Data Driven Decisions

when Hurricane Katrina was about to hit the coast the United States a large retailer did a study to prepare themselves by asking what products they might sell out of and what they should stock up on a room full of intelligent and experienced executives thought through what those products might be and came up with reasonable answers such as flashlights batteries water canned food sandbags and more but when they ran the data in analytics the number one product turned out to be Budweiser beer this is the power of data to illuminate insight to take us beyond intuition and help us make data empowered decisions and has relevance for most everything we do more and more of our actions and interactions with the world's are becoming mediated by data this alters how we interact and the choices we make understanding and seeing data can completely change the ranking of a set of options available to us and hence how we allocate our resources both as individuals and collectively almost everything can be tested measured and improved and this is truly bringing about a quiet but fundamental cultural transformation in how we make decisions data fication brings about a more objective form of decision making what is called data-driven decision-making for example when it comes to choosing a movie we used to go to the store and pick up the movie browse through all the titles read the description and decide which one we want to see now we're confronted with algorithms that make recommendations based upon data from the last films that we've seen as well as who our friends are what films they have seen in lights and the aggregation of feedback from thousands of millions of other users Madeleine McIntosh from a book publishing house talked about the culture of publishing changing with the arrival of Amazon's data-driven approach the traditional culture publishing was what she called their culture of lunches a culture of conversations where people had hunches and ideas about books and then discussed them Amazon then brought a date even numbers and math driven approached this decision and was able to basically figure out much better what was working and what wasn't working with the result being that they've essentially taken over the markets this transformation is happening in many areas of our economy more traditional companies are being displaced by companies that have embraced this new technology and the cultural paradigm of data think about wine tasting which you might think of as a quintessentially human skill there are human experts who look at and smell the wine to tell you what it tastes like and if it's of good quality this is the highly refined skill and sensory ability but it's also true the wine is at the end of the day just certain molecular composition and you can analyze that with numbers the wine analytics company analytics have been able to figure out that you can predict how an expert will rate it before they've even tasted the wine with remarkable accuracy and this applies to more and more spheres of life all Street is no longer full of people on seats making trades based on intuition and hope but up to 70% of those decisions are now made by algorithms acting on data likewise decisions on healthcare diagnostics are increasingly made by our listicle systems sports decisions are based on big data extracted from cameras around the court all pitch and sensors in the shirts of players the implicit premise of big data is that decisions can be made based fully upon data and computerized models shifting the locus of decision-making for people and institutions to data and former models bill Schmid's o from EMC describes well how decisions are currently made based upon management's gut feeling one of the most critical aspects of Big Data is its impact on how decisions are made and who gets to make them when data is scarce expensive to obtain or not available in digital form it makes sense to that well place people make decisions which they do on the basis of experience they've built up and patterns and relationships observed and internalized intuition is the label given to this type of inference and decision-making people state their opinions about what the future holds what's going to happen how well something will work and so on and then plan accordingly the term hippo is an acronym now used to describe this type of corporate decision-making process where the highest-paid person in the room gets to make the final call much for approached decision-making has been a function of simply not having data and not knowing in the past we've had to make decisions about complex environments and complex systems without being able to see or know what they are really like just based upon some intuition but big data analytics offers this new telescope with which to actually see these systems and the difference between having a hunch and actually seeing the data can be huge in terms of the decisions that get made every minute the world loses an area forests the size of 48 football fields and deforestation in the Amazon basin accounts for the largest share of this contributing to reduce biodiversity habitat loss climate change and other ecologically devastating effects but better data about the location of deforestation and human encroachment on forests could help governments and local stakeholders respond more quickly and effectively a project called planets is currently developing the world's largest constellation of Earth imaging satellites it will soon be collecting daily images of the entire land surface of the earth at 3 to 5 meter resolutions while considerable research has been devoted to tracking changes in forests it typically depends on coarse resolution images furthermore these existing methods generally can't differentiate between human causes of forest loss and natural causes this project planets is challenging the analytics community to develop machine learning models for labeling satellite image scripts with atmospheric conditions and various classes of land cover and land use types resulting algorithms will help to better understand where how and why deforestation happens all of the world's a much clearer image of this complex system would enable action orientated decisions take place the switching the dynamic from hunches guesses and intuition to that of a data-driven decision-making approach data holds a huge potential to revolutionize how we make decisions to shake up existing inert patterns of thought and action taking to overthrow unquestioned bias to question established assumptions but data also has its limitations and this will we'll look at in the next module as we go further into the conceptual foundations of the big data paradigm talking about what's come to be called a tourism the belief in data