‘Power curves’: What natural and economic disasters have in common

The following extract is taken from a thought-provoking article from McKinsey. Power curves are much loved by authors, such as Clay Shirky, Seth Godin, Charles Leadbetter to illustrate the potential for conversation, collaboration and innovation, through adoption of: web 2.0; social media; crowdsourcing; collective intelligence, etc.

They are, therefore, very much “in vogue” and, I suspect, will continue to be so for some time to come…probably not a great surprise that economic theory is enjoying a renaissance in difficult times!

However, from the perspective of “financial regulation” in UK, it is difficult to believe that, if FSA chose to IGNORE the warning signs [generated by financial modelling] about Northern Rock and HBOS, they would be any more effective by monitoring “the system”!!!

“Make the system the unit of analysis. You can’t assess the behaviour and performance of a specific agent—for example, a financial-services company—without gauging the behaviour and performance of the system in which it is embedded. Proponents of a systemic financial regulator that would span multiple subsectors and geographies are making a similar argument”.

Click on the link and feel free to give me your thoughts: Power Curves…