Will BI Put an End to Intuition?

Ann All

Back in May, we blogged about a New York Times article that highlighted interesting real-world applications of business intelligence like a Virginia police department's analysis of crime reports that helped cut the city's crime rate.

 

By combining that analysis with other data such as weather patterns and sporting event schedules, the police were able to boost staffing levels for times and locations that saw predictable rises in crime -- in Hispanic neighborhoods on pay day, for example, where thieves were targeting residents as they left check-cashing outlets.

 

The article's overall theme seemed to be that BI was good for purposes other than trying to sell people more stuff.

 

Now, however, we have an econometrician (someone who uses statistical and mathematical techniques to solve problems and to test and demonstrate theories -- and yes, we had to look it up) and Yale law professor who puts a negative spin on the increasingly common practice of applying BI to all kinds of data.

 

Ian Ayres believes that in the near future few if any tasks will be based on independent judgment or intuition. In a Newsweek article about his new book "Super Crunchers" (which is what Ayres calls companies that control and manipulate data), he says this reliance on data won't necessarily benefit customers.


 

Instead, Ayres says, auto dealers (and other businesses as well) could calculate exactly how far they could push customers on prices, loan rates and other fees. Airlines (or other businesses) might opt to treat customers that data shows are more likely to jump ship better than their most loyal customers.

 

Interviews like this one make data mining sound borderline scary in a "1984"-like way. While we can't always rely on companies to use their increasingly sophisticated BI capabilities for good rather than evil, we also think there will always be a place for intuition.

 

Intuition has arguably driven some pretty monumental business decisions. We're betting that "Super Crunchers" wouldn't necessarily back the idea of developing a portable device to download music, for example.



Add Comment      Leave a comment on this blog post
Aug 30, 2007 8:47 AM Ian Ayres Ian Ayres  says:
I'm the "Yale law professor who puts a negative spin on the increasingly common practice of applying BI to all kinds of data."But I'm actually a great fan of Super Crunching. BI has already and will continue to produce great benefits for consumers. It helps us find the products and services that we really want. Super Crunching on quality of usually a very good thing.Super Crunching on price might be scarier. But even here it is difficult to know whether counter crunching by consumer websites like www.farecast.com and zillow.com end up evening the playing field.My book talks about some of the troubling impacts of data-driven decisionmaking on us as employees and citizens as well. But the big picture is of the amazing things that we can now do. By the way, I've posted a ton of prediction applets at http://islandia.law.yale.edu/ayers/predictionTools.htm that would let people predict all kinds of things (their due date, their kid's height, who is likely to win a tennis or baseball game). Reply
Aug 30, 2007 12:13 PM Ann All Ann All  says:
Thanks for the clarification, Ian. I must admit (somewhat sheepishly) that I haven't yet read your book -- though I intend to do so. My comments were based entirely on the Newsweek article I cited. I think most folks can identify with the point you are making -- even if they don't agree with it: Technology, no matter how useful, often has a dehumanizing element. Heck, I still have occasional nervous thoughts about HAL from "2001: A Space Odyssey." Reply
Sep 5, 2007 2:50 AM Keith Bennett Keith Bennett  says:
Dr. Ayres discussion of reasonably foreseeable negatives is consistent with the settled economic principle that the production of any 'good' will also inevitably produce one or more 'bads'. Producing analyzed information in support of decision-making is no exception. By the way, Econometrics is ofter used for analyses that are entirely atheoretic. Reply
Sep 5, 2007 8:50 AM Shahid Ferozie Shahid Ferozie  says:
Technicalities aside we tend to overlook the fact that from time immemorial innovations are the forte of man and not programs. We still use a minor part of our brains and it has been proven that if and when humans use the whole of their brainpower they can scale unbelievable heights. Often they are misnamed as paranormal. Human Intelligence (HI) far exceeds the Business Intelligence (BI) and there should be no fear that BI will at any stage suppress Intuition. Yes it is agreed that BI will act as a sleeping pill for most but many will be spurred further with BI tools to aide deeper and more widespread intuition. Reply
Sep 5, 2007 9:52 AM Jed Simm Jed Simm  says:
Numbers can only take you so far. They can give you data and possibly information, but alone don't give you knowlege or wisdom.Yes, its important to have dataYes, data analysis can give insightsBut, at the end of the day, mankind will make decisions based on emotions, beliefs, attitudes and data. Most CEOs are 'intuitives' and got there because of their ability to go beyond the data.When we conducted a BI exercise for one company, we found the existing BI tools woefully inadequate to meet their real information needs. So we still have a long way to go.Data analysis, at the end of the day, is only a base information source. Reply
Sep 6, 2007 3:41 AM Sundar Sundar  says:
Good article.There are pitfalls.Managers working with minimal set of data so far, find it difficult to manage information overload. They also tend to look at wrong metrics and take decision.Sufficient understanding of cause and effect and sensitivity is missing still. It would take years before most managers put the data into right use. Reply

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