Luck is in the “Big” numbers

Statistical analysis of large amounts of information, facilitated by new technologies, already allows us to predict much of the future

Recently while visiting a friend’s ecommerce startup in Lisbon, I came across an interesting fact. Along with the traditional designers, programmers, marketers, etc, she had hired a mathematician for the startup team. In a company where resources are limited, who would think of hiring a mathematician? When she showed me in more detail the work she was doing, it became clear the value of having someone with a background in statistics, because they could understand with great precision where and how much they could invest in marketing to get the best return on investment in advertising.

My friend is one more in the recent trend of “big data” that exists worldwide. Books like Freakonomics or the various ones by the author Malcolm Gladwell, have popularized statistical analysis and correlations. Analyses as controversial as the correlation of the drop in crime in New York City with the legalization of abortion twenty years earlier have become part of the coffeehouse conversation.

But what is “big data“? It is the ability to analyze large amounts of statistical information and correlate it, which is only now possible due to new technologies. The amount of information collected increases daily, data collected by your cell phone, credit card, car, etc, can now be correlated to predict your future behavior. And companies are increasingly starting to use these tools in their daily lives. Amazon announced last week that it is developing a system where it predicts its customers’ purchases before they make them, making it possible to send the product to the distribution center closest to their home. If for example the new season of “Game of Thrones” on DVD is coming out soon, and a certain person is likely to want to buy it, Amazon can ship it in advance. Have you ever noticed how on Facebook the advertising that appears more and more has to do with topics that interest you? No, it is not a coincidence.

But if we think that the future depends more and more on machines, what is getting special attention is the appreciation of characteristics that are not evaluated by machines. The case of baseball in the United States (documented in the movie Moneyball with Brad Pitt) is an example. When all teams start using statistics to choose players, the differentiating factor is again human and the feeling of the coaches.

The ethical and privacy issues are very relevant in big data. Won’t we have more cases of discrimination? Yes, it is true that they can happen, but they already happen nowadays. Although many people say they have no prejudices, how many are actually able to make decisions independent of race, religion, sexual orientation, or even the university where they studied, or their favorite soccer club? At the same time some stereotypes can also be broken. Gladwell in his most recent book talks about several cases of great professional success of people who would initially be “limited” by dyslexia. Who knows, we may find correlations of all these analyses that allow us to eliminate current prejudices and identify the so-called “limitations” as critical success factors in certain professions.

In e-commerce, with the amount of data collected, this type of analysis is increasingly accessible, and it is also increasingly difficult to be competitive in the sector without taking them into account.

If you have not yet hired a mathematician for your company… Maybe it is time to do so.

David Bernardo
David Bernardo
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