Zero One: Can Data Predict Customer Behavior?
From soothsayers to fortune tellers to data scientists, business leaders have been trying to predict the future since the dawn of the deal. If companies knew today what customers will want tomorrow, they can better serve them, improve the customer experience, and boost sales.
Predictive analytics was supposed to break the barrier, replacing luck-of-the-draw tarot card readings – also called “focus groups,” in corporate speak – with data-driven insights about prospective customer behavior. Now business leaders believe artificial intelligence’s black box is the new crystal ball, a machine that learns from data to predict what customers will want even before they do.
But does data-fueled technology make you feel like you know what’s going to happen?
Truth is, time and again business leaders have been let down. Just look at your balance sheet; predictive analytics didn’t usher in an era of can’t-miss budgets.
Of course, that’s not stopping companies from continuing to mine data for golden nuggets. Consider Forrester’s series of data trends for 2018:
· More than half of chief data officers will report to the CEO, up from 34 percent n 2016 and 40 percent in 2017
· “Data engineer” will become the hot new job title, reflecting the importance of data initiatives supporting the business analyst
· One out of five companies will deploy AI to make decisions and provide real-time instructions
· Four out of five companies will rely on service providers for some portion of their insights capabilities
Forrester notwithstanding, maybe companies are pinning their hopes a little too much on data, or at least predictive analytics and machine learning. Data may or may not be the problem, but the interpretation of data surely plays an antagonistic role.
This idea can be summed up in a comment on LinkedIn from Tom Goodwin, executive vice president and head of innovation at Zenith USA. Data, he says, not only isn’t helpful but can be dangerous and misleading.
“Data showed that Red Bull would flop, that people don’t want smartphones, that 3D TVs would be the next big thing, that people won’t pay for content and that Hillary would win,” Goodwin says. “We’ve become blinded by it on the false belief it’s ambivalent, that it’s objective, when it merely reflects the chaotic nature of the world and the objectives of those who recorded and spread it.”
Goodwin goes on to describe how finding data, or frame data, to support any argument is simply a matter of effort and has no basis in truth. Sound familiar?
The great American author Mark Twain wrote in 1906: “Figures often beguile me, particularly when I have the arranging of them myself; in which case the remark attributed to (British Prime Minister Benjamin Disraeli) would often apply with justice and force: ‘There are three kinds of lies: lies, damned lies, and statistics.’”
Here’s an idea: Maybe the future isn’t supposed to be known.
Tom Kaneshige writes the Zero One blog covering digital transformation, AI, marketing tech and the Internet of Things for line-of-business executives. He is based in Silicon Valley. You can reach him at firstname.lastname@example.org.