A photoessay speak a 1,000 words?

I have been doing some research and modeling the use of words that could then create predictive analytics based on behaviors and sharing some of the random slides with you.

A brief into ruction from wikipedia on what an n-gram is?  http://en.wikipedia.org/wiki/N-gram

“In the fields of computational linguistics and probability, an n-gram is a contiguous sequence of n items from a given sequence of text or speech. The items can be phonemessyllablesletters,words or base pairs according to the application. The n-grams typically are collected from a text or speech corpus.An n-gram of size 1 is referred to as a “unigram”; size 2 is a “bigram” (or, less commonly, a “digram”); size 3 is a “trigram“. Larger sizes are sometimes referred to by the value of n, e.g., “four-gram”, “five-gram”, and so on.”

So does it mean we think Social is new? Not for over 200 years! Seems a little in decline now actually?

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What if we could look at word usage and determine stock prices?

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Or why Supplychain is a critical investment opportunity?

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What if we could see that farming and water have a relationship?

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What if we can see technology changing in-front of our eyes and know what next?

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And derive that Behavior is the pivot?
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And look at how business models are always a fundamental?
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And why the word “Aggregate” is always critical for 200 years or more?

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And why “Climate change” in the last 50 years has become an issue?

 

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Whatever you derive is interesting. But the work around word usage reflect behaviors which are a privet to creating analytical models that can potentially be leveraged from buying equities to understanding change. That’s part of my work with a very smart team. Love to hear your thoughts.

You should try https://books.google.com/ngrams  very interesting.

 

Disclosure: Our work is not part of any work or research at Google.

Behavior is disrupting everything, from markets to economies and governments?

Behavior is the API!  Airbnb, the API was “Trust” that is disrupting a global hospitality industry creating new value in a very old industry.

What has behavior got to do with rational policy, business models, balance sheets and how consumers buy? Everything!

When you look at behavioral economics, it a real surprise to all who know that the two Nobel Prize winners Herbert Simon (1978) and Daniel Kahneman (2002) where not economists!

Why is behavior such a critical topic that’s got everyone from shareholders, CXOs and board members to startup entrepreneurs in Silicon Valley interested critically in this extraordinary subject? Because we are people!

When most planning for a product or a service or a business or a policy is developed, it is in majority in isolation of behavior of the stakeholders involved. This often is a rationality that seems highly irrational, but more often than not, isn’t.

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Daniel Kahneman and Amos Tversky wrote “Prospect theory: An Analysis of Decision under Risk” in 1979 which laid the foundation of how psychological behavior and it’s impact on economics in decision making was a critical causal behavior.  This was seminal.

So let’s look at some of the most recent disruptive companies that are and have changed the “behavior” of their ecosystems and thus lead to disruption.

Apple, Google, FaceBook, Twitter, Airbnb, WhatsApp, Uber, et al. The behavior altering models deployed with through algorithms and engineering wrapped around lead to the disruption of their ecosystems. This was critical, not just their pieces of software that made a process more efficient. Their altered or amplified behaviors that lead to the disruption of behaviors and with economic impact across their ecosystems.

Thus the classic business models that create “Abundances” and “Scarcities” as a dichotomy are now resulting in behaviors that have never been witnessed before. From change in politics to consumer to the environment to financial main street, never before has behavior radically altered models. One of the most critical factors is technology which has disrupted the economics of;

1. Behaviors discovering relationships (WhatsApp, FaceBook, Google)
2. Behaviors accelerating instant gratification (Like, Comment, Share)
3. Behaviors accelerating discovery, collaboration and commerce (Amazon, eBay, Google, iTunes, etc)

A good example is agriculture and food security.

LOCAVORE, HOW BEHAVIOR IS DISRUPTING A TRILLION DOLLAR MARKET IN FOOD RETAIL

http://gerardjrego.com/2014/03/23/locavore-how-behavior-is-disrupting-a-trillion-dollar-market-in-food-retail/

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Thus whether you are a entrepreneur, academic, investor, employee, board member or consumer. Look at behavior, the API of the ecosystem you are looking at and you can instinctively as well as model what’s potentially coming next around your own behavior to the question you asked yourself. That is disruptive.

Is your company next?

We as a group are working on leveraging behaviors to potentially create new models, workflow and collaboration for industries that are seen as only hardware intensive and pure tech play to address these opportunities. The question I leave you with.

Wearables. Is behavior going to really be the pivot on which you and the rest of the world decides to leverage. If so what behavior(s) will alter the current ecosystems and lead to creative disruption?

Locavore, how behavior is disrupting a Trillion dollar market in food retail

Behavior is the pivot of opportunity and changing behavior disrupts incumbents creating whole new industries.  This is a great opportunity to connect 450m small farmers to mom & pop retailers and then to consumers.

1. Trust disrupted Organized hospitality – Airbnb

2. eCommerce disrupted Retail – Amazon, eBay, et al

3. Mobile disrupted Online – WhatsApp, Uber

4. Custom disrupted Fixed Menu – Dell

The list is changing very fast as behaviors are changing too.

Locavore  as defined in Wikipedia. “A locavore is a person interested in eating food that is locally produced, not moved long distances to market”http://en.wikipedia.org/wiki/Locavore

Why is Locavore a behavior that is leading to change? The behavior of local is perceived for a causal impact on better quality, better choice and better economics. This is so significant that according to a AT Kearney report the locavore opportunity is significant enough that big retail is looking at this changing behavior as disruptive to the core business.

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http://www.atkearney.com/documents/10192/709903/Buying+into+the+Local+Food+Movement.pdf/68091049-b5c2-4d2a-a770-ee5b703da8fd

From the USDA report “The Role of Food Hubs in Local Food Marketing”, the definition of local food is below.

What is a local food?
The term “local food” is used often, and with various and sometimes contradictory interpretations. The new Oxford American Dictionary defines a “locavore” as a local resident who tries to eat only food grown or produced within a 100-mile radius. Likewise, many consumers and policymakers define local as being within a 100-mile radius of one’s home, while others feel that 200, 300, or 400 miles can still be considered a local food. Eventhe Federal Government varies its definition of local:

• The 2008 Farm Act defines a “locally or regionally produced agricultural food product” as one that is marketed less than 400miles from its origin.”

• The Food Safety Modernization Act, enacted in January 2011, defines local as food purchased within 275 miles or the sameState where it was produced.

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http://www.rurdev.usda.gov/supportdocuments/sr73.pdf

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“Local is the most influential product claim in grocery.” New Hope Natural Media Survey
http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDC5106618

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First Mile           Screen Shot 2013-10-15 at 2.28.01 PM

 

Behavior is a real disruptor. The real behavior is the lack of trust which is seen as trust of produce, convenience and prices which are the real opportunity. Leverage this behavior and you have a disruptive opportunity. We as a team are working on precisely just this at the Stanford Peace Innovation Lab and will keep you updated or just watch this space.

Why is this behavioral change leading to new business models and disrupting profit-pools? It is the small farmers, mom & pop stores and thus consumers, being disaggregated from opportunity for availability, accessibility and affordability.

450M SMALLHOLDER FARMERS AND A $450 BILLION MARKET! IT’S ALL MOBILE, SENSORS, ANALYTICS AND MARKETPLACES.

http://gerardjrego.com/2013/12/03/450m-smallholder-farmers-and-a-450-billion-market-its-all-mobile/

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KILLER APP! FRAGMENTED MARKETS, CROWDSOURCING BUSINESS MODELS AND MOBILITY
Why are fragmented markets the next big thing?
http://gerardjrego.com/2013/10/15/killer-app-fragmented-markets-crowdsourcing-business-models-and-mobility/

THE MOST VALUABLE COMPANIES – MOM AND POP STORES, POSTAL SERVICES AND DABAWALLAS IN MUMBAI
http://gerardjrego.com/2013/12/08/the-most-valuable-companies-mom-pop-stores-postal-services-dabawallas-in-mumbai/

RETAILGRID! BUSINESS PLAN FOR FIRST MILE “COMMERCE” DISRUPTION, IS THIS THE NEXT MILE!

http://gerardjrego.com/2013/09/16/retailgrid-business-plan-for-first-mile-commerce-disruption-is-this-the-next-mile/

The Circular business model and economy. Sustainable competitive advantage

The challenge today has seen such erosion of capital, wealth and consumer value, that today companies are being acquired or dying faster than ever imaginable. Business models of most companies are not circular. That is the challenge? This is the disruptive opportunity!

So what if;

1. Every mining or oil & gas company in the world developed local communities that leveraged a agri-crop model that cleans the mining & oil & gas sites, created entrepreneurial opportunities, created an investment model that the companies needed for their core business with a  futures contract and where the local communities where the Prosumers?

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2.  time you drove your car you paid for mileage and insurance premiums on the same
3. Your shoe “mileage” and your calories burnt got you an insurance policy and discount on food from Nike
4. Every time you used your light you paid for the lumens consumed and the utility got you a discount on your energy bill

But before we address the “Circular business model and economic” opportunity, lets look at company mortality today which is shocking.

A must read is Business Model Warfare

By Langdon Morris, Senior Practice Scholar, Ackoff Center for the Advancement of Systems Approaches (A-CASA), The University of Pennsylvania
An InnovationLabs White Paper, prepared &, published jointly with A-CASA.
http://innovationlabs.com/BusModelWarfare.pdf

These three slices of history convey a clear pattern. Projecting the pattern forward as we noted above, it’s likely that about a third of today’s major corporations will survive as significant businesses for the next twenty-five years. “Most will die or be bought out and absorbed because they are too slow to keep pace with change in the market. By 2020, more than three quarters of the S&P 500 will consist of companies that

we don’t know today.”

Fortune 500
• A study by planners at Shell found that by 1983, one-third of the companies listed among the 500 in 1970 had not only fallen from the list, but had gone out of business altogether.3 That’s an average mortality rate of 12 companies per year, or one per month. They also found that a multi-national corporation comparable in size to a Fortune 500 company could only be expected to survive for between 40 and 50 years.

Forbes 100
• In 1917, Forbes magazine created its own list of the largest 100 US companies. By 1987, 61 of those companies no longer existed. Over the seventy year span, in other words, an average of about one company per year disappeared. Of the remaining 39 original companies, 18 were still large enough to remain on the list in 1987.

S&P:
• The S&P 500 list provides a third reference point. In 1957, the S&P listing of 90 top companies was expanded to 500. By 1997, only 74 of the original 500 companies remained, an average mortality rate of more than 10 per year.4 But a more detailed analysis shows that the rate of mortality has been steadily increasing, with far more companies failing as the end of the century approached. The average life span of an S&P 500 company has steadily decreased from more than 50 years to fewer than 25 today.

The numbers are shocking and it’s gotten even worse today. Why? The discontinuity of the Upstream, Midstream and Downstream cycles of business that is disrupting business ecosystems faster than ever before.

An example?

WHAT IF EVERY CARGO SHIP, TRUCK AND AIRCRAFT CONNECTED TO A COMMODITY EXCHANGE & GREEN?http://gerardjrego.com/2013/09/30/what-if-every-cargo-ship-truck-and-aircraft-connected-to-a-commodity-exchange-green/

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or local communities were tied into creating energy supplychains for their lifetime?

CARBON CAPTURE AND STORAGE (CCS) – AN ELITE INDIAN TREE CREATING A GLOBAL SUSTAINABLE SOLUTION!

http://gerardjrego.com/2013/09/24/carbon-capture-and-storage-ccs-an-elite-indian-tree-creating-a-global-sustainable-solution/

or green bonds financed the opportunity for connecting companies to communities in energy supplychains?

GREEN BONDS, GREEN MINING ZONES, ELITE PONGAMIA AND BUSINESS MODELS
http://gerardjrego.com/2014/02/20/green-bonds-green-mining-zones-elite-pongamia-and-business-models/

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The list goes on.

This is what we are seeing example of where the network ecosystem of connecting the circular is creating opportunities for marketplaces from iTunes and App stores to Google and Amazon.

WHY MARKETPLACES ARE EATING INDUSTRIES!

http://gerardjrego.com/2013/12/29/why-marketplaces-are-eating-industries/comment-page-1/#comment-404

MORGAN STANLEY THINKS SO? WILL AUTO OEMS BECOME POWER UTILITIES

http://gerardjrego.com/2014/02/25/morgan-stanley-thinks-so-will-auto-oems-become-power-utilities/

WHY “SMALL” IS THE NEXT BIG?

http://gerardjrego.com/2014/02/21/why-small-is-the-next-big/

Look at the the following;

1. Cash Conversion Cycle
2.  Inventory Stock Turns
3. GMROI

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Conclusion?
Business models that enables the circular creation of inventory, capital and wealth that connects upstream, midstream and downstream are disruptive and the greatest opportunity to do that is now? Mobility around technologies such as mobile phones and connectivity commoditize the opportunity of network discovery, collaboration and commerce, which is the key cycle for the circular economy.

Is your company and job next? You have the framework to look at now.

The risk culture API, where is the next Silicon Valley?

Multiple rounds of research, Q&A and investor ecosystems are constantly looking for the next Silicon Valley. As I sit here in a Starbucks cafe in London off Mayfair and off a meeting with a very interesting tech team I thought about putting this into a quick perspective.

The most important API is social and it’s the ability to take risks.

1. Common Joe on the street willing to invest $10,000 in a couple of folks just because if the cool idea.
2. Quit my undergrad or Phd and start a company.
3.  Leading CXOs goes works for two guys in startup mode in a room.
4. Investors backing people with no plans, just ideas.
5. Bigger the idea, the more fun it is.
6. Failure is the Success.
7. Success is the next ecosystem of all of the above.
8. Government (especially the military) investor in ideas that are one to two decades ahead

Silicon Valley or Silicon Wadi in Israel. The same.

Then there are the rest where the API is risk mitigation.

1. Invest in real-estate
2 Invest in Gold
3. Invest in Fixed Deposits
4. Debt is great
5.  The past is the the vocabulary
6. Government is the employer

Then the results speak for themselves.

Based on this can you look for the next cluster that is leading creative destruction? These characteristics may help after all Social-risk taking is the key API.

TALPIOT, NSA, UNIT 8200, PENTAGON, ET AL, ENGINE OF GLOBAL INNOVATION AND ENTREPRENEURSHIP!
http://gerardjrego.com/2013/10/29/talpiot-nsa-unit-8200-pentagon-et-al-engine-of-global-innovation-and-entrepreneurship/comment-page-1/#comment-50

JOB CREATION, INNOVATION & PEACE? WE NEED THE MILITARY, DARPA, NASA, TALPIOT, INQTEL, STANFORD, MIT?http://gerardjrego.com/2013/09/20/job-creation-innovation-peace-we-need-the-military-darpa-nasa-talpiot-inqtel-stanford-mit/

http://startupnationbook.com (“START-UP NATION addresses the trillion dollar question: How is it that Israel – a country of 7.1 million, only 60 years old, surrounded by enemies, in a constant state of war since its founding, with no natural resources—produces more start-up companies than large, peaceful,and stable nations like Japan, China, India, Korea, Canada, and the UK? How is it that Israel has, per person, attracted over twice as much venture capital investment as the US and thirty times more than Europe?”)

http://startupnationbook.com

‘The Entrepreneurial State’: Apple Didn’t Build Your iPhone; Your Taxes Did
http://www.pbs.org/newshour/businessdesk/2013/09/the-entrepreneurial-state-appl.html

From Robot Soldiers To Driverless Cars, DARPA Advances Innovation
http://www.forbes.com/sites/toyota/2013/09/03/from-robot-soldiers-to-driverless-cars-darpa-advances-innovation/

Presentation: “Where Good Technologies Come From”
http://thebreakthrough.org/archive/presentation_where_good_techno

This is the API. It’s not tech. It’s social.

Staples is an example of Cash Conversion Cycle, Stock Turns & GMROI

I just read this and wanted to share this with you.

Staples Q4 Profit Miss Estimates; Plan To Close Up To 225 Stores By 2015
http://www.nasdaq.com/article/staples-q4-profit-miss-estimates-plan-to-close-up-to-225-stores-by-2015-20140306-00152#ixzz2vBITIrkl

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http://tools.morningstar.co.uk/uk/stockreport/default.aspx?tab=11&vw=er&SecurityToken=0P0000053Z%5D3%5D0%5DE0WWE$$ALL&Id=0P0000053Z&ClientFund=0&CurrencyId=GBP

PROFIT POOL 101 AND GOOGLE SELLS HANDSET BUSINESS TO LENOVO
http://gerardjrego.com/2014/01/30/profit-pool-101-and-google-sells-handset-business-to-lenovo/

Marketplaces are eating industries. Why?

1. Lowering Cash Conversion Cycles

2. Increasing Inventory Stock Turns

3. Increasing GMROI

The ones with the inventory and lack of omnichannel ability to achieve all of the above are getting disrupted. Staples is only one example.

 

Tesla IP upstream and Power utility downstream? Lego?

What if Tesla licensed it’s technology to all the auto OEMs and become a utility company downstream? Software eats hardware and marketplaces eats industries.

Will 3D printing turn Lego into an intellectual property publisher?

http://venturebeat.com/2014/03/03/will-3d-printing-turn-lego-into-an-intellectual-property-publisher/

 

profitpool_pcindustry screen-shot-2013-09-18-at-4-20-53-pm

MORGAN STANLEY THINKS SO? WILL AUTO OEMS BECOME POWER UTILITIES

http://gerardjrego.com/2014/02/25/morgan-stanley-thinks-so-will-auto-oems-become-power-utilities/

PROFIT POOL 101 AND GOOGLE SELLS HANDSET BUSINESS TO LENOVO
http://gerardjrego.com/2014/01/30/profit-pool-101-and-google-sells-handset-business-to-lenovo/

WHY MARKETPLACES ARE EATING INDUSTRIES!
http://gerardjrego.com/2013/12/29/why-marketplaces-are-eating-industries/

Now this is exciting. Watching shorting of equity and an opportunity to disrupt an industry? Ultimately three simple metrics win.

1. Cash Conversion Cycle

2. Inventory Stock Turns

3. GMROI

Watch the greatest disruption around us as we speak and then read “Business Model Warfare”

I have been a long proponent of business models and why by just looking at the core of a business, you see the Profit Pool (http://www.bain.com/publications/articles/how-to-map-your-industrys-profit-pool.aspx) and the business model and you get a very good handle on the business, whether startup or a publicly traded corporation.

Business Model Warfare

Business Model Warfare

The Story Behind Business Success and Failure

by Langdon Morris

http://www.innovationlabs.com/publications/business-model-warfare/