Covering Disruptive Technology Powering Business in The Digital Age

This article was originally published by www.forbes.com and can be viewed in full here

Amazon’s decision to open its first brick-and-mortar store in Seattle is an interesting new departure for Amazon, but it also offers us the chance of some enlightenment on some of the larger questions of business, in both online and physical worlds. Here are two questions to bear in mind as you watch developments.

How Does Data Match Up Against Insight and Local Knowledge?

One of the great things about the old independent bookstores was that, if they were successful, they were well-matched to their local areas. In fact, I always thought that if you wanted to get an impression of what a neighborhood was like, or whether you’d enjoy living there, the best thing to do was to visit the local bookstore. This geographic/demographic/psychographic match was achieved by the insight and instinct of the bookseller, developed through interaction with their customers.

Amazon’s product selections will rely heavily on its treasure trove of data, but what else will they use? According to the Seattle Times, Amazon says the store won’t be stocked solely on data. “It’s data with heart,” said Jennifer Cast, VP of Amazon Books. “We’re taking the data we have and we’re creating physical places with it.”

But what does this mean? If the local manager thinks a particular title will do well, but the data thinks otherwise, what happens?

There’s an interesting parallel here with human-vs.-computer chess. Once computers became so good at chess that they could consistently beat any human, it all became boring and the action moved to human-and-computer chess – that is humans and computers playing in partnership. Then the  whole thing  became very interesting again. In one tournament the winner was a team of humans with quite modest chess skills, playing in partnership with three chess programs,

When it comes to product selection, will Amazon be attempting some analogous human-algorithm partnership, and if so will it outperform humans or algorithms on their own? If so, it could be the beginning of a whole new era in online business – big data as a supplement to human insight, not a substitute for it.

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