It’s hard to predict the future, especially in business where it seems like fate is especially moody. For example, a Harvard dropout wanted to make sunglasses so he founded Polaroid. After later fathering “instant photos,” Polaroid became one of the pioneers in modern digital photography. Next, Polaroid went bankrupt. Then, in 2010, it tried to make a comeback with Lady Gaga as Creative Director. Lady Gaga? Who could have predicted that?
Some say business is completely chaotic and unpredictable. Let’s call these people “business nihilists,” but purists of the genre are rare. While some uncertainty is undeniable, most people concede at least some business patterns probably exist – even if we can’t articulate those patterns or agree on what they are. For example, pretend your cousin asked for your advice. He’s going to start a business selling used dental floss (yuck) and wants to know if you think it’s a good business idea. Regardless of whether your answer is yes or no, any response is a tacit admission that patterns might exist. There’s at least some probabilistic connection between cause and effect.
We bring this up because, most of the time, businesspeople walk around with an assumption of patterns. After all, if everything were truly chaotic there would be little need for business schools and most executives could be replaced with balanced coins. The assumption of patterns is worth calling out because data science is a field devoted to pattern-hunting. Therefore it shouldn’t be too much of a shocker that data-science-based research has begun finding patterns that suggest business is more predictable than most of us assume. That’s bad news for nihilists, but great news if you happen to be a businessperson. Yes, patterns really do exist… and data science is finding some big ones.
Most folks use brains to find patterns. In other words, the brain is the main “tool” we humans use for pattern recognition. The human mind can be fantastic at detecting certain patterns. Problem is, our brains can also fool us and detect patterns where none exist. We get the wrong signals. The fields of cognitive bias and behavioral psychology are based on this very discovery – our brains aren’t always reliable. This picture is a great example of how easily (and irresistibly) our brains see patterns where there may not be any. (Do you see a woman’s face in the trees?)
In other words, there are patterns our brains are good at and others they’re bad at. Admitting this, there’s a lot of reason for excitement. That’s because sometimes computers can be really good at finding precisely the types of patterns our brains are ill-suited for. Therefore the right pairing between our brains (for some patterns) and advanced technologies (for other patterns) holds tremendous potential for the future of business, strategy and innovation. For example, astonishingly accurate algorithms are being used to predict if businesses will likely survive or fail. Others are predicting customer behavior, shifts in the marketplace, environmental impacts, the winners of competitive rivalries and even the internal cultural behavior of big and small companies.
Accurate predictive models like these don’t happen in a vacuum. Computers don’t have the creative chemistry or passions of businesspeople when spotting an opportunity and driving it forward. Technology doesn’t go to the birthday party of your top customer’s daughter or share ideas over a beer with your team. By the same token, your brain doesn’t accurately detect subtle probabilistic interdependencies while crunching a terabyte of data through complex algorithms with perfect fidelity. Think of data science and technology as a friend. A really, really boring friend, but someone you can always count on for certain kinds of favors. A friend with benefits.