Thursday, February 9, 2012

BIG’s Blog: Turns Out We’re Biased

When we make decisions, we see what we want to see. We go with our “gut” and let hope override risks that don’t fit with our hopes.

You think that is bad? Actually, it’s worse. “We are often confident even when we are wrong,” says David Kahneman in his new book Thinking Fast and Slow. “An objective observer is more likely to detect our errors than we are.”

Here is a term you are going to be hearing more and more: Big Data. Huge amounts of data and decision science, also known as analytics will soon be driving daily decisions.

Computer systems will analyze billions of bits of data with self-learning algorithms to help us reduce our human biases from our decision making. And the big news: they will do it in real-time. For example, setting dynamic retail prices at Macy’s, prescribing a certain medication at your doctor’s office, or raising and lowering fare prices to maximize passenger loads and revenue for airlines. Actually, all three of those examples are already happening.

Want to see what I am talking about in story form? Rent the movie Moneyball; it’s just out on Netflix.

This is Moneyball in all kinds of industries. And it is already happening.

But what about fundraising? For those fundraisers that use direct marketing; can you see an application?

How about dynamically analyzing individual giving data to determine the “optimum time,” the “right message,” and the “optimum amount to suggest” when contacting a donor. All with an eye towards minimizing costs, maximizing revenue and enhancing the relationship with the donor. One, maybe two, “asks” a year, and still seeing year-over-year growth in each donor’s file. I call this “pushing out costs.”

Watch this very carefully! This is a key part of the coming Golden Age of fundraising.


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