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Applied Research Discovery and 009

Innovation (ARDI)

Applied Research Discovery and Innovation (ARDI) is CFB’s five-year initiative to

create breakthroughs in Banking, Financial Services, the marketplace environment, with
outcomes made possible by innovations and advances in computational creative thinking
using scientific and social-economic-technology research in a broad range of
applications. Computational creative thinking is defined comprehensively to encompass
computational concepts, creativity, methods, techniques, models, simulations, algorithms,
aesthetics, design, practices, and tools, that augment human cognition, understanding, and
decision making using computing devices. Computational creative thinking merged with
Social-economic science provides a context to define a Service Science which may help
inform innovations in service oriented industries such as Banking and Finance and its
associated adjacent industries. ARDI research and education outcomes are expected to
produce paradigm shifts in our understanding of a wide range of complex phenomena and
socio-economic-technical innovations that create new wealth for, commercial,
customers’, and shareholder interest, and enhance service quality for customers,
suppliers, partners and associates, while addressing the risk of evolving and innovating
the Banking industry, thus expanding the understanding of the entire ecosystem of the
global Banking industry. The research would use Banking as a context but produce
outcomes that help define Service Science and would be generally applicable to any
service industry.

ARDI investigators are expected to help define a new discipline of Service Science and
generate ground breaking multidisciplinary research outcomes across banking, finance,
computer and information sciences, engineering, mathematical sciences, social sciences,
behavioral, and economic sciences, cognitive sciences, human computer interaction,
architecture, product design, business, law, and any related discipline that has a
interdependence. Related industries may also be explored such as health care,
gerontology, housing, life long learning, financial literacy, consumer advocacy,
government policy, workforce productivity, human resource management, training and
development, marketing science, as these are integral and adjacent to banking and wealth
creation and management. The development of computational creative thinking to
enable discovery and innovation on all fronts of science and technology is likely to
stimulate advances that collectively accelerate development.

With an emphasis on bold, multidisciplinary activities that, through computational

rgarcia at media.mit.edu March 23, 2009

creative thinking, promise radical, paradigm-changing outcomes, ARDI promotes
transformative research within CFB. Accordingly, investigators are encouraged to come
together in the development of far-reaching, high-risk research agendas that capitalize on
innovations in, and/or innovative use of, computational creative thinking to create new
knowledge and societal impact far beyond today’s capabilities. Research efforts around
the world are beginning to address various aspects of the CFB Macro themes, and ARDI
projects are expected to build upon productive intellectual partnerships involving
investigators from academia, industry, government, and/or other types of organizations,
including international entities, that advance ARDI objectives within the rapidly evolving
global context. The research and education should have a particular focus on real-world
experimentation and application while being grounded in theory and practice. CFB
encourages the use of novel or hybrid approaches that fuse together different disciplines
where both qualitative and quantitative research methods are applied.

Motivated by transformative research opportunities, ARDI seeks bold proposals within or

across the following CFB Macro Themes and three capability areas:

The following are the Macro Themes with broad descriptions that may encompass many
disciplines.
Description
Macro Theme
Information Information flow is the signal versus and noise of information science. The value
Value Flow is an increase or decrease in signal. Information is the lowest atomic unit of
measure for our research. The flows form interdependent chains or graph of
relationships. The flows of value are not exclusive to money and include any
convertible value.
Behavioral Includes any behaviors that happen before and after the decision of a consumer or
Economics producer. Behavior is observed, modeled, anticipated, projected, and predicted as
well as all the vagaries of the human condition. The unit of measure is at human
scale and includes many uncontrolled factors.
Identity, Trust Identity includes concepts of privacy or public disclosure. Trust implies the
Privacy, Security concepts of gradations of security or no security if full trust is granted. Both
included measures of credibility and honesty or value systems that are human.
The concepts span system processes and human interaction.
Network Networks are the systems that connect and the people acting in social interactions.
Economies Information flows, social behavior, identity and trust are aggregated into economic
interactions within a network.
Social Includes individual and corporate actions representing and raises questions of
Responsibility ethics. This aggregates the network economies into defined groups that care for,
direct and indirect impact, and consequences of decisions.
The Macro Themes are described in the broadest terms to allow for interpretation by the
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investigators and the proposed research. These Macro Themes are to be defined by the
research and serve to illustrate a wide range of interest. Many traditional academic
disciplines may be described as being applicable to one or more of the above Macro
Themes, it is our intention that this interpretation take place and encourage an expansive
view of the proposals in terms of cross discipline application of concepts and work from
areas that would not typically be considered part of what Banking my desire to consider.
For example, one could adopt concepts from biology or ecology and attempt to apply
them to an understanding of dynamics in financial systems and it may be an acceptable
proposal. What would be required is a creative use of computation to help model the
dynamic and simulate its representational validity to banking and finance. In addition
some aspect should involve how human activities impact the dynamic with computation
augmenting the system. The investigator should take liberties in interpreting the Macro
Themes and attempt to describe their proposal using some of these terms.

To illustrate one possible interpretation of the Macro Themes the chart below suggest an
example of a consumer impact, theoretic basis, and research unit for each Macro Theme.
These are in not absolute nor would they apply to every interpretation and are only
included to help the reader formulate their own view or what these Macro Themes may
address or how they might be associated with particular research areas, methods or
techniques. Note that while computation may not be at the core of each entry it may be
appropriate to instrument processes to capture data such that computation could be used
for the analysis where some creative interpretation of the results may be needed to arrive
at a conclusion or subsequent line of inquiry.

Macro Theme Consumer Impact Theory Basis Research Unit

Information Usability Communications Bits/Bytes
Value Flow Sensing Store Signal/Noise Numbers/Time
Behavioral Consumer Individual Psychology
Economics Buying Decision Choice Theory Mind/Emotion
Identity, Trust Consumer Risk Containment Safe Systems
Privacy, Security Confidence Chaos Theory Semiotics
Network Connected Complexity/Game/ Societal
Economies Consumption Graph Theory Knowledge
Social Consumer Philosophy Values
Responsibility Literacy Politics/Economics Ethics/Law

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The following are the capabilities areas that span the Macro Themes for which proposals
may be submitted.

From Data to Information to Knowledge: enhancing human cognition and generating

new knowledge from a wealth of digital data.

An abundance of digital data promises a profound impact in both the quality and rate of
discovery and innovation in Service Science, as well as in other societal contexts.
Worldwide, researchers are producing, accessing, analyzing, integrating and storing
massive amounts of digital data daily, through observation, experimentation and
simulation, as well as through the creation of collections of digital representations of
tangible artifacts and specimens. Modern experimental and observational instruments
generate and collect large sets of data of varying types (numerical, video, audio, textual,
multi-modal, multi-level, multi-resolution) at increasing speeds. Often, the data users are
not the data producers, and they thus face challenges in harnessing data in unforeseen and
unplanned ways. In many applications, for example, in meso-scale financial prediction
or critical infrastructure protection applications, the ability to gather, organize, analyze,
model, and visualize large, multi-scale, heterogeneous data sets in rapid fashion is often
crucial.

New methods are required that convert raw data into meaningful information that creates
knowledge and understanding from an abundance of digital data, and that accelerate the
transformation of knowledge into new products and services that stimulate economic
growth as well as other societal benefits. Driven by compelling research opportunities,
new efforts to support the complex tasks of exploratory data analysis and discovery must
be explored.

The massive scale and often dynamic nature of data dictate that relevant computational
technologies be fast, flexible, and capable of operating at multiple levels of abstraction.
Data of different types often must be synthesized into a single model that permits an
emphasis on data meaning rather than on the forms in which the data were originally
represented. Models may dynamically incorporate information via data assimilation and
machine learning. Alternative models may be compared in exploratory data analysis. A
key component of developing a model is often an inverse problem: deducing system
properties and structures, parameter values, or underlying principles from data. Inverse
problems are commonly non-unique or in some way ill-posed, so that the data may not
determine a unique model and selection of the best model may require careful
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optimization. Ultimately, the value of a model depends on the major challenge of
validation against "ground truth"; feedbacks between mathematical, computational, and
application-domain analysis, each influencing the next step in the others, are vital to real-
world insight.

Analysis of large data sets, both real-time and offline, including numeric, textual, and
temporal data, demands scalable storage, manipulation, algorithms, presentation, whose
computational complexity grows as slowly as possible with the scale of the data.
Research may require the development of novel algorithms and strategies that, for
example, can discern and exploit parametric, geometric, and topological properties of
data, as well as the development of novel data mining and dimension reduction
methodologies that can expose the knowledge underlying data. Some of the important
ways of extracting information from data include data aggregation and annotation, pattern
recognition, perturbation and sensitivity analysis, real-time manipulation, filtering and
estimation, spectral graph analysis, statistical analysis, and stochastic simulation. New
visualization methods can enhance human cognition, allowing scientists, engineers,
researchers, to detect and comprehend previously indiscernible abstract concepts,
patterns, and important exceptions amidst vast data. Approaches informed by knowledge
of human cognition and perception can amplify individuals’ capability to perceive,
understand, synthesize and reason about complex and often dynamic data. In some
domains, innovative technologies may also need to address the data confidentiality,
privacy, security, provenance, and regulatory issues that often impact the use of data.

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Understanding Complexity in Economic Models, System Dynamics, and Financial
Ecology: deriving fundamental insights on systems comprising multiple interacting
elements in natural, built, and social systems.

Identifying general principles and laws that characterize complexity and capture the
essence of complex systems is one of the major challenges of 21st century science.
Complex systems are more than just complicated; they display distinct characteristics not
encountered in "simple" systems, such as multi-scale interactions, emergent behavior,
pattern formation, and self-organization, and they are often inherently stochastic or
operate in unpredictable settings. The traditional economic models that are the basis for
modern banking needs to evolve to a system dynamic and in the near future a holistic
financial ecology to address the global challenges of a banking industry that has a scale
that is so complex that the typical management strategies are now inadequate to
understand, predict, and control the systems consequences. Nonlinear couplings and
feedbacks across multiple processes and scales typify these systems. They are not
amenable to reductionism; finding constructs that persist through the dynamics is
fundamental, and involves a major role for innovative computational experimentation.
As well as advancing Service Science, the understanding of complexity will enable the
design, synthesis, and control of novel complex engineered and human systems.
Furthermore, it will facilitate intervention in and analysis of complex natural and social
systems. This capability therefore promotes the exploration and modeling of natural
interactions, connections, complex relations, and interdependencies, scaling from sub-
particles to galaxies, from sub-cellular to biosphere, and from the individual to the
societal, across time, in order to understand, mimic, synthesize, and exploit complex
systems.

The functionalities offered by computational creative thinking allow “experiments” to

take place entirely in cyber-space with models that simulate the real-world behavior. In
many situations, simulation through computation is the only feasible approach to a
systematic investigation of realistic complex service science phenomena, or is essential to
the scientific basis for and design of "traditional" experiments. Key challenges include
accuracy and resolution, efficiency, perturbation analysis, uncertainty, stochasticity,
validation against “ground truth”, long-term dynamics, and predictive modeling.
Simulations and computational experiments in mainstream environments within industry
or informal educational settings can engage students, the public, commerce, in the
excitement of research discovery and innovation.

Much of the understanding of complexity will come from mathematical and statistical
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modeling and analysis, based on both theoretical and empirical studies. Mimicking and
synthesizing systems will exploit a wide variety of techniques. Complexity often
requires advances in numerical methods for differential, algebraic, and discrete systems.
Other approaches include agent-based modeling, neural networks, and dynamically
interactive human-in-the-loop calculations. An important consideration for large systems
is that scalable methods and tools be available in the working environments.

Understanding Human Interaction, Behavior, and Relationship Networks by

Building Virtual Self-Organizing Environments: enhancing discovery and innovation
by bringing people and resources together across institutional, geographical and cultural
boundaries, this should be inclusive of industry, government, academia, the public, the
international community, the 3rd world through the developed world.

Virtual Self-Organizing Environment (VSOE) can facilitate the conduct of cutting-edge,

transformative research and learning within and across all fields. As complex, networked
socio-economic-technical systems supported by cyber-infrastructure, VSOE’s promise to
connect people and resources across institutional and geographic boundaries, to foster
dynamic configurations of instruments, data streams, facilities, and researchers and to
enable new approaches to Service Science inquiry through remote access to experimental
tools, observational instruments, simulation systems, and globally dispersed individuals.
Because they extend beyond traditional “brick and mortar” research institutions, they
allow for more flexible boundaries and memberships and for scientific inquiry to be
performed at a scale and a distance never before possible. Achieving such radical
scalability and seamless integration and inter-operability will require the application of
computational creative thinking to all levels of VSOE design, implementation, and
maintenance. A living lab of systems and human activity captured for research.

For example, how can researchers who remain rooted in their home institutions and
disciplines establish common ground for successful VSOE’s that satisfy everyone’s
preferences and practices? How can heterogeneous data of different forms and types be
most effectively transferred and integrated? How can information systems become easily
inter-operable and accessible any place, any time? How can organizational and
regulatory structures be aligned with their virtual ones? How can cultural differences be
resolved? Myriad other concerns must be addressed in order to design, build, and
advance effective VSOE’s. As distributed, dynamic, and computationally-enhanced
modes of operation and organization, VSOE’s will need to overcome traditional
boundaries in unprecedented ways and not only expand but diversify the research

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opportunities. As such, VSOE's should also be explored as a primary vehicle for
enhancing innovation and broadening participation in not just research but also exciting
inquiry-based commerce.

Understanding how to model and leverage these socio-economic-technical systems to

generate and accelerate transformative research within and across different Service
Science areas necessarily requires the bringing together of domain scientists with
expertise in, for example, economics, information science, network science, artificial
intelligence and machine learning, game theory, work-flow and value chain analysis,
statistics, software/hardware design, information privacy and security, participatory and
social computing, operations research, human behavior, and organizational studies.
Accordingly, ARDI investigators of different disciplinary perspectives should collaborate
on the design, development, and implementation of VSOE's to test and verify proposed
theories and models of distributed learning and discovery with specific problems,
populations and purposes. In effect create a living lab in the environment for which the
research may be applied, that is real-world settings.

Successful projects in the Virtual Organizations capability should seek to produce

paradigm-shifting research in the targeted areas as well as advance the understanding of
virtual organizations as new modalities of Service Science and commerce. The outcomes
should be transformative to create more generalized systematic knowledge and principled
understanding of the intertwined human behaviors and technological conditions that
enable effective VSOEs.

All three capabilities mentioned above are inter-related. Realistic modeling to accurately
represent living systems are becoming possible for ever more complex phenomena,
which defy understanding by other means. Such models and increasingly sophisticated
Service Science observations are described in terms of data of unprecedented scale, from
which insight must be extracted through more ingenious techniques than before.
Attacking these problems also requires larger organizations, often both geographically
dispersed and intellectually diverse; empowerment of such groups is central to this
transformation. Accordingly, proposals in one capability, or that cross two or more of the
three capabilities, and are applicable to one of more of the Macro Themes are
encouraged.

REVISION NOTES
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Applied Research Discovery and 009
Innovation (ARDI)
Initial draft, copied from the NSF Cyber-Infrastructure Discovery and Innovation description and
simplified and revised for CFB requirements. Portions of the Program Description are from the original
NSF Cyber-Infrastructure Discovery and Innovation grant application re-interpreted for CFB.

rgarcia at media.mit.edu March 23, 2009