Super Crunchers

In: Business and Management

Submitted By acp1912
Words 390
Pages 2
Super Crunchers: Chapter 1

Recommendation software can make people’s life way easier by telling them what people with similar interests also enjoyed. Some of these platforms are Amazon, Netflix, Match.com and Pandora.com. Unlike traditional dating services, eHarmony’s founder Neil Clark Warren predicted a statistical model of compatibility that relies on regression. This is the main technique of Super Crunchers and consists of a statistical procedure that takes raw historical data and estimates how various factors influence a single variable of interest.

The matching algorithms of online dating websites are not completely data-driven. All the services rely on the preferences of their clients (regardless of whether these preferences are valid predictors of compatibility). E-Harmony allows clients to discriminate on the race of potential mates and its refusal to match clients of the same sex (gays and lesbians) has put the company out of step.

Companies such as Lowe’s and Circuit City are also using Super crunching when selecting job applicants. Instead of using traditional tests to measure the applicants’ IQ, these companies are using modern tests that evaluate three personality traits of the applicants: their conscientiousness, agreeableness and extroversion. The reason for this is cause research has shown that these personality traits are better predictors of worker productivity.

Non-obvious predictors can also help a business in keeping their costs down. For example, instead of having large inventories, Super Crunching allows firms such as Target and Wall-Mart to use a just-in-time purchasing and inventory system. UPS is an example of a company that uses an algorithm to predict when a customer is likely to switch to another shipping company. By using the same kind of regression formula, the company is able to predict when a customer’s loyalty is at…...

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