August 27, 2007
I'm biased. And so are you.
Earlier this year, I changed teams and moved offices within Microsoft. This interrupted a little habit I had developed: pinning up my “Cognitive Bias of the Week” outside my office.
Cognitive biases are somewhat like optical illusions, but they affect our thinking rather than our vision. A well known example is confirmation bias; we tend to give more weight to positive observations that confirm our beliefs rather than negative observations. Fortune-tellers may appear successful when people remember one or two correct predictions more readily than the many that were off the mark.
Of course, you wouldn’t make such an error, would you? Think again. Like an optical illusion, many biases are extremely difficult to shake even when you are aware of the effect. In fact, some biases are most effective when we try to think most logically.
I believe it’s important for those of in the BI world to understand these biases. We represent data and analytic conclusions in highly persuasive ways. We help our customers to get it right or to get it wrong - and at times our influence may be inadvertently malign. With that in mind, I’m going to translate my “Cognitive Bias of the Week” posters to occasional blog posts on particular biases. I hope you’ll find these interesting, and relevant. Let me know.
Here’s one to start with. It’s about risk, and it has some revealing insights into how we consider the impact of risk in our decisions. It’s often called “The Pseudocertainty Effect” and it was first examined by Tversky and Kahneman.
Imagine that the US is at risk from a new disease spreading from Asia. Without treatment, it will kill 600 people, but we have two treatments to choose from.
• With Program A, 200 people will certainly live.
• With Program B there is a 1/3 probability that all 600 people will leave. However, there is also a 2/3 probability that they will all die.
Program A is positive – you’re certainly going to save some people. Program B potentially has a better outcome, but it is way less than certain. What treatment program do you recommend?
In the original study, 72% recommended Program A, and only 28% preferred Program B.
Let’s flip the problem round.
• With Program A, 400 people will certainly die.
• With Program B there is a 1/3 probability that no-one will die. However, there is also a 2/3 probability that all 600 people will die.
Now, Program A is negative: 400 people will certainly die. Program B is still uncertain: there is a risk it will all go wrong. However, if you do nothing 600 will die anyway, and if you follow Program A, 400 will certainly die. With Program B you have a chance of saving everyone. In the original study, when presented in this way to a different sample, 78% chose Program B.
That’s pretty remarkable. Exactly the same choices, presented in a different way, led to a complete inversion of preferences.
From this example, you can perhaps see why I consider cognitive biases to be an important study for BI analysts and developers. We may think of ourselves, or our users, as super-rational objective analysts of complex data; but in reality we are subject to these same biases. Also, we will tend to fall back on these biases, shortcuts and heuristics when we are making decisions under stress.
As BI becomes ever more pervasive, emergency planners probably would use our tools and techniques to handle an epidemic. But we could also be discussing customer churn rather than a deadly disease. The specific KPIs we choose, the manner in which we present them – the ways in which they influence decisions may be subtle, but the impact can be dramatic.
I’ll try to keep up a regular posting of biases, with examples relevant to the BI world.
Posted by Donald Farmer at 11:32 AM | Comments (2)
August 12, 2007
Data visualization - in a music video
Not quite BI, but how often do I get the chance to post a link to a data visualization music video?
If you think you recognize the music, you're probably right. It's playing in the background of the Geico caveman advert when he's on the moving walkway in the airport.
My colleague Olivier Matrat points out that the video production is by a French design firm H5 who also made this excellent visualization for a nuclear services company.
Enjoy.
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Posted by Donald Farmer at 11:22 AM | Comments (0)
August 11, 2007
The world is flat - or at least its files are.
A couple of weeks ago, Scott Humphries held his annual Pacific Northwest BI Summit in Oregon. It is a private event, small but highly valued, and organized impeccably by Scott. The Summit is a real pleasure, with all the ingredients of a memorable symposium - fascinating company, beautiful surroundings, and a wonderful host. However, the Summit is much more than just a good time: it is an opportunity to have conversations and to exchange insights across a very broad spectrum of the BI business, not only with deeply knowledgeable friends, but also with colleagues from companies outside our usual circle of partners.
This year we formally covered four topics - RFID intelligence, software as a service, IT and business alignment, and data warehouse appliances. Informally, the subjects were ever more diverse. Coming away from the weekend, I always find that some insights have been new and surprising; some have simply, but valuably, confirmed what I have already been hearing from partners and customers; and some give an interesting new tingle to vaguely defined feelings I have had about the BI Industry and its practices.
Here is just one example. We were discussing Software as a Service, and someone observed that, in their SaaS world, many clients still exchanged data with the service in the form of encrypted flat files, exchanged over secure http. These customers were unwilling, for security, to open a port in their datacenter to exchange data with the service provider. There was much head-nodding and recognition around the table. For me especially, having spent five years specifically working on data integration technologies, I was all too aware that flat files are pervasive.
Nevertheless, one thinks of software as a service as being on the leading edge of innovation, and it was a little surprising to discover that good old flat files are still to be found there - and not only as lingering artifacts of an earlier age, but as a positive choice for otherwise early-adopting customers. It is rather like visiting the restroom in a high-tech Japanese building, and finding a squat toilet – elegant and efficient, but somehow something one expected to be phased out.
I love flat files. You have to marvel at the sheer ingenuity - sometimes inspired, sometimes perverse - with which data architects have been able to overload the meanings of delimiters, work around embedded characters, pad fields, compress fields, normalize, denormalize, you name it. And it’s not only what people have been able to do with the 2**7 characters of ASCII – We had great fun working out how efficiently to parse (and help users to define) fixed width columns in multi-byte character sets. Great stuff!
I have a friend in Canada who, in his retirement, carefully watches the Canadian markets. For this he uses Microsoft's MoneyCentral website. Now, as it happens, several of the exchanges who provide data to MoneyCentral use a simple form of compression for their streaming ticker data: they leave out the decimal point from each quote. For a quote to two decimal places, this can account for between 14% and 25% compression. Every hour or so, the data provider sends a reminder of where the decimal place should be. However, very occasionally, the provider would overlook to send this reminder and my friend's stocks appeared to jump 10000% in value. At his age, this kind of excitement could be too much for him.
Bud's method for dealing scenario was simple enough - he emailed me whenever this happened. After all, I work at Microsoft, so surely I can tell those guys at MoneyCentral to sort it out. Naturally, the team spots these problems pretty quickly anyway and the figures would be adjusted within minutes. Nevertheless, Bud was convinced that I was so powerful within Microsoft that all I had to do was pick up the phone, and entire teams jumped into action to fix the problem just for him. (Today, I believe the problem is permanently solved. I certainly haven't had that panic email from Bud in a while.)
When I reflect on it, it is natural that flat files still have a role to play in our new world of software as a service. They are, like the squatting toilet, simple and efficient. They do, perhaps, involve perhaps some manouevers to which we, in our technolgoical comforts, have grown unused. (My wife and I concluded that the wonderfully supple and elegant old ladies and men performing Tai Chi in parks of an early morning in Hangzhou were actually practising for what my own grandmother would call their "necessary visits.")
Technologies move more slowly in the real world than they do in the high-energy environment of innovators and start-ups. I have no problem with that. If for some folks the world is still flat, it is a good thing that those of us eager to rush forward with all that is new, still have to accommodate them.
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Posted by Donald Farmer at 12:13 PM | Comments (0)
