Applying RAND Methods To Finance

The RAND Corporation's CEO spoke at the Commonwealth Club last night and I scored a front row seat.  It helps that the Club's own CEO was once a RAND analyst.  Almost all of RAND's research focuses on cost-benefit planning tools that public policy makers can use.  I noticed that they have published some research on behavioral finance, economics, and energy.  Wall Street can use that stuff free of charge.  Alfidi Capital's never-ending search for financial insights means there is gold to be mined in RAND's methods.

RAND's CEO mentioned the corporation's early work in dynamic programming, linear programming, and game theory.  Analysts in many sectors still use those methods today.  Finance types would have used variations of the Solver program for decades to automate their optimization searches in those methods.  I'm increasingly certain they use Python programs today.  Moving objects around saves time over running long scripting routines.  The operations research that RAND and other government analysts perfected after WWII is now heavily used in Python applications.  Python even handles cost-benefit analysis, RAND's bread and butter.

I was intrigued to hear RAND's optimism over data visualization tools.  Python can do that too, so making data comprehensible to semi-literate policymakers is within every competent analyst's reach.  Technocrats who design our society's future policies now have compelling visual sales tools as the rest of society reverts to pre-literacy levels of comprehension.  I bet RAND also uses the scenario planning method that Royal Dutch Shell and Global Business Network have used for decades.  My web search for jobs involving scenario planning shows a few listings that require proficiency with - you guessed it - the Python language.  There's no escaping coding as literacy these days.  I also noticed a few references to manipulating data stored in Hadoop architectures during scenario analysis.  It's all about Hadoop and Python for finance types who dream of the C-suite for the next decade.

RAND's concerns over threats to the future of objective research are solvable.  Their CEO's main concerns were the short attention spans for digesting longer research products and the political polarization in Washington that discourages objective policy solutions.  First, consider that Arthur McCollum's Eight Action Memo of 1940 summarized US strategic aims in the Pacific with just six pages of text.  Any RAND report with a one-page executive summary is digestible by policy makers who don't code and won't read in depth.  Second, solving the polarization gridlock means presenting research conclusions that are summarized in ways that both liberals and conservatives can understand.  This may require drafting two separate executive summaries for a research product - one written with liberal language, one written with a conservative language - and circulating them separately on Capitol Hill.  Each political audience can then perceive the project summary in language it understands.  Either political interpretation is valid so long as they both point to the same RAND policy recommendations.

I should have applied for the RAND Arroyo Center Army Fellows Program while I was on active duty but it's probably too late in my career to get a slot.  I took a lot of analytical coursework through Army distance learning and my MBA program, and I can still break out my old notes on PERT/CPM and minimax problems if needed.  The stuff comes in handy.  If RAND needs my help, they know where to reach me.  I'm available and affordable.

3 Crucial Skills for US Military Veterans Seeking Corporate Careers

I served in the US Army after my studies at the University of Notre Dame.  Some of my ROTC program classmates stayed on active duty for the long haul, longer than I thought would be sane.  They are now approaching their 20-year service milestones, which means some of them are considering life on the outside.  I have them in mind when I think about the references I used years ago when I started my own transition to civilian life.  The published works available to help military veterans make career transitions could fill a whole library shelf.  Most of that material is general and repetitive.  Hardly any guidance is tailored for someone with a more technical career goal.  Fear not, senior veterans, because Alfidi Capital is here to fill the knowledge gap.  

I have identified three skill sets germane to a large corporate environment.  These skills are portable to any corporation and are particularly useful in very technical fields.  Acquiring them requires mastery of peer-reviewed bodies of knowledge.  These qualifications are vastly more credible with corporate recruiters than any military-specific skills a veteran possesses.

Six Sigma certification is the first skill set that veterans should acquire if they want corporate careers.  Completing a Six Sigma project within the US Department of Defense confers a resume bullet more valuable than experience with real bullets.  The American Society for Quality (ASQ) maintains extensive references on Six Sigma and related topics.  The International Association for Six Sigma Certification (IASSC) lists options for completing the qualifying exams.  Completing the appropriate training and exams is not cheap but is absolutely necessary for official qualification.  

Knowledge management (KM) is the second skill set.  Practitioners become the go-to people when an organization translates the DIKW Pyramid into real operations.  Experts read KMWorld for the latest developments.  The American Productivity and Quality Center (APQC) defines many KM best practices.  The KM business discipline does not yet have a universally recognized body of knowledge and several organizations have emerged with competing certification standards.  I believe that mastering the APQC material through independent study is sufficient at present to claim expertise.  

Operations research (OR) is the final skill set.  The Allied Powers in World War II invented the modern field of OR, and today select US Army officers maintain qualification in the operations research / systems analysis (ORSA) specialty.  The Institute for Operations Research and the Management Sciences (INFORMS) is the US governing body for the OR profession; they have all the resources needed for someone seeking qualification.  

Mastering these skills enables a veteran to compete for corporate jobs that have prerequisites beyond entry-level experience.  Combining them with certification as PMI's Project Management Professional would make a veteran's resume very compelling.  Lacking these hard skills can be a serious handicap.  It is an unfortunate fact of modern life that business skills have diverged far enough from the generalist "soft skills" of military leadership to disqualify many veterans from white collar occupations.  Veterans who wish to avoid confinement to the low-income ghetto of permanent entry-level career paths should master widely accepted business knowledge.  This means hitting the books all over again.  

I recently attended a talk by US Marine Corps combat veteran David Danelo about his book The Return:  A Field Manual for Life After Combat.  The audience at San Francisco's Marines Memorial Club recognized that veterans' passion for a meaningful life should carry over into a civilian career once they leave the military.  Passion hits a brick wall when civilian employers find a veteran's resume devoid of recognizable prerequisites.  Veterans who master the three disciplines above prove they have the passion to carry on as relevant civilians.  

Observation for KMWorld "Measuring Collaboration Success"

I don't have time to read my various media inputs from cover to cover.  I just focus on knowledge I can use. I value KMWorld for insights into knowledge management but sometimes knowledge hides in plain sight.  Let's take a closer look at their June 2013 article, "Measuring Collaboration Success."

Forrester Research's very subjective, self-reported questionnaire drives the conclusions of a tradeoff chart measuring business units by their contribution to business value and their ability to drive change.  I can tell what's missing just by looking at the chart.  The least flexible business unit is manufacturing, followed by operations.  The most flexible unit is sales.  The missing variable is obvious:  investment in fixed plant.  Sales is a largely human element that can be changed at little cost by hiring and firing people in the sales force until the right people are in place.  Minor tweaks to their CRM systems cost little.  Compare this to the difficulty in changing a manufacturing unit without enormous new investments in physical infrastructure.  Changing operations is almost as costly because it involves reengineering supply chains.

The whole purpose of KM is to optimize the performance of large, complicated organizations.  That includes pushing KM practices down to capital-intensive business areas like operations and manufacturing.  I would like to argue that applying operations research and KM together can reduce the delta in business value between new product development (which isn't always capital-intensive until physical prototypes go for testing) and manufacturing.  The literature on KM is extensive but much of it is qualitative in nature.  KM sorely needs a textbook treatment like Cloudonomics that can quantify the value added by reducing the costs of human latency or introducing new collaborative tools.  That's the kind of thing I'd like to see KMWorld and Forrester Research address when they publish new KM thinking.