Civilization carries a grand illusion of stability. Yet, things change around us constantly. Our personalities change with aging, societies die around us, the Earth warms and cools in turn. However, we seem to need to plan our lives on the basis of stable relationships, only to be overtaken by continuous change. Unfortunately, change is not a kind and gentle thing. Change comes from conflict — hot, hands-on conflict that is not limited to “what we’ve got here is a failure to communicate.” Conflicts run deeper than most of us would think.
For instance, Isaiah Berlin (1909-1997), British philosopher, historian of ideas and political theorist, states that moral values (memories of what used to work) can and do conflict. Since values point to what used to work, times are always troubled from one point of view or another. Our times are troubled times indeed. Can we find out what used to work that does not work anymore? Better yet, can we find out what will work?
The fifth Managing Retirement Income conference will start on February 9, 2009 in Boston. RIIA continues to be the exclusive endorsing association and will continue to chair the conference. One of the responsibilities of the conference chair is to create the theme for the conference. Each year brings a new theme. This year’s theme is “product and process development” — and this focus comes at a time of a generalized reassessment of what things are worth in the economy in general and in the financial industry in particular.
Conference participants will present a comprehensive range of currently available retirement products and processes. They will also talk about their plans for the future. It is fitting that our keynote speaker will be Bruce Sterling, a prominent futurist and author of many books including a book with MIT Press, Shaping Things, that summarizes Bruce’s foray into the world of product (and process) design. This book should be an important text for product designers in training, if it is not already the case. In it, Bruce summarizes the most salient aspects of the past and present of design. He also articulates a vision of the future.
In this book, Bruce starts with a description of “Artifacts” that are “made by hand, used by hand, powered by muscle … created one at a time, locally, by rules of thumb … People within an infrastructure of artifacts are ‘Hunters and Farmers.’”
Next he moves to explaining “Machines” that are “complex, precisely proportioned artifacts with many integral moving parts that have tapped into non-human, non-animal power sources …. People within an infrastructure of Machines are ‘Customers.’” He dates the transition from an “Artifact” techno-structure to a “Machine” techno-structure around 1,500 A.D.
He sees the next transition around WWI with the arrival of “Products” that he defines as “widely distributed, commercially available objects, anonymously and uniformly manufactured in massive quantities …. People within an infrastructure of ‘Products’ are ‘Consumers.’”
His next transition took place in 1989, with the appearance of “Gizmos” that he establishes as “highly unstable, user-alterable … multi-featured objects, commonly programmable, with a brief life-span …. People within an infrastructure of ‘Gizmos’ are ‘End-Users.’”
The next transition that we will be looking at, but not the last transition in the book, took place in 2004 when “the United State Department of Defense suddenly demanded that its thousands of suppliers attach Radio Frequency ID tags, or “arphids” to military supplies.” This created “Spimes” identified as “sustainable, enhanceable, uniquely identifiable, and made of substances that can and will be folded back into the production stream of future ‘Spimes.” Moreover, “people who live within an infrastructure of ‘Spimes’ are ‘Wranglers.’”
So, how does this relate to financial products? Well, are we still designing products for the past or are we starting to design products for the future? In what ways are “Gizmos” related to financial products? Can you see that we have already been developing “Gizmos” rather than “Products” with advice calculators, embedded Monte-Carlo simulators, Web-enabled applets, etc.?
What about “Spimes”? What financial products do we have that would be able to give investors an online, real-time assessment of where they are with regards to what we expect from them and how far we may be from our goal? Would financial products built and marketed in units of outcomes (retirement income, college tuition, health-care procedures, etc.) be steps in that direction?
There is much to think about in Shaping Things, and I look forward to the discussion during the conference. What else should we look at and how should we prepare for it?
From our retirement management and retirement income perspective, we look to design products and processes that address customer needs (income) and risk factors.
Clearly, a specific product or process cannot address all risk factors at once. The importance of specific risk factors changes over time. Given the financial crisis that became most visible during the last few months, are there matching risk factors that have moved from the background to the forefront? The traditional priorities seem to have been inflation, market and longevity. Has this changed?
During a recent RIIA conference call, some members, including financial advisor Keith Diffenderffer, described the social, political, business and financial changes that we are living through as a betrayal of trust between the investor, the industry and the government. Taking a few steps back, one can see that a key value of thinking is the creation of representations that enable the holder to understand and to manipulate a situation faster and more predictably. There are mental models that work, and mental models that do not work. Our values (intangible as well as financial) reflect what used to work, what used to pay. Our values truly incorporate the winning cost/benefit calculations of the past. Once our mental models and values cease to work as expected, we feel a betrayal of trust. What has changed around us that would invalidate what used to work? What has changed around us that would reflect a world with different values from the past?