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Human Obsession with Prediction - Coggle Diagram
Human Obsession with Prediction
Assumption
past behavior reasonable predicts the future
rely on historical data
Good predictions need: (a) sound data and (b) sound models(reasoning)
(a) sound data
Data is raw facts
become information when they are sorted, condensed, and contextualized.
Insight, or knowledge, is actionable information.
For example, 24, 32, and 28 are data of temperatures for tomorrow which makes them information.
Deciding what you will need to wear tomorrow is insight that you can act on.
need a coat tomorrow
Collecting and managing data is the IT unit's job
Not all data is worth managing
Not all information it produces is competitively valuable
What's competitively valuable requires non-IT managers' judgments
Without it, IT excels at collecting more without a clear business purpose
Troves of irrelevant data bod down business decisions
Proverbial needle in the wrong haystack
(b) sound models(reasoning)
Software apps transform data into information then into business insight.
Insight does not emerge spontaneously from data without efforts to transform it.
As a non-IT manager, you can help identify what business outcomes are competitively important to predict,
within what time constraints
which model you would use to predict them
You can begin with just one business outcome that you believe could differentiate you from your archrivals
Predictions are only as good as the managerial insight in the underlying models.
Their underlying models/reasoning is based on functional domain knowledge, which can come only from non-IT managers.
For example, classifying a customer in a high-maintenance group requires a marketing manager’s insight into what predicts membership in that group
purchase frequency, average order size, and returns history
Models in other functional areas require that line function’s insight
fulfillment timeliness from operations, account delinquencies from accounting, demand-and-supply models from operations staff, and product pricing from senior management