The Federal Trade Commission Contemplates Big Data

Earlier this month, the US Federal Trade Commission issued recommendations for businesses seeking to implement big data solutions. The report summarizes multiple sources -- a public workshop held last September, with four panels tackling different aspects; 65 public comments from citizens, industry representatives, think tanks, consumer groups, privacy advocates, and academics; and an earlier seminar on big data held in 2014.

The main caveat emerging from the report is that companies can inadvertently stumble into discriminatory actions if their big data inferences hit a protected class in a discriminatory manner, especially if a more direct approach could have prevented the discrimination. For example, a big data decision to not market a good price to a particular postal zone could also be perceived as depriving a protected class (by race, religion, gender).

Potential problems with careless big data inferences include inferring that certain geographic or behavioral traits make an individual ineligible for credit, favorable rates and discounts, or beneficial treatment (such as solicitations from top universities). Because individuals sharing certain protected demographic features (race, religion) can share a common postal zone or set of shops, inferring an individual's traits from population correlations could put a business at risk for being sued for discriminatory inferences, so to speak.

The potential for bias seems considerable, and the subtitle of the report captures the main concern: "A Tool for Inclusion or Exclusion?" For instance, if data from wearable devices are used to determine whether certain civic funding occurs (parks, repaving projects), the affluent areas could benefit disproportionately because wealthy people have FitBits while poor people don't.

The authors are careful to note that many benefits can accrue from big data used properly, including finding clever ways to pick promising people out of larger pools. For example, some people in impoverished areas are on the right track, and by finding them, new lending, educational, and work opportunities can be created. Some companies are using their big data tools in just this manner, and creating win-win scenarios.

The report has plenty of interesting examples worth contemplating:

• A credit card company that rated consumer credit worthiness based on whether they'd paid for marriage counseling, therapy, or tire repair services, based on inferences within their big data set.
• The ability of companies to identify "suffering seniors" with early Alzheimer's to exploit with offers.
• Preferring job applicants based on whether they used a browser they installed themselves (Firefox, Chrome), rather than one that came with their computer, as they'd found employees with these traits "perform better and change jobs less often."

The references point to a site worth a visit, if only to remind you that correlation does not equal causation: Spurious Correlations. On the day I visited, the featured chart correlated US spending on science, space, and technology with suicides by hanging, suffocation, and strangulation. Maybe the recent increases in the NIH, NOAA, NASA, and NSF budgets aren't the unvarnished good news we initially thought . . .

The FTC report is worth a look, if only to remind ourselves of the limitations of big data, which the authors capture succinctly:

Companies should remember that while big data is very good at detecting correlations, it does not explain which correlations are meaningful.

Or which correlations are risk-free.

As businesses become more digital at their core, data will become more central to success. And not just analytics, but rich customer data. Managing these data, using them judiciously and efficiently, and ensuring compliance with various laws and expectations will be vital to long-term strategic change and growth. Companies that begin early will learn first and best if they are diligent.

Review: "The Victorian Internet" by Tom Standage -- and Why It's Relevant

Before TCP/IP, there was tap-tap-tap -- and similar social and economic consequences came with both communication improvements. That's the underlying theme of Tom Standage's "The Victorian Internet," a short book packed with interesting facts, tie-ins, and characters relevant to the modern communications age. The book was first published in 1998, and updated in 2007. It seems very relevant, however, as the history it captures speaks so clearly to the modern era of electronic communication.

The evolution of the electric telegraph from the visual telegraph -- yes, the Victorian Internet actually started with two L-shaped arms waving signals across the French countryside, which the British changed to eight lozenges in two columns -- was not assured. It took new technology, materials, and systems before it came into existence. Even then, it wasn't obvious what to do with the electric telegraph. Military and government use? Commerce? News? Personal communications?

The technical challenges were daunting. Insulating wires, finding impedances, powering signals, laying trans-oceanic cables, and so forth -- it was all new territory, and competing theories and inventors provide a brief, colorful backdrop to descriptions of the electric telegraph's early days. Connections to some parts of the modern world also become clear, such as why there are a number of place names called "telegraph hill" and why AP and UPI are/were called "wire services." How Reuters emerged is particularly interesting, as is the utility of pneumatic tubes as an affordance for decentralized telegraph offices. The prevalence of "handles" in place of names for operators, the use of abbreviations to capture ideas and emotions -- it all seems a bit familiar.

These social aspects of the Victorian Internet are perhaps the most riveting part of Standage's stories. Romance online. Spying and misinformation, as well as encryption. The tension between local and world news. Governments struggling to keep up with the pace of commercial change. The role of electronic communication to prevent war and as a tool for warmongers. There were even authors speculating at what all this meant, futurists from the past.

And the Victorian Internet is still with us. Remember the earlier description of the eight lozenges in two columns? These lozenges could be turned to represent certain characters or concepts. Today, we use a similar scheme, called ASCII -- 8-bit strings to represent various characters or concepts in the online world. The distance from telegram to Twitter to Instagram is shorter than we may realize.

Written with verve, Standage's book is worth a read, especially as organization's face uncertainty about how to respond to today's unique publishing challenges. If past is prelude, there are clues here as to how a combination of clear thinking and nimble response helped some firms and individuals thrive in new realms.

Introducing Caldera Publishing Solutions

Today, I'm pleased to announce Caldera Publishing Solutions, a new consulting firm in academic, scholarly, and scientific publishing designed to help non-profit and for-profit publishers gain market advantages and develop sound long-term strategies designed for growth and differentiation.

First, let me introduce myself. My name is Kent Anderson. I'm a past-President of the Society for Scholarly Publishing (SSP), former Publisher at AAAS/Science, and former Publishing Director at the New England Journal of Medicine. I've had many roles in scholarly publishing, including serving as a CEO (STRIATUS/JBJS), Board member (SSP), strategic advisor (many different organizations), Managing Editor (American Academy of Pediatrics), and blog writer and editor (Scholarly Kitchen).

For me, Caldera represents an exciting culmination of experience. I hope I can bring what I've learned over the years -- formal training, empirical experience, and general "how to" techniques -- to a broader array of organizations. My forte involves rapidly and accurately assessing a situation, then delivering a framework for future growth and success. Scholarly and scientific publishing is more complex and challenging than ever, and new strategies within and around it abound. I can help you make sense of them in a way that's appropriate to your customer and market context.

Caldera is founded with your growth and success in mind. The main image of a caldera is a large spot of tremendous, untapped power and energy, which can last for eons if vented properly. My goal is to help organizations find the best way to tap into the hidden power of their market position, communities, talent, resources, and product offerings.

To get started, please email Caldera at contact@caldera-publishing.com.