I found a wonderful visualization of the collapse of the economy when I went to the Spirituality, Science, and Technology blog today.

The post talked about a paper on the Epidemiology of the Credit Crises which was found while reading Chemoton § Vitorino Ramos’ research notebook. I tracked it back to the original paper which you can download and read as a PDF.

The paper also refers to a page with a video of the collapse that you can download and review. The paper was written by Reginald Smith of the Bouchet-Franklin Institute in Rochester. This is very impressive and very interesting to look at. However, you also need to look at his cautions:

• This is not ‘market contagion’
• This shows correlations, it’s nor about causation
• While this uses the word ‘Epidemiology’, it’s not about a mechanism

At the start of the simulation, the individual companies (small circles) are mostly doing well. This starts in 2007.

At the beginning, 2007

A year later, these companies are doing poorly as indicated by yellow and red. Consult the paper for a detailed explanation of the color coding and how this was done.

At the end, 2008

As an educational piece, it’s an interesting insight into the progressive collapse we’re all now experiencing, but why is this of interest for Customer Facing Systems? The point of this is that most Customer Facing Systems generate enormous amounts of information, but it’s often hard to make sense out of it. One of the banks I worked with some years ago gave each manager a printout every morning of all the statistics generated in the previous 24 hours. It was a printout that stacked 6″ high on their desk on standard line printer output paper. I questions some of the managers about what they got out of it, and mostly it was nothing useful.

If you’re running a Customer Facing System, you need to find an analysis that makes some sense and shows you what’s happening. This collapse simulation is very instructive and illustrates how a good analysis can help us make sense of a complicated situation. It also makes the point that you can’t press it too far. You need to understand not only what you can do, but also the limits of what you can do.

Categories: Human Activity Systems