It’s no exaggeration to say that Big Data is revolutionizing and will revolutionize how business is done. Dynamic pricing models, customized customer experiences, real-time adaptations in production and distribution – the opportunities for businesses are endless.
Yet opportunity brings with it danger. And a significant danger looms in the world of Big Data.
Interpretation.
Data may be objective but our interpretation of it is subjective. And we fall prey to a multitude of cognitive biases that distort our judgment and decision-making.
Imagine a company that over seven years loses 14% of its revenues and 9% of its market share. How would you assess the CEO? A failure, right? How would you assess a CEO who over seven years turns an annual loss of almost $13B into a profit of more than $7B? A success? Now what if I told you it was the same CEO? The goal of Alan Mulally, former CEO of Ford, was to shrink and focus the company so it could become much more profitable.
So what’s going on here? What’s going on is that we tend to draw conclusions from available information without asking if that information is sufficient to draw a valid conclusion. We have a conclusion bias. – a bias to conclude, not to ask if we should conclude or what additional information we should have to conclude.
Another example: the confirmation bias, which refers to our tendency to search for, focus on and remember information that aligns with our preconceptions. Hmmm, think you’ve ever done that?
Here’s the net of this: Big data isn’t the solution. Our ability to properly interpret and utilize data – that’s the solution.
Big data demands big interpretation. Otherwise, it’s big danger.
Your thoughts?
Michael
The Big Danger of Big Data
