Sunday, September 30, 2007

Analytics That Explain Themselves

As computers have gotten more powerful, so too has the complexity of analytics they can do. But this power often brings a paradox: Complex and interesting analytics can go unused because few people know how to interpret the results.

When it happens, this failure is rarely due to the people. It’s usually due to a shortsighted view of analytics, a view that focuses on the underlying data processing at the expense of making the results understandable.

That’s the bad news. The good news is, computers can be used not just to “do” analytics but to explain them. For example, long ago at Personify, reports had a footer called “How to Read This Report.” It was a plain-English sentence that described the data using the top-left cell as an example. It was simple but effective.

The latest thing to remind me of this topic was one of the best display ads I’ve ever seen on the Internet. I was looking up Apple on a stock-quote site, and one of the ads was this:

The ad explains Apple’s current performance on a popular technical-analysis indicator for stocks. Traditionally, technical analyses are rendered as charts that require expertise to interpret. With this ad, Scottrade is demonstrating its SmartText technology that interprets the charts for you, using current data. (The reason I think it’s a great ad: Most ads promise something; this ad actually does it, in context.)

Would technical-analysis pros finds the explanations simplistic? Probably. But for the casual user, do the explanations begin to make sense of something that might be useful? I’d say yes.

I don’t follow the field of technical analysis for stocks, so I don’t know how unique or effective SmartText is—although it’s apparently unique enough to warrant its own ad campaign. What I do know is this: In business analytics the equivalent of SmartText’s functionality is a rarity. Analytics results that people don’t understand are not so rare.

In other words: Analytics, you’ve got some explaining to do.

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