Black Swan

I am becoming obsessed with randomness and probability. What follows is based very heavily on Nassim Nicholas Taleb research. Imagine a turkey on a farm. Everyday the turkey has ever known, the farmer comes every morning and feeds it. From the turkey's point of view, the farmer is a friend, a trusted being. Then, one morning, the farmer kills the turkey. A black swan has occurred from the point of view of the turkey. A completely unexpected event.

Take our stock market, heck take the entire global market, companies, and global economies have created multiple levels to guard against risk. Options trading, derivatives, options on derivatives, credit default swaps, and so on, and on, and on. Each product is designed to allow some risk, some profit, and some safety. Some products have two components such as derivatives, allowing a company to sell its risk to others. Risk, actually, is an interesting side of the coin. Companies have large staffs of risk professionals, calculating, and guarding the said corporations from risk. Recently, companies started to realize that risk comes in many forms, and a new area was born "operational risk". This is the risk where an employee goes crazy and shoots everyone. So, you would argue that all this guards the said companies from risk. Now, Nassim Taleb, and myself, actually believe that this enhances risk. All this calculating is simply creating an impression of safety. Like the turkey, we go day in and day out believing we are safe, until one day, the farmer kills the turkey.

The basic problem is that we can't understand the future. In fact, we can't understand that we can't understand the future. We keep believing in things, looking for correlations, patterns in randomness. We find them, in fact we tend to create patterns in randomness. Are the markets random? I would argue no. In fact, I would argue that the markets are becoming very much un-random. The markets are starting to be governed by machines following very concrete rules. There are also very few players in the market that have the weight to move markets, and a lot of those players are using machines. All of this is very scary.

Another interesting example is China. An unprecedented amount of common people are investing heavily in the market. And, the market is going up and up and up. But, like everything else in life, it will come down, and boy will it come down hard. And there will be ripples throw the global markets, and global economies. But, this isn't the black swan I am afraid of. I am afraid of something more. I am afraid of something we don't know is going to happen.

Global Development

It is all the rage these days to do global development. One "system", global implementation. The idea being is economy of scale. Any region can perform development allowing other regions to reap the rewards. There are different ways for a single system to achieve global development.

1. The system is being developed by 1 region. All global requirements are funneled to this region. The actual system maybe run centrally or locally within the regions.

2. Each region has a separate system which, based on an agreed protocol, feed a shared central system.

Ah, but there is another way. You maybe able to have a single system, and yet global, parallel development. You can split the system into areas of concern, and assign different parts to different systems. Unfortunately, at one point or another, the areas will overlap. This brings up an interesting scenario. Single system, many teams split across different timezones answering to different management, have different requirements, different users, schedules, etc... Quite a mess. Now, each region is actually working on a common goal. The system is a specific system, serving a specific goal, but different masters. The trick is to split the system into a common framework and a regional implementation. If the regions are using the same system, and there is a core of the system which is indeed universal, but there is also an aspect of the system which is very much unique to a given region. Understand the problem the system is solving. Then understand the fundamental aspect of the system, the raw materials, if you will. This is the common framework. Each region may modify the framework, but what they are doing is enhancing the breadth of the system. Imagine a graph, links and nodes going every which way. Imagine dark areas of the graph, unexplored. These dark areas represent parts of the system developed by other regions, but not yet used locally. When a given area matures to that functionality, it will be there for it. The unexplored areas of the graph become used, and therefore visible. This seems a very interesting way to create a global enterprise architecture. Model the system as a graph, allow each region to build out the graph, but in such a way as to allow other regions to use only what they need. Then allow the graph to be customized to the regions needs. If done correctly, the system will become a set of loose shared modules, with concrete implementation by each region. The regions decide how the modules are used and how they link. Of course, some linkages is defined. Regions may enhance existing modules, build new ones, or create region specific enhancements to existing.