Today businesses can measure their activities and customer relationships with unprecedented precision. As a result, they are awash with data. This is particularly evident in the digital economy, where clickstream data give precisely targeted and real-time insights into consumer behavior…
Much of this information is generated for free, by computers, and sits unused, at least initially. A few years after installing a large enterprise resource planning system, it is common for companies to purchase a “business intelligence” module to try to make use of the flood of data that they now have on their operations. As Ron Kohavi at Microsoft memorably put it, objective, fine-grained data are replacing HiPPOs (Highest Paid Person’s Opinions) as the basis for decision-making at more and more companies.
The wealth of data also makes it easy to run experiments:
Consider two “born-digital” companies, Amazon and Google. A central part of Amazon’s research strategy is a program of “A-B” experiments where it develops two versions of its website and offers them to matched samples of customers. Using this method, Amazon might test a new recommendation engine for books, a new service feature, a different check-out process, or simply a different layout or design. Amazon sometimes gets sufficient data within just a few hours to see a statistically significant difference…
According to Google economist Hal Varian, his company is running on the order of 100-200 experiments on any given day, as they test new products and services, new algorithms and alternative designs. An iterative review process aggregates findings and frequently leads to further rounds of more targeted experimentation.
This sounds like a social scientist’s dream – if we could get our hands on the data.
My big question about all of this data is this: what should be done with it? This article, and others I’ve seen, have said that it will transform business. If this is just a way for businesses to become more knowledgeable, more efficient, and ultimately, more profitable, is this enough? Occasionally, we hear of things like discovering and/or tracking epidemics by looking at search queries or tools like the “mechanical turk” to crowdsource small but needed work. On the whole, does the data from the Internet advance human flourishing or concentrate some benefits in the hands of a few or even hinder flourishing? Does this data give us insights into health and medicine, international relations, and social interactions or does it primarily give entrepreneurs and established companies the chance to make more money? Are these questions that anyone really asks or cares about?