ANALYTICS

You Need an Algorithm, Not a

Data Scientist
by Kira Radinsky
DECEMBER 15, 2014
Mark Twain once said: “The past does not repeat itself, but it rhymes.” Although future
events have unique circumstances, they typically follow familiar past patterns. Today,
data scientists can predict everything from disease outbreaks to mortality to riots.

It’s no surprise, then, that companies trying to hear the rhymes and see the patterns in
their sales conversions are trying to manually analyze their own data, hire the best data
scientists, and train their managers to be more quantitative.

However, this people-centric, high-touch approach is not scalable. Markets are too
dynamic, and some of the changes too imperceptible, to be realistically captured by
humans.

Consider a company that is selling electronic devices. Let’s say that historically they have
been selling well to companies that value their fast delivery and the quality of their
product. As time passes, the competition grows and a global trend for green products
arises. The profile of the company’s perfect customer slowly shifts and could go
unnoticed by manually examining the market. However, those small shifts are
identifiable by algorithms that continuously monitor the historical sales cycle of the
company, cross-referencing it with external sources, like social media posts and
newspaper articles discussing these trends, and finding correlations with the propensity
to buy. Due to the size of this information base and its unstructured nature, monitoring
all those delicate changes in real time becomes an almost impossible task for a human
analyst.

While few companies have the luxury of having data scientists with the expertise needed
to develop these sophisticated algorithms, nor the staff to analyze the results effectively,
there is less need today. Data science today requires fewer experts, as many more
automated tools are being developed and used to analyze thousands of events.
(Disclosure: my company, SalesPredict, is in this industry.) The more sophisticated tools
require very little or no human intervention, zero integration time, and almost no need
for service to re-tune the predictive model as dynamics change.

Today, automated algorithms can identify patterns and provide insights such as:

Did you notice a big portion of your customer churn is from companies who have not
used one specific feature of your product in the last three months?
Did you notice that the leads that converted to closed deals this month were from
medium size high-growth companies who were searching for keywords comparing
your product to your competitor?

But as your business changes, the answers will change as well, requiring more and more
automation to track those changes and supply the business leader with real-time,
actionable recommendations that are always relevant.

In the next few years, I believe many businesses, especially B2B, will use prediction in
their business. But those who get the most from these analytics will be those that use
automated algorithms – which are faster, more accurate, more scalable, and more
adaptive than manually analyzed data.

In stock trading, human analysts once did the trading. Today, more and more automated
machine learning algorithms accompany their decisions. It has become much harder to
compete without such algorithms. Similarly, in the next few years, very few businesses
can afford not to have automated decision making systems mining their data and
suggesting the best next actions – not only in operations, but in the marketing, sales, and
customer service departments too. Following a large amount of ever-changing
information will be the competitive edge.
Kira Radinsky, Ph.D. is the chief scientist and the director of data science of eBay, co-founded
SalesPredict (acquired by eBay in 2016), and serves as a visiting professor at the Technion, Israel’s leading
science and technology institute.

This article is about ANALYTICS

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Sean McClure 2 years ago

This article is grossly out of touch with what it means to do Data Science. Machine Learning algorithms
are not one-off implementations that are built into a system and then left alone. They are brought into
existence by Data Scientists who must accurately model the system of interest (e.g. the market in which
a given company is competing), and utilize appropriate algorithms to t that model. No market remains
static and therefore no model/algorithm is going to continuously provide accurate predictions in the
absence of a dedicated data science effort. If this were the case there would be no competitive
advantage. Every company would simply use the same algorithm thus canceling any net benet to the
organization.

We have to remember that the hard coded algorithms used in traditional software development are not
what we're talking about here. Data Scientists pair custom models (that must be discovered) with
learning algorithms that act in a probabilistic fashion. This means their output is not something an
engineer has wired into an application but rather something that gets calculated using data and the
underlying mathematics of the model. At any given time the output can be something entirely
unanticipated yet inline with the underlying patterns that drive the behavior of an organization's
market. This is what gives these applications the ability to adapt, explain and predict their environment
in ways no human coded rules could ever do.

The very act of successfully integrating machine learning algorithms into software is the core reason
why data scientists are hired. In other words, you don't get THE algorithm without the Data Scientist.

There is an unfortunate misconception that the algorithms used by Data Scientists are something you
grab off the shelf. Again, if this were the case there would be no competitive advantage. Learning
algorithms are only useful if the underlying models they are executing against are an accurate
approximation of the domain the software will be used in. Arriving at those models takes dedicated
research from trained scientists.

Therefore, a Data Scientist is precisely what you need. An algorithm without a Data Scientist is an
algorithm without a model. And an algorithm without a model is useless.

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