Download - Teaching Computers to Think Like Decision Makers: the next revolution in the data sciences

Teaching Computers to Think Like Decision Makers

Mark ZangariCEO, Quantellia LLC

San Francisco UniversityMay 23, 2014

[email protected] 717 4221

Copyright © 2014 Quantellia LLC. All Rights Reserved.

Robert McNamara• Secretary of Defense (1961-68)• Ford Motor Co. (1946-61)• USAF “Statistical Control” (1943-46)

Data System Analysis

Decision

http://sunsite.berkeley.edu/FindingAids/dynaweb/calher/jvac/figures/j12EB-644A.jpg

http://www.whatswrongwiththeworld.net/office-interior-1940s.jpg

http://www.biega.com/bcbphotos/biega-engineer.jpghttp://lcweb2.loc.gov/service/pnp/hec/28300/28336r.jpg

Data Acquisition…

Data Storage…

Data Mining…

Analytics…

Data

http://sunsite.berkeley.edu/FindingAids/dynaweb/calher/jvac/figures/j12EB-644A.jpg

http://www.whatswrongwiththeworld.net/office-interior-1940s.jpg

http://www.biega.com/bcbphotos/biega-engineer.jpghttp://lcweb2.loc.gov/service/pnp/hec/28300/28336r.jpg

Data Acquisition… Data Mining…

Analytics…

Data

Data Storage…

DataInstrumented

Code / Sensors

DataManagement

Analytics

Presentation

System Analysis

Decision

DataInstrumented

Code / Sensors

DataManagement

Analytics

Presentation

Big Data

Business

Intelligence

Demarcation between automated (computer-centric) and manual (human-centric) information processing.

Gap between computer and humanbridged by Data Visualization.

Units Cost Per Unit1-100 $12.00

101-500 $10.00

501-1000 $9.00

1001-10000 $7.50

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Marketing Driven Demand Uplift

Manufacturing Unit Cost by Volume

The Product Manager’s Decision:

To maximize profit…a) How many units do I order from the

manufacturer?b) What retail price do I charge?c) How much of my profit do I re-invest

in marketing?

(Mkt Size = 50,000)

Even with all the data you need, and clear visualizations, making good

decisions is still very hard to do.Why?

Data System Analysis Decisionü

Because:

a) Humans are not good at runningSystems in their heads.

b) Unlike Data, there is little mainstream computerized support for modeling and analyzing Systems.

(But let’s see if we can change that…)

Build a Computable Systems Model Visually

• Attributes• Dependencies

The Product Manager’s Model and quickly

Identify Model Elements:

• Outcomes / Goals“What are we trying to achieve?”

• Levers“What can we control?”

• Externals“What affects our outcomesthat we can’t control?”


Identify DependenciesDependencies“How are A, B and C related to X, Y and Z?”IntermediatesWhen outcomes are not directly related to levers or externals.


Quantify DependenciesDependencies“How are A, B and C related to X, Y and Z?”


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Expressions

External Data Sources / AnalyticsSketch Graphs

Quantify Dependencies

Dependencies“How are A, B and C related to X, Y and Z?”


Models also provide a systematic way to assess the impact of uncertainty, sensitivity, precision and risk on the decisions they support.

While humans are not good at processing systems models, we are much better at analyzing and designing them. This leads to a natural human-computer partnership.



a) How many units do I order from the manufacturer?

b) What retail price to I charge?c) How much of my profit do I

re-invest in marketing?

… to maximize profit?

But wait, there’s more.

38,000$15

7%


Most decisions are made not justto optimize outcomes, but to managerisk.

A bi-product of the optimization search is data that can be used to:• Assess sensitivity of the desired

outcome to particular levers and externals.

• Assess downside risk associated with each positive outcome.

Opportunity envelopeRisk envelope

Gradient shows sensitivity

Some Interesting Structural Characteristics of Models…Build a Computable Systems Model Visually

Feedback Loop

… Lead to Important Behaviors.Equilibrium and Transient States

• Real-life systems, even if they are stable, are not static, but in a steady state or equilibrium.

• When such systems are perturbed, they oscillate, or experience a transient.

• Effective decision makers need to be able to understand the effects their decisions will have both on the transient phase and on the new equilibrium.


Equilibrium with price at $12

Price raisedto $15

New equilibrium with price at $15

Transientphase

Data System Analysis

Decision

Big Data / Business Intelligence:

Data

System Analysis

Decision

Decision Intelligence

Analyze system

Build model

Integrate Data to specify dependencies

Search the space of decision leversand externals to determine

optimal outcomes and risk profiles

Gap between computer and humanbridged by Data Visualization of Decision Variables, not the Input Variables as before.

Decision Intelligence:

• Gives decision makers what they need most, and they cannot get from Business Intelligence: help answering the question “If I make this decision, then what will be the likely results, and what risks am I exposed to?”

• Provides a framework for the most effective use of existing data and analytics tools in a given problem.

• Provides visual and other artifacts that assure team alignment and act as a form of “institutional memory”

New Kinds of Visualizations

• Familiar data visualizations still have their place in Decision Intelligence, but note that the “axes” are now more meaningful to decision makers as each represents an “actionable” quantity.

• In addition, there is a powerful role for new dynamic System Visualizations.

Call to Action:

Now that the “Big Data” problem is mostly solved, we need invest our talents to return to the “Big

Picture”.

We must develop software tools and methodologies that integrate data and systems to

produce the kinds of insights real users really need.

Download a free trial of World Modeler from www.quantellia.com

Mark ZangariCEO, Quantellia LLC

San Francisco UniversityMay 23, 2014

[email protected] 717 4221

Copyright © 2014 Quantellia LLC. All Rights Reserved.

Thank You.

Download - Teaching Computers to Think Like Decision Makers: the next revolution in the data sciences

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