Tuesday, August 10, 2010

Is There a Dark Side to Analytics?

A case study in the Harvard Business Review issue of May 2007 was written by Thomas Davenport and Jeanne Harris. The case considers the possible uses of client information and suggests that there may be some unintended consequences that may be less than the "right thing to do". There were case commentaries by George Jones, President and CEO of Borders, Katherine Lemon, Associate Professor of marketing at Babson College's Carroll School of Management, David Norton, Senior VP at Harrah's Entertainment and Michael McCallisster, President and CEO of Humana to complement the case study.

One of the key points of the case study is that customers are generally not aware that much of the information they provide to businesses is often sold to other businesses. Some of the more egregious examples are prescription information from a large supermarket with a pharmacy who sells the information to insurance companies; another example is the amount of alcoholic beverages that is being bought by a specific individual or family which might also end up in the data base of the insurance company that holds the insurance policy for that individual or family and which could lead to increased premiums.

It doesn't take a lot of imagination to conjure up additional ways in which the data gathered for analysis can be used in ways that the customer never understood and who probably would not have given permission to share had the customer been aware of who was buying access to the data. With the amount of information given by individuals and companies and then being sold to other companies for analysis, it is becoming eminently clear that there is a need for better communication between the customer and/or business and the companies who are asking for that information.

As a first step companies who sell the information need to apprise their customers what information is being sold and to whom. The first step to resolve this issue is transparency that could provide the customer with the opportunity to request that information regarding their purchasing behavior either be limited to certain items or even eliminated from the data base.

As it turns out many of the retail stores that gather that customer information need to sell the information because of the low margins many retains stores operate on these days. This added income may be the difference between profit and loss. Nevertheless, withholding this knowledge that the company is gathering specific information regarding the buying habits of specific customers to sell to other companies that can analyze and make business decisions about those customers MUST NOT continue to be withheld. The opportunity to abuse and misuse the information casts a dark shadow on those of us who make a profession of using analytics to make better business decisions. It is worse than the old adage that people lie with statistics. In this case people are using statistics to possibly punish people who are unaware of what is happening.

The bottom line is that we who are in the analytics industry must find a way to bring sunshine onto our analytics. Any other way is both unethical and immoral!

No comments:


web visitor stats
OptiPlex 755 Desktops