Category Archives: rants

It’s Nice To See CNN Run a Piece that Says Big Data is Big Trouble

the doctor doesn’t like the phrase “big data” or the “big data” craze. First of all, as he has said time and time again, we’ve always had more data than we could process on a single machine or cluster and more data than we could process in the time we want to process it in. Secondly, and most importantly, just like the cloud is filled with hail, big data is filled with big disasters waiting to happen.

As the author of the article on on the big dangers of ‘big data’ astutely points out, there are limits to the analytic power of big data and quantification that circumscribe big data’s capacity to drive progress. Why? First of all, as the author also points out, bad use of data can be worse than no data at all. As an example, he cites a 2014 New York Times Piece on Yahoo and it’s Chief Executive which demonstrated the unintended consequences of trying to increase employee drive and weed out the chaff by way of scorecard-based quarterly performance reviews which limited how many people on a team could get top ratings. Instead of promoting talent and driving talented people together, it split them up because, if you were surrounded by under performers, you were sure to get the top score – but if you were surrounded by equals, you weren’t.

This is just one example of the unintended consequences of trying to be too data driven. Another example is using average call time in a customer support centre versus number of calls to close a ticket as a measure of call centre agent performance. If an agent is measured on how long she spends on the phone on average, she is going to try to take shortcuts to solve a customer’s problem instead of getting to the root cause. For example, if your Windows PC keeps locking up every few days and a re-boot fixes it, you will be told to proactively reboot every 24 hours just to get you off the phone. But that doesn’t necessarily fix the problem or guarantee that you will not have another lock-up (if the lock-up is a certain combination of programs opened at the same time that refuse to share a peripheral device, for example). As a result, the customer will end up calling back. Or, if she can’t solve your problem, you will be switched to another agent who “knows the system better”. That’s poor customer support, and all because you’re keeping track of the average time of every call and computing averages by rep and department.

Big data will let us compute more accurate economic forecasts, demand trends, process averages, and so on, but, as the author keenly points out, many important questions are simply not amenable to quantitative analysis, and never will be. The examples of where your child should go to college, how to punish criminals, and whether or fund the human genome project are just a few examples. Even more relevant are product design queries. 34% of users want feature A, 58% want feature B, and 72% want feature C, but how many want features A and B or A and C or B and C or all three features? And how many will be put off if the product also contains a feature they don’t want, is too confusing due to too many frivolous features, or doesn’t have all important feature D that you didn’t ask about, but now have to have because your competitor does?

And, even more important, McKinsey, which in 2011 claimed that we are on the cusp of a tremendous wave of innovation, productivity and growth … all driven by big data had to recently admit that there is no empirical evidence of a link between data intensity … and productivity in specific sectors. In other words, despite all of the effort put into big data projects over the last few years, none have yielded any results that are conclusively beyond results that would have been achieved without big data.

And, most importantly, as someone who has studied chaotic dynamical systems theory, the doctor can firmly attest to the fact that the author is completely correct when he says understanding the complexity of social systems means understanding that conclusive answers to causal questions in social systems will always remain elusive. We may be able to tease out strong correlations, but correlation is not causation. (And if you forget this, you better go back and take another read through Pinky and the Brain’s lesson on statistics.)

Dilemma or Not, Buyers Still Must Take Ethics into Account

In a recent post over on Spend Matters UK, Andrew Cox asked whether “aggressive buyers are stupid or guilty of segmentation errors”. In this post, the author chimed into the debate over supplier bullying, initiated by Peter Smith over the continued extension of unreasonable payment terms by 2 Sisters and Sainsbury’s, continuing the unsavoury Tesco tradition. According to Mr. Cox, food companies should not be condemned as ‘unethical’ just for extending payment terms as ethical standards are a contested concept.

While I agree that what is unethical for some is just fine for others, as per the example provided in the post, one would think that there are some positions that just about everyone with a conscious could agree upon, just like the vast majority of people in modern society believe that murder is wrong. In the debate, Peter Smith is condemning the act of a supplier unnecessarily extending payment times to the point where a company could risk bankruptcy. I would hope that this would be a situation that most people could agree is simply not ethical.

But this is not the only time when ethics should be taken into account. Ethics should also be taken into account when choosing a supplier. When choosing a supplier, fair labour standards should be considered. Now, while what is fair is always a subject of debate, it should not be a subject of debate that a fair supplier

  • follows all health, safety, and minimum wage standards of the country or countries they operate in
  • if there are no such standards, the supplier does not unnecessarily expose its workers to risk, does not maintain conditions that threaten its workers’ health, and/or does not pay its workers less than a living wage in the country that is being sourced from (as defined by the World Economic Forum, etc.)
  • does not unnecessarily harm the environment

And while it might be difficult if there are no standards to determine that conditions are sufficiently healthy or safe, that the wages paid are suitable, or that the supply is not unnecessarily harming the environment, there are points when it becomes obvious. Just like delaying supplier payments 180 days or more is ridiculous, so is choosing a supplier that houses its workers in buildings that should be condemned (which are doomed to collapse like Rana Plaza), that allows workers into a mine without adequate safety gear, that uses wide-spread clear-cutting that will clearly harm the local environment, or that pays its workers so little that they can’t afford to keep a roof over their head and eat. If we can’t agree that if the majority of the population, and in particular, the majority of the population that defines our customer base, would consider the supplier and its practices unethical that we should too, then do we even deserve to call ourselves professionals? Every professional organization worth it’s salt has a code of conduct, and most of these have an ethics clause that say we will adhere to the ethics of the industry we work in and the society we live in. If the majority of society condemns an action or a state of affairs, and, in the country we operate or sell in has laws that condemn an action or a state of affairs, how can we claim there is any debate whatsoever from an ethical perspective in regards to a supplier that takes that action or maintains that state of affairs?

You’d Think It Would Be Obvious By Now that You Should Not Poison Your Customer

After the plethora of lawsuits filed in 2008 against Sanlu Group for putting melamine in the milk (or, to be precise, a baby formula that was based on milk) as per this article in the New York Times, against the individuals responsible for importing rip-off toothpaste (that was not manufactured by Colgate) contaminated with diethylene glycol (which is a sweet tasting poison used in anti-freeze and which kills poor defenseless LOLCats), and against Mattel for importing toys coated in deadly lead paint (as per this article from USA Today), you’d think that even if they were run by sociopaths without any ethics whatsoever, corporations focussed on the bottom line would know better than to poison their customers.

However, after reading Pierre the maverick Mitchell’s Friday rant which was “an open call to hotels to NOT poison their customers”, all I have to say is, apparently not!

Maybe they don’t know they’re doing it, or they do but believe that the average customer doesn’t stay often enough or long enough to be exposed to enough toxins to be damaged. Now, this might be the case for the average person who only uses a hotel once or twice a year on vacation, but what about the travelling salesperson or executive who spends more time in hotels than in their own home? How long before BPA builds up to toxic levels in the bloodstream, given that a new study has determined that your body absorbs more BPA than previously thought (rodalenews.com)? If the coffee maker and plastic stir sticks that you use to make your coffee every day leaches BPA, how long before you are sick, whether you realize it or not?
And that’s just the tip of the iceberg! According to Pierre, the non-dairy creamers many hotel chains provide are full of toxins — sodium caseinate, monoglycerides, and diglycerides. We might as well eat glue!

It’s scary. And the worst part is that the cost savings the hotel realizes from buying cheap coffee makers, non-dairy creamers, and other toxic products are negligible. Compared to the revenue a hotel chain can see on a nightly basis from a quality offering that puts them ahead of their peers, a few pennies of savings versus a few dollars in profit is not only negligible, it’s just stupid!

Grocery Retailers Waste So Much Food It Should Be Criminal!

Approximately 1/3rd of all food is wasted in North America. (See 2013’s Thanksgiving Post.) For years, I’ve been struggling to figure out why. It’s well known that the biggest offenders are

  1. processors in developing countries who (due to financial, managerial, and technical constraints) struggle to properly store, cool, and process the food on-time to preserve it.
  2. restaurants, who discard as much food as they discard other waste (Source SI)
  3. retailers, who through bad forecasting, order too much and then spoiled food goes in the dumpster

But it is not well known that retailers intentionally over-order and waste food just to make sure their produce section looks nice (Source Spend Matters “eating the cost of wasted food and sometimes thats ok waste matters part 6”). And that is definitely NOT OK! Never, ever, ever! Not when over 13% of the world’s population is undernourished (Source: KFF and Wikipedia) and 15% of Americans, that’s right, 15% of Americans are considered “food insecure” and experience hunger in their households. (Source: FAO Washington “the new face of hunger: why are people malnourished in the richest country on earth”)

In other words, the produce that is being wasted by retailers as an “acceptable loss” might be enough to counter a sizeable portion of the undernourishment problem in America — and that’s not counting the waste by restaurants and food processors! There’s no excuse for this. Not only are people going hungry, but we’re paying more for our retailers’ stupidity.

Why do they do this? According to Spend Matters, retailers believe that having a good-looking produce section that is fully stocked with fresh products is essential to get customers in a store. And that having more products than needed rather than running out tends to be better for business. While both of these statements are true, this doesn’t mean that a store has to considerably over-order to avoid stock out or waste food.

Not only has computing power increased dramatically since the pentium was released twenty years ago, which allows large amounts of historical data to be processed on the Procurement Manager’s workstation, but so has the accuracy of demand prediction models which can very accurately predict demand for any product at any time of the year, and even take into account the impact of sales, market shortages, and market recalls. A 1% buffer in these models is more than plenty to prevent stock-outs 99% of the time if these models are properly applied on enough data.

Furthermore, the standard practice of marking the produce down 50% when it starts to rot in hopes in that it will sell before it is unconsumable is stupid. When you see rotting tomatoes, moldy oranges, or squishy cucumbers, you’re not even going to buy them for 75% off. Stores have to smarten up and do two things.

  1. Mark produce down when it’s shelf-life gets down to 72 hours or less.
    Considering we also have very accurate models of shelf life under given situations, this isn’t hard to do.
  2. Donate produce with a shelf-life of less than 48 hours to a local shelter on a nightly basis.At this point, the store is taking a 75%+ write-off anyway and it knows it. It would be much better to donate the food, and get a charitable donation tax credit, when the food can still be safely used than throw the food in the waste bin. Especially since the retailer could use this to get a brand boost if it advertises that it donates X$ in food each year to the local food bank.

    No consumer expects every item to be in stock every time they go to the store with the never-ending stream of supply disruptions we experience these days, so the game has to change. And no consumer wants food to go to waste if people in their own city are starving! It’s not about the most fresh produce, but the most responsibility — and these days, a little goes a long way and the first store or chain in a region to capitalize on this is going to get a big brand boost.

And if you are a eco-nut who wants to protest something, here’s a cause. Protest grocery stores that build waste, or shrink, into their model without making sure that such food doesn’t end up in the dumpster. While some sustainability problems aren’t easily addressed, this one is.