Big Data and the Role of Intuition

Many people have asked me over the years about whether intuition has a role in the analytics and data-driven organization. I have always reassured them that there are plenty of places where intuition is still relevant. For example, a hypothesis is an intuition about what’s going on in the data you have about the world. The difference with analytics, of course, is that you don’t stop with the intuition — you test the hypothesis to learn whether your intuition is correct.

Another place where intuition is found in analytical companies is in the choice of the business area where analytical initiatives are undertaken. Few companies undertake a rigorous analytical study of what areas need analytics the most! The choice of a target domain is typically based on the gut feelings of executives. For example, at Caesars Entertainment — an early and continuing user of analytics in its business — the initial focus was on analytics for customer loyalty and service. CEO Gary Loveman noted that he knew that Caesars (then Harrah’s) had low levels of customer loyalty across its nationwide network of casinos. He had also done work while at Harvard Business School on the “service profit chain” — a theory that companies that improve customer service can improve financial results. While the theory had been applied and tested in several industries, it hadn’t been applied to gaming firms. But Loveman’s intuition about the value of loyalty and service was enough to propel years of analytics projects in those areas.

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