Month: March 2018

And why it is important to differentiate between the Fake and the True Gut Instinct

Very often in your life you have an opinion. And you make discissions without being able to explain your choice. These decisions will often leave one with the impression having decided randomly and without structure. But the opposite is the case. With lightspeed your brain has processed millions of algorithms trained by terabyte of data. This then will lead to one’s Gut Instinct proposal. Your brain doesn’t tell you how it made the decision, but it was a proper defined way. This is exactly how Machine Learning works. Good trained algorithms without being in the position to explaining the outcome. Take it or leave it, live with uncertainty. Many successful people and managers are controlling and managing their companies with Gut Instincts. You prepare a lot of decision papers, but in the end it’s the CIOs Gut Instrict providing the direction. Decisions like these are then beautified with some objective data, but in the end the way was already clear.   This is ok, as  Machine Learning is ok as well,  if you know their limitations and risks. Like Machine Learning a good Gut Instinct needs a lot of data, training and feedback. If one makes a Gut decision and the data and the training has not been available in the past a Gut decision can have fatal consequences. Especially senior people and managers often believe their decisions are well trained Gut decisions, but often these aren’t. Gut decisions without  the necessary training and data (creating the necessary neuronal networks) are Fake Gut Instincts and dangerous either. It’s not easy to decide when one’s Gut Instinct is fake or a good one, but knowing about the differences helps one to being a little more sensitive when pushing your strategy through the organization.      

Will Amazon take it all in Banking as well?

A discussion on LinkedIn around Open Banking which I have been part of, has encouraged me to write a few words about this topic once again. I gave a first comment on this earlier in “Digital Transformation to Keep up Revenue”. There I already mentioned that the winner still will take it all because of the network economics. This is exactly what people in that discussion pointed to. Existing platforms such as Amazon are for so many reasons in a far better position than banks in Germany in particular. And I absolutely agree with this. Banks need to open up their processes and services an integrate them into these existing platforms as one of the comments explains. Another questions which I am asking myself is what’s so new about this? Back to the future … I remember around 15 years ago there was already the call for banks to transform from a value chain to a value network. In Germany there have been a lot of papers under the name “Industrialization of Banking” about opening up product, sales and settlement of banking into three decoupled and separated main processes each of which can easily be recombined in value networks. In that concept one bank could develop products, the other one could offer them to the market and a third one could offer settlement of those products in a loosely coupled manner.  That was the time when first banking fabrics for payment or securities processing came up. If one takes the concept of value networks seriously than there is only one small step to an open banking idea where a bank can integrate its services into an existing platform such as amazon. Why hasn’t that happened yet then? Is there some unfinished homework to be done? If you can’t beat them join them Indeed it could be too late for banks to become a platform themselves but it is not too late to integrate with existing platforms. If you can’t beat them join them. On the other hand, as we know, existing platforms are becoming more and more powerful and network economics tend to create monopolies by their nature. This is being observed by competition authorities too. I hope they will not stand still and make soon sure that competition is upheld in this field.

How Agile and Architecture can work together

I headed in parallel the Architecture and Innovation team when I was with Zurich.  This was more an interim solution than a thought long-term strategy. Over the years I learnt this ‘accident’ was, besides all the problems we faced, a lucky chance. Architecture, as I knew and practiced before, was typically more an independent and often isolated governance discipline. It was neither a delivery unit nor was it bound and connected to business development and innovation. Managing both disciplines empowered architecture in an unknown way. This new mix provided a different way of understanding business and innovation. Supporting the implementation of ideation and incubation directly payed back into the enterprise continuum and increased acceptance.  Yes, we could have done better. From a retrospective view our activities  haven’t been synchronised with this kind of thinking and strategy.  But our experiences now can be. Possessing this knowledge now I would directly start from scratch with this mix. Provided the upper management also believes in this story like I do now. This referenced white paper about Agile Architecture addresses a comparable approach. Nice read by the CIO magazine.