business

We Need Transparency in Algorithms, But Too Much Can Backfire

Curated on July 30, 2018 by Stefaan Verhulst

Kartik Hosanagar and Vivian Jair at Harvard Business Review: “In 2013, Stanford professor Clifford Nass faced a student revolt. Nass’s students claimed that those in one section of his technology interface course received higher grades on the final exam than counterparts in another. Unfortunately, they were right: two different teaching assistants had graded the two different sections’ exams, and one had been more lenient than the other. Students with similar answers had ended up with different grades.

Nass, a computer scientist, recognized the unfairness and created a technical fix: a simple statistical model to adjust scores, where students got a certain percentage boost on their final mark when graded by a TA known to give grades that percentage lower than average. In the spirit of openness, Nass sent out emails to the class with a full explanation of his algorithm. Further complaints poured in, some even angrier than before. Where had he gone wrong?…

Kizilcec had in fact tested three levels of transparency: low and medium but also high, where the students got not only a paragraph explaining the grading process but also their raw peer-graded scores and how these were each precisely adjusted by the algorithm to get to a final grade. And this is where the results got more interesting. In the experiment, while medium transparency increased trust significantly, high transparency eroded it completely, to the point where trust levels were either equal to or lower than among students experiencing low transparency.

Making Modern AI Transparent: A Fool’s Errand?

What are businesses to take home from this experiment? It suggests that technical transparency – revealing the source code, inputs, and outputs of the algorithm – can build trust in many situations. But most algorithms in the world today are created and managed by for-profit companies, and many businesses regard their algorithms as highly valuable forms of intellectual property that must remain in a “black box.” Some lawmakers have proposed a compromise, suggesting that the source code be revealed to regulators or auditors in the event of a serious problem, and this adjudicator will assure consumers that the process is fair.

This approach merely shifts the burden of belief from the algorithm itself to the regulators. This may a palatable solution in many arenas: for example, few of us fully understand financial markets, so we trust the SEC to take on oversight. But in a world where decisions large and small, personal and societal, are being handed over to algorithms, this becomes less acceptable.

Another problem with technical transparency is that it makes algorithms vulnerable to gaming. If an instructor releases the complete source code for an algorithm grading student essays, it becomes easy for students to exploit loopholes in the code: maybe, for example, the algorithm seeks evidence that the students have done research by looking for phrases such as “according to published research.” A student might then deliberately use this language at the start of every paragraph in her essay.

But the biggest problem is that modern AI is making source code – transparent or not – less relevant compared with other factors in algorithmic functioning. Specifically, machine learning algorithms – and deep learning algorithms in particular – are usually built on just a few hundred lines of code. The algorithms logic is mostly learned from training data and is rarely reflected in its source code. Which is to say, some of today’s best-performing algorithms are often the most opaque. High transparency might involve getting our heads around reams and reams of data – and then still only being able to guess at what lessons the algorithm has learned from it.

This is where Kizilcec’s work becomes relevant – a way to embrace rather than despair over deep learning’s impenetrability. His work shows that users will not trust black box models, but they don’t need – or even want – extremely high levels of transparency. That means responsible companies need not fret over what percentage of source code to reveal, or how to help users “read” massive datasets. Instead, they should work to provide basic insights on the factors driving algorithmic decisions….(More)”

Democracy Is a Habit: Practice It

Curated on July 26, 2018 by Stefaan Verhulst

Melvin Rogers at the Boston Review: “After decades of triumph,” The Economist recently concluded, “democracy is losing ground.” But not, apparently, in the West, whose “mature democracies . . . are not yet in serious danger.” On this view, reports of the death of American democracy have been greatly exaggerated. “Donald Trump may scorn liberal norms,” the reasoning goes, “but America’s checks and balances are strong, and will outlast him.” The truly endangered societies are those where “institutions are weaker and democratic habits less ingrained.”

It has become a common refrain, even among those critical of Trump’s administration. “Our democracy is hard to kill,” Harvard political scientist Steven Levitsky said in an interview about his new book with Daniel Zeblatt, How Democracies Die. “We do still have very strong democratic institutions. We’re not Turkey, we’re not Hungary, we’re not Venezuela. We can behave quite recklessly and irresponsibly and probably still muddle through that.”

Is democracy in the United States really so robust? At the outset of World War II, American philosopher John Dewey cautioned against so easy a conclusion—and the simplistic picture of democratic society that it presumes. In Freedom and Culture (1939), he worried that democracy might succumb to the illusion of stability and endurance in the face of threats to liberty and norms of decency. According to Dewey, we must not believe

that democratic conditions automatically maintain themselves, or that they can be identified with fulfillment of prescriptions laid down in a constitution. Beliefs of this sort merely divert attention from what is going on, just as the patter of the prestidigitator enables him to do things that are not noticed by those whom he is engaged in fooling. For what is actually going on may be the formation of conditions that are hostile to any kind of democratic liberties.

Dewey’s was a warning to be wary not just of bad governance but of a more fundamental deformation of society. “This would be too trite to repeat,” he admits, “were it not that so many persons in the high places of business talk as if they believed or could get others to believe that the observance of formulae that have become ritualistic are effective safeguards of our democratic heritage.”…

Dewey may seem like an odd resource to recall in our current political climate. For if we stand in what Hannah Arendt once called “dark times,” Dewey’s optimistic faith in democracy—his unflinching belief in the reflective capacity of human beings to secure the good and avert the bad, and in the progressive character of American democracy—may look ill-equipped to address our current crisis.

Yet this faith was always shaped by an important insight regarding democracy that many seem to have ignored. For Dewey, democracy’s survival depends on a set of habits and dispositions—in short, a culture—to sustain it. …

“The democratic road is the hard one to take,” Dewey concluded in Freedom and Culture. “It is the road which places the greatest burden of responsibility on the greatest number of human beings.” Precisely for this reason, Dewey believed the culture of democracy—the habits and sensibilities of the citizenry—in greater need of scrutiny than its constitution and procedures. For what are constitutions and procedures once you have deformed the ground upon which their proper functioning depends?…(More)”.

How to be a public entrepreneur

Curated on July 25, 2018 by Stefaan Verhulst

Rowan Conway at the RSA: “Political theorist Elinor Ostrom was the first to coin the phrase “public entrepreneur” in her 1965 UCLA PhD thesis where she proposed that government actors should be the makers of purpose-driven businesses. She later went on to surprise the world of economics by winning a Nobel prize.

To the economic establishment Ostrom was a social scientist and her theories of common goods and public purpose enterprise ran counter to the economic orthodoxy. 44 years later, at the same time that she was taking the stage as the first (and only) woman to win a Nobel prize for economics, another California-based thinker was positing his own vision for entrepreneurship… “Move fast and break things” was famously Mark Zuckerberg’s credo for Silicon Valley entrepreneurs. “Unless you are breaking stuff,” he said in 2009, “you are not moving fast enough.” This phrase came to epitomise the “fail fast” start-up culture that has seeped into our consciousness and redefined modern life in the last decade.

Public vs Private entrepreneurs

So which of these two types of entrepreneurship should prevail? I’d say that they’re not playing on the same field and barely even playing the same game. While the Silicon Valley model glorifies the frat boys who dreamt up tech start-ups in their dorm rooms and took the “self-made” financial gains when big tech took off, public entrepreneurs are not cast from this mold. They are the government actors taking on the system to solve social and environmental problems and the idea of “breaking things” won’t appeal to them. “Moving fast”, however, speaks to their ambitions for an agile government that wants to make change in a digital world.

Public entrepreneurs are socially minded — but they differ from social entrepreneurs in that they carry out a public or state role. In a Centre for Public Impact briefing paper entitled “Enter the Public Entrepreneur” the difference is clear:

“While “social entrepreneurs” are people outside government, public entrepreneurs act within government and, at their heart, are a blend of two different roles: that of a public servant, and that of an entrepreneur. The underlying premise is that these roles are usually distinct but the skill sets they require need not be. Indeed, the future public servant will increasingly need to think and act like an entrepreneur — building new relationships, leveraging resources, working across sector lines and acting, and sometimes failing, fast.”

Today we publish a RSA Lab report entitled “Move Fast and Fix Things” in partnership with Innovate UK. The report examines the role of Public Entrepreneurs who want to find ways to move fast without leaving a trail of destruction. It builds on the literature that makes the case for public missionsand entrepreneurship in government and acts as a kind of “how to guide” for those in the public sector who want to think and act like entrepreneurs, but sometimes feel like they are pushing up against an immovable bureaucratic system.

Acting entrepreneurially with procurement

A useful distinction of types of government innovation by the European Commission describes “innovation in government” as transforming public administration, such as the shift to digital service provision and “innovation through government” as initiatives that “foster innovation elsewhere in society, such as the public procurement of innovation”. Our report looks at public procurement — specifically the Small Business Research Initiative (SBRI) — as a route for innovation through government.

Governments have catalytic spending power. The UK public sector alone spends over £251.5 billion annually procuring goods and services which accounts for 33% of public sector spend and 13.7% of GDP. A profound shift in practice is required if government is to proactively use this power to stimulate innovation in the way that Mariana Mazzucato, author of The Entrepreneurial State calls for. As Director of the UCL Institute for Innovation and Public Purpose she advocates for “mission-oriented innovation” which can enable speed as it has “not only a rate, but also a direction” — purposefully using government’s purchasing power to stimulate innovation for good.

But getting procurement professionals to understand how to be entrepreneurial with public funds is no mean feat….(More)”.

Cloud Communities: The Dawn of Global Citizenship?

Curated on July 25, 2018 by Stefaan Verhulst

Robert Schuman Centre for Advanced Studies Research Paper by Liav Orgad and Rainer Baubock: “New digital technologies are rapidly changing the global economy and have connected billions of people in deterritoralised social network. Will they also create new opportunities for global citizenship and alternatives to state-based political communities?

In his kick-off essay, Liav Orgad takes an optimistic view. Blockchain technology permits to give every human being a unique legal persona and allows individuals to associate in ‘cloud communities’ that may take on several functions of territorial states. 14 commentators discuss this vision.

Sceptics assume that states or business corporations have always found ways to capture and use new technologies for their purposes. They emphasise that the political functions of states, including their task to protect human rights, require territorial monopolies of legitimate coercion that cannot be provided by cloud communities.

Others point out that individuals would sort themselves out into cloud communities that are internally homogenous which risks to deepen political cleavages within territorial societies.

Finally, some authors are concerned that digital political communities will enhance global social inequalities through excluding from access those who are already worse off in the birthright lottery of territorial citizenship.

Optimists see instead the great potential of blockchain technology to overcome exclusion and marginalisation based on statelessness or sheer lack of civil registries; they regard it as a tool for enhancing individual freedom, since people are self-sovereign in controlling their personal data; and they emphasise the possibilities for emancipatory movements to mobilise for global justice across territorial borders or to create their own internally democratic political utopias.

In the boldest vision, the deficits of cloud communities as voluntary political associations with limited scope of power could be overcome in a global cryptodemocracy that lets all individuals participate on a one-person-one-vote basis in global political decisions….(More)”.

The Data Transfer Project

Curated on July 22, 2018August 3, 2018 by Stefaan Verhulst

About: “The Data Transfer Project was formed in 2017 to create an open-source, service-to-service data portability platform so that all individuals across the web could easily move their data between online service providers whenever they want.

The contributors to the Data Transfer Project believe portability and interoperability are central to innovation. Making it easier for individuals to choose among services facilitates competition, empowers individuals to try new services and enables them to choose the offering that best suits their needs.

Current contributors include Facebook, Google, Microsoft and Twitter.

Individuals have many reasons to transfer data, but we want to highlight a few examples that demonstrate the additional value of service-to-service portability.

A user discovers a new photo printing service offering beautiful and innovative photo book formats, but their photos are stored in their social media account. With the Data Transfer Project, they could visit a website or app offered by the photo printing service and initiate a transfer directly from their social media platform to the photo book service.
A user doesn’t agree with the privacy policy of their music service. They want to stop using it immediately, but don’t want to lose the playlists they have created. Using this open-source software, they could use the export functionality of the original Provider to save a copy of their playlists to the cloud. This enables them to import the lists to a new Provider, or multiple Providers, once they decide on a new service.
A large company is getting requests from customers who would like to import data from a legacy Provider that is going out of business. The legacy Provider has limited options for letting customers move their data. The large company writes an Adapter for the legacy Provider’s Application Program Interfaces (APIs) that permits users to transfer data to their service, also benefiting other Providers that handle the same data type.
A user in a low bandwidth area has been working with an architect on drawings and graphics for a new house. At the end of the project, they both want to transfer all the files from a shared storage system to the user’s cloud storage drive. They go to the cloud storage Data Transfer Project User Interface (UI) and move hundreds of large files directly, without straining their bandwidth.
An industry association for supermarkets wants to allow customers to transfer their loyalty card data from one member grocer to another, so they can get coupons based on buying habits between stores. The Association would do this by hosting an industry-specific Host Platform of DTP.

The innovation in each of these examples lies behind the scenes: Data Transfer Project makes it easy for Providers to allow their customers to interact with their data in ways their customers would expect. In most cases, the direct-data transfer experience will be branded and managed by the receiving Provider, and the customer wouldn’t need to see DTP branding or infrastructure at all….

To get a more in-depth understanding of the project, its fundamentals and the details involved, please download “Data Transfer Project Overview and Fundamentals”….(More)”.

How Mobile Network Operators Can Help Achieve the Sustainable Development Goals Profitably

Curated on July 17, 2018May 29, 2019 by Stefaan Verhulst

Press Release: “Today, the Digital Impact Alliance (DIAL) released its second paper in a series focused on the promise of data for development (D4D). The paper, Leveraging Data for Development to Achieve Your Triple Bottom Line: Mobile Network Operators with Advanced Data for Good Capabilities See Stronger Impact to Profits, People and the Planet, will be presented at GSMA’s Mobile 360 Africa in Kigali.

“The mobile industry has already taken a driving seat in helping reach the Sustainable Development Goals by 2030 and this research reinforces the role mobile network operators in lower-income economies can play to leverage their network data for development and build a new data business safely and securely,” said Kate Wilson, CEO of the Digital Impact Alliance. “Mobile network operators (MNOs) hold unique data on customers’ locations and behaviors that can help development efforts. They have been reluctant to share data because there are inherent business risks and to do so has been expensive and time consuming. DIAL’s research illustrates a path forward for MNOs on which data is useful to achieve the SDGs and why acting now is critical to building a long-term data business.”

DIAL worked with Altai Consulting on both primary and secondary research to inform this latest paper. Primary research included one-on-one in-depth interviews with more than 50 executives across the data for development value chain, including government officials, civil society leaders, mobile network operators and other private sector representatives from both developed and emerging markets. These interviews help inform how operators can best tap into the shared value creation opportunities data for development provides.

Key findings from the in-depth interviews include:

There are several critical barriers that have prevented scaled use of mobile data for social good – including 1) unclear market opportunities, 2) not enough collaboration among MNOs, governments and non-profit stakeholders and 3) regulatory and privacy concerns;
While it may be an ideal time for MNOs to increase their involvement in D4D efforts given the unique data they have that can inform development, market shifts suggest the window of opportunity to implement large-scale D4D initiatives will likely not remain open for much longer;
Mobile Network Operators with advanced data for good capabilities will have the most success in establishing sustainable D4D efforts; and as a result, achieving triple bottom line mandates; and
Mobile Network Operators should focus on providing value-added insights and services rather than raw data and drive pricing and product innovation to meet the sector’s needs.

“Private sector data availability to drive public sector decision-making is a critical enabler for meeting SDG targets,” said Syed Raza, Senior Director of the Data for Development Team at the Digital Impact Alliance. “Our data for development paper series aims to elevate the efforts of our industry colleagues with the information, insights and tools they need to help drive ethical innovation in this space….(More)”.

Exploring New Labscapes: Converging and Diverging on Social Innovation Labs

Curated on July 17, 2018August 3, 2018 by Stefaan Verhulst

Essay by Marlieke Kieboom:”…The question ‘what is a (social innovation) lab?’ is as old as the lab community itself and seems to return at every (social innovation) lab gathering. It came up at the very first event of its kind (Kennisland’s Lab2: Lab for Labs, Amsterdam 2013) and has been debated at every consequent event ever since under hashtags like #socinnlabs, #sociallabs and #psilabs (see MaRs’s Labs for Systems Change — 2014, Nesta’s Labworks — 2015, EU Policy lab’s Lab Connections — 2016 and ESADE’s Labs for Social Innovation — 2017).

However, the concept has remained roughly the same since we saw the first wave of labs (Helsinki Design Lab, MindLab and Reos’ Change Labs) in the early 2010’s. Social innovation labs are permanent or short term structures/projects/events that use a variety of experimental methods to support collaboration between stakeholders to collectively address social challenges at a systemic level. Stakeholders range from citizens and community action groups to businesses, universities and public administrations. Their specific characteristics (e.g. developing experimental user-led research methods, building innovation capacity building, convening multi-disciplinary teams, working to reach scale) and shapes (public sector innovation labs, social innovations labs, digital service labs, policy labs) are well described in many publications (e.g. Lab Matters, 2014; Labs for Social Innovation, 2017).

As Nesta neatly shows innovation labs are part of a family, or a movement of connected experimental, innovative approaches like service design, behavioural insights, citizen engagement, and so on.

Spot the labs (Source: https://www.nesta.org.uk/blog/landscape-of-innovation-approaches/)

So why does this question keep coming back? The roots of the confusion and debates may lie in the word ‘social’. The medical, technological, and business sectors know exactly what they aim for in their innovation labs. They are ‘controlled-for’ environments where experimentation leads to developing, testing and scaling futuristic (mostly for profit) products, like self-driving cars, cancer medicines, drug test strips and cultured meat. Some of these products contribute to a more just, equal, sustainable world, while others don’t.

For working on societal issues like climate change, immigration patterns or a drug overdose crisis, lab settings are and should be unmistakably more open and porous. Complex, systemic challenges are impossible to capture between four lab walls, nor should we even try as they arguably arose from isolated, closed, and disconnected socio-economic interactions. Value creation for these type of challenges therefore lies outside closed, competitive, measurable spaces: in forging new collaborations, open-sourcing methodologies, encouraging curious mindsets and diversifying social movements. Consequently social lab outcomes are less measurable and concrete, ranging from reframing existing (socio-cultural) paradigms, to designing new procurement procedures and policies, to delivering new (digital and non-digital) public services. Try to ‘randomize-control-trial’ that!…(More).

The Skeptic’s Guide to Open Government

Curated on July 14, 2018May 29, 2019 by Stefaan Verhulst

Open Gov Partnership: “Whether you are inside or outside of OGP, you may not yet be convinced of the benefits of opening government. When you open government, what do you get in return? If you are asking this question, this guide is for you.

The guide summarizes what is known about the impact of opening government in five areas: 1) public service delivery 2) business opportunities 3) government efficiency and cost saving 4) prevention of corruption and 5) trust in government. Each chapter draws from empirical evidence, and highlights reformers who are opening government in innovative ways….(More)”.

Smart Cities: Digital Solutions for a More Livable Future

Curated on July 4, 2018August 3, 2018 by Stefaan Verhulst

Report by the McKinsey Global Institute (MGI): “After a decade of experimentation, smart cities are entering a new phase. Although they are only one part of the full tool kit for making a city great, digital solutions are the most powerful and cost-effective additions to that tool kit in many years. This report analyzes dozens of current applications and finds that cities could use them to improve some quality-of-life indicators by 10–30 percent.It also finds that even the most cutting-edge smart cities on the planet are still at the beginning of their journey.

Smart cities add digital intelligence to existing urban systems, making it possible to do more with less. Connected applications put real-time, transparent information into the hands of users to help them make better choices. These tools can save lives, prevent crime, and reduce the disease burden. They can save time, reduce waste, and even help boost social connectedness. When cities function more efficiently, they also become more productive places to do business.

MGI assessed how dozens of current smart city applications could perform in three sample cities with varying legacy infrastructure systems and baseline starting points. We found that these tools could reduce fatalities by 8–10 percent, accelerate emergency response times by 20–35 percent, shave the average commute by 15–20 percent, lower the disease burden by 8–15 percent, and cut greenhouse gas emissions by 10–15 percent, among other positive outcomes.

Our snapshot of deployment in 50 cities around the world shows that wealthier urban areas are generally transforming faster, although many have low public awareness and usage of the applications they have implemented. Asian megacities, with their young populations of digital natives and big urban problems to solve, are achieving exceptionally high adoption. Measured against what is possible today, even the global leaders have more work to do in building out the technology base, rolling out the full range of possible applications, and boosting adoption and user satisfaction. Many cities have not yet implemented some of the applications that could have the biggest potential impact. Since technology never stands still, the bar will only get higher.

The public sector would be the natural owner of 70 percent of the applications we examined. But 60 percent of the initial investment required to implement the full range of applications could come from private actors. Furthermore, more than half of the initial investment made by the public sector could generate a positive return, whether in direct savings or opportunities to produce revenue.

The technologies analyzed in this report can help cities make moderate or significant progress toward 70 percent of the Sustainable Development Goals. Yet becoming a smart city is less effective as an economic development strategy for job creation. Smart cities may disrupt some industries even as they present substantial market opportunities. Customer needs will force a reevaluation of current products and services to meet higher expectations of quality, cost, and efficiency in everything from mobility to healthcare.

Smart city solutions will shift value across the landscape of cities and throughout value chains. Companies looking to enter smart city markets will need different skill sets, creative financing models, and a sharper focus on civic engagement.

Becoming a smart city is not a goal but a means to an end. The entire point is to respond more effectively and dynamically to the needs and desires of residents. Technology is simply a tool to optimize the infrastructure, resources, and spaces they share. Few cities want to lag behind, but it is critical not to get caught up in technology for its own sake. Smart cities need to focus on improving outcomes for residents and enlisting their active participation in shaping the places they call home….(More)”.