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Losing at the Front Lines: Data Driven Mindsets

January 18, 2011 Leave a comment Go to comments

In an Authors@Google talk linked in LAK11, Ian Ayres, author of Super Crunchers, discusses the power of data-driven decision-making. His major thesis urges firms towards a more data-driven decision model and highlights human limitations of thinking. The speech reminds me of a recent book I read entitled Why Most Things Fail: Evolution, Extinction and Economics by Paul Ormerod. Both Ormerod and Ayres make dual points in respect to data: we can’t possibly break it down as well as machines but are significantly empowered through its utilization. In a sense our data is a double-edged sword revealing both human limitations and strengths. We are truly in an era of machine power, an era of “information management” wherein our most valuable assets are those that pull in the wealth of information around us and allow us to make sense of what we’ve found.

Ayres makes the point that as firms begin to shift to a system of more data-focused functions the “front-line employee will lose discretion.” Considered in relation to the computer, the human mind cannot compete and many of the decisions once made by human beings will shift to a computer’s decision-making model. Gone will be the subjective procedures of human interactions. Ayre’s mentions a bank loan officer’s assessment of a loan applicant on the basis of human observation and the factors of physical appearance or communication factors. He suggests that the financial crisis of 2008, building then when this speech was delivered in November of 2007, could have been avoided. Human means just cannot make the cut when the computers are in charge.

In short, computers are cold calculators of data. They deliver pure and evidence rich decisions free from the foils of subjectivity.

Is there danger here? One can only wonder at what the future will hold in terms of data decision-making. Certainly privacy concerns will curb much of the data grabbing procedures but one has to wonder just how much data is sucked up without one’s knowledge. Even worse, many provide reams of personal data willingly and wander into an online environment where considerably personal data is largely transferred and shared among network friends and peers. There is a risk for over-exposure and, as Ayre’s presentation suggests, an army of hungry firms craving for this personal information.

Perhaps the wary will be best prepared for this future world of data obsession. In those who hide away from the world of network utopia we may find a golden wall of protection. As millions drain their moats and cast off their metaphorical weapons of privacy, the future may prove optimism a delusion. We love our network and our new online goodies, but will the years ahead reveal a mad-panic of reaction. When data-driven decisions are made less by our human neighbors and more by mega computers stored away in corporate basements what can we do? As they say, when its online its there forever. We may loathe the used-car salesman now, but imagine how nice he’ll seem when the PC is the one floating the deal and our every point of negotiation has already been considered.

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