Guest post from Kurt Peckman, Program Director, IBM Predictive Analytics
Follow Kurt on Twitter: @KurtPeckman
Last Sunday was Father’s Day. This is a paradoxical “holiday” in the U.S., as it is a day to honor fathers with gifts and food, but they are still required to work in the yard, fix stuff, yell at kids and run errands.
I received thoughtful, useful and handmade gifts from my three wonderful kids. They included a converter that lets me play my iPhone through my cassette tape deck in my car (needless to say I’m not driving a 2012 model); a homemade comic strip card about mutant aliens; and, a personalized gum wallet made of duct tape (see picture below).
The real challenge was what to get my father for Father’s Day. In fact, I face this conundrum every gift-giving occasion with my father.
As those of you with fathers can attest, the typical dad has everything he will ever need in his entire life by the age of 31, plus or minus two years. And, I mean everything – tools, gadgets, sweaters and golf paraphernalia.
This personal challenge is what prompted me to use the recently released IBM Analytical Decision Management to provide a recommended action related to my gift selection. My strategic objective was to have my father accept and enjoy my gift.
Because we have been talking a lot about Customer Analytics, Next Best Action and IBM Signature Solutions at this year’s IBM Business Analytics Analyst Summit (search #ibmbas12 on Twitter to follow the commentary), you can understand why I could easily configure my IBM Analytical Decision Management solution. (Hint: Replace “father” with “customer” and “gift” with “offer.”)
Following were the steps to my recommended decision:
· Using years of historical fatherly gift giving data (e.g., ties, golf shirts, jive coupons with the promise of a “car wash”), I restricted the analysis of my data so that the recommended action(s) would be based only on those gifts given in the summer months (e.g., nothing with long sleeves).
· I also opted to exclude “no action” from the recommended action list, which is often a viable decision for retention offers but not for gift giving to my father, especially if I hope to stay in the Peckman will. Just kidding. Sorta.
· I defined the list of the potential recommended outcomes linked to my objective: Give a product, a service; or a combination of the two. Then, I built new business rules and predictive models that were not included since the last time I used IBM Analytical Decision Management. For example, new rules:
If (golf_hndcp[current] > golf_hndcp[lastyear]) & (golf_complaints > 3) then add risk points;
If balance_giftcard > 0 then add risk points;
If (favorite_child[current_month] = me) then subtract risk points;
… and so on.
· Similarly, I created new predictive models:
Before deploying the gift giving decision management solution for use in the field by end users (like me, my wife, my children) I ran all the proper “what if” scenarios and used the new constraint-based optimization functionality in an attempt to maximize enjoyment and minimize effort to carry/use and subject to cost constraints. (To see the other new features in IBM Analytical Decision Management, read the data sheet.)
For example, a new Audi has a predictive acceptance of 100 percent (1.00) but falls outside cost limits for the gift; and, $5.00 tickets to Ballet in the Park (performed by an up-and-coming troupe of back-ups to the back-up dancers) fall within cost constraints, but have a predictive acceptance of less than 2 percent or 0.01667.
By completing all of these steps, “IBM Decision Management for Gift Giving” (the next Signature Solution?) is ready to generate a recommended action to my wife’s question, “What should we get your dad for Father’s Day?”
My recommended outcome >>> Gift certificate to the Olive Garden.
The next step is to put my updated application up into the cloud (read more about Analytical Decision Management SaaS) so my extended social network can run the SaaS version for batch gift recommendations.
And, in case you have any wild ideas, I have a patent pending on the personalized gum wallet made of duct tape.
For more information:
· Read my Decision Management blog series on business rules, predictive analytics and optimization.
· Attend the IBM Innovations in Business Analytics Virtual Launch on demand and learn all about the new Analytical Decision Management solution
· Read the whitepaper on how to use decision management for a competitive advantage