On Stephen Baker’s direct recommendation I picked up a copy of his book, The Numerati. Actually, I picked up 2 copies and sent 1 to my dad.

I wish he blogged, because his take on the book would make for an awesome read. Long-story-short, from his perspective, the concept of The Numerati has been around long before the book. He credits Isaac Asimov as one of the first people to uncover some of the prediction based ideas introduced in The Numerati.

That said, let me give you my take. If you haven’t read The Numerati, don’t worry I won’t ruin it for you in this post. At a high level Baker shines the light on a segment people called The Numerati. They are a group of very smart people in varying industries, from IBM to the NSA, that are using math to predict outcomes. These outcomes could be anything from a transaction at your local grocery store to a 9/11 like situation.

How is this possible? Data. Everyday people leave behind pieces of data about what they do. Every call we make on our cell phone, every website we visit, everything we purchase on our credit card, and even the places we visit (captured by cameras) all contribute to the information marketers, hackers, and the government have about us. That data when carefully analyzed can help someone determine if we’re:

1. Republican or democrat
2. Worth an extra 30K in compensation or unnecessary overhead
3. Likely to buy recently discounted laundry detergent
4. A criminal trying to cheat a vegas black jack table

Those are just some of the examples; there are thousands more.  Perhaps the most famous example of The Numerati in action was the campaign Barack Obama ran during the 2008 presidential election.  His focus on data, people, and the web was unprecedented and is widely regarded as the key component (besides being an amazing public speaker) to winning the presidency.

I found a lot of similarities between The Numerati and Moneyball. Both of these books run counter to Malcolm Gladwell’s arguments in Blink. This fascinated the hell outta me. Moneyball basically says don’t trusty your eyes, trust data, and more importantly trust the right data (eg not homeruns). That’s a really similar idea to The Numerati. After all with the mountains of data out there why would you trust your gut over a model put together by some guy from MIT?

Personally, I’ve always been a “Blink” guy. My instincts have rarely lead me astray. In fact, I’d argue they’ve been right 90% + of the time. I believe that data is important, data without context is useless, and data should be used to LEAD you – not make the decision for you. I’ve seen data for years lead to cases of analysis paralysis and little to no risk taking.

The Numerati concept, not the book, doesn’t seem to account for emotion. If we just looked at the data, why would anyone get married? The divorce rate is 50% and growing? The odds are against you. But, emotion gets in the way. We get wrapped up in the IDEA of a marriage, white picket fence, kids, etc. Emotion, not data drives the decision.  As marketers we’ve been taught to focus on reasons to CARE not reasons to believe.  Beliefs are rooted in facts which are rooted in data.  Caring is emotional.  It’s the reason people are willing to pay the Apple tax.

Would the iPhone have come to market if only “data” was used? What about Nike+? Twitter? BMW Films? Nintendo Wii? BlueRay? I don’t think so. To me, the companies that succeed today leverage their data to INFORM and then use their gut (aka Blink) to make the decision. It’s that combination, in the right ratio, that helps you get the DOVE Campaign For Real Beauty campaign.

I kept asking myself throughout the book, “if all of this information is out there and we have The Numerati to help us make sense of the data – WHY aren’t ads more relevant?” Think about it. Shouldn’t the ads you see be smarter and more in tune to YOU? Are marketers simply not paying attention? Are they still seduced by the lure of mass media tools like TV where we’re trying to connect with a broad target/segment, instead of the individual? I’m not sure. I’ve been in marketing and advertising for roughly 12 years and I’ve rarely seen marketers leverage the vast amount of data in the way The Numerati indicates we can and should. Strange. I welcome your thoughts on this topic.

The other thing I wonder is if people would be more inclined to proactive provide data to marketers if they were deriving a better value and experience from marketers. As Baker mentions, we’re already doing this with shopper loyalty cards. For a small discount (eg 10%) on your groceries we’re voluntarily giving the grocery store data about our shopping habits. It’s about a mutual exchange. I give you something and I get something. Seems fair. I can tell you this, I’d give away information about me voluntarily to car companies so that I could avoid seeing ads from any car manufacturer not named BMW. I’m not going to buy a Kia, Chysler, Ford, or Lexus. It’s just not happening. Wouldn’t those companies want to avoid marketing their vehicles to me? Seems fair. I’m open to it, but companies aren’t.  Facebook tried this approach with Beacon.  But, they made a big mistake in not asking it’s members if they wanted to opt into the program.  People want to have a say.

That’s the future to me; companies and consumers engaging in a system of mutual exchange. It benefits everyone so long as the information provided is used responsibly.

Pick up a copy of The Numerati. It’s a great book with real world examples that will help you think about the power of data. Data is powerful. But with great power comes great responsibility. Baker covers this challenge in the book, but it deserves even more attention.  As you can see from the length of this post, it’s made me rethink several things and has my mind moving. You’ll be doing the same thing after reading The Numerati.