTN is pursuing business on the African continent to bring telephony to the masses; people who have little access to basic lifestyle products – yet they own cellphones…

The new world of innovation is far removed from the classical industrial view on innovation. Here are some points to ponder:
– re-thinking your business’s abstract value in relation to its value proposition (Apple is becoming a media company)
– redefining business models by separating the participative customers from economic customers (Google is an infomogul)
– driving open innovation models by using collaborative and socially connected talent pools (Google’s Android is a developer ecosystem, etc)
– protecting your business channel turf (Microsoft’s focus on interrelated and mass-adopted products)

What to do during tough times – Innovate, Collaborate OR Protect?

Three bits of news seconds from each other got my attention today. You figure out what this means in light of these three Innovation Strategies:
1. Design based innovation – being focused on design and ecosystem based offerings
2. Open collaborative innovation – using information and the participative customers to entice the economic customer
3. Innovate though protective barriers – use legal systems and threat based tactics to protect your market

From ZDNet Tech Update:
Apple beats estimates; credits iPhone sales
“Apple beats estimates; credits iPhone sales Sam Diaz: It’s not the past performance that investors want to know about, it’s the future. What are companies doing to ride the economic storm? Yesterday, Apple reported fiscal fourth quarter earnings of $1.14 billion, on revenue of $7.9 billion. The company credited the strong quarter partly to iPhone sales. “We sold more phones than RIM,” CEO Steve Jobs said.
Other highlights from the quarter:
* The company sold 6.9 million iPhones, taking the company passed its goal of 10 million sold for 2008 – with two months left in the year. The company said iPhone is now 39 percent of the total business.
* Apple shipped 2.61 million Mac computers, a 21 percent increase over the year-ago quarter. It set a company record for a single quarter.
* More than 11 million iPods were sold, up eight percent from a year ago. The company said it was record for a non-holiday quarter. It’s market share for portable music players remained above the 70 percent mark.
* The iTunes store has more than 65 million active accounts and a catalog of 8.5 million titles. It has just added more television shows, renewed its content deal with NBC and added high-def programming.
* The company has $25 billion in cash and zero debt. In a call with analysts, Jobs hinted that the financial position gives the company the “ability to invest our way through this downturn.”
* The iPhone App store expects to see its 200 millionth application downloaded by tomorrow, 102 days since the July launch.”

From CNET Reviews:
The Android is here
If you managed to miss the hype, here’s some news: T-Mobile’s G1 phone, which runs Google’s Android mobile platform, is here. The phone might not be perfect, but Google’s Android platform has the potential to make smartphones more personal and powerful. We’ve got full coverage, including a full review of the G1 phone itself, the latest news on Google Android, and a speed test that pits the G1 against the iPhone 3G. Dig in!
* Coders get 70 percent of Android Market revenue
Google officially opened its Android Market Wednesday and promised that beginning next year, programmers will get the lion’s share of revenue from applications sold on the download site for the company’s mobile phone operating system. The first incarnation of the Android Market has more than 50 applications available

From DailyEdge:
Microsoft Flexes for Global Anti-Piracy Day
The selection of October 21 as Global Anti-Piracy Day may have been random, but Microsoft is tying its renewed emphasis on reducing the use of unlicensed and otherwise illegal software to the larger economic fears that businesses and end users alike are dealing with right now.
Anti-piracy numbers:
48: number of countries in which Microsoft is launching or relaunching anti-piracy education and enforcement actions today
5: number of continents on which those 48 countries can be found
20: number of resellers against which Microsoft announced legal action today, for allegedly selling pirated software
1/3: number of PCs globally, at minimum, that contain pirated, unlicensed or counterfeit software, according to Microsoft
$50 billion: Cost to businesses, globally, of pirated or unlicensed software in 2007
800-785-3448: telephone number customers can call to give Microsoft hot anti-piracy tips

120000: the number of open source projects actively working on solving this problem, Google is one of those companies with a few projects…

Open letter to Google Documents…

Dear Google documents team,

I’ve been a great supporter of your on-line applications (been using it for about a year now). In actual fact I’ve convinced many people to consider using it once you have figured out how to fix some of the most basic errors. Since 45% of your products are in beta it is probably worth waiting for the final release.

This is my problem:
We use google documents in our company for e-mail, calendaring, and sharing of on-line documents. This is where my problem comes in. The on-line documents don’t load the stylesheet. This seems like a simple problem, but that means that I cannot open any of my documents!

I have attempted many solution that include; using my Microsoft operating system with IE, using Chrome, Firefox on my Apple, etc and no luck! Also read your on-line help and support system.

Wait for you to fix the basic problems with Docs or move all my documents to Zoho. Zoho is a great application with a complete set of applications that really work well. Or, use Microsoft’s Small Business Office Live online application (it only support IE and Firefox currently).

If you are a corporate wanting to use Google Apps, evaluate this option very carefully…

Regards, Jay