Jeff Ma, he of the book Bringing Down the House about winning at Blackjack, gave the closing keynote on advanced analytics.
First he asked what can you learn from Blackjack
- Reduce the casino’s (or your competitor’s) edge For instance basic blackjack strategy executed perfectly reduces your losses by 50%
- Avoid omission bias People favor risk caused by inactivity than by activity in that they hate taking action that causes risk and so they do nothing even when that is wrong
- The fallacy of “gut feeling” All decisions are based on data, even if we are not clear what that data is
- The right decision is different from the right outcome Making the right decision does not mean you will always get the right outcome, just that you will do so more often
Always favor data over gut!
These leads to some characteristics of an analytically inclined organization:
- Trust in the team (about what a good decision is for instance)
- Intrinsic motivation (to make better decisions)
- Metrics (as few as possible but no fewer)
- Competition (but with shared success)
What are some of the limitations of analytics? How might you challenge these limits
- Job security is critical – you must be focused on the long term win not on keeping your job for the next little while
- Provide context but not necessarily control
- Collect the data you need to measure good decisions
- Remember that you are only trying to make better decisions not perfect ones – hard problems don’t need perfect solutions
Finally he says believe in the numbers. Use the data, believe in the data, make good decisions even in the face of individual challenges and bad (if unlikely) outcomes. And remember that this is a long term thing not a one-time thing.