When Data Science Led To Losses

wealthymattersAbout 5 years ago, a telecommunications company wanted to be able to predict whether a customer would cancel their service or not. If the company could catch a customer right before they fall out and convince them to stay put, then the company keeps revenue.

So the analysts and data scientists were set off to races on developing a model that could help the company better predict when customers were planning to quit their service.

After about a year and a couple hundred thousand dollars worth of resource hours the team had developed a successful model. It was 85-90% accurate. They then worked with process managers, and customer service teams to develop playbooks and guides to help approach customers who may not be interested in the service. A few more hundred thousands of dollars dropped into the project. Once they felt like the algorithm was set and the team members were trained they went forward to implement the project. Read more of this post


Not Everything That Counts Can Be Counted And Not Everything That Can Be Counted Counts


During World War II, lots of fighter planes were getting hit by anti-aircraft guns. Air Force officers wanted to add some protective armor/shield to the planes. The question was where? The planes could only support few more kilos of weight.

A group of mathematicians & engineers were called for a short consulting project. Fighter planes returning from missions were analyzed for bullet holes per square foot. They found 1.93 bullet holes/sq. foot near the tail of the planes whereas only 1.11 bullet holes/sq. foot close to the engine.

The Air Force officers thought that since the tail portion had the greatest density of bullets, that would be the logical location for putting an anti-bullet shield. A mathematician named Abraham Wald said exactly the opposite; more protection is needed where the bullet holes aren’t – around the engines.

His judgment surprised everyone. He said “We are counting the planes that returned from a mission. Planes with lots of bullet holes in the engine did not return at all”.

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