Thin-Slicing & Rapid Cognition in Commerce

Those who've bickered about business and industry with me over a cup of coffee know I love to blend larger socio-observations into the folds of commerce.  After all, businesses exist within these environments and sometimes even create them.  Because of this congruence, I'm forever enticed by their relation.  As it relates to this post, I'm specifically interested how business leaders make decisions amongst the relentless flow of information in the modern, data-driven world.

The concept of Rapid Cognition or "thin-slicing" is why people declare; "You don't get a second chance to make a first impression."   Thin-slicing refers to the ability of the unconscious to find patterns in situations and behavior based on very narrow slices of information and is a dazzling part of of how people make sense of sophisticated problems such as the hiring of a new executive.  Does it take 8 months for a hiring manager to understand a new-hire's competency or can a settled understanding be had during a single interview?  Much outstanding research supports the fact that the single interview may, given certain a certain context, be more reliable.  So how can this be used in business?

I've been recently writing much about the prevalence of data and real-time decision making in business.  The relentless pursuit of data-driven businesses has flooded most executives minds with more raw information than is bearable and though these metrics do ease many business processes, they also can distract.  Information-overload is pervasive and the topic of many corporate training sessions for small businesses and corporate chains like big-box stores.  I recently spoke with a professional friend who Manages a local Walgreens store.  He reviews hundreds of Key Performance Indicators (KPI's) daily, which are a product of the sophisticated data-driven business Walgreens runs.  I'm curious how his intuitive senses and thinly-sliced judgment may stack against these KPIs.  This Walgreens Manager shares the decision-maker role with countless others within industry trying to make highly influential decisions in regards to very complex problems and sometimes we hear stories of courageous executives turning off the dashboards, etc. and using the the Gut.  The Gut is a product of thin-slicing and research has proven its effectiveness in decision making.  Decision-makers use it when they walk a factory floor or make deals via a hand shake.  The disregard the endless complexities associated with the decision and instead make smart decisions in hours, minutes, and seconds.  Because of proven success, I suggest a tempered look at using thin-slicing during everyday decision making as well as during highly complex problems.  This can work especially well with problems that present countless variables to consider.  Overall, it's simply another angle by which a complex decision can be refined into manageable parts.

A Final Dash of Salt…

Many factors affect the quality of a decision made using rapid cognition techniques and therefore it is inherently full of caveats.  However, I'm most interested how the many topics of data-driven commerce, several which have been touched on in prior posts, can be influenced by rapid cognition.  Business leaders are flooded with data, much of it benign.  Rapid cognition may be the key to making quick, deeply reliable, and sophisticated decisions without getting lost in the sea of information.

Wind Turbine Power Generation & The Science of Emergence

I’d like to continue piggy-backing on my previous posts about localized data and control with an entry-level post about wind forecasting as it relates to energy production and energy markets. 

Wind prediction is part of our local, nightly newscast and the principles guiding it are scientific standards: low pressure persuaded by distant bodies of water make wind.  This is nothing new.  What is new, however, is the hyper near-term prediction of wind velocity, angle, density, etc. for the use in wind farm design and operation.  Day-out forecasts have long been available for these purposes, but several firms now offer data-analytics software (i.e. LIDAR) and turbine blade hardware that can make real-time predictions of incoming wind several thousand feet away.  Micro adjustments are then made to blade pitch and the like so as to better capture the energy within the wind.  This ability is not necessarily new as many newer turbine blades incorporate design that exploits complex hydrodynamic principles, but adapting them to further increase production is still ongoing. This is very similar to the use of automated flight stabilizing flaps used on commercial aircraft.   The below video is a quick, anecdotal example.

What’s more, I believe the concept of Emergence used in Science could also compliment the refined efficiency of large farms.  Emergence is the concept of self-organization without leadership.  Fire-flies, ants, fish, and the like use it to build complex societies and coordinate movement without the aid of central command.  It’s the same reason why some neighborhoods within a city sprout and gentrify quickly.  One unique shop or venue opens up and passerby’s stop.  Soon enough, people come to view the venue, start new venues, move, multiply, grow, etc. until a new neighborhood has formed with new character all without official direction.  I’m leading to the point that wind farms can benefit from this concept too. 

A farm built in such a way so as to capture wind data from the front-facing turbines could then communicate valuable data backwards to the “school” of turbines stacked behind it just as fish do effectively letting them "see" and adjust to wind in real-time.  Farms could make quick, forward-looking micro adjustments to harvest the best catch.  Assuring every installation of wind generation has more up-time is critical to making it a viable node within the larger generation/transmission system.  Independent System Operators will be able to consider using this power more regularly and at better prices with these increased efficiencies instead of it currently being relegated to generation for nighttime load.

A Final Dash of Salt…

This post isn’t a rant into the awesomeness of wind power.  Instead it’s an extension of my recent theme on data-driven, networked energy production and consumption.  I look at any opportunity to turn passive technologies (i.e. wind) into active and controllable ones.

Has Distributed Generation (DG) Reached a Fall-line in the Utility Industry?

In follow-up to my previous post about the Internet of Things, I’d like to discuss one of the most prominently affected industries and a topics: Utilities and Distributed Generation (DG).

When Edison first performed Direct Current (DC) transmission of electricity, the concept of DG was the paradigm of electric consumption: consume electrons near where they’re produced.  Consumption remained this way for a small amount of time before Alternating Current (AC) allowed the gap between generation and consumption to literally widen.  Today, this model is even more evident as most consumers cannot even speculate as to where their electrons come from.  However, several evolving forces have renewed interest in this classic concept and reinforced the possibility of DG becoming a valuable energy alternative for Industrial, Commercial, and even Residential consumers.  It is being seriously evaluated by many agencies and utilities around the country.

                Utility administration must craft their perspective on this topic as it will be continually discussed in this and several upcoming decades.  First, they should settle upon why not to embrace this concept, which includes fundamental power production and distribution issues such as power quality.   Utilities traditionally discourage multiple generation sites on the account of power quality.  The introduction of various generation points, times, sources, voltages, etc. greatly affect the physics of producing and transmitting “good” power: load factor, voltage, harmonics, etc.  In many cases, DG directly erodes the effects of the natural Economies of Scale traditional to electricity generation and the very reason Centralized Generation (CG) exists.  On a purely mathematical basis, increasing DG, at least in 2012, will make CG less efficient.   Classic Economics assures us the most efficient player should always produce the appropriate good/services, which has so far been demonstrated by the AC generators of the last 100 years.  Interestingly, this paradigm is now also driving a resurgence of DG discussions across the spectrum of Utility customers. 

                There are increasing instances when the actual consumer of electrons may be able to produce them more efficiently than a centralized Utility and as such each Utility must render an opinion on why to embrace the concept.  Micro-generation technologies such as turbines, battery storage, PV, bio-reactors, etc. allow for this.  Utility point of view sometimes changes as they begin to run the numbers on Avoided-cost.  If the harm of DG on power quality and planning can be minimized, it may be more efficient to allow for DG, thus making the avoided-cost component an immeasurable real-time stat to monitor.  This is generally in contradiction to most people’s thinking of big Utilities in that many believe they simply want to sell as much electricity as possible just as any other business would.  In reality, Utilities want to sell the right amount of power, which is a delicate dance between bulk and efficiency.  So does DG stand a realistic chance amongst evolving fuel and technology prices?

                Real potential exists for DG to gain noticeable traction right now largely due to two macro trends.  First, the advancement of micro or hyper-local generation technologies across the Utility customer spectrum makes on-site generation economical.  Second, the real-time and decision-making power of a data-driven economy and energy marketplace make micro control and connection realistic.  The Classic Economics referenced prior state that the most efficient player should produce any given service/good, but this fundamental decision process has never been widely applicable to energy generation and consumption.  Energy has always been dumb.  The data-driven information revolution and the implementation of data analysis, real-time control, and networking technologies make it possible for Generators and Consumers to interact, which is a new element to the Utility industry.  DG can generate when most efficient while CG reduces peaking-plants and vise versa.  These are the data trends that are flipping a 100-year old Monopoly on its head and should surely become action-items on any utility CEO’s desks if they aren’t already.

 A Final Dash of Salt…

 Data-driven energy generation and consumption: the biggest change to the utility industry since AC

transmission?  I think so!

Extra Reading…

Check out the sections on the changing nature of risk.

http://www.ferc.gov/legal/fed-sta/exp-study.pdf

The Internet of Things

I'll begin my 2012 musings with a discussion of the Internet.  A digital information network that has been hyper-refined in the past decade to the point of resolving a Marketers once unachievable dream: 1-to-1 commercial messages.  The convergence of several technologies (geo-location, AI algorithms, wireless) now make it very possible for commercial messages to be acute, timely, and accurate for the individuals receiving them.  Those who participate heavily in the Internet have experienced this giant learning-machine and are very aware of how clever Google is in following them around.  For a humble computer network originally begun for the purposes of scientific research and review, the Internet now is purely a commercialization engine and one that is an increasingly apt business person.  This is being led by the comical amount of web/tech firms still setting up ship in the valleys of Southern California.  A drive through this area is like Cirque Du Soleil with acts such as Zynga and Twitter.  What's important to understand is the commercialization of the Consumer Internet is leading to big things for Industry.

Industrial communication and business understanding used to be a grab-bag of trend analysis tricks and executives knew it was a dismal science, but big and little corporate ships were steered in such ways.  "Business Intelligence" didn't even enter corporate jargon until the late 1990s.  In the oddest of stories, advancements in the consumer Internet is benefiting Industry, which is not the norm, to change this.  Industry usually works through problems or opportunities and passes the knowledge, products, or services to consumers.  Or consumers only benefit from certain things because they exist for Industry (i.e. the electricity grid).  By this I mean the consumer 1-to-1 Internet has ushered in the technologies, processes, and culture of Industrial Internet: the Internet of Things.

Micro-chips that require no electricity, can sense variables around them (i.e. temp, movement, etc.), and make educated decisions are the keystone to the Industrial Internet.  Whereas the Internet has been largely a digital facade for humans being, it is now perfectly possible for Things to be part of it as well and Industry can therefore refine their understandings and business management to micro levels.  The possibilities are truly endless. Every assembly-line widget can get itself to the correct destination, traffic signals can adjust to context, buildings adapt to the weather by the minute.  Mail-delivery persons only check boxes that have mail and tires talk to drivers.  Firms are beginning to scratch the surface of this network, but know that many are pouring cash into new ideas that exploit it.

A Final Dash of Salt...
I'm very interested in the Industrial Internet as it pertains to energy use because it's part of why the 120 year old Utility industry is being flipped on its head right now.  Dumb energy has always been consumed in dumb ways.  The Internet of Things is a game-changing force in the worlds of conservation, efficiency, and power management.  Don't worry though, Skynet is not here yet!

Here Comes the Sun!

Play this song while reading this post...

(Here's a more specific PV post stemming from my previous comments on Grid Parity.)

"Jimmy Carter makes the first presidential push for solar renewables in the 70s."  "If the small state Rhode Island were covered in PV panels the U.S. would be set for electricity."  "The thermal value of energy hitting the Earth's surface at any moment is many thousands of times greater than demanded by its inhabitants."  Among other Utopian claims, we've all heard about the Sun's potential to save us from the energy abyss.  It's a endlessly hot topic about a technology that has modernized and as such, legitimized itself in the past 10 years.  Because of these developments, unbridled enthusiasm reigns at many PV startups and has fueled a chaotic landscape of serious players.  But I need a less kabuki-esque presentation of where this technology really stands.

It may be the case that PV energy may finally be coming of age.  Much has happened in the past 10 years and even 2011 alone.  The historical troubles with the 60 year-old technology have slowly been tackled successfully and the trickiest are now being settled as well (i.e. low conversion efficiency, support material industries, etc.).  Most advancement has come from two things; the ramped-up production of traditional Silicon Wafer production now decoupled, scaled-up, and more responsive beyond its previous paternal semiconductor industry and the creation of cheap Thin-Film conducting inks and substrates, which can be printed at 100ft/min.  The former reason is a great example of the power of scale to reduce cost.  A PV Moore's Law has evened been discussed because of consistent 50% boost in production every 18 months as cost are halved.   The latter is a testament to a venture marketplace that truly values new tech and an engineering-focused business model that continually tweaks better manufacturing processes and rising conversion efficiency from Thin-Films.  Both trends address the paramount reason PV hasn't been able to achieve that idealistic idea of using the sun for electricity: cost.  Aside from the forward-looking CEO, the entire industry has long been considered a niche sector and still is by many because of this reason.    But now even big-time utility firms are crafting their PV strategies.  

Utility CEOs produce awesome amounts of megawatts in central locations and distribute it outwards to customers, which is the Alternating Current hallmark of Thomas Edison that allowed him to beat Nicola Tesla's Direct Current.  It's been the only way to deliver electricity for over 130 years.  However, this notion is challenged by the sun's endless ability to electrify every inch of earth, thus allowing each consumer to effectively detach themselves from big utilities, presuming a viably technology is available to them.  Distributed generation via PV and other home remedies are increasingly on the lips of analysts weighing the costs of either building new power plants or instating consumer incentives for PV.  Viable, affordable, and accessible consumer PV is on its way and as I've said before could be in $5,000 DIY kits at stores within years.  Growth of distributed generation is the primary reason a data-driven electricity market is in dire need and the tangent Smart Grid industry is so abuzz.  Too long a passive, reaction-less marketplace, technologies like PV coupled with real-time info-metric communications could really reshape how small and big consumers of an old-school commodity bring their relationship into a new century.  It's extremely exciting to me.  So much new, great work to be done in a old industry.

A Final Dash of Salt…

Silicon PV is efficient, but mostly cost prohibitive, currently.  Prices are incrementally lowering towards grid parity, which is assisted by the overall rise in level of cost for the other typical fossil fuels.  Thin-Film or CIGS (copper, indium, gallium, selenium) are cheap to make, but much less efficient.  Both address overall cost and are close to making the technology economically practical distributed and centralized generation alternative.  Further market and government assistance is needed to bring PV to the masses at the level as it's often spoken about.  Eventually everyone should have access to the original fossil fuel!

GAME CHANGER?

Interested in Thin-Film PV?  Here are some world class play-makers in the industry.

http://www.nanosolar.com/

http://www.avancis.de/en/

http://www.stion.com/

http://www.firstsolar.com/en/index.php