C7 reads

Since its beginnings, there were very few requirements for each new C7 employee. As time went by, some basic conditions were added, each of them with its corresponding learning system, to carry out in the first months of activity.
However there is a first condition that survived from those early days and that remains valid today: reading.
An old rumour, which has already become myth, says that Hari Seldon himself predicted C7's foundation, while working in his theory about the Galactic Empire decline. In his honor, The Foundation (I. Asimov) is the first non-theoretical book recommended for anyone who wants to understand what is done within Continente Siete.
In contrast, in The Fifth Discipline (P. Senge) is where one can find better answers in terms of operational and theoretical aspects. These help you understand the mindset and approach taken in most problems, and the subsequent resolution.
The last member of the founding triad is The Black Swan (N. Taleb). This book serves as a constant reminder that those premises which are assumed as valid are not always so, thereby driving a constant review of every working paradigm.
Numerous literary works were added to these three books, such as Statistical Inference and Design of Experiments (R. García), Six Pixels of Separation (M. Joel), Pride and Prejudice (J. Austen), The Courage of Truth (M. Foucault), The Tipping Point (M. Gladwell). Each one of them has an owner who lends it so that anyone interested can read it, scoring on a sheet that serves as a record and control, to avoid  losing anything on the way.
Together, these books foster the habit of reading, both as educational and for the simple pleasure of reading. In fact, our library is near the arm chairs, inviting anyone who has some time off to visit at any point.
So the next time you come, we invite you to look through all these books. I am sure you'll find one that catches your eye, allowing you to pause your activities, have a coffee and read, read, read.

Leer, leer, leer, vivir la vida

que otros soñaron.

Leer, leer, leer, el alma olvida

las cosas que pasaron.

Se quedan las que quedan, las ficciones,

las flores de la pluma,

las solas, las humanas creaciones,

el poso de la espuma.

Leer, leer, leer; ¿seré lectura

mañana también yo?

¿Seré mi creador, mi criatura,

seré lo que pasó?

- Miguel de Unamuno -

Systems - Ontological vs Epistemic approach

This time I'm going to delve in a more philosophical or theoretical aspect. Is quite an open-ended thing, so don´t expect a straight up point!

It all begins because many times we found ourselves (in C7) talking about systems, whether it's about defining a problem, understanding the dynamics of a situation, or trying to leverage the emergent of a system.

On the many different ways to define what a system actually is, it is usual to compare it to a "bunch of parts" and talk about how on a system these parts interact, have a structure, a purpose or something. We are not concerned about this aspect now, we are assuming a mild understanding of what a system actually is.

The line that I want to draw this time, albeit blurry and wide, is the difference between what we can interpret and analyze as a system, and what needs to be taken as a whole. This is why we'll be talking about the ontological and epistemological realms.

hmmmmmm.... reaaaaally?

Ontological refers to an "entity", what may be called a "thing in itself". Think of a person, which is "a thing in itself" regardless of being constituted by many different parts. If we set these parts apart, the person is no more, and putting things back together won´t bring the person back. It has specific properties that emerge on it´s own level of aggregation, like character, emotions, self-consciousness, and so on.

On the other hand, Epistemological refers to a "unit of knowledge" or "what can be known", regardless of the kind of bond that ties it together. Think of a group of people, like a mob. Even though they might behave as one, with emergent properties, you can separate them, and after a while put them back together, and they´ll be able to exhibit the same behavior. It seems quite similar in it´s properties to an ontological person, but it´s complexity can be reduced.*

*We´ll be talking about irreductible complexity some other time

This difference is better taken, or understood, in relation to the quintessential concept of "emergence". Let's see how these different fields take on this:

onthological emergence: apparition of a qualitative novelty,
epistemological emergence: unpredictability from lower levels.

So, for instance, even if we know that a given phenomenon is caused by the interaction of many parts, like a mob, it's very different the approach we'll take if we are studying the movement of the people through a set of stairs and halls or if we are looking at the explosion of violence that can occur inside mobs.

In the first case, we can successfully, and sufficiently, model it understanding the "decision rules" of every individual for themselves, and see what happens when those rules interact. We do not need to assign a "mood" to the mob, or a transcendent purpose or a hierarchy. Accounting for the individual rules we can model the emergent behavior. But we cannot establish a direct, obvious link between the individual rules and the whole. This is easy to see in bird flocks, whose movement is unpredictable, even though we can know with a high certainty what every individual bird does.

On the second case, it is not enough to look at any individual, as there are some properties that are shared between all the elements inside the mob. The "violence", "excitement", or the maintenance of it, is not located on any individual, but rather on the interaction between them. If a leader is taken out, another individual will probably take it's place. Actions can be coordinated between different sections of the mob, and there is a threshold quantity of people so that this phenomenon takes place. Under this "critical mass", nothing happens, even if the "most violent individuals" are present. So in this case we need to look at the mob as a whole, with a given structure and mechanisms, but largely indivisible.

Why does that matter? Well, it serves as a framework to tell what "is" from what we "see as". What has existence of its own and what is an apparent unit. This serves us to consider for instance a methodology for approaching an issue, or the level of aggregation we can use to describe the lower or higher levels that we are interested into.

This perspective may not change what we actually end up doing on a given task or problem, but is an important reality check, and it´s a big clue to help us set the way the analysis takes place. It will help us answer some things: "Are we asking the right question?", "Is this one problem or a set of related, smaller problems?", "Do we need other tools, or disciplines, to tackle this thoroughly?", and so on.

Perhaps this is no more than a brain teaser, but if it gets you to be more conscious about the way to approach different problems, then it´s a double win.

Flush the toilet…

..and check which way water spins!

It may sound new to some people and it may ring a bell to others when it comes to the question: which way does water spin when you flush the toilet? The answer will come later.

There are several forces involved in the motion of an object, but there is one special effect that appears when the analysis takes place in a rotating reference frame. The latter term refers to a non-inertial reference frame rotating relative to an inertial one, in which case Newton’s laws cannot describe properly the forces involved unless fictitious forces are used.

We can now discuss, for instance, the centrifugal forces; but it is more interesting to learn about Coriolis Effect. It was in 1835 when a French engineer-mathematician called Gustave-Gaspard Coriolis described this “force”. Any object in motion in a rotating reference frame is accelerating by a force perpendicular to its motion. Even though this force does not exist because of a physical interaction, it creates a deflection on the path of an object due to the motion of the coordinate system, i.e. the Earth. This is why this kind of effect can only be appreciated at large scale, when the object´s  speed is greater than the ground’s.

Three aspects are related to the Coriolis Effect. First of all, the motion of the Earth is the rotating frame reference, but the effect weakens as we approach to the equator in a horizontal direction. That is why the latitude is another aspect to take into account. Finally, the motion of the object will also determine the magnitude of the Coriolis Effect.

Some examples can be seen both in natural and human developments. When it comes to natural sources, this effect is shown by the motion of great lakes and oceans, even the wind. On the other hand, the deflection planes or missiles evidence when travelling mostly from one hemisphere to another is also because of the mentioned effect. 

Image 1. Large-scale wind patterns

All in all, we now know there is an effect named Coriolis which impact depends on the reference time-frame and affects our everyday-life (and in greater magnitude if you are further the Equator). But, can we really see it if we flush the toilet at home?

I am sorry to disappoint you guys! But if you flush the toilet in the Northern hemisphere or in the Southern, the swirl (vortex) generated only depends on the lavatory itself and other irregularities of the surface, because the speed of the drain is faster than the one generated by the Coriolis Effect. If you really want to verify the effect, you have to use a bigger recipient and tons of water. In laboratory circumstances, i.e. certain temperature and latitude, letting the water set still; then the conditions are set to evidence the Coriolis Effect when the Earth’s movement is slower than the one of the water relative to its container.

Algorithms in Continente Siete

What is an algorithm?

An algorithm is a step-by-step procedure for calculations. The following is an example from the "HowStuffWorks" website:

Let's say that you have a friend arriving at the airport, and your friend needs to get from the airport to your house. Here are four different algorithms that you might give your friend for getting to your home:

The taxi algorithm:

1. Go to the taxi stand.
2. Get in a taxi.
3. Give the driver my address.

The call-me algorithm:

1. When your plane arrives, call my cell phone.
2. Meet me outside baggage claim.

The rent-a-car algorithm:

1. Take the shuttle to the rental car place.
2. Rent a car.
3. Follow the directions to get to my house.

The bus algorithm:

1. Outside baggage claim, catch bus number 70.
2. Transfer to bus 14 on Main Street.
3. Get off on Elm street.
4. Walk two blocks north to my house.

Continente Siete Beginnings

Continente Siete started as a business consulting boutique company, with big focus in mathematics. We had the know-how, we had technology, methodology and teaching experience. Put these traits in the cocktail mixer and the first result that pops out is: consulting! Why? Consulting pays, and we already had some experience in the industry as well.

We started out as "Business Psychologists", trying to understand companies' problems, and offering innovative solutions to overcome them. This path took us to Demand Forecasting, where we tackled Forecast Accuracy problems for major companies through various approaches (technology, process engineering, methodology and training). The path also took us to Transportation, Online Marketing, Telecommunications and other Industries. The mechanics, however, were always the same. You tell us your bigger problems, and we'll find an innovative solution.

Business for Continente Siete resulted promising, the company grew from 4 employees to 20 in less than 2 years.

The Consulting Dilemma

What was our growth model? Sell more projects! However, this required us to hire more people, more training, etc. In the end, we could never turn around income-cost equation drastically enough.

Furthermore, potential projects were always huge, and often led to long negotiations that could turn out either way. This made planning extremely difficult.

Combine these two, and you have a company that is always living in the edge, having to think thrice before entering negotiations with a potential new client.

Continente Siete's Shift

Early 2012 we took a strategic turn towards pure algorithms. Before, algorithms were part of a bigger service, but after this point, they became our core.

The idea was simple (and frankly, it was always there, but we had never made it explicit before this point), find a massive problem, and identify what part of that problem can be addressed with pure mathematics, no humans involved.

Continente Siete would then continue their consulting service, but redefine it as either Private Lab, or Premium Service. These are today our labor intensive areas of application. The third area, the biggest one, is development. This way our services fund our product developments, until they become self-sustainable.

This is where we are right now, trying to make our developments self-sustainable so that they can serve as an "income buffer" for the whole Company, and shift planification towards the long-term.

Algorithms in Continente Siete

Today there are several algorithms we are developing inhouse.

Flimbu: our most mature product, Flimbu automatically optimizes any Adwords account by changing the CPC (cost-per-click) values of every keyword in the portfolio. In order to do this there are extraction, forecasting and optimization algorithms working in sync.

Behavioral: e-commerce is still growing at gigantic steps. Almost all sales come from either the website or a newsletter. However, most companies are using the same website layout and newsletter configuration for everyone. This not only has a short-term opportunity cost, but it also has a negative long-term effect on the user (they get tired, saturated). Behavioral is a set of algorithms that understands patterns in the users and uses these patterns to optimize both newsletter configuration and website layout. Businesses should only offer what is attractive for the specific user.

Forecastia: this product not only contains a set of forecasting algorithms (this is commodity) but it offers an extremely efficient matching algorithm. The latter is its competitive advantage, which is understanding what forecasting model should be used for each series, and how to "clean" the series before even starting to segment it.

Price Analytics: how much do I gain by increasing the price of this product by 10%? Price Analytics is a set of algorithms that target this type of questions. By reading price movements and volume shifts in sales through econometric and data mining algorithms, it is able to quantify price elasticity effects (of both promoted and non-promoted products).

Continente Siete logo figure - a mathematical algorithm that rotates a simple geometric shape in three dimensions, but it's easier to say it's a butterfly, right? Plus, it has the metaphorical perks...

Why do Algorithms?

The strategic turn in Continente Siete aimed towards algorithms, but... Why algortihms? Well, there are several benefits in developing algorithms:

• Non-linearity: algorithms can be run by computers, which in turn can be set into products, enabling for non-linear growth. This means that they are completely scalabale, and we don't need to incur in significant costs to provide the product for more clients. Marginal costs are close to zero.
• Universal language: mathematics is Universal, and so are algorithms. It doesn't matter whether you are in Argentina, or in Pakistan, the code is the same.
• No boundaries: no shipping costs, no material movement, basic logistics. The only thing that travels is information, and Internet enables it to travel the whole World. 
• Unrestricted: there are practically no laws or policies that restricts the importing / exporting of data. Business does not depend on the Government type.

All these benefits make algorithm development extremely attractive. However, there is a big con in algortihms. As it travels the world and is somewhat visible to many eyes, copying becomes fairly easy. There are very low entry barriers. So how does Continente Siete build their protection policies?

I like to believe we turn a con into a pro. These low entry barriers motivate us to build our protection system base on innovation and continuous improvement. Stay ahead and let them copy!