Thursday, October 30, 2008

What’s real and what’s for sale? The need to reach an interpretive level of scientific literacy in the 21st century

In the Christopher Buckley book, and 2006 movie of the same name, “Thank You for Smoking”, a big tobacco funded “research institute” and a smooth-talking spin artist spews statistics and statements that deny the association between smoking and poor health. A key point of the film is that these types of “spin artists” are everywhere, driven by corporate dollars. The Wild, Wild West Internet is the 21st century’s primary information source, a place where cowboy creationists concoct religion masked as fact, and spam espousing penny stocks replaces financial analysis. Countries, big and small, communist and capitalist, are rife with propaganda when it comes to issues like health and the environment. The proliferation of information in modernity has brought about an era in which the treacherous abundance of misinformation must be countered by a deeper form of scientific literacy.

The fate of humanism and self-determination by individuals and societies in the 21st century, for all cultures, lies with the achievement of a global scientific literacy that permits the search for truth in world full of false and deceptive information. Individuals must be able to parse the statistics and conclusions disseminated by exploitative organizations in order to understand the phenomena that define their daily lives. We need to augur the existing definitions of scientific literacy to include the ability to evaluate the quality of scientific information and intellectual curiosity.

We can approach this goal when two conditions align – teaching and funding. A study by David Berliner and Ursula Casanova showed that positive outcomes towards scientific literacy occur when teachers place emphasis on developing positive attitudes toward science, the potential societal impact of scientific knowledge and innovation, and highlight the historical evolution of the sciences. In a nutshell, what Berliner and Casanova are talking about is teaching science well.

The winning strategy will involve governments committing to funding science education, creating and keeping qualified individuals in the field from elementary school to PhD, creating museums to foment interest amongst the youth and investing in innovative programs and curriculum. The fight will involve non-profits and activists. It involves parents who care and participate in the effort. The recipe includes equal parts presidents and prime ministers, Bill Gates and Warren Buffett, and Mom and Dad. The Chinese seem to understand the importance of funding science education. Deng Nan, first secretary of the China Association for Science and Technology, told the Xinhua news "Our focus is to ignite children's curiosity about nature and inspire their interest in scientific concepts.” Investing in getting children interested in science hits the nail on the head. Whether China puts their yuan where their mouths are is another matter. China’s $1.2 trillion and growing in reserves could buy a whole lot of science textbooks, but even with some encouraging signs now emerging on the environmental front, one still gets the ominous feeling that any increased scientific literacy will just be a byproduct of China’s quest to be the next great military power.

Meanwhile, in the Middle East, less than 1% of annual budgets go to the sciences, while its military budgets chew 20 times that.

Scientific knowledge across the global socioeconomic spectrum is the best social investment that we can make. In a way, assuming we have a planet left when and if societies achieve this sophisticated level of scientific knowledge, teaching children and young adults can be viewed as a grassroots path to saving the environment and good health. The result would be a world, not only a thriving planet, but a world full of people who can make informed decisions. They will understand the ramifications of their day-to-day behavior--from what they buy in the supermarket to whether they litter and pollute. They will better understand the dangers of drugs, whether they are prescribed by the doctor, the television, the government or the crack dealer. They will be able to decide whether the lobbyists, controlled government agencies or experts like Dr. Phil are best qualified to tell them what to eat. At the same time, these same people will be able to question whether governments and corporations are environmentally conscious.

As important as science education is in the United States or Europe, it is crucial in emerging global economies like China and India, and the forgotten continent of Africa. Scientific literacy is not found in poor urban Americans eating at McDonald’s twice a day, thinking “hydrogenated” is what happens after drinking a glass of water. It is not found in the Chinese in small villages dumping garbage upstream from their own homes. It is not found in an African believing sex with a virgin will cure him of HIV.

At its core, scientific illiteracy is a scourge of the poor that strips of them of their wealth and health and is the root of many of the world’s worst social problems. The poor are incapable of making sound decisions on their own because of their lack of scientific understanding. For folks like Bill and Melinda Gates pulling the budget strings, it’s attacking many of the problem at the root –much like teaching a man to fish, before he pours arsenic in the lake.

In the sea of distortions, political propaganda or outright lies, scientific knowledge is the astrolabe we can give everyone to navigate misinformation. In order for it to happen, a global effort and commitment will be required. People must understand the ramifications of their individual behavior and choices and the decisions made at all levels of government and corporations. Only then can humanity truly choose to make this world a better place.


Berliner, David and Casanova, Ursula, “Increasing Scentific Literacy Means Teaching It”, Instructor, 1989

Buckley, Christopher; Thank You For Smoking, Random House, 1994

“Scientific literacy: a new strategic priority for China”, by Quyang Jing, March 29, 2006,

“China to buy $3 billion stake in Blackstone”, International Business Times, May 24, 2007

Tuesday, October 28, 2008

George Soros on the superbubble, the bailout and Paulson & Co.

Update: 3/12/09

MIT posted a video of this talk awhile back. So while I took decent notes, if you have an hour you can watch the talk here. Actually, most of the interesting points came in the first hour.

George Soros talked bubble and bailout today at his talk at MIT. Here’s are some of the quotes and a summary of some of the most interesting point.

“The future is determined by the decisions people make, and since people don’t make their decision on rational decisions or predictable theories. For instance, the way Henry Paulson and his team responded to Lehman Brothers changed the course of history.” said Soros. Soros was emphatic that allowing Lehman to default was a mistake. Effectively, that was the point that led to the financial system melting down.

Soros was highly critical of Paulson on other fronts and says that Paulson has not taken the necessary steps. The necessary steps would have been:

1) Re-start lending by recapitalizing the banks. Paulson has moved over on this – Soros had suggested to him that injecting equity was more important than taking debt. Soros said that his idea was inject equity in the form of a convertible bond at a low rate as to not impair operations. This could have been covered by the markets, or if not, by the treasury. In either case, the treasury would serve as an underwriter.

2) Prevent the housing crisis from overshooting on the downside by reducing foreclosures to a minimum. Soros believes the solution has to involve shaving the mortgages down to the level of the value of the homes. “You have to downsize the mortgages to 80% of the current home values, so that even if there is a further drop people have positive equity.” Soros says this is hard – changing a contract post agreement is unconstitutional, but it somehow must be done. Addendum: Greg Mankiw has some analysis on a couple suggestions on how to do this.

3) Stabilize the global economy: Allow more nations with sound economies to run fiscal deficits to keep their economies running. (Editor’s note: I’m not aware of restrictions, but there may be some in place from the IMF).

Soros contended that the housing bubble was like a small bubble, a detonator that set off a superbubble that has been brewing for 25 years created by the increasing use of leverage, and that markets are efficient. This resulted in deregulation and the increasing use of financial instruments. Regulators themselves believed that markets were self-regulating. In his book released earlier this year, The New Paradigm for Financial Markets, he described the superbubble had built up and predicted that it would collapse. I don’t need to tell you whether that came true or not. Said Soros, “With bubbles, reality actually confirms the truth and misconception, until the difference is so great it is not sustainable. It’s a non-linear process that is initially self-reinforcing and in the end self-defeating.”

Soros believes that as a working hypothesis, most of the time people assume markets are right. It’s more instructive to think of the markets as always wrong.

“Usually, markets correct their own mistakes, so these things are not that common. Occasionally you have this type of self-reinforcing situation. This is usually driven by a trend: for example, Internet, or increasing usage of leverage. Then, there is a misinterpretation and sets off this reinforcing process. In this case, it was that the price of real estate is independent of the ability to lend.” We've obviously learned those are intrinsically linked.

Soros shared a conversation he had with Alan Greenspan in the past. Greenspan said that financial innovation brings such great benefits that it outweighs the cost of the occasional bubble. Soros says that until this period, Greenspan had a real argument, but now the flaws in the system have become self-defeating.

Soros argues that this crisis is self-generated by the system and it originated at the center (the core developed nations, especially the US and UK). It is not due to an external shock as some claim. The natural thing to do, says Soros, is to focus on saving the center (that being the US, UK, etc.) and not the nations on the periphery that are suffering, such as Iceland and the Ukraine. Countries at the periphery have historically been subject to discipline while powerful nations focus on saving the core of the system. 1982 was the first example of this, where the Central banks saved the system, but sent Mexico through the wringer.

Soros said the US must successfully lead an effort to stabilize the system (although he doesn’t think the Bush administration can do it), including peripheral nations and banking systems in order to remain at the center. Soros says to this point, “Otherwise, the system as we know will not continue. A new system will emerge and the US will not have the type of influence it has now.”

Monday, October 27, 2008

GPL versus BSD license for mobile imaging workflow solution

Trying to figure out whether to use the GPL or BSD license. Numerodix had a good simplified explanation on it:

•In the GPL license you have the four freedoms: to run the software, to have the source code, to distribute the software, to distribute your modifications to the software. What this implies is that when you obtain the software, you have the *obligation* to ensure that these four things hold true for the next person you give it to. After all, someone had to go to the trouble of preserving these rights for *you*, so you have to do the same for the next guy.

•The BSD license is different, because it gives *you* the right to distribute the software, but it does not oblige you to make sure that the next guy has any such right. Well, that’s not really a problem, the next guy can ignore you and get the software from the same source that you did (if that source is still available). But if you change it and you give it to him, you can forbid him from passing it on.

See the Numerodix blog post for a more detailed explanation.

FossWire also has a good comparison here.

What are we going to do with our open source mobile diagnostics workflow solution? As an open source software project, we'd like to license it out for non-profit use and use in the developing world for free. But we also think it's possible our software might be modified for for-profit use in the developed world. In this case, we would want a reciprocal contribution - a donation, either in funding or code. I'm thinking that means GPL. GPL means that if another organizations uses or modifies any code your organization produces that code must also be licensed under the same terms.

Greg Mankiw will work less because of the Obama tax plan?

Apparently, Greg Mankiw thinks the Obama tax plan will lower his incentive to work. Professor Erik Brynjolfsson made an interesting point in his Economics of Information class today - Mankiw's blog doesn't have any ads or paths to monetization - so he's clearly driven by something other than putting money in his bank account, as most Professors are. Somehow, I doubt he'll work any less hard. Mankiw's analysis is actually sharp and interesting though.

Assuming I actually have a job when I graduate from MIT Sloan, I know that I will not work any less hard because of the Obama tax plan. I think the real question is whether it will take money out of the economy, which I think is a real danger. Rich people tend to re-invest the money and create value in the economy - will the fact the lower classes will likely spend this money put more money in the economy? At the end of the day, it will all end up in the pockets of corporations anyhow. It's not like people making less than $50,000 in America are suddenly start going to saving this money (and slowing the velocity of money and growth). They're going to spend on things they need. Historically, the government has a terribly slow cash conversion cycle. They collect money slowly, administer it bureaucratically and slow the velocity that money creates value in the economy. That's my main concern.

(Note: Greg's blog is great. He's more conservative than my centrist position, but I highly recommend the blog for his clever perspective. Wonder if he eats at The Wok since he lives in Wellesley.).

Later addendum: Mankiw has recently blogged about spending and multipliers.  Not clear if the Obama administration has a deep understanding of this yet, but with the economist they have in the room, I trust they will get it right.

Saturday, October 25, 2008

Spaceward Ho! and lessons for innovation

Whenever I think of the fun side of innovation in business, I'm reminded of a genius game that my brother and I played growing up called Spaceward Ho!  Yes, the name of the game has an exclamation point in it.

It was quite an amazing game actually, and pretty summarizes well research, development andopponents were in a universe with a finite number of planets and your goal was to conquer it.

You had a fleet of ships that you designed yourself.  Design was driven through R&D, which you could perform on five dimensions, range, shields, weapons, defense and miniturization.  

Plus as the ships evolved they looked totally awesome.  Can't find the one with the dog-nose cone.  I'll have to start playing again.

The sixth place you could invest was on radical innovation, where your R&D team would try to hit a couple of goals you wanted and it would be a home run if they ever did it.  Here's an example.  Although the decoy ship was awesome.  Love how they depict engineers.

You controlled renewable (cash) and non-renewable resources (metal) which were necessary to fund your expeditions.  These had be mined and earned from the planets you owned.  

There were so many lessons from Spaceward Ho! that are applicable to the world today.

  • You can use technology and R&D to gain a competitive advantage.
  • Mini was all about resource conservation.  It seemed so stupid and expensive at the beginning of the game, but at the end it was a massive competitive advantage.
  • The law of diminishing returns: 20% increased effort and spending in mining didn't result in 20% increase in output.  Genius.  
  • You need a good innovation strategy, and a good "go-to-market" strategy.  
  • Going after radical innovation is massively fun, but unpredictable.
  • Doing innovation well is do-or-die in Spaceward Ho! and business
  • Everybody wants to rule the world.  Only the bold get to.

Spaceward Ho! taught the 12 year old version of myself a lot about innovation before I had to privilege of learning about it from the likes of Fiona Murray, Clayton Christensen and Ed Roberts.

As it turns out, Spaceward Ho! is still around and being made better.  It is my belief that every business school student at Harvard, Stanford, MIT Sloan, etc. should be required to play this game to learn about innovation.  Check it out and get on it.

If interested, another good post about the lessons learned from Spaceward Ho! is here.  This one's for private equity.

Addendum: This link contains some details about the clever little facts in Spaceward Ho!

Tuesday, October 21, 2008

Morse Code versus Texting

Luis Sarmenta shared this in our NextLab Mobile Technologies class where we were talking about UI design for data entry. It is interesting that for all the work that has gone into texting interfaces, it's still not that fast.

I couldn't beat the guys with my iPhone, but then again they're experts. Maybe the very fastest texter would have a chance. It's fun to try anyhow if you have five minutes to kill.

Sunday, October 19, 2008

Pros and cons of making more software free

Scribbled some notes down on Richard Stallman's argument that all software should be free. Interesting to have this debate at Sloan. Stallman's article is philosophical, but of course as business school students, it came down to a debate over the net economic surplus created.

Should software be free?

No, it shouldn't be

  • Profits incent innovation; no investment in software means a slower rate of technology improvement
  • Software would be developed internally to meet business needs; this would be ineffecient
  • Quality cannot be guaranteed, especially for the non-technical consumer; is it really free if you need to buy support services to get it to work?
  • From the CIOs perspective, you need accountability (one throat to choke), scalability, and availability. It's hard for open source to do this.
  • Software can be donated or provided at a discount for those who need it

Yes, software should be free
  • Programmers can still make money customizing software for customized functions and support services
  • Potentially lower barriers to entry for businesses
  • Could potentially lead to the production of more and better software based on existing software
  • Could help the developing world who cannot afford to pay
  • Quality of software is often low due to “black box” approach; opening code would allow for improvements
  • Creates virtual monopolies or oligopolies that limit benefits to consumers (e.g. Windows)
  • Enforcement is a violation of principles of freedom (the Libertarian argument)
  • Free software promotes unprecedented levels of worldwide collaboration, why stop it?
Realistically speaking:
  • Balance between open source and for-profit models is ideal. In a way, it is an effective way to segment many markets.
  • Software copyright rules currently provide 70 years of protection; perhaps this should be reduced to a much shorter term (5 to 15 years?)
  • Benefits from holders of software copyrights opening up their platform is substantial; creates customer loyalty and enhanced products with minimum additional $ investment
  • Total cost of ownership is the way to evaluate all solutions, be they open-source, freeware, internally developed or out of a box.
  • The success of the Waltham company Black Duck, which help manage a company's mish-mash of code from the intellectual property perspective shows how jumbled this space is. Managing open source requires a lot of energy, and when you sell your company, you may be beholden to open source software licenses if you built on top of them.
  • Conclusion: Realistically, the balance that is being created is fantastic. People will choose business models that make sense.

Friday, October 17, 2008

Amazingly hideous professional sports jerseys...

So I am going to a bachelor party where we have to wear throwback baseball jerseys, ridiculous facial hair (not likely for me) and tight baseball pants. The original inspiration I believe, was this picture of Kent Tekulve from his Pirates days:

So began the incredibly frustrating stretch for a credible baseball costume for an Asian. I'm not Japanese, so originally I didn't want to do a Japanese ballplayer. I'd have preferred doing a Korean player. But good Chinese players are limited - Chien-Ming Wang is Taiwanese, but hardly retro enough, and Yankee to boot. I didn't want to pay $190 for a Byung-Hyun Kim jersey, plus he was pretty horrid as the "closer" for the Red Sox. Eventually, I started looking at Japanese players. Couldn't find a Len Sakata jersey. No dice on even Hideo Nomo where I thought I might have some luck. I don't like Ichiro. Couldn't find a Shigetoshi Hasegawa jersey. Almost bought Kei Igawa jersey - yes, he's a Yankee, but he's so bad he sort of reflects the Bronx Bombers present (likely brief) downward blip.

Some other ridiculous things I saw other than Tekulve (besides prices on MLB jerseys, which are just absurd):

A Todd Walker turn AHEAD the clock jersey. A really botched promotion by MLB. Just look at this one. $600, what a ripoff. I'm thinking about offering the guy $100.

This rugby jersey from the Stade Francais rugby :

And last year's kit is here. Wow. And this one:

I got the brown one with the pink flowers, LOL, I'll post a picture when and if I get it since I ordered it from some dicey site in the UK. I guess I'm going against the rules a bit, but I have all the rugby gear, socks and everything since I currently play. Baseball pants aren't something you really wear a lot if you buy a pair. Also, some guys are going as the Cincy Bengals running back legacy (Rudi Johnson, Kijana Carter and Stanley Wilson. So I think the Stade Francais rugby jersey is fair game, along with my somewhat short rugby shorts and some yet to be found pink socks.

Need to retract my $30 bid on the autographed Kei Igawa jersey...

Thursday, October 16, 2008

McCain/Obama Picture

Sometimes a picture is worth a thousand words.

Patrick spares budget for sexual assault and domestic violence

Due to the financial crisis, Massachusetts Governor Deval Patrick was required to cut the state budget by more than $1 billion.

Jane Doe Inc., the Massachusetts Coalition for Domestic Violence and Sexual Assault reports that one area reports that one area Patrick did not cut was support services for battered or assaulted women. Kudos to him for finding the money in a tough operating environment to keep these key services.

From JDI:

Sexual Assault and Domestic Violence Spared Budget Cuts

JDI is pleased to share the news that Governor Patrick’s 9C cuts to the current budget did not reduce funding for the life-saving and life-changing services provided by our sexual assault and domestic violence member programs, the Sexual Assault Nurse Examiner Program and other providers across the Commonwealth. We will continue working closely with the Administration, our membership and our partners to determine how other cuts might indirectly affect survivors and do all we can to minimize the impact.

We urge everyone to send a thank you note to Governor Patrick for his leadership on these issues.

We also want to thank all of you for your advocacy efforts on behalf of these issues. It has made all the difference. THANK YOU!

Good Capital: A new model in Venture Capital/Venture Philanthropy

Andrew Wolk brought in Jackie VanderBrug and Mari Brennan Barrera, Vice President of the EOS Foundation and formerly Executive Director of Highland Street Foundation for an interesting talk about social capital. Mari represented the grant side, while Jackie talked about the Good Capital venture philanthropy fund, which is structured like a VC. I’ll focus this post around Good Capital as they have a pretty unique operating model.

Good Capital looks at risk, return and impact in its investment process. They tell their customers to expect mid-to-high single digit returns, with sustainable enterprises creating social benefits on top of the financial return.

Thus far, Good Capital has made two investments. Good Capital funded Better World Books (helping them scale their model of selling and re-using donated books to keep them out of landfills and put them to good use. They are also an investor in Adina, a fair-trade beverages (one of the founders of Odwalla is involved). Jackie thinks this one both has a positive cause and has the potential for big returns. Good put in $1 million into this deal, while Sherbrooke Capital, which does health and wellness investments, contributed $10 million. Adina wanted Good at the table for their network, positive image and their model of providing highly beneficial consulting services (through their relationship with sister company Criterion Ventures).

The fund is an interesting sell. Because of its small size and involved approach, fees are 2.85% plus 20% of carry. That’s toward the high end for any fund. Is this better than philanthropy? For me, if I were a high-net-worth individual, it would be, even with the fees. Low digit returns or even just getting your money back mean sustainable social enterprises are being launched. Then you get the money back (assuming they deliver on their promises) to be re-used. This is different from Acumen, which is more like philanthropy – you give the money to them up front, and they invest it in socially oriented projects and expect your return in impact.

The financial return is a big thing to consider, of course. Typical venture capital investing will see 6 busts, 2 singles/doubles and 2 home runs in a portfolio of 10 companies. In investing in social enterprise, VandenBurg expects more singles and doubles, fewer home runs, but fewer strikeouts. That’s interesting. Deals are typically less risky but will offer lower financial returns. I wonder if their social angle will give them access to deals small VCs normally wouldn’t get into. Adina is a fine example of this, and has the profile of something that could be a 10x. If one of these new funds that's being launched could really blow the doors off on the financial returns side, that would be huge for the industry.

Wednesday, October 15, 2008

President Susan Hockfield's Fall "State of MIT address"

Per the significant interest in my post about the CitiAssist and MEFA student loan cancellations, I'm posting MIT President Susan Hockfield's letter that directly addresses how the financial crisis is impacting MIT's operations. The letter also covers a few other issues, such as MIT's role in advising both parties on a number of issues in the upcoming elections and a new fundraising campaign.

To the members of the MIT community:

As I write my customary autumn letter, the hopeful, bustling start of the new semester stands in sharp contrast to the ongoing turmoil in the world's financial markets. I am convinced, however, that the wisest thing we can do, individually and as a community, is to keep our focus on the extremely important work at hand. At MIT, our responsibility to build a better future by advancing knowledge and educating students to serve the nation and the world retains its enduring value.

Having said that, however, across the MIT community, market upheavals are understandably causing concern. Economic conditions have real impacts in the lives of our students, faculty, and staff. Although no one is in a position to predict the future, I want to start this letter by reassuring you that MIT enters this period from a position of strength, that our priority is to minimize the impact on the members of our community, and that we remain steadfast in our commitment to undergraduate financial aid.

We are closely monitoring the rapid changes in the financial environment. For now, we do not foresee making any dramatic changes to our budget plans for this year. Our budget is responsible and balanced, with a reasonable margin of safety. Given the uncertainties that lie ahead, however, it is simply prudent for all of us to look for opportunities to control spending wherever possible, with the goal of preserving flexibility we may need.

For faculty or staff with specific concerns, please don't hesitate to contact your dean or Human Resources. And for anyone interested in understanding more about the global financial crisis, I recommend the webcast of last week's campus forum with six senior MIT economists.

A position of strategic strength

We enter this unsettled period from a position of both academic and operational strength. At the State of the Institute Forum on September 29, the Provost, the Chancellor, and the Executive Vice President and Treasurer joined me in providing a snapshot of MIT as we embark on a new academic year. (Summary and webcast)

At the Forum, I outlined recent changes to MIT's financial framework that would be positive in any context, and that will be especially helpful in weathering economic uncertainty. Efforts over the last two years to rebalance the use of funds from the endowment and from the general institute budget have given departments, labs and centers an increase in funds in the last two budget cycles, have provided greater financial flexibility and, perhaps most importantly, have produced a balanced budget for the current year. We also recently adopted a new endowment spending policy designed to make endowment contributions to the budget more predictable. Fluctuations in the value of the endowment will still affect our operating budget, but the new spending policy will smooth out those variations and give us more time to prepare for any needed changes. The endowment last year returned 3.2% on investments, a good result in turbulent times.

These improvements to our financial framework permit us to plan more strategically and to harness all of our financial resources more effectively to support our mission. While such advances would be welcome in any financial environment, they are particularly timely and important now.

National political contests call on MIT's expertise

The upcoming political transition has also captured much attention this fall. Together with many members of the faculty, I have focused on making a powerful case for the importance of national investments in science and technology research and education.

We have reached out actively to provide both presidential campaigns with information on the critical role of education and research in fueling this nation's fundamental economic growth. I have also engaged with national organizations (the American Association of Universities, and the Council on Competitiveness) to communicate our agenda to the campaigns. Here on campus last week, MIT hosted an energy debate between the campaigns; in Washington, MIT faculty have served as witnesses for 23 Congressional hearings on energy issues. As a new Administration takes shape, we will continue this kind of aggressive outreach.
As we know well at MIT, in any scientific or technical field, innovative solutions that reach the marketplace represent the flowering of research seeds planted years or even decades before. In the last quarter century, America has reaped the rewards of two innovation revolutions, in information technology and biotechnology. These revolutions launched entirely new industries, created millions of jobs, vastly improved our overall productivity and produced virtually all the technologies that account for our modern quality of life.

Where did those revolutions spring from? From the seeds of basic, federally funded research. Today, America badly needs another innovation revolution -- perhaps more than one -- and funding basic research will once again pave the path to the goal. These arguments are obviously in the interests of MIT, but I believe they are absolutely central to restoring America's long-term prospects as well.

Increasing MIT's great strengths

To a large extent, my role outside MIT is to make the case for science- and engineering-focused education and basic research as the essential building blocks for innovation and economic growth. As I make that argument in different venues, I am struck over and over by how much the world counts on MIT for breakthrough research, for innovative solutions to daunting problems and for the balanced insights of an honest broker.

And given the kind of extraordinary work going on across all of our schools, at the Lincoln Laboratory and in our research labs and centers, it is easy for me to make that case. Even the shortest list of the latest discoveries and inventions, or of recent awards and honors to our faculty and students, would run to several pages.

Central to this mission of innovation and discovery is supporting our students and securing our commitment to them. With that aim, last week we formally launched the Campaign for Students. In its two-year nucleus phase, the Campaign has already raised more then half of its $500M target. It will increase support for undergraduate financial aid and graduate fellowships, for the undergraduate educational commons and for student life. In the Campaign's early phase, funding for graduate fellowships has enjoyed great success, which is particularly important in these times. The Campaign will conclude in 2011, as a birthday present for MIT's 150th anniversary.

The Campaign for Students stands as only one of many efforts to strengthen the Institute as a place to live, learn and work. The MIT community has engaged actively to increase the number of women and under-represented minorities among our students, faculty and staff. To amplify the many important projects and programs now in place and to accelerate our progress, the Diversity Leadership Congress on November 18 will bring together more than 300 of MIT's academic, administrative and student leaders to inform, inspire and support those most responsible for creating a culture of diversity and inclusion. At MIT, an aspiration for the highest level of excellence is woven deeply into our values and culture; that excellence depends on welcoming into our community people with a passion for MIT's mission from different backgrounds and with diverse points of view. The participants will bring the work of the Congress to the whole MIT community.

We recognize together that these times will challenge us on many fronts. Yet MIT has withstood serious tests before, always by continuing its important work during times of national and international turmoil. We should continue to be optimistic about the future, even while we are prudent about the present. Drawing on our extraordinary resources of talent, intellect, commitment and creativity, MIT will once again help chart a course that serves the country and the world.

I remain entirely confident that by the time we turn 150 in 2011 we will together have written an important new chapter in MIT's legacy of service.

Susan Hockfield

Tuesday, October 14, 2008

Staples' first hybrid delivery truck visits my neighborhood

Update: For anyone who's interested, Wired had an exceptional post on the construction and design of the hybrid delivery truck.

Kudos to Staples. This morning, as I was walking down North Street, I saw what is apparently Staples first hybrid delivery truck. I'm not really clear on the impact, or if it's just a branding thing, but at it at least seems like an effort. I'm guessing the cost of having a hybrid fleet of delivery trucks would be ghastly at this point, but you'd have to think that fuel efficiency in high-usage logistics vehicles will be moving to forefront in the next few years.

Friday, October 10, 2008

Is the meltdown going to cause better access to higher education in the long run? (Yes, I'm trying to look on the bright side)

Last week, I wrote about how Citi had cancelled the CitiAssist loans on MIT Sloan (and Harvard, for that matter) and how the student loan industry is going to pieces. It's especially crazy since a year or so ago, these same companies were being criticized, fired or regulated for spending absurd amounts of money buttering up college loan administrators to win this business. In other irony, this has also somehow been the path to Democrats finally getting more money from the government to subsidize higher education. In the long run, I doubt the increase in the Perkins and other subsidized loan limits will fall, so that is a good thing for American students on finanial aid. I emphasize in the long run. Because this assume things like "credit will still exist" and "the end of days is not upon us".

So what's the impact for schools? Here's a back of the envelope calculation for MIT Sloan. Let's say Sloan just wants to get international students back to the table - the CitiAssist loan has typically been good for this purpose - it was variable rate pegged to prime, so this was far less onerous than lending rates in developing and emerging world countries.

Assuming there's 400 students, and 35% are international. That's 140 students. Let's assume 100 international students out of these 140 need loans, and that the liquidity crisis will just last one year. One would need to borrow around $70,000 a year to cover tuition, housing, a snazzy new Lenovo tablet, drinks at the BHP and maintenance on your BMW (just kidding, for the most part). That's around $7 million, that would eventually be repaid. I think Sloan could handle that. The problem is that this is the loan for MANY other schools as well.

And Sloan is tiny and wealthy compared to most of those institutions (albeit expensive). And like I said before in the previous post, I worked as a consultant to a lot of institutional funds, including endowments. Let's just in the search for Alpha, they had some very risky configurations of private equity, hedge funds and derivatives. At least one substantial endowment (let's say over $500 million) is going to come out year end when they mark-to-market and be completely embarrassed. And that will mean a well-respected institution's operating budget will have to be severely cut. If the market keeps going down like this, it might be a lot of institutions.

Another huge impact will be on the Perkins Loan. They've already increased the limit by $1,000. This isn't a bad thing for students. The Perkins Loan is a federal, subsidized loan at 5%. But this means every student in America who is on financial aid will probably take this loan! Stafford and Pell grants are also going up. What does this mean? Well, due to the financial meltdown, we may finally get what a lot of liberals have been calling for - the government facilitating greater access to higher education. Well, except that no one can afford to quit a decent job and cover living expenses to do anything other than part-time communiy college or an online degree. I'm scared to calculate this number. It has to be in the tens of billions.

Thursday, October 9, 2008

Supply chain war stories from the front line

An interesting e-mail from a Sloan alum, Reggie S. on shocks rippling through the supply chain. He gave me permission to post it, and it's pretty valuable for those of who read this blog and are thinking about any type of business plan or strategy that requires manufacturing and logistics. Interestingly, when I talked to Claude Robert, CEO of Montreal's Robert Transport, he saw many of the trends that Reggie points out as presently affecting the way companies do business.

Here's the e-mail from Reggie:

"I just wanted to share some information with those of us involved in the supply chain/ops side of things that may be helpful. We have just been discussing supply chain issues in the company and with others in the industry and we have noticed a few problematic trends, not specific to my employer but for the logistics industry as a whole.

*Companies experiencing disruption from supplier bankruptcy are becoming increasingly common. I had to struggle through this earlier this year (hint: not fun). Make sure you know that your company has all of its assets accounted for on paper and agreed by both parties. Also, have appropriate proof of payment and ownership. Finally, make sure an alternate source is identified. We got out of it OK. Arguing with bankruptcy lawyers about why not to auction your stuff is about fun as arguing with divorce lawyers about why they should not take your assets (though I have never been divorced, thankfully). Suppliers are also increasingly asking for more lenient payment terms or advance payment since their short-term credit facilities, commercial paper or bank lending, are drying up.

*Bringing things in from East Asia is getting ridiculously expensive. First, a container from China has gone from something like $3k to $8k over the last year and a half or so and second ships are starting to slow down to save fuel and sometimes even “skip” ports they don’t feel they have enough to drop off/pick up economically. Also, the end of the Chinese VAT tax rebate means exporters are usually paying about 8% to ship stuff out. The RMB appreciation is another pressure. Adding up freight cost, inventory holding cost, safety stock needs, VAT tax, & broker fees among other things have made some classes of products even out much of the cost between US and China sources. Some of our supplier machine shops are reporting large orders coming back from China to be done domestically.

*In ground logistics in the US, the industry is getting worried about a potential capacity shortage for truck shipping. 6-9% of all US truckload carriers have gone out of business since the start of the year and reportedly at least 1,000 overall have bit the dust this year including a few big ones like Jevic and Alvan Motor Freight. In 1Q 2008 reportedly 45,000 trucks left the market. Despite being gouged by fuel surcharges, people are openly saying the industry is going to shake out to the point where there will be a shortage instead of surplus in truck capacity which of course means higher prices for everything (again) and maybe bigger problems in distribution overall.

*As an indicator of things to come, container freight growth between East Asia and North America is pretty much flat and not expected to increase, if not decrease, in the near future. The biggest freight lanes with growth have been East Asia<->Europe and East Asia<->Middle East (not including oil).

Aetna CEO Ronald Williams on corporate transformation and leadership in the health care industry

Another day, another CEO turnaround story. Gotta love business school. Yesterday, it was James Schiro of Zurich Financial Services talking about his role in turning around the Swiss reinsurance giant. Today, Aetna’s Chairman and CEO Ronald Williams dropped by MIT Sloan to talk about how he has transformed Aetna into arguably the worst company in the entire health care space to one of the best and most admired. In 2001, Aetna was #9 out of 9 companies in the Forbes most admired health care company’s list. In 2007, it was #1, and profitable. Williams was very impressive in how articulate he was and how nuanced his answers to difficult questions about health care were.

Aetna's Business Transformation Strategy

First, Williams described the principles behind Aetna's business transformation, which I captured in this table.

An amazing metric – before it took Aetna 28 days to close the books; now it takes them 6 days, with infinitely greater real visibility.

The Aetna Way – Corporate Values

Beyond the business principles, Williams emphasized leadership and values. The Aetna Way, he stressed, has four main principles:
1) Integrity
2) Quality service and value
3) Excellence and accountability
4) Engaged employees

Williams has put these front and center. As a result, there has been a remarkable transformation. In 2002, 46% of their employees said they were proud to work for Aetna, a depressingly low number. In 2007, that number was 78%.

Like Schiro, Williams walks the talk. Last year, he gave over 270 talks to his employees, all of which emphasized the Aetna Way.

Leadership and management principles

Williams also talked about his key leadership and management principles, which I have summarized into these bullet points.
1) Managing change is an essential skill.
2) When someone says something that can be interpreted ambiguously, assume positive intent.
3) Give bad news early and personal.
4) Drive performance through expectations rather than demands.
5) Invest in talent management and succession planning.
6) Establish a core leadership curriculum within your firm.
7) Take assignments that are fit for you, both in terms of skill sets and where you are in life.
8) Live by a core set of values and stick to them
9) Be willing to re-invent yourself – Williams cited his time at MIT Sloan as a time he decided to reinvent himself from someone strong functionally to a person with strong general management and leadership skills. It worked out okay, no?
10) Embrace diversity on all fronts; having different perspectives on a management team is incredibly valuable.
11) Know the difference between leading and managing
12) Share what you know with others.
13) Make a goal to be 15% better every year.
14) Always add value.
15) Maintain eternal vigilance.

Demographic breakdown of the US uninsured people

Out of the 45.7 million people in the US who are uninsured (and consequently, a drag on the health care system, since hospitals are often required to treat them regardless):
11 million are Medicaid eligible
9.7 million are not American citizens
4.7 million are college and university students
9.1 million have an income of over $75,000 (!)

Some of these areas have relatively easy solutions. For instance, the 11 million who are Medicaid eligible just, well, need to be put on Medicaid. They're eligible and need to sign up. The problem is that these people have problem - drugs, literacy or just plain not understanding the system.

College students should probably have compulsory plans offered by the universities, although that's subject to a more nuanced debate at some other point.

People with over $75,000 can pay. They should either be required to, or truly accept the risk of not being insured, which isn't typically what happens.

Sources of Health Care Cost Increases

27% is general inflation (wage inflation being a big part of this)
43% is increased utilization (defensive medicine, technology improvements, new treatments)
30% is cost increase in excess of inflation (poor lifestyle, broader access within plans, provider consolidation)

Wednesday, October 8, 2008

Leadership insights from James Schiro, CEO of Zurich Financial Services

This post summarizes some insights today from an excellent talk by James Schiro, the American CEO of Swiss insurer Zurich Financial Services, about the topic of financial leadership in a difficult situation, which of course is an especially timely topic. Schiro has turned around Zurich from a company that lost $3.6 billion in 2002 to one that made $5.6 billion last year. This has been done through centralizing risk management and divesting non-core business to focus on Zurich’s core skill of delivering outstanding, customer centric services focused around insurance.

Some of Schiro’s most interesting points:

1) In 2002, Schiro took over as CEO and said that he wanted Zurich to be a “boring” company. It’s the sexy stuff such as CDOs and other derivatives that have buried companies like AIG recently. Zurich got out of this for the most part and is in strong condition, both in comparison to its 2002 state and its competitors as the markets melt down.

2) Recognize when you don’t have technical expertise and surround yourself with a team that does.

3) Confidence and credibility is important in an individual leader, and it’s important for a firm as a market leader.

4) Focus on the core of what you’re good at. Schiro said when he joined the firm was highly decentralized with over 350 profit centers, very few of which were actually profitable.

5) Schiro shifted Zurich’s focus to operational excellence, growth in profitable core businesses and transforming Zurich into a customer-centric firm. Customer centric firms seem few and far between in financial services, yet can this can be a significant source of loyalty, repeat business and word-of-mouth advertising.

6) As a leader, Schiro argues that you must constantly develop talent by stretching young people, investing in people and forcing people outside of their comfort zone. Experienced people must be mentors.

7) He looks for people who are adaptable, flexible and can manager in ambiguous environments. A strong leader can also motivate people to action and get people to fight for a common cause.

8) Being transparent about the competitive pressures a company is under and communicating that to other senior managers is essential to getting the buy-in at that level necessary to execute.

9) A centralized framework for risk taking across the enterprise is essential in this day in age. (Amen, ERM!)

10) Setting the right tone at the top is important from a leadership perspective. To this end, Schiro stops in at a monthly training for mid/senior level managers in his firm every month, no matter where it is in the world. That’s what he was doing in Boston – that’s putting your money where your mouth is.

Monday, October 6, 2008

Citibank pulls CitiAssist student loans

Here's a snippet of a note from MIT Sloan leadership informing us that CitiAssist loans have been pulled (I deleted the administrative stuff). I'm alright as they are honoring loans through '09, but this is bad news for a few reasons:

1) It's the main loan students from abroad use to fund studies in the US, at least in our program. It is going to be seriously hard to finance an education in the US from abroad next year, I suspect.

2) It makes me even more worried about the financial health of Citi.

3) The government has increased Federal Perkins loan limits - that's actually good for me. The Perkins loan is the best of the student loans at 5% - but that's more money out of the federal governments pocket.

4) I'd be especially worried for people looking at schools who aren't as well off in terms of endowment, or as well run versus MIT. However, endowments have taken massive hits - the extent of the bloodbath is yet unknown, but many endowments were deep in alternatives. As a former consultant on the asset administration side for some of these endowments, I am truly scared for some of them.

5) How schools react and deal with this will impact the perception of whether schools should retain their tax-exempt status.

6) Earlier this year, I had my MEFA loan (Massachusetts Education Finance Authority) pulled before I switched to CitiAssist. So this isn't the first time this has happen.

Here's the letter from the MIT Sloan administration:

Dear Sloan MBA student,

As a result of the nationwide credit crisis we regret that we must now notify all Sloan Master’s Students that late last week MIT was notified that Citibank has exercised its 30 day option to cancel the CitiAssist custom student loan program with MIT Sloan, effective November 2, 2008.

Outlined below are the key elements of information, as we understand them at this time. There will be more to communicate in the days and weeks ahead. We have been working to assess availability of other options as a School and Institute, on behalf of our current students and potential applicants. These efforts proceed based on a fundamental principle of the School: namely that we place great value on the economic and geographic diversity of our community and both of these had been materially supported through the CitiAssist program.

For the current 2008-2009 academic year, Citibank will honor all MIT Sloan loans already processed and approved, meaning both Fall 2008 and Spring 2009 disbursements will be honored.

MIT Student Financial Services (SFS) staff are working with the MBA Program to:

· provide counseling regarding additional short term loan options for the current academic year

· sponsor lunchtime sessions for our students (tentatively scheduled to take place next week at Sloan) to communicate what we are learning and to answer questions

We will be working with our Institute colleagues to address student funding issues during this challenging time. The MBA division leadership and I will be engaged with both the leadership of the MBA student community and its broad membership as well as we move ahead.

We will meet this challenge as we have in the past – as a strong, engaged community committed to all its members.


Dave Schmittlein

John C Head, III Dean

Friday, October 3, 2008

Wendy's demonstrates consumer surplus

Greg Mankiw, the Harvard economist (passed onto my by Pablo Montagnes, a Kellogg economist) astutely points out that this is an excellent illustration of consumer surplus.

I now officially know that the Sloan School has turned me into an Econ dork.

Thursday, October 2, 2008

The future of mobile banking

The ZMET model for market research is a qualitative research technique which uses images and metaphors to reveal how consumers think and feel about brands, products or industries. Sounds pretty hokey, I know, but recently, my good friend and media expert Andreas Ruggie did one with me as the subject and I actually found it to be quite enlightening. The topic was the future of mobile banking and transactions.

The setup is 8 images which I posted throughout. Andreas asked me to pre-select these images before the interview so that we could discuss them. This turned out to be a way m,ore interesting exercise than I thought it could be. Thanks to Andreas for providing the transcript and doing a great job facilitating.

Andreas – What were your primary motivations for choosing the pictures that you did?
Ted – So, I just went through a few websites and used Google images to try to pick images that lined up with my perception of what mobile banking is and where its used, and where it will be. So I gather that it just hasn’t, I think we have more options for access in the US, right, we have ATM’s on every corner, you know bank branch in every neighborhood, and we all have web connections, and PC’s, so it’s kind of different, so I have all these images of how mobile phones are used outside the US, like Asia where I’ve spent some time, and the developing world, so a lot of the images are focused around how it’s used there. But I think in the US, it has a lot of potential, but the interface isn’t really convenient enough yet, maybe not secure enough yet, so in other countries where you have less of an option as to how you do your banking, it’s more adopted, you see it used there more.
Andreas – OK, well let’s start with this one (1) since you mentioned international, how does this image relate to mobile banking, and think you already sort of explained that in your personal life.

Ted – Yeah I’m doing a bunch of projects in Africa that are mobile phone centric, so one of them is developing a scalable model for cervical cancer screening in Zambia using mobile phones, and sort of through the process of learning, about what’s going on there, that mobile phones are getting to the point where they’re pretty ubiquitous in Africa and they’re serving as sort of the primary mechanism for everything, including a lot of the payments, the payment system is not just mobile banking, but mobile bill pay, and like rechargeable digital power companies where you buy an add-on to your phone for micro payments, so that’s where this image comes from.
Andreas – OK, so let’s delve into some of the touchy feely questions. How does this image make you feel?
Ted – Well I picked this image I think because it’s very positive one, everyone’s around the phone, you can tell it’s a very rural village, people live in straw huts, but they have a mobile phone. I think this is a great picture, because it feels like the phone is the connection to the outside world, bringing a lot of joy to these people, and I think that’s what mobile phones have the power to do in places like this. They can change people’s lives, bring currency liquidity and microfinance and a lot of power to these people, but also connection to the outside world, information, the ability for people to connect to the outside, I imagine they’re very isolated location.
Andreas – So putting yourself into this picture, if you were a part of this picture, based on what you just told me, what role would you play?
Ted – If I were to play a role it would be to design some type of technology or process to improve the lives of these people.
Andreas – Is there anything hidden in this image, like something below the surface that is not apparent upon first site but that was a subconscious motivator for you?
Ted – I just grabbed the image, I didn’t spend a ton of time looking for an image like this, but when I sit here and look at with you, it’s maybe a lot of subconscious, of what I think mobile phones have the power to do.
Andreas – OK, how does this image (2) relate to mobile banking?

Ted – I was looking for pictures like the one before, you know the rural, and I saw this one and I kept it in the stack because I think of sometimes the annoyance of people always being on their phones, and I’m the worst, I like sit in class and like browse my phone. Whenever the conversation is boring me I’ll check my email real quick on my phone, so I just thought this is an absurd example.
Andreas – So if you were in this picture you’d be the vibrating cow?
Ted – I do always leave my phone on vibrate.
Andreas – How does that make you feel though in terms of your own use, since you say that you’re annoying. Does that give you any hesitation in terms of spending even more time in your life in the future using it?
Ted – Well in some ways vibrate is different from off, if I didn’t want to know, if I didn’t want the information, I’ve had the phone off, but my phone hasn’t been off since I got a cell phone in 1997, I’m part of the connected economy these days. I’d say that if I could get mobile banking alerts that provided me with information I’d want to know, I’d leave my phone on vibrate. I’d like to have my push email set to notify me, because I’d want to know what’s going on, I’d want that sense of connectedness. In regards to mobile banking, finance wise you want to have that same level of visibility to what’s going on.
Andreas – What about this, are you this guy (image 3)?

Ted – I just picked this one because I think of the most powerful mobile banking or at least most sophisticated mobile banking economy as Japan, where they use it as like they’re T-pass, they make mobile micro payments, pay for snacks at the 7-11, that type of thing.
Andreas – So is this like the future for you?
Ted – Yeah, in some places I think it’s the present. You see the woman listening to music, this is a banker, he’s reading financial news and doing mobile banking, and then I think…
Andreas – The bank is almost apprehensive or something…
Ted – Yeah, the distressed bank, I don’t know if he’s been taken out of the picture, or no one wants to visit him. I didn’t actually notice that until just now.
Andreas – Yeah, me neither. What do you think that means?
Ted - So, Sovereign Bank, my business accounts, I have a consulting company on the side, so I only get paid once a month or every couple of months, but I don’t move money around all that often, but whenever I do, I just walk two blocks and stop at the bank, but if some of these transactions like mobile or even web based were better I’d probably never stop in the bank. The store is the thing I’d like to see, when you can pay with a cell phone in a store, that’s when you really cross over with the whole thing.
Andreas – OK, this one (4)

Ted – Just another example of a place where mobile banking could have a big effect. Like I see a place here that doesn’t look to me like you’d have a cable line or wifi and you probably wouldn’t be very close to a branch. It looks like Mexico to me.
Andreas – So the other one was a rural setting and it was like discovery, people were happy, whereas here it looks a little more desolate, is this almost like the frontier that hasn’t been hit yet?
Ted – Yeah, it's remote, and you have people who are clearly, they have eight trucks, it looks to me like a thriving business, I have no idea what they do, but the remote folks still need services, and I thought this was an example of a location where mobile banking would make a big impact.
Andreas – So again, insinuating yourself in this photo, would you be the one to provide service to these people, or do you see this as a future where you could live in a place like this and still feel connected?
Ted – A little of both, I think as a lot of the social and developing world entrepreneurs need a system to facilitate making a payment, so you can imagine these guys do business with a budget with even smaller fries, how are they going to facilitate payments, are they going to do it by cash, or some simple banking thing where they touch up a code and that’s it.
Andreas – So I didn’t even know what this one is (5)

Ted – So in Hong Kong they have this thing called Octopus, and its like a Charlie Card, except imagine if you could use your Charlie Card anywhere to buy anything of convenience basically, like a tap card you could pay for 7-11, you could pay for pass, yo9u could get into the horse track. Basically you have an account that comes with the card with money on it and it debits the account. If you lose it, somebody else can use it.
Andreas – Is this the card?
Ted – This is the ubiquitous reader, it’s RFID. So I wanted to bring the RFID element into it a little bit cause I think that’s a big mechanism that mobile banking could go in that direction. It’s a mobile phone, but if it has an RFID chip in it with certain layers of security that you could facilitate a lot of payments. I would love that. There would be nothing greater, and you wouldn’t have the problem like with the Octopus card in Hong Kong is that if you lose it somebody else could use it. But your mobile phone is intrinsically linked to you, if you have your own payment code or pin code that slows everything down, you could tap and pay with your phone anywhere, that would be amazing, you could do anything you want, you just need a phone.
Andreas – So you would welcome an Octopus-like culture?
Ted – I would love it. With the Octopus card, if you have it in your bag, you don’t even have to take it out of your bag, you can just tap your purse, it’s just so convenient, and you see on the T people struggling with their whatever, you’re waiting in line at the convenience store, if you go to certain sporting events in Hong Kong, there’s no people selling tickets or anything, you just go, take your Octopus card you tap and go through the turnstile.
Andreas – All virtual transactions.
Ted – It just takes so many layers of costs out, its so convenient.
Andreas – This is more a graph than an image, but (6)… Who’s data is this?

Ted – It's Tower Group. But I just thought it was striking, I ran into it as I was going through some of the images. It seems so little, 1.1 million mobile banking users in 2007, to think there will be 41 million users in 4 years, is quite remarkable. I don’t know how exactly that will happen but…
Andreas – Well, things happen fast in high tech. Alright, this one’s missing the face of the girl, she was smiling (7)

Ted – Yeah this one’s person to person and I just really like this idea, there’s always that guy who owes you $20 or something, and he’s never got it, and I just imagine, just give me 20 credits on the phone, or the same thing with Octopus, just tap, pay, sort of a fluidity of liquidity that the phone generates. They always talk about how potentially you’re going to replace cash with credit cards, but I can’t stick a credit card in you and run it and get 20 bucks from you, but that might be possible with phones.
Andreas – Well that’s interesting because as opposed to the Octopus one where you were explaining that that was just a replacement mechanism for transactions, this one is actually insinuating that, as you said, a transaction that you wouldn’t necessarily have been able to go through…
Ted – Yeah I think that’s right, I think there’s the case where sometimes I owe you 20 bucks, that different, but say we play a round of golf or something, and you just want to give me 100 bucks, you could do something like that…
Andreas – And the other difference here is that this is an interpersonal transaction, these people are actually gaining a relationship by a virtual transaction.
Ted – Yeah, it kind of has a power to mediate relationships in a different kind of way.
Andreas – This image is linking an American Express card to a cell phone. (8)

Ted – I’m a loyal AMEX user ecause the service is exceptional, and I like having as close to consolidated one stop reporting as possible. I would prefer to see my mobile phone transactions tied closely back to, I’d like the reporting to be integrated with something I look at already. I would prefer not to have another thing to look at all the time. I don’t want a mobile account and add that on to the things I have to pay and check on, I would prefer it to be linked to my bank account or my credit card, but I would especially prefer it to be linked to American Express because they give me a lot of piece of mind with regards to security and if there’s a transaction that goes wrong I know that they’ll help me out with it, make sure that whatever security problem that happened is fixed.
Andreas – But going back to our segue into this image, obviously this is an ad for American Express, but if we were pessimists about this, and we saw your credit card information linked to your phone, and you think about what if you lost your phone or something, right, there’s this new horizon of …
Ted – Yeah, I trust that there would be, you’d only be able to tap and go for transactions under $10, and to transfer money peer to peer you’d have to have some combination of codes, and security. This stuff will get adopted when it gets figured out, there’s certainly models to do it, I think that the risk management people are pretty good.
Andreas – So there’s clearly a threat out there, but you feel comfortable about the players already involved in pushing it through…
Ted – Yeah, well I mean how much worse is it going to be the outright identity theft that already occurs? Every time you use your credit card at a restaurant there’s a chance it’ll be stolen, and you don’t have a pin number for a credit card in the US, you sign, and anyone could sign my signature, mean it’s just a T squiggle and a C squiggle. So yeah, I think it’s a super interesting thing as to how it’s going to be done, I mean it could be less risky than a credit card, right? I mean one could imagine, a phone is a much more powerful device in terms of what you can do security wise compared to a credit card.
Andreas – Now we’re going to move on to your expectations about mobile banking, I know you’re not a big user, and this might have something to do with your concerns. OK, have you ever heard of mobile banking being offered by a bank or credit union, and how did you or how would you learn about it?
Ted – I think Bank of America offers it, I don’t use it, the thought of entering all the numbers to log in and password doesn’t seem all that convenient for me to do on a cell phone.
Andreas – Interesting. So that would be one of your barriers to entry, so to speak?
Ted – Yeah, I would need it to be. That’s a question for me as to whether I would ever adopt mobile banking. I would use it for the transactional type stuff more than I would ever use it for information about my accounts. I rarely have a situation where I would need to know exactly how much money I had in an account at that moment when I’m walking down the street and just need to know, that doesn’t really happen. I generally have a sense of my finances, I sit down at the computer, I feel organized, so I don’t really see myself adopting mobile banking in that matter. I don’t know how they could make mobile user interfaces all that much easier because I don’t think it’s necessarily the design of a mobile web banking interface, I just don’t think that… you’re either going to enter a wrong number, its just not that easy to do on a mobile phone, it’s not a super comfortable thing.
Andreas – OK, those are kind of the concerns. So going back to a more optimistic point of view, after becoming aware of mobile banking, those concerns aside, if you wanted to, what avenues of research would you use, what would motivate you to learn more?
Ted – I’m definitely an early adopter of most technologies, I mean I actively sought out the little key chain micropayment card when I heard about it. I got the Amex one, PayPal. I actively sought getting those because I thought they would make my life more convenient. They did, even if the only place I could pay was CVS. So I would probably find out about it from one of the blogs I read or just seeing someone else us it, and if it would make my life more convenient and make me look just a little bit cool. I’d give it a shot, for sure.
Andreas – OK, so if you tried it once, what features would make you try it again?
Ted – With all this stuff, it’s got to be convenient, easy to use, that’s the most important thing. It relates to, what am I doing now, and will it actually save me time, I mean time is money, right? Time is valuable to me, I don’t have a lot of it, I’d rather be doing something else than waiting in line, signing receipts, getting a T pass, when I could just be going through.
Andreas – So if it was the right experience for you, if it was convenient for the population in general, do you see mobile banking as a supplement to internet banking or as a replacement? Could this be the future?
Ted – I see it more as replacement for other things, to maybe the ridiculous key chain full of loyalty cards, or as a partial replacement for credit cards. I don’t see it as replacement for web banking services, but I could be wrong on that. I could think of a scenario on which I get all the email to my phone and my computer, if I got an email, I click on the link, it said I owe money to Amex, I opened, it, and it’s already linked to my bank account and I could just pay that way, I could see that. I don’t look at my individual banking transactions that much anyhow.
Andreas – OK, summary. Describe in detail the ideal mobile experience, taking into account all the things we’ve discussed. What kind of messaging would impact you the most? What kind of advertising campaign would capture your attention? What kind of service would satisfy you as a consumer? So this is your big sendoff.
Ted – I’d want that integrated payment ability across as many different locations as possible, with strong security linked to my personal identity and finances. I’d want pretty simple reporting and alerts to tell me if my account balance is low. I’d want it linked to, if not Amex, an organization that gives me the same level of piece of mind that if I use this for transactions, it would be secure.
Andreas – In terms of messaging, we saw your images, but what would be your ideal ad campaign that would sell you on an emotional level?
Ted – I’m already sold on it just because having seen what Octopus is like in Hong Kong, the massive level of convenience, all you have to do is show me someone tapping their cell phone. But probably the security would be an important part of the messaging. I’d need the piece of mind that everything is sort of kosher, convenience and security are the two things, they go hand in hand, because it’s a pain in the ass when someone steals your identity. A couple of security incidents and the value of saving ten seconds goes away pretty quickly.
Andreas – Any last thoughts you’d like to add or say? We’ve seen what Tower has to say about the near future, so should folks be going for it in this space?
Ted – Yeah, but I think they should go big. It’s a lot bigger opportunity to be something like Octopus in the US market than it is to provide the existing banking customer base with mobile features when they have so many other ways to bank.
Andreas – So go big or go home?
Ted – Exactly.

Wednesday, October 1, 2008

NextLab team works with OpenMRS to scale medical imaging workflow solution

I learned in my stint as an enterprise IT strategy consultant that IT is like the holy grail in Indiana Jones and the Last Crusade. Just as good technologies gives life, bad technology takes it away. Never has that statement been so literal as it is in developing world health care.

As I mentioned in previous post, our project with CIDRZ to improve cervical cancer diagnosis in Zambia has evolved towards the workflow management back end to allow physicians to remotely review, diagnose and provide feedback on images. An exciting development is that we’ll be working to make this fit in with the OpenMRS system. OpenMRS is an open-source medical records system that is gaining traction in the developing world. If the goal is scalability, and having an impact beyond Zambia into the entire realm of developing world medical imaging, compatibility with OpenMRS is an extremely important step. This will allow for what we develop to be leveraged and re-used and evolved.

At the Open Innovation Workshop that I attended in May, many of the younger PhD and me were wondering about models where collaboration and innovation enable by new ICTs could save this world. OpenMRS is an example, albeit one fraught with potential pitfalls. Medical records are an issue and a major cost for health care providers everywhere in the world. By providing a scalable, open source system and getting talented developers to work on add-in modules, OpenMRS offers a solution for providers looking to keep information technology costs low. This enables the providers to spend the money on what really matters – treating patients.
I’m curious to learn more about OpenMRS – it looks scalable and robust from its data design. It’s been deployed in a number of developing world locations. If it works, it will allow providers to divert money towards where it really matters.

There’s another team working on a front-end Android interface for medical records imaging led by Zach Anderson, a MIT Course 6 programmer that we are collaborating with a well. It sounds like they too will be compatible with OpenMRS. More on that collaboration in another post as I learn more about what specifically they are doing.