Economic Outlook

Posted on February 8, 2012 by Chris Warburton

This week I was fortunate to be at the Credit Grantors Association 2012 kick off dinner.

Unfortunately Benjamin Tal could not speak (he is great to listen to), however we had a good replacement with Peter Buchanan.

Generally the graphs pointed towards increasing debt load within the Canadian economy.  However there was less concern expressed on the economic effects of this over the next 12months due to the steady policy of the Bank of Canada.

However there were a couple of factoids that stood out as potential flags to watch.

  • Canadian debt to income ratio (DTI) is now around 165%.  This is now higher than the USA (it was always lower)
  • Although the DTI ratio has declined in the USA this reduction did not happen by more prudent lending or consumers reigning in spending.  2/3 of this reduction was from defaults.

As always… monitoring changes in the situation closely.

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The next ‘big thing’ in modelling

Posted on February 2, 2012 by Chris Warburton

I was lucky enough this week to be able to attend the CSRSA general meeting.

The topic was  “Conceptual frameworks for a future analytic game changer?” by Larry Rosenberger, former CEO of FICO.

His view was that as we move into a world with greater access to information; the role of customer contact and using the data from this customer contact, will become ever more important.

This is critical information, that can represent a competitive advantage for companies if tracked and used in the right way (within the context of models, in this case).

Interestingly, despite being high profile, social network data was not seen as necessarily rich data.  Also information gained from customer care and collections processes whilst useful is expensive to collect.

This pointed to a sweet spot in between where targeting and asking the right questions to the right people at the right time, could yield very rich data helping target offers, and actions to best match the customer needs.

The design of this process to gather information will be crucial and may indeed represent a larger challenge than the modelling itself…..this is the new frontier.

For me I was left thinking about chaos theory and the linkage to modelling. The more you drill down the more complex it becomes, however all of this seeming chaos is driven by the interaction of a few simple parameters, highly sensitive to initial starting conditions.

Understand those and you can attempt understand the system itself…..

…..a thought provoking talk.

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Questions in the workplace

Posted on January 30, 2012 by Chris Warburton

Just had a interesting discussion regarding questions in the workplace.

Questioning organisations (measured by a high ratio of questions to statements – 5:1) are healthier and higher performing that non questioning organisations (low ratio eg 1:1).

However just asking more questions may not lead you and the team to higher performance.
The question ratio is the symptom of a healthy environment, rather than the cause.

It is interesting, as this ratio and observation is easy to make and could help as a quick check on organisational culture and its health a group. Something new to watch for.

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