Segmentations from Underground – Where IBM Meets Dostoevsky

Living Life in Reverse and the Perfection of Joseph Roth
March 14, 2013
haiku for a phone booth
March 21, 2013
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(Originally published March 14, 2013, in Dilema Veche, here.)

I am a sick man…. I am a spiteful man. I am an unattractive man. I believe my liver is diseased.

Every time I read another story about how the ultimate dream of predictive analytics is almost within reach, about the coming final customer segmentation of one, about business intelligence mining the full, complete and deep depths of big data, and about how we will soon know what a customer will buy before they even think to buy it, I can’t help hearing these words – the great opening lines of Dostoevsky’s Notes from Underground.

Here (according to Marketing magazine) is the latest example, spoken a few weeks ago in Australia by the new Chairman, CEO and President of IBM, Ginni Rometty, and contained in an article titled: “IBM’s CEO on data, the death of segmentation and the 18-month deadline.”

“Big data will spell the death of customer segmentation and force the marketer to understand each customer as an individual within 18 months or risk being left in the dust, according to IBM’s CEO Ginni Rometty,” the article said.

“ ‘Marketers will say my job has always been to understand customers [sic] segments,’ Rometty explained. ‘The shift is to go from the segment to the individual. It spells the death of the average customer. Take the data and do things like real-time pricing, you’re going to do omnichannel… you’re going to bring out the latency in the data.’ ”

Yes, she said, group segmentation is dead. The individual is king. Simply collect enough data and crunch it completely. Understanding and predicting each customer alone, separately, individually, will soon be key.

I concede that “to do omnichannel” (as Ms. Rometty said) sounds very impressive (whatever it means). But I’m not sure sometimes if the whole idea she is selling is too optimistic or instead too depressing. I suppose it depends on your view of the human spirit.

Of course, in the end, I know that companies like IBM, Oracle and others are simply trying to sell more expensive products by convincing other businesses that they need the ability to leverage and/or hasten this “death of the average customer.” Companies must begin communicating directly to each individual consumer based on their very personal and particular interests, needs, and desires. (Then again, you might wonder why, if that’s true, Ms. Rometty still bothers to give a speech to a group of people rather than sending individually tailored remarks to each of them based on, yes, their particular interests, needs, and desires.)

I know there is great value in segmenting a market effectively. It works. From the design of a product, to strategy, to messaging, to placement, to spin-offs. Divide the public into a hundred different pieces. Use their needs, behavior, geography, psychographics, occasions. Criss-cross and cross-match. It is a powerful tool. Why mass-market your brand when you can direct it to customers who are more certain to buy? And why not, while we’re at it, send birthday reminders and news that something I once bought is now new and improved. That’s how to do it.

So send me an SMS the next time I’m near Starbucks. Offer me a coupon for a competing brand of ice cream. Throw a pop-up on a webpage based on my emails. And that’s just for starters. Think of the possibilities. Combine Google searches, email messages, SMS texts, IM chats, GPS locators, payment card data, website visits, membership clubs, Facebook information. Indeed, collect and combine all the electrons I use and sort them and analyze to predict what I’ll do.

It’s like a dream with no end. Here, for example, is a bit of how IBM wants to pitch it:

“IBM SPSS [which originally – and tellingly – meant the Statistical Package for the Social Sciences] technologies help you build accurate predictive models quickly and intuitively, and apply them in mission-critical business processes supported with Enterprise Management Marketing solutions. Discover patterns and trends in structured or unstructured data more easily. Model outcomes and understand what factors influence them so you can take advantage of opportunities and mitigate risks.”

And from Oracle, a nicely plain description from one of its manuals:

“Predictive analytics is a process used to discover strong, meaningful patterns and relationships in large amounts of data. These patterns and relationships are used to more accurately predict and analyze the behavior of customers and prospects.”

These Oracle predictions, it explains, include how a particular person will respond to certain types of marketing channels, which customers are likely to leave, which new customers are likely to be profitable, and, of course, which customers are likely to buy which products.

Simply put, if we gather enough information about individual customers, we can predict what they’ll want and we can push them to do what we want them to do. It’s all very exciting. And it is certainly true that never before have we had the capability, the information, the technology, the incredible tools that give us the wherewithal to approach this possibility and feel so close to success.

Yes, it’s perfect – and yes, it appears, it’s almost within reach.

But is it? Is it really? It is good to have goals, but isn’t it just as important to know where they end?

You want to sell me some new ice cream because I like to buy ice cream? That obviously makes sense. But do you have enough data to know that I’ll soon start a new diet? Can you create a new algorithm to anticipate this shift? Perhaps if you knew my age, where I was raised, the magazines I subscribe to, the SMS my doctor sent me, what book my wife ordered, the website I just read, my medical records, the medical records of my parents. Yes, if only you had enough information, you think, you would always know what to market to me and when?

Or let’s say that you do. And you send me a coupon at just the right time. You remind me of offers as I enter a store. But now, I might ask, does my psychographic profile tell you I don’t like that you know where I am? In that case, I might stop buying whatever product you push – just because you push it. Or can you calculate that, too? Yes, of course, if you had enough data. You would then know when to tell me what not to buy because you would know I’ll do the opposite of whatever you tell me.

Yes, if only. If only we had the data. And someday we will. Someday, you’ll see.

And what happens then? Will we predict every purchase? Or will humans rebel? Have they started already? Could this possibly be why we see more and more offers to search for websites at random? To “randomize” photos? To play webcam roulette? To find something new. Unpredictable. Unknown. Something, anything, someone please give us photos, ideas, or products we never knew to expect.

And that is where Dostoevsky comes in. For no matter how godlike we think we’ve become, it’s always good to remember there forever lingers some folly in whatever we do. So here, from 1864, I present for you to add to the extraordinary content of your personal big data:

“Indeed, if there really is some day discovered a formula for all our desires and caprices–that is, an explanation of what they depend upon, by what laws they arise, how they develop, what they are aiming at in one case and in another and so on, that is a real mathematical formula–then, most likely, man will at once cease to feel desire, indeed, he will be certain to. For who would want to choose by rule? Besides, he will at once be transformed from a human being into an organ-stop or something of the sort; for what is a man without desires, without free will and without choice, if not a stop in an organ? What do you think? Let us reckon the chances–can such a thing happen or not? …”

“And as all choice and reasoning can be really calculated–because there will some day be discovered the laws of our so-called free will–so, joking apart, there may one day be something like a table constructed of them, so that we really shall choose in accordance with it. If, for instance, some day they calculate and prove to me that I made a long nose at someone because I could not help making a long nose at him and that I had to do it in that particular way, what FREEDOM is left me, especially if I am a learned man and have taken my degree somewhere? Then I should be able to calculate my whole life for thirty years beforehand. …”

And what would happen then?

“Shower upon him every earthly blessing, drown him in a sea of happiness, so that nothing but bubbles of bliss can be seen on the surface; give him economic prosperity, such that he should have nothing else to do but sleep, eat cakes and busy himself with the continuation of his species, and even then out of sheer ingratitude, sheer spite, man would play you some nasty trick. He would even risk his cakes and would deliberately desire the most fatal rubbish, the most uneconomical absurdity, simply to introduce into all this positive good sense his fatal fantastic element. It is just his fantastic dreams, his vulgar folly that he will desire to retain, simply in order to prove to himself–as though that were so necessary–that men still are men and not the keys of a piano, which the laws of nature threaten to control so completely that soon one will be able to desire nothing but by the calendar. And that is not all: even if man really were nothing but a piano-key, even if this were proved to him by natural science and mathematics, even then he would not become reasonable, but would purposely do something perverse out of simple ingratitude, simply to gain his point. And if he does not find means he will contrive destruction and chaos, will contrive sufferings of all sorts, only to gain his point!”

[Footnote: I’m attaching the link to the original story about Ms. Rometty’s speech, here. The article says the three Vs are Velocity, Volumn, Veracity. It would appear from the IBM website, and elsewhere, that the third V is Variety, not Veracity, though an IBM spokeswoman did not respond to an email seeking confirmation.]

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1 Comment

  1. Rohan says:

    Spot on.
    I got here by searching ‘dostoevsky and big data’ because I figured someone else must’ve been put in mind of Notes from Underground upon encountering all the hype surrounding big data. Notes from Underground is amazing and so accurate in describing so many things.
    It’s kind of ironic though that Dostoevsky is held in great esteem today at least partially because of how ahead of his times he was in recognizing where Russian society was headed; in other words, how accurate his predictions were about how things panned out. I think I read somewhere that he boasted he could intuitively understand many things with very little data.
    And again it’s Dostoevsky predicting that when we will live in a world where the powers that be will use predictions to govern us, we will act unpredictably just to spite the system.
    I prefer the intuitive predictions of a Russian literary giant to the data-driven predictions of modern times. But that’s just me, an individual.

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