Felix Salmon in Wired: “This shift in US intelligence mirrors a definite pattern of the past 30 years, one that we can see across fields and institutions. It’s the rise of the quants—that is, the ascent to power of people whose native tongue is numbers and algorithms and systems rather than personal relationships or human intuition. Michael Lewis’ Moneyball vividly recounts how the quants took over baseball, as statistical analysis trumped traditional scouting and propelled the underfunded Oakland A’s to a division-winning 2002 season. More recently we’ve seen the rise of the quants in politics. Commentators who “trusted their gut” about Mitt Romney’s chances had their gut kicked by Nate Silver, the stats whiz who called the election days beforehand as a lock for Obama, down to the very last electoral vote in the very last state.
The reason the quants win is that they’re almost always right—at least at first. They find numerical patterns or invent ingenious algorithms that increase profits or solve problems in ways that no amount of subjective experience can match. But what happens after the quants win is not always the data-driven paradise that they and their boosters expected. The more a field is run by a system, the more that system creates incentives for everyone (employees, customers, competitors) to change their behavior in perverse ways—providing more of whatever the system is designed to measure and produce, whether that actually creates any value or not. It’s a problem that can’t be solved until the quants learn a little bit from the old-fashioned ways of thinking they’ve displaced.
No matter the discipline or industry, the rise of the quants tends to happen in four stages. Stage one is what you might call pre-disruption, and it’s generally best visible in hindsight. Think about quaint dating agencies in the days before the arrival of Match .com and all the other algorithm-powered online replacements. Or think about retail in the era before floor-space management analytics helped quantify exactly which goods ought to go where. For a live example, consider Hollywood, which, for all the money it spends on market research, is still run by a small group of lavishly compensated studio executives, all of whom are well aware that the first rule of Hollywood, as memorably summed up by screenwriter William Goldman, is “Nobody knows anything.” On its face, Hollywood is ripe for quantification—there’s a huge amount of data to be mined, considering that every movie and TV show can be classified along hundreds of different axes, from stars to genre to running time, and they can all be correlated to box office receipts and other measures of profitability.
Next comes stage two, disruption. In most industries, the rise of the quants is a recent phenomenon, but in the world of finance it began back in the 1980s. The unmistakable sign of this change was hard to miss: the point at which you started getting targeted and personalized offers for credit cards and other financial services based not on the relationship you had with your local bank manager but on what the bank’s algorithms deduced about your finances and creditworthiness. Pretty soon, when you went into a branch to inquire about a loan, all they could do was punch numbers into a computer and then give you the computer’s answer.
For a present-day example of disruption, think about politics. In the 2012 election, Obama’s old-fashioned campaign operatives didn’t disappear. But they gave money and freedom to a core group of technologists in Chicago—including Harper Reed, former CTO of the Chicago-based online retailer Threadless—and allowed them to make huge decisions about fund-raising and voter targeting. Whereas earlier campaigns had tried to target segments of the population defined by geography or demographic profile, Obama’s team made the campaign granular right down to the individual level. So if a mom in Cedar Rapids was on the fence about who to vote for, or whether to vote at all, then instead of buying yet another TV ad, the Obama campaign would message one of her Facebook friends and try the much more effective personal approach…
After disruption, though, there comes at least some version of stage three: overshoot. The most common problem is that all these new systems—metrics, algorithms, automated decisionmaking processes—result in humans gaming the system in rational but often unpredictable ways. Sociologist Donald T. Campbell noted this dynamic back in the ’70s, when he articulated what’s come to be known as Campbell’s law: “The more any quantitative social indicator is used for social decision-making,” he wrote, “the more subject it will be to corruption pressures and the more apt it will be to distort and corrupt the social processes it is intended to monitor.”…
Policing is a good example, as explained by Harvard sociologist Peter Moskos in his book Cop in the Hood: My Year Policing Baltimore’s Eastern District. Most cops have a pretty good idea of what they should be doing, if their goal is public safety: reducing crime, locking up kingpins, confiscating drugs. It involves foot patrols, deep investigations, and building good relations with the community. But under statistically driven regimes, individual officers have almost no incentive to actually do that stuff. Instead, they’re all too often judged on results—specifically, arrests. (Not even convictions, just arrests: If a suspect throws away his drugs while fleeing police, the police will chase and arrest him just to get the arrest, even when they know there’s no chance of a conviction.)…
It’s increasingly clear that for smart organizations, living by numbers alone simply won’t work. That’s why they arrive at stage four: synthesis—the practice of marrying quantitative insights with old-fashioned subjective experience. Nate Silver himself has written thoughtfully about examples of this in his book, The Signal and the Noise. He cites baseball, which in the post-Moneyball era adopted a “fusion approach” that leans on both statistics and scouting. Silver credits it with delivering the Boston Red Sox’s first World Series title in 86 years. Or consider weather forecasting: The National Weather Service employs meteorologists who, understanding the dynamics of weather systems, can improve forecasts by as much as 25 percent compared with computers alone. A similar synthesis holds in economic forecasting: Adding human judgment to statistical methods makes results roughly 15 percent more accurate. And it’s even true in chess: While the best computers can now easily beat the best humans, they can in turn be beaten by humans aided by computers….
That’s what a good synthesis of big data and human intuition tends to look like. As long as the humans are in control, and understand what it is they’re controlling, we’re fine. It’s when they become slaves to the numbers that trouble breaks out. So let’s celebrate the value of disruption by data—but let’s not forget that data isn’t everything.
From Faith-Based to Evidence-Based: The Open Data 500 and Understanding How Open Data Helps the American Economy
Beth Noveck in Forbes: “Public funds have, after all, paid for their collection, and the law says that federal government data are not protected by copyright. By the end of 2009, the US and the UK had the only two open data one-stop websites where agencies could post and citizens could find open data. Now there are over 300 such portals for government data around the world with over 1 million available datasets. This kind of Open Data — including weather, safety and public health information as well as information about government spending — can serve the country by increasing government efficiency, shedding light on regulated industries, and driving innovation and job creation.
It’s becoming clear that open data has the potential to improve people’s lives. With huge advances in data science, we can take this data and turn it into tools that help people choose a safer hospital, pick a better place to live, improve the performance of their farm or business by having better climate models, and know more about the companies with whom they are doing business. Done right, people can even contribute data back, giving everyone a better understanding, for example of nuclear contamination in post-Fukushima Japan or incidences of price gouging in America’s inner cities.
The promise of open data is limitless. (see the GovLab index for stats on open data) But it’s important to back up our faith with real evidence of what works. Last September the GovLab began the Open Data 500 project, funded by the John S. and James L. Knight Foundation, to study the economic value of government Open Data extensively and rigorously. A recent McKinsey study pegged the annual global value of Open Data (including free data from sources other than government), at $3 trillion a year or more. We’re digging in and talking to those companies that use Open Data as a key part of their business model. We want to understand whether and how open data is contributing to the creation of new jobs, the development of scientific and other innovations, and adding to the economy. We also want to know what government can do better to help industries that want high quality, reliable, up-to-date information that government can supply. Of those 1 million datasets, for example, 96% are not updated on a regular basis.
The GovLab just published an initial working list of 500 American companies that we believe to be using open government data extensively. We’ve also posted in-depth profiles of 50 of them — a sample of the kind of information that will be available when the first annual Open Data 500 study is published in early 2014. We are also starting a similar study for the UK and Europe.
Even at this early stage, we are learning that Open Data is a valuable resource. As my colleague Joel Gurin, author of Open Data Now: the Secret to Hot Start-Ups, Smart Investing, Savvy Marketing and Fast Innovation, who directs the project, put it, “Open Data is a versatile and powerful economic driver in the U.S. for new and existing businesses around the country, in a variety of ways, and across many sectors. The diversity of these companies in the kinds of data they use, the way they use it, their locations, and their business models is one of the most striking things about our findings so far.” Companies are paradoxically building value-added businesses on top of public data that anyone can access for free….”
FULL article can be found here.
Entrepreneurs Shape Free Data Into Money
Supporters of such programs often see them as a local economic stimulus plan, allowing software developers and entrepreneurs in cities ranging from San Francisco to South Bend, Ind., to New York, to build new businesses based on the information they get from government websites.
When Los Angeles Mayor Eric Garcetti issued an executive directive last month to launch the city’s open-data program, he cited entrepreneurs and businesses as important beneficiaries. Open-data promotes innovation and “gives companies, individuals, and nonprofit organizations the opportunity to leverage one of government’s greatest assets: public information,” according to the Dec. 18 directive.
A poster child for the movement might be 34-year-old Matt Ehrlichman of Seattle, who last year built an online business in part using Seattle work permits, professional licenses and other home-construction information gathered up by the city’s Department of Planning and Development.
While his website is free, his business, called Porch.com, has more than 80 employees and charges a $35 monthly fee to industry professionals who want to boost the visibility of their projects on the site.
The site gathers raw public data—such as addresses for homes under renovation, what they are doing, who is doing the work and how much they are charging—and combines it with photos and other information from industry professionals and homeowners. It then creates a searchable database for users to compare ideas and costs for projects near their own neighborhood.
…Ian Kalin, director of open-data services at Socrata, a Seattle-based software firm that makes the back-end applications for many of these government open-data sites, says he’s worked with hundreds of companies that were formed around open data.
Among them is Climate Corp., a San Francisco-based firm that collects weather and yield-forecasting data to help farmers decide when and where to plant crops. Launched in 2006, the firm was acquired in October by Monsanto Co. MON -2.90% , the seed-company giant, for $930 million.
Overall, the rate of new business formation declined nationally between 2006 and 2010. But according to the latest data from the Ewing Marion Kauffman Foundation, an entrepreneurship advocacy group in Kansas City, Mo., the rate of new business formation in Seattle in 2011 rose 9.41% in 2011, compared with the national average of 3.9%.
Other cities where new business formation was ahead of the national average include Chicago, Austin, Texas, Baltimore, and South Bend, Ind.—all cities that also have open-data programs. Still, how effective the ventures are in creating jobs is difficult to gauge.
One wrinkle: privacy concerns about the potential for information—such as property tax and foreclosure data—to be misused.
Some privacy advocates fear that government data that include names, addresses and other sensitive information could be used by fraudsters to target victims.”
The Emergence Of The Connected City
Glen Martin at Forbes: “If the modern city is a symbol for randomness — even chaos — the city of the near future is shaping up along opposite metaphorical lines. The urban environment is evolving rapidly, and a model is emerging that is more efficient, more functional, more — connected, in a word.
This will affect how we work, commute, and spend our leisure time. It may well influence how we relate to one another, and how we think about the world. Certainly, our lives will be augmented: better public transportation systems, quicker responses from police and fire services, more efficient energy consumption. But there could also be dystopian impacts: dwindling privacy and imperiled personal data. We could even lose some of the ferment that makes large cities such compelling places to live; chaos is stressful, but it can also be stimulating.
It will come as no surprise that converging digital technologies are driving cities toward connectedness. When conjoined, ISM band transmitters, sensors, and smart phone apps form networks that can make cities pretty darn smart — and maybe more hygienic. This latter possibility, at least, is proposed by Samrat Saha of the DCI Marketing Group in Milwaukee. Saha suggests “crowdsourcing” municipal trash pick-up via BLE modules, proximity sensors and custom mobile device apps.
“My idea is a bit tongue in cheek, but I think it shows how we can gain real efficiencies in urban settings by gathering information and relaying it via the Cloud,” Saha says. “First, you deploy sensors in garbage cans. Each can provides a rough estimate of its fill level and communicates that to a BLE 112 Module.”
As pedestrians who have downloaded custom “garbage can” apps on their BLE-capable iPhone or Android devices pass by, continues Saha, the information is collected from the module and relayed to a Cloud-hosted service for action — garbage pick-up for brimming cans, in other words. The process will also allow planners to optimize trash can placement, redeploying receptacles from areas where need is minimal to more garbage-rich environs….
Garbage can connectivity has larger implications than just, well, garbage. Brett Goldstein, the former Chief Data and Information Officer for the City of Chicago and a current lecturer at the University of Chicago, says city officials found clear patterns between damaged or missing garbage cans and rat problems.
“We found areas that showed an abnormal increase in missing or broken receptacles started getting rat outbreaks around seven days later,” Goldstein said. “That’s very valuable information. If you have sensors on enough garbage cans, you could get a temporal leading edge, allowing a response before there’s a problem. In urban planning, you want to emphasize prevention, not reaction.”
Such Cloud-based app-centric systems aren’t suited only for trash receptacles, of course. Companies such as Johnson Controls are now marketing apps for smart buildings — the base component for smart cities. (Johnson’s Metasys management system, for example, feeds data to its app-based Paoptix Platform to maximize energy efficiency in buildings.) In short, instrumented cities already are emerging. Smart nodes — including augmented buildings, utilities and public service systems — are establishing connections with one another, like axon-linked neurons.
But Goldstein, who was best known in Chicago for putting tremendous quantities of the city’s data online for public access, emphasizes instrumented cities are still in their infancy, and that their successful development will depend on how well we “parent” them.
“I hesitate to refer to ‘Big Data,’ because I think it’s a terribly overused term,” Goldstein said. “But the fact remains that we can now capture huge amounts of urban data. So, to me, the biggest challenge is transitioning the fields — merging public policy with computer science into functional networks.”…”
Walgreens Taps Crowdsourcing to Deliver Cold Medicine to Shut-Ins
Mashable: “Walgreens is reaching out to consumers who are so walloped with a cold or flu that a trip to the corner drugstore seems an insurmountable obstacle.
The national drug chain is partnering with TaskRabbit, the online mobile marketplace, to allow deliveries of over-the-counter cold medicine in any of the 19 cities in which TaskRabbit is available. Such deliveries can be made via TaskRabbit’s iOS app or on its website. Standard TaskRabbit rates apply including a 20% service charge and a runner’s fee. So if a runner’s fee is $10, you would pay an additional $12 plus the cost of your cold medicine, to get the delivery.
The partnership, arranged by OMD’s Ignition Factory, runs this week through Feb. 18, typically the weeks in which cold and flu complaints have the sharpest increases. During that time, the Walgreens option will appear in TaskRabbit’s iOS app’s Task Wheel and on the website. Though TaskRabbit has partnered with other national brands, including Pepsi, this is its first with a retailer.
However, the deal is more of a pr exercise than anything else: Consumers have had the ability arrange a TaskRabbit to shop and buy cold medicine at Walgreens prior to the agreement. The chain is hoping to raise awareness about this option, though.
“We just wanted to make it as easy as possible,” says Wilson Standish, project manager at Ignition Factory. “When you’re sick, you don’t even want to get out of bed.”
Design in public and social innovation
New paper by Geoff Mulgan (Nesta): “What’s going right and what’s going wrong? Is design a key to more efficient and effective public services, or a costly luxury, good for conferences and consultants but not for the public?
This paper looks at the elements of the design method; the strengths of current models; some of their weaknesses and the common criticisms made of them; and what might be the way forward.
Contents:
- Strengths of the design method in social innovation and public service
- Social design tools table
- Weaknesses of design projects and methods
- The challenge
- Design in the context of innovation”
The future of law and legislation?
prior probability: “Mike Gatto, a legislator in California, recently set up the world’s first Wiki-bill in order to enable private citizens to act as cyber-legislators and help draft an actual law. According to Assemblyman Gatto:
Government has a responsibility to listen to the people and to enable everyone to be an active part of the legislative process. That’s why I’ve created this space for you to draft real legislation. Just like a Wikipedia entry, you can see what the current draft is, and propose minor or major edits. The marketplace of ideas will decide the final draft. We’re starting with a limited topic: probate. Almost everyone will face the prospect of working through the details of a deceased loved one’s finances and estate at some point during their life. I want to hear your ideas for how to make this process less burdensome.”
Crowdsourcing Social Problems
Article by William D. Eggers in Reason: “reCAPTCHA and Duolingo both represent a distinctly 21st-century form of distributed problem solving. These Internet-enabled approaches tend to be faster, far less expensive, and far more resilient than the heavyweight industrial-age methods of solving big social problems that we’ve grown accustomed to over the past century. They typically involve highly diverse resources-volunteer time, crowdfunding, the capabilities of multinational corporations, entrepreneurial capital, philanthropic funding-aligned around common objectives such as reducing congestion, providing safe drinking water, or promoting healthy living. Crowdsourcing offers not just a better way of doing things, but a radical challenge to the bureaucratic status quo.
Here are several ways public, private, and nonprofit organizations can use lightweight, distributed approaches to solve societal problems faster and cheaper than the existing sclerotic models.
Chunk the Problem
The genius of reCAPTCHA and Duolingo is that they divide labor into small increments, performed for free, often by people who are unaware of the project they’re helping to complete. This strategy has wide public-policy applications, even in dealing with potholes….
Meanwhile, Finland’s DigitalKoot project enlisted volunteers to digitize their own libraries by playing a computer game that challenged them to transcribe scans of antique manuscripts.
Governments can set up a microtasking platform, not just for citizen engagement but as a way to harness the knowledge and skills of public employees across multiple departments and agencies. If microtasking can work to connect people outside the “four walls” of an organization, think of its potential as a platform to connect people and conduct work inside an organization-even an organization as bureaucratic as government.
…
Decentralize Service to the Self
A young woman slices her finger on a knife. As she compresses the bleeding with gauze, she needs to know if her wound warrants stitches. So she calls up Blue Cross’ 24-hour nurse hotline, where patients call to learn if they should see a doctor. The nurse asks her to describe the depth of the cut. He explains she should compress it with gauze and skip the ER. In aggregate, savings like this amount to millions of dollars of avoided emergency room visits.
Since 2003, Blue Cross has been shifting the work of basic triage and risk mitigation to customers. Britain’s National Health Service (NHS) implemented a similar program, NHS Direct, in 1998. NHS estimates that the innovation has saved it £44 million a year….
Gamify Drudgery
Finland’s national library houses an enormous archive of antique texts, which officials hoped to scan and digitize into ordinary, searchable text documents. Rather than simply hire people for the tedium of correcting garbled OCR scans, the library invited the public to play a game. An online program called DigitalKoot lets people transcribe scanned words, and by typing accurately, usher a series of cartoon moles safely across a bridge….
Build a Two-Sided Market
Road infrastructure costs government five cents per driver per mile, according to the Victoria Transport Policy Institute. “That’s a dollar the government paid for the paving of that road and the maintaining of that infrastructure…just for you, not the other 3,000 people that travelled that same segment of highway in that same hour that you did,” says Sean O’Sullivan, founder of Carma, a ridesharing application.
Ridesharing companies such as Carma, Lyft, and Zimride are attempting to recruit private cars for the public transit network, by letting riders pay a small fee to carpool. A passenger waits at a designated stop, and the app alerts drivers, who can scan a profile of their potential rider. It’s a prime example of a potent new business model…
Remove the Middleman
John McNair dropped out of high school at age 16. By his thirties, he became an entrepreneur, producing and selling handmade guitars, but carpentry alone wouldn’t grow his business. So the founder of Red Dog Guitars enrolled in a $20 class on Skillshare.com, taught by the illustrator John Contino, to learn to brand his work with hand lettered product labels. Soon, a fellow businessman was asking McNair for labels to market guitar pickups.
Traditionally, the U.S. government might invest in retraining someone like John. Instead, peer-to-peer technology has allowed a community of designers to help John develop his skills. Peer-to-peer strategies enable citizens to meet each other’s needs, cheaply. Peer-to-peer solutions can help fix problems, deliver services, and supplement traditional approaches.
Peer-to-peer can lessen our dependence on big finance. Kickstarter lets companies skip the energy of convincing a banker that their product is viable. They just need to convince customers…”
Engaging Citizens in Co-Creation in Public Services
New report by Professors Nambisan and Nambisan for the IBM Center for the Business of Government: “The term “co-creation” refers to the development of new public services by citizens in partnership with governments. The authors present four roles that citizens co-creators often assume: explorer, ideator, designer, and diffuser.
- Explorers identify/discover and define emerging and existing problems.
- Ideators conceptualize novel solutions to well-defined problems.
- Designers design and/or develop implementable solutions to well-defined problems.
- Diffusers directly support or facilitate the adoption and diffusion of public service innovations and solutions among well-defined target populations.
Report authors Drs. Satish and Priya Nambisan of University of Wisconsin-Milwaukee provide detailed examples of citizens playing each of these roles. They note that numerous forces contribute to the trend of citizens participating in government activities, “a shift from that of a passive service beneficiary to that of an active, informed partner or co-creator in public service innovation and problem-solving.“
The help government leaders craft successful co-creation programs, the report outlines four strategies to encourage citizen co-creation:
- Fit the approach to the innovation context
- Manage citizen expectations
- Link the internal organization with the external partners
- Embed citizen engagement in the broader context”
What Jelly Means
Steven Johnson: “A few months ago, I found this strange white mold growing in my garden in California. I’m a novice gardener, and to make matters worse, a novice Californian, so I had no idea what these small white cells might portend for my flowers.
This is one of those odd blank spots — I used the call them Googleholes in the early days of the service — where the usual Delphic source of all knowledge comes up relatively useless. The Google algorithm doesn’t know what those white spots are, the way it knows more computational questions, like “what is the top-ranked page for “white mold?” or “what is the capital of Illinois?” What I want, in this situation, is the distinction we usually draw between information and wisdom. I don’t just want to know what the white spots are; I want to know if I should be worried about them, or if they’re just a normal thing during late summer in Northern California gardens.
Now, I’m sure I know a dozen people who would be able to answer this question, but the problem is I don’t really know which people they are. But someone in my extended social network has likely experienced these white spots on their plants, or better yet, gotten rid of them. (Or, for all I know, ate them — I’m trying not to be judgmental.) There are tools out there that would help me run the social search required to find that person. I can just bulk email my entire address book with images of the mold and ask for help. I could go on Quora, or a gardening site.
But the thing is, it’s a type of question that I find myself wanting to ask a lot, and there’s something inefficient about trying to figure the exact right tool to use to ask it each time, particularly when we have seen the value of consolidating so many of our queries into a single, predictable search field at Google.
This is why I am so excited about the new app, Jelly, which launched today. …
Jelly, if you haven’t heard, is the brainchild of Biz Stone, one of Twitter’s co-founders. The service launches today with apps on iOS and Android. (Biz himself has a blog post and video, which you should check out.) I’ve known Biz since the early days of Twitter, and I’m excited to be an adviser and small investor in a company that shares so many of the values around networks and collective intelligence that I’ve been writing about since Emergence.
The thing that’s most surprising about Jelly is how fun it is to answer questions. There’s something strangely satisfying in flipping through the cards, reading questions, scanning the pictures, and looking for a place to be helpful. It’s the same broad gesture of reading, say, a Twitter feed, and pleasantly addictive in the same way, but the intent is so different. Scanning a twitter feed while waiting for the train has the feel of “Here we are now, entertain us.” Scanning Jelly is more like: “I’m here. How can I help?”