Category: investment

[Books] Wiser (part 2) – getting past groupthink to better outcomes

Authors Cass Sunstein and Reid Hastie have put together an excellent and readable taxonomy of the “bugs” that can afflict group decision making and cause groups to blunder in their book Wiser.

In the first part of this blog I discussed their dissection of the causes of group decision making failure.

How can we make groups function better?

The book carries a number of actionable insights into how to improve group decision making for the better:

Inquisitive and self-silencing leaders

Men out-talk women two to one in jury deliberations, the same happens in companies. Leaders and other high-status member of groups will exert a lot of influence, they can do the group a favour by remaining silent and indicating a willingness to hear all of the uniquely held information. That helps overcome one of the main issues identified with groupthink – self silencing which leads to a failure to share critical information.

Priming critical thinking

Rather than prizing consensus, give social reward to new and competing information.

The role of roles

Information aggregation becomes more likely with roles, as each member knows that the others have something to contribute, a division of labour in examining a problem will make hidden profiles less likely.

Shift perspectives:

“If a new CEO came in, what would they do?”

Does devil’s advocacy work?

It has become commonly thought that devil’s advocacy or can help get past groupthink influences. The authors are torn on this point. Devil’s advocacy as an idea is trying to formalize the commitment to expressing differing viewpoints (which is a good thing). Those assuming the devil’s advocate role are able to avoid the social pressure to agree. However the authors believe evidence is split on this – there is a difference between authentic dissent and a formal requirement for an assigned devil’s advocacy, who may be arbitrarily assigned and simply “acting out a role”. For this to work the devil’s advocate has to actually mean what they are saying.

An upgrade to devil’s advocacy, which has a greater chance of working is to get an entire team to work on a contrarian viewpoint, with the aim of defeating the primary team’s plan to execute a mission. so called, “red-teaming”.

The Delphi Method

This is a formal approach to aggregating individual views. It proceeds in a number of rounds. First round votes (or estimates) are taken, in complete anonymity. The second round estimates must all fall within the 25th – 75th percentile of the first round estimates. This process is repeated until the group converges on a single estimate. It’s an averaging process, but one that allows for a single stubborn (or convicted) group member to influence the final outcome a lot more than a simple average.

Separate Identification and selection.

The qualities that make a good identification process, particularly diverse and divergent thinking, are very different to a selection process which needs to favour convergent thinking. All too often these steps can be compressed together, making it difficult to juggle the requirements for both divergent and convergent thinking.

Harnessing experts

I found this section particularly interesting and relevant!

A few tips on how best to use experts:

 

  • Obtaining a statistical answer from a few of them, rather than relying on just one
  • Limit experts to domain areas where there is evidence that expertise gives an edge (eg how to combine asset classes to give a diversified portfolio as opposed to whether the stockmarket, or interest rates,  will go up or down tomorrow or next month)
  • Look for track records from experts (weight individual expert views by the track record)

 

Specifically for investment advice this points toward asking the questions

“What other strategies were considered, but ultimately didn’t quite make it into this advice?”

“Is this advice the work of one, or many, experts?

was this advice produced in an environment of challenge among experts, how were the different expert inputs incorporated and weighted (process)?

I for one will certainly be taking away a few of these insights and trying to apply them more consistently.

What do you think is the most helpful?

[Books] Wiser – how group decisions can let us down

I’m sure you can picture the scene. A group sits down to make a critically important decision. Much discussion follows. One person after another lays out their views, lots of points are made. There are some clear areas of agreement. Nods all round. The answer starts to become clear. With a few changes a consensus develops. The decision is made. Everyone feels good, confident. this is definitely the right decision. No doubt. We all agree.

But is it?

Many people will have experienced or heard about situations where things didn’t quite go to plan and it transpired the group blundered. The term groupthink has become relatively well know.

This excellent book written by Cass Sunstein and Reid Hastie starts with a simple observation and a simple question: In many fields we endow groups of people with the authority or responsibility to make key decisions.

Do groups usually correct individual mistakes?

 

The simple answer is that they do not, and they can even amplify mistakes. This basic insight has great relevant to pension funds, investment committees and all sorts of other groups tasked with making meaningful decisions in complex domains.

In this highly readable book the authors take us through a quick tour of the taxonomy of “bugs” within group decision making, however their approach is balanced – also laying out the ways in which groups might be thought to do better than individuals, and the circumstances in which they can.

Understanding how and why groups blunder is not staggeringly complex, but requires a focused and methodical examination of human nature and biases, with social influences playing a big role throughout. Unpacking some of the sources of group failure in this way starts to yield immediately actionable insights on how to correct for these issues. The authors also helpfully guide readers through a number of real-life experiments that support the points they make.

 

Individual and Group judgements

 

We as individuals use judgement heuristics (rules of thumb), and have biases. We can be overconfident and place too much weight on our own experience and opinions. These behavioural traits are well known on an individual level. When we get together to debate and make decisions in a group sense these can result in “garbage in garbage out”.

Individual confidence tends to increase after a group deliberation. Deliberative groups (those that deliberate before arriving at a view) can be overconfident and wrong, this can have serious consequences in government policy, corporate strategy and for institutional investors including pension funds (tasked with making the investment decisions for large pools of invested assets).

In Defence of Groups – Wise Crowds?

Surely groups ought to be:

  • At least as good as the most informed member: if that individual can make their case persuasively or clearly, others will realise their own errors and get behind the better informed viewpoint – eg “why are all manhole covers round?”
  • Groups ought to be able to aggregate information effectively to get a fuller picture than held by any individual – particularly if they contain no experts but a range of dispersed information
  • Synergy: the give-and-take of group discussion might lead the group to sift information in a way that uncovers insight that the individuals would not have reached by themselves.

Is there evidence that these dynamics function in practice?

In practice there are four key reasons why groups fail, and this is really the central insight of the whole book

 

  1. Groups fail to successfully aggregate info shared by members, then focus on information that is widely shared by the members rather than that known by only one or two members

  2. Groups become polarized: adopt a more extreme position than the average of the members pre-deliberation

  3. Groups fall victim to decision making cascades. Whereby early opinions excessively influence direction of decision

  4. Groups amplify the individual biases of group members

 

Let’s draw a distinction between different types of group and different types of problem:

 

Statistical v deliberative groups: statistical groups each independently contribute a point estimate of an unknown variable (eg, the temperature of a room). Deliberative groups discuss the answer to a particular problem. Most of the issues with groups occur with deliberative groups.

 

“Eureka” problems are ones where the true answer, once voiced is immediately obvious to the rest of the group (“why are manhole covers round?”). Problems with an outcome which is certain and measurable (eg the temperature of a room) are different to those where outcomes are uncertain and not immediately measurable (eg investment decisions).

 

It is clear that the decisions taken by investment committees and trustees frequently fall into the toughest category where group failures are most likely!

 

Information Sharing – the Common Knowledge Trap

Groups often risk falling into the common knowledge trap – common information that is held by multiple group members is given more weight than it ought to be, and significant information held by only one or two members can be ignored.

 

Self-silencing is a big threat to effective group decision making.

There can often be social pressure or subtle penalties to speaking out, especially if what the individual has to say is jarring or disruptive. In practice this effect can depend on the self-confidence, and subtly on the status of the individual involved meaning that men, women, minorities and certain occupations will all experience this differently

 

Polarization

Like minded groups, post deliberation can often get into a more extreme position than any of them started in pre-deliberation. This is most clearly visibile with respect to politiical affiliation. The authors cite interesting studies that show that groups of left-of-centre or right-of-centre individuals will tend to adopt more extreme positions post-deliberation than their average pre-deliberation, and will tend toward greater consensus in the more extreme position. Why does this happen?

Individual opinions can turn more extreme when corroborated by others, and confidence can also increase once an individual learns their view is shared by others. Social pressures/forces will cause members to adjust, at least slightly, to the dominant position.

Polarization doesn’t always lead away from the right answer of course, if the members of the group are individually leaning toward the right answer then the group polarization is likely to produce a decisive swing to the correct view. However groups badly blunder when they polarize toward an incorrect answer, becoming more confident in the incorrect answer in the process.

Cascades.

The human being is at root a social animal, language may well be the most subtle and engaging social mechanism in the animal kingdom – and we are wired to synchronise with other humans from birth. Hence what others do or say will influence what we do or say. What can easily happen is that subsequent speakers may defer to the opinion of earlier ones, and later speakers, hearing two or more people state the same belief may assume these beliefs were arrived at independently (and therefore have higher reliability). The authors describe an interesting experiment where subjects consistently make obviously false statistical judgements, being influenced by what earlier subjects stated.

If consensus is prized, and known to be prized, then self silencing is more likely.

Amplification

Groups often amplify natural human biases such as availability (if something can be easily called to mind, it is considered more likely), representativeness (if someone superficially appears to fit a particular mould, we are likely to judge them as being more suitable) , framing and egocentric bias. The planning fallacy, overconfidence bias.

Why? Informational influences and social pressures are again at work.

Having understood the ways in which groups blunder, the authors guide us through ways we can make groups function better – I discuss this in part 2 here.

I am right, you are wrong…

So this is about strategies and tactics to understand and get past I am right you are wrong type situations and get to better outcomes. Specifically I am going to address this through three vignettes.

But before we start I’d like to ask you to picture a recent example of a disagreement. I’m sure you can all picture a classic moment of disagreement. An entrenched position develops. Voices get raised. People get animated. Interrupt each other, give short, spikey answers.

We’ve all been there, either as protagonist or observer – does it lead to good outcomes?

Here’s a few reasons why it happens – innate human yearning for control from an early age, an inbuilt desire to be right, to “win”, to assert views. A sense of “ego”. Innate desire for relative status – especially in a knowledge world where status can often be measured by being right.

Add to that the difference between Open vs closed mindsets.

Bring in a bit of Overconfidence bias, it’s been shown that senior people, successful people tend to be overconfident, selection process bias to persuasive people with confident views.

A lot of combustible ingredients there! Not a surprise perhaps that these situations occur pretty often – and derail group decision making.

Can we unpack some of these disagreement de-railers and offer thoughts and strategies/tactics for addressing? That’s the aim of this short piece.

Distinction – at least three types of disagreement here …

Type (1) – Thoughtful Disagreement

 

As an aside, If you haven’t already read it – I recommend a great book on thisPrinciples by Ray Dalio (founder of Bridgewater, who many of you will have heard of). Really influenced my thinking on this point (and plus is just a fantastic book on life & work).  He talks about the concept of being “radically open minded”. A genuine worry that you might not be seeing choices optimally. Suspend your judgement for a second and evaluate something through someone else’s eyes. Agree that you might be wrong.

Some  great framing to try and force ourselves to adopt when we find ourselves in this situation “I don’t know much relative to what I need to know”. “help me understand how I may be wrong”. It’s a great framing, but it is hard! And it needs everyone to take that stance, definite role for a facilitator or chair here in promoting that kind of atmosphere. Everyone needs to get a little humble, agree to be as open minded as they possibly can be, and go through that process together of suspending judgement for a second and hold conflicting concepts in the mind for a little while, holding that tension there for a bit without jumping one way or the other (which is a hard thing to do).

 

A common example of this that we encounter internally is debates of expected returns on asset classes at our investment committee. We tend to have strong views and don’t agree. As you’ll know the number you use does matter for allocation purposes. But clearly it’s something you can debate all day long. You’d be surprised how animated and energetic people can get over the difference between 3% and 4%!

 

To characterise the argument – Pete might say “I think the expected return on equities ought to be 4% and not a penny less”. But I might say “No, Pete, you are wrong, you’re too overconfident – it should be 3% and not a basis point more”.

 

There’s a clear clash there and a real risk of “I’m right you are wrong” developing. We have got past this by using some of the strategies described above. What we find if we hold on to both views and pursue the ideas behind them is that Pete is worried that too low a number might lead to excessively high allocations to chase return targets, whereas I fear that too high a number would lead to a false sense of security. Both very valid positions, and by holding the tension there we’ve got to better outcomes, I believe.

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Type (2) – The Entrenched Position Holder. Here we’re talking about a situation where one party may be more expert or better informed than the other

 

Closed mindedness or what psychologists call an “emotional hijack” could be the real enemy here and we need to be on the watch out for those.

 

So you encounter an entrenched position from someone you suspect probably doesn’t see or understand the full picture. A common example of this we’ve encountered is debates on interest rates and hedging. A proposal is in the process of being rejected because of a logical-sounding but (in your view) flawed argument (“I am against hedging because I think the BoE will raise rates next month”).

 

In the moment temptation can be very strong to try and “win” through force of logic. But experience suggests trying to meet an entrenched position holder head on in that way doesn’t usually lead to good outcomes, if done too stridently it might even push other neutrals or people biased toward your point of view into the debate in support of them, especially if it looks like they are being patronised.

 

To help understand the opposing side here, I think it’s really important to say that we all experience mental pain when an event or person comes along to challenge a tightly-held idea. This can be especially so it if reveals a personal weakness on our part. It is especially tough for more closed-minded people to cope with this situation. Being aware of it in ourselves (and using cues as triggers to control behaviour) can help get more open-minded.

 

But if we’re observing someone else and we are picking up some or all of these cues/traits that emotional hijack or closed-mindedness is coming into play, it calls for some tactics.

 

Recognise that emotions are powerful in the moment and will almost certainly “hijack” logical thinking (research shows that the flow of blood to areas of the brain is physically hijacked and diverted, so you in the heat of an argument no-one has their full cognitive capabilities on-line).

 

  1. Open by receiving the position positively –

 

“We disagree  – that’s great!” or “good challenge” … it shows we have an important issue here that we need to spend time getting to the bottom of. Find out what is really true and

Plus it rewards, encourages, fosters dissenting voices (dissent is often a good thing – if done in the right way).

 

2. Agree on basics ….

 

Can we agree we are here to make the best decision we can?

Agree ground rules around process/structure – don’t block each other from speaking. 2 mins each uninterrupted to make case. Then each agree to play back your hearing of the other’s argument, to help internalize and demonstrate that you are listening.

 

What can we now both agree on?

 

What is the evidence in front of us? Be evidence based and encourage others to do the same,

Where are we trying to get to – is the goal agreed upon or is that a point of dispute?

What are our constraints – are those agreed on both sides.

 

A tactic we have found works well is to establish what you might call boundary conditions (“if we were fully funded, would you want to be hedged”).

 

3. Don’t expect to get a solution straight away

But don’t let the debate put the issue on hold for ever and kicked into “long grass”. Keep open dialogue going

Inject a little humour and levity if at all possible – can lighten the mood and diffuse any potential confrontational atmosphere which can keep things moving along. I’ve seen this done really well by certain board chairs at just the right moment (not detracting from the seriousness of the debate, but a well judged comment can lighten tone and relax people).

Consider compromise stances

Even if we can’t ultimately agree, how do we size the position, is there a timing compromise

 

Type (3) – the Personality Clash

 

Needless to say there are a huge variety of personality types, and of course this influences how we behave and react in a business context. I’ve become a big fan of the Deloitte Business Chemistry, and risk type compass is also something we’ve used. There are others (Hogan, Myers Briggs, Five factor, Gallup) They all give different helpful ways of looking at personality and, particularly how it impacts on the interactions we have with others. It helps understand ourselves and others, helps explains a large part of a lot of issues.

 

Understanding personality characterisations and the traits that arise from how individuals are “wired” helps takes away the individualisation, personalisation of the thing. Gives you a language to depersonalise (“you’re going all guardian on me again – help me here”). It’s a great vehicle for improving one’s own Self awareness.

Let’s take an example here. In the language of the Deloitte business chemistry framework- I’m a driver

 

hat means I thrive on making progress and getting things done, and can get impatient when I feel like I am getting “bogged down”. I can and do therefore often face objections from guardians who rightly often ask “show me more data or let’s stop for a second and think more deeply about this and what we are trying to do here”. Deep down I share their desire for logic, but I’m also silently screaming “let’s just get this done!”, as I perceive their requests for data or more debate as a “no”. Personality lens gives the option to depersonalise, increase self-awareness and recognise as a classic guardian/driver clash, which is much more helpful in moving forward.

 

I do see that a bit on trustee boards – often the chair might be a driver type personality, brought in perhaps to move forward and get things done, enact change. Many trustees are likely to take guardian viewpoint (indeed, the word trustee kind of invokes a sense of guardian). Can lead to clash. Also a role for consultant and other advisors in the personality mix. Important to understand.

 

So, to wrap

 

I’m right you are wrong situations, arise all the time for a bunch of reasons, but unlikely to lead to good outcomes.

 

Leave you with one thought: always try and aim for thoughtful disagreement.

 

Talked about three scenarios and some strategies and tactics to handle/navigate

 

Two well informed people with a genuine clash of ideas

Dealing with emotional hijack when we have two sides with different levels of expertise

Clashing personality types

What I’m reading summer 2017

What I read this summer

Stumbling on Happiness
The pursuit of happiness is built into the very definition of human desire. We treat our future selves as though they were our children, spending most of the hours of most of our days…
madetostick
From one of our leading technology thinkers and writers, a guide through the twelve technological imperatives that will shape the next thirty years and transform our lives Much of what will happen in the next thirty years is inevitable, driven by technological trends that are already in motion. 
categoryofone
Do you know a company that defies comparison and exists in a category all by itself …. a “Category of One” as author Joe Calloway puts it? Are there common, repeatable features of…
Productivity
Why Deep Work Matters in a Distracted World
Even though mobile devices have increased our access to information and ability to communicate with others, they’ve also introduced barriers that could negatively impact our work. By…
Struggling to be productive at work? Take a neuroscientist`s...
Do you ever struggle to get things done? Do you sometimes feel your brain is not as sharp any more? Did you used to read books and now find it challenging to even finish a short article in…
The Surprising Cognitive Benefits Of Small Talk At Work
The weather, Mondays, Game of Thrones, that local sports team… These are all generally considered as safe small talk topics at work. But for many people, bonding with colleagues is not…
Simplify podcast, 6 episodes with powerful and simple ways to...
Simplify is for anybody who’s taken a close look at their habits, their happiness, their relationships, or their health and thought “There’s got to be a better way to do this.”
Evernote Podcast Interview: Tiago Forte`s Approach to...
Tiago forte is a recognised productivity guru and has a lot of thought provoking good-sense ideas on how to increase one’s productivity especially regarding knowledge work. He’s an advocate of Dave Allen’s “Getting Things Done” (GTD) methodology and talks about the idea of “intermediate packet delivery” that is to say making sure there is a clear output from each block of knowledge work (could be as small as an agenda for a meeting, or a single tweet) but the key is not breaking a train of thought and forcing yourself to try and pick up again mid-train later.
Pensions & Investment
ror20case20study20-20chan-408719-1.jpg
In an indication of how thinking in the industry has developed, Punter Southall have also used long-term ALM modelling incorporating allowance for sponsor default to model what they term (slightly less optimistically than LGIM)  “Risk of Ruin” (RoR).Takeway – in this case study they provide an example of how RoR analysis helps the trustees to focus on the most important issue in the case of an action that decreases the scheme’s covenant, in this case pursuing security rather than negotiating for a cash infusion or de-risking.
LGIM Investment Strategies for Covenant Risk
Using long term ALM analysis focused on the Expected Proportion of Benefits Met (“EPBM”) under scenarios where the corporate sponsor defaults, LGIM draw some interesting and actionable conclusions for investment strategy choices in response to changes in sponsor covenant. It particularly highlights a tipping point as a sponsor falls below BBB rated. Takeaway – depending on covenant strength scheme may want more return-seeking assets to maximise proportion of pensions expected to be paid.Caveat – this analysis doesn’t appear to take into account the PPF, this is a key debate with regulatory guidance continuing to stipulate that trustees shouldn’t take this into account.
RAFI Asset Allocation Interactive
Been loving playing with RAFI’s new tool, one for all you investment geeks out there. Broadly it looks to illustrate the properties of various asset-side portfolios, assessing the long-term expected returns, and risk-adjusted returns.Takeaway – we’re in a world of lower returns and most portfolio are unlikely to deliver the sort of real returns we’ve seen in the past. We need to be realistic about outcomes, however diversification and risk management still matter
Books …
" Inside the Nudge Unit | The Behavioural Insights Team
For anyone who has ever pondered how to phrase an email to encourage people to do something, these insights from inside the UK Government’s Behavioural Insights Team (also known as the “nudge unit”) are fascinating. Halpern describes the EAST (Easy, Attractive, Social, Timely) principles for designing nudges and explains how the wording of a letter increased tax revenues by billions of pounds.
Work Rules!: a new book of insights from Google`s Laszlo Bock...
Laszlo Bock (ex-SVP of people management at Google) lifts the lid on the real stories behind some of the people management innovations that have made google such a success. It’s a must for anyone who has ever thought hard about how to motivate high performing teams. My highlights:Tap into the power of intrinsic (vs extrinsic) motivation by empowering employees and giving them purpose. This helps motivate employees, and increases both well-being and productivityIt was great to see the honesty that he puts out there – refreshing to read that everyone at google hates performance reviews but no-one can agree on a better system!Frequent surveying of views, data gathering and clear KPIs are key to making “self managed teams” work bestThe design of many of our institutions, including most companies are “command-and-control” hierarchies inherited from the 20th (or even 19th) century manual work era where the prevailing view was that individuals needed strict rules imposed upon them. They aren’t appropriate for knowledge work and they restrict productivity by reducing intrinsic motivation
TV series …..
Black Mirror (TV Series 2011- )
How did I not see this years ago? Darkly dystopian but utterly compelling. Created by Charlie Brooker. With Daniel Westwood, Hannah John-Kamen, Beatrice Robertson-Jones, Daniel Kaluuya. A television anthology series that shows the dark side of life and technology.
Other Books
Behind Closed Doors
Utterly terrfiying, gripping
created in Publicate

One minute guide to real-world AI implementation 

McKinsey just published an excellent and comprehensive paper covering how Artificial Intelligence (AI) can deliver real value for business.

tl;dr

The only issue – at 80 pages it’s a lot to read.

A lot of the use cases focus on retail, energy and education, one angle I find particularly are the read-across of these examples into service based and business-to-business environments. There are definitely some relevant points that could map to a services/B2B worlds: for example the automation of admin tasks for teaches, more targeted sales and marketing and more personalised customer service.

Here’s my take on the key points from the document:

1. No shortcuts: first data & digital, then AI

AI becomes impactful when it has access to large amounts of high-quality data and is integrated into automated work processes. AI is not a shortcut to these digital foundations. Rather, it is a powerful extension of them.

The firs thing firm’s need to do is come up with a real business case for AI that relates to the firm’s strategy, this requires separating the hype and buzz around AI from its actual capabilities in a specific, real-world context. It includes a realistic view of AI’s capabilities and an honest accounting of its limitations, which requires at least a high-level grasp of how AI works and how it differs from conventional technological approaches.
Each new generation of tech builds on the previous one – this suggests AI can deliver significant competitive advantages, but only for firms that are fully committed to it. Take any ingredient away—a strong digital starting point, serious adoption of AI, or a proactive strategic posture—and profit margins are much less impressive. This is consistent with McKinsey findings in the broader digital space.
Technology is a tool and in itself does not deliver competitiveness improvements.

2. Areas to focus on to create real value: project, produce, promote or provide 

To fulfil the expectations being heaped upon it, AI will need to deliver economic applications that significantly reduce costs, increase revenue, and enhance asset utilization.

Mckinsey categorized the ways in which AI can create value in four areas:(1) enabling companies to better project and forecast to anticipate demand, optimize R&D, and improve sourcing; (2) increasing companies’ ability to produce goods and services at lower cost and higher quality; (3) helping promote offerings at the right price, with the right message, and to the right target customers; and (4) allowing them to provide rich, personal, and convenient
user experiences

3. Data ecosystem & staff culture to the fore 

Firms must conduct sensible analysis of what the most valuable AI use cases are. They should also build out the supporting digital assets and capabilities. Indeed, the core elements of a successful AI transformation are the same as those for data and analytics generally. This includes building the data ecosystem, adopting the right techniques and tools, integrating technology into workplace processes, and adopting an open, collaborative culture while reskilling the workforce

4. Take a portfolio approach focused on use cases in short, medium and long term, be lean, fail fast & learn

A portfolio-based approach to AI adoption cases, looking at use cases over a one- to five-year horizon, can be helpful.

In the immediate future, McKinsey suggest a focus on use cases where there are proven technology solutions today that can be adopted at scale, such as robotic process automation and some applications of machine learning. Further out, identify use cases where a technology is emerging but not yet proven at scale. Over the longer term, McKinsey’s view is to pick one or two high-impact but unproven use cases and partner with academia or other third parties to innovate, gaining a potential first-mover advantage in the future. Across all horizons, a “test and learn” approach can help validate the business case, conducting time-limited experiments to see what really works and then scaling up successes. Fast, agile approaches are important.

5. Don’t be a hammer in search of a nail … 

To ensure a focus on the most valuable use cases, AI initiatives should be assessed and co-led by both business and technical leaders. Given the significant advancements in AI technologies in recent years, there is a tendency to compartmentalize accountability for AI with functional leaders in IT, digital, or innovation. This can result in a “hammer in search of a nail” outcome, or technologies being rolled out without compelling use cases. The orientation should be the opposite: business led and value focused. This business-led approach follows successful adoption approaches in other digital waves such as mobile, social, and analytics.

McKinsey graphics on AI:

2016’s Most Popular 

My most-read blog posts of 2016 were: 

1. Why Anthony Hilton is wrong about DB pensions 

This post, responding to the misguided (in my view) viewpoints of London Evening Standard journalist Anthony Hilton in September garnered by far the most views of any of my blogs this year (around 1400 views). 

An extended version of this article was also featured in Professional Pensions, and also became their most viewed opinion piece of the year

The article must have stuck a chord with readers in the pensions world. We do of course live in pretty challenging times for DB pension funds, with several strong macro-economic headwinds making it harder to deliver the benefits that have been promised. This year saw a vigorous debate around what should, or should not be done to the DB pensions system. This debate was further catalysed by the high-profile cases of BHS and British steel, and the debate looks set to run on into 2017. 

Given the importance of the DB system to the retirement prospects of millions of members I believe a solid debate on some of these important issues is to be welcomed, and look forward to continuing the debate productively in 2017.

2. No Ordinary Collision – the Future of Asset Management

Powerful forces of change are at play in many industries, and asset management is certainly one of them. Technological and demographic shifts will shape the future of the asset management industry, in this piece (April 2016) I discussed some of  the intersecting forces, drawing on a wide body of existing research on the future of work and finance. 

Here are my six key takeaways: 



3. Consulting firms reply to the Work & Pensions Select committee 

In the wake of the BHS pensions story, the W&PSC issued a green paper calling for views on the future of the DB pensions system in the U.K. Given the prominence of this debate and the considerable air-time it’s received this year the responses from the main actuarial & investment consulting firms were considered and insightful. What was also interesting was the diversity of views. Will most schemes pay the benefits promised? Should the role of TPR change? Should there by wholesale change to the system? Will small changes be effective? Is consolidation feasible? These were all questions on which the consulting firms gave insightful, but often differing answers. 
I hope you’ve enjoyed my blog posts this year. I look forward to sharing more in 2017. Sign up to receive updates on new posts.