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Designing Data Products


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Presentation delivered during the Introductory Course to Big Data in Agriculture. 29/11/2013, NCSR Demokritos, Athens, Greece.
The presentation is heavily based on the report titled “Big Data Now: 2012 Edition", by O’Reilly Media, Inc.

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Designing Data Products

  1. 1. Open Data for Agriculture Intro to Big Data 29/11/2013 Athens, Greece Joint offering by Supported by EU projects
  2. 2. Designing Data Products Dr. Vassilis Protonotarios Agro-Know Technologies, Greece
  3. 3. Intro • This presentation provides introductory information about – the (big) data products – the design of (big) data products, – the Drivetrain approach for the design of objective-based (big) data products. • The Drivetrain approach will be applied to agricultural case studies in the next session • The majority of the slides were based on the report “Big Data Now: 2012 Edition. O’Reilly Media, Inc.” Slide 3 of 66
  4. 4. Objectives This presentation aims to: • Provide an introduction to data products • Define the “objective-based data products” concept – Describe the Drivetrain approach in the design of (big) Data products – Analyze the design of data products – Provide applications / case studies In order to provide the methodology for the development of data products Slide 4 of 66
  5. 5. Structure of the presentation 1. Intro to designing (great) data products 2. Objective-based data products – The Drivetrain approach 3. Case studies (x4): Application of the Drivetrain approach 4. The future of data products Slide 5 of 66
  7. 7. What is a (big) data product? • What happens when (big) data becomes a product – specifically, a consumer product • Produce (big) data based on inputs ? = data producers • Deliver results based on (big) data ? = data processors • Uses big data for providing useful outcomes? Slide 7 of 66
  8. 8. Facts about (big) data products • Enable their users to do whatever they want – which most often has little to do with (big) data • Replace physical products Slide 8 of 66
  9. 9. The past: Predictive modeling • Development of data products based on data predictive modeling – weather forecasting – recommendation engines – email spam filters – services that predict airline flight times • sometimes more accurately than the airlines themselves. Slide 9 of 66
  10. 10. The issue of predictive modeling • Prediction technology: interesting, useful and mathematically elegant – BUT we need to take the next step because…. • These products just make predictions – instead of asking what action they want someone to take as a result of a prediction Slide 10 of 66
  11. 11. The role of predictive modeling • Great predictive modeling is still an important part of the solution – but it no longer stands on its own – as products become more sophisticated, it becomes less useful Slide 11 of 66
  12. 12. A new, alternative approach • the Drivetrain Approach – a four-step approach, already applied in the industry – inspired by the emerging field of self-driving vehicles – Objective-based approach B A Slide 12 of 66
  13. 13. A fine objective-based model Slide 13 of 66
  14. 14. Case study • A user of Google’s self-driving car – is completely unaware of the hundreds (if not thousands) of models and the petabytes of data that make it work BUT • It is an increasingly sophisticated product built by data scientists – they need a systematic design approach Slide 14 of 66
  16. 16. The Drivetrain approach Slide 16 of 66
  17. 17. ource: Case study: Search engines Why ? 1997 2013 Slide 17 of 66
  18. 18. The 4 steps in the Drivetrain approach • The four steps in this transition: – Identify the main objective • For Google: show the most relevant search results – Specify the system’s manageable inputs [levers] • For Google: ranking the results – Consider the data needed for managing the inputs • Information about users’ activities in other web sites – Building the predictive models • For Google: PageRank algorithm Slide 18 of 66
  19. 19. Drivetrain approach goal NOT use data not just to generate more data – especially in the form of predictions BUT use data to produce actionable outcomes Slide 19 of 66
  21. 21. The issue of insurance companies • Case study: Insurance companies – Their objective: maximizing the profit from each policy price – An optimal pricing model is to them what the assembly line is to automobile manufacturing – Despite their long experience in prediction, they often fail to make optimal business decisions about what price to charge each new customer Slide 21 of 66
  22. 22. Transition to Drivetrain approach • Identifying solutions to this issue – Optimal Decisions Group (ODG) approached this problem with an early use of the Drivetrain Approach – Resulted in a practical take on step 4 that can be applied to a wide range of problems. Model Assembly Line Slide 22 of 66
  23. 23. The Drivetrain approach Set a price for policies, maximizing profit • price to charge each customer; • types of accidents to cover; • how much to spend on marketing and customer service; • how to react to their competitors’ pricing decisions • Data collected from real experiments on customers Randomly changing the prices of hundreds of thousands of policies over many months • • Develop a probability model for optimizing the insurer’s profit Slide 23 of 66
  24. 24. Slide 24 of 66 Developing the modeler: Model Assembly Line
  25. 25. The role of the Modeler • Modeler Component 1 • model of price elasticity: the probability that a customer will accept a given price (for new policies and renewals) • Modeler Component 2 • relates price to the insurance company’s profit, conditional on the customer accepting this price. • Multiplying these two curves creates a final curve • Shows price versus expected profit • The final curve has a clearly identifiable local maximum that represents the best price to charge a customer for the first year. Slide 25 of 66
  26. 26. The final curve Slide 26 of 66
  27. 27. The role of the Simulator • Lets ODG ask the “what if ” questions • to see how the levers affect the distribution of the final outcome • Runs the models over a wide range of inputs • The operator can adjust the input levers to answer specific questions • “What will happen if our company offers the customer a low teaser price in year one but then raises the premiums in Y2? • Explores the distribution of profit as affected the inputs outside of the insurer’s control • E.g. “What if the economy crashes and the customer loses his job?” Slide 27 of 66
  28. 28. The role of the Optimizer • takes the surface of possible outcomes and identifies the highest point • finds the best outcomes • identify catastrophic outcomes – and show how to avoid them Slide 28 of 66
  29. 29. Take-home message Using a Drivetrain Approach combined with a Model Assembly Line bridges the gap between predictive models and actionable outcomes. Slide 29 of 66
  31. 31. Recommendation engines • Recommendation engines – data product based on well-built predictive models that do not achieve an optimal objective. – The current algorithms predict what products a customer will like, • based on purchase history and the histories of similar customers. Slide 31 of 66
  32. 32. The case of Amazon • Amazon represents every purchase that has ever been made as a giant sparse matrix – with customers as the rows and products as the columns. • Once they have the data in this format, data scientists apply some form of collaborative filtering to “fill in the matrix.” Slide 32 of 66
  33. 33. The case of Amazon • Such models are good at predicting whether a customer will like a given product – but they often suggest products that the customer already knows about or has already decided not to buy. Slide 33 of 66
  34. 34. Mixed-up recommendations Slide 34 of 66
  35. 35. The Drivetrain approach Drive additional sales by surprising and delighting the customer with books not initially considered without the recommendation • Ranking of the recommendations Data to derive from many randomized experiments about a wide range of recommendations for a wide range of customers: To generate recommendations that will cause new sales • Develop an algorithm providing recommendations which escape a recommendation filter bubble Slide 35 of 66
  36. 36. Slide 36 of 66 Developing the modeler
  37. 37. The role of the Modeler • Modeler Component 1 • purchase probabilities, conditional on seeing a recommendation • Modeler Component 2 • purchase probabilities, conditional on not seeing a recommendation • The difference between these two probabilities is a utility function for a given recommendation to a customer • Low in cases where the algorithm recommends a familiar book that the customer has already rejected (both components are small) or a book that he/she would have bought even without the recommendation Slide 37 of 66
  38. 38. The final curve Slide 38 of 66
  39. 39. The role of the Simulator • Test the utility of each of the many possible books in stock • Alternatively just overall the outputs of a collaborative filtering model of similar customer purchases Slide 39 of 66
  40. 40. The role of the Optimizer • Rank and display the recommended books based on their simulated utility • Less emphasis on the “function” and more on the “objective.” – What is the objective of the person using our data product? – What choice are we actually helping him or her make? Slide 40 of 66
  42. 42. Customer value • Includes all interactions between a retailer and his customers outside the actual buy-sell transaction – making a product recommendation – encouraging the customer to check out a new feature of the online store – sending sales promotions • Making the wrong choices comes at a cost to the retailer – reduced margins (discounts that do not drive extra sales) – opportunity costs Slide 42 of 66
  43. 43. The Drivetrain approach optimize the lifetime value from each customer • Product recommendations • Offer tailored discounts / special offers on products • Make customer-care calls just to see how the user is • Invite them to use the site and ask for their feedback Zafu approach: not send customers directly to clothes but ask a series of simple questions about the customers’ body type, how well their other jeans fit and their fashion preferences • Develop an algorithm leading customer to browse a recommended selection of Zafu’s inventory Slide 43 of 66
  44. 44. Slide 44 of 66
  45. 45. Slide 45 of 66 Developing the modeler
  46. 46. The role of the Modeler • Modeler Component 1 • purchase probabilities, conditional on seeing a recommendation • Modeler Component 2 • purchase probabilities, conditional on not seeing a recommendation • Modeler Component 3 • price elasticity model to test how offering a discount might change the probability that the customer will buy the item • Modeler Component 4 • patience model for the customers’ tolerance for poorly targeted communications Slide 46 of 66
  47. 47. The final curve Slide 47 of 66
  48. 48. The role of the Simulator • Test the utility of each of the many possible clothes available • Provide successful matches between questions & recommendations Slide 48 of 66
  49. 49. The role of the Optimizer • Rank and display the recommended clothes based on their simulated utility – driving sales and improving the customer experience • Less emphasis on the “function” and more on the “objective” – What is the objective of the person using our data product? – What choice are we actually helping him or her make? Slide 49 of 66
  51. 51. Building a car that drives itself (1/2) • Alternative approach: Instead of being data driven, we can now let the data drive us! • Models required: – model of distance / speed-limit to predict arrival time; a ruler and a road map needed – model for traffic congestion – model to forecast weather conditions and their effect on the safest maximum speed Slide 51 of 66
  52. 52. Building a car that drives itself (2/2) Plenty of cool challenges in building these models but by themselves, they do not take us to our destination • Simulator: to predict the drive times along various routes • Optimizer: pick the shortest route subject to constraints like avoiding tolls or maximizing gas mileage Slide 52 of 66
  53. 53. It is already implemented According to Google, about a dozen self-driving cars are on the road at any given time. They've already logged more than 500,000 miles in beta tests. Slide 53 of 66
  54. 54. The Drivetrain approach Building a car that drives itself Vehicle controls • Steering wheel, Accelerator, Βrakes Data from sensors etc. • sensors that gather data about the road • cameras that detect road signs, red or green lights & unexpected obstacles • Physics models to predict the effects of steering, braking & acceleration • Pattern recognition algorithms to interpret data from the road signs Slide 54 of 66
  55. 55. Developing the Modeler Slide 55 of 66
  56. 56. The role of the Modeler • Modeler Component 1 • Route selection, conditional on following a recommendation • Modeler Component 2 • Route selection, conditional on not following a recommendation Slide 56 of 66
  57. 57. The role of the Simulator • examine the results of the possible actions the self-driving car could take – If it turns left now, will it hit that pedestrian? – If it makes a right turn at 55 km/h in these weather conditions, will it skid off the road? • Merely predicting what will happen isn’t good enough. Slide 57 of 66
  58. 58. The role of the Optimizer • optimize the results of the simulation – to pick the best combination of acceleration and braking, steering and signaling Prediction only tells us that there is going to be an accident. An optimizer tells us how to avoid accidents. Slide 58 of 66
  60. 60. The present • Drivetrain Approach: – a framework for designing the next generation of great data products – heavily relies on optimization • A need for the data science community to educate others – on how to derive value from their predictive models – Based on product design process Slide 60 of 66
  61. 61. Current status of data products • Data continuously provided in big data providers – Facebook, Twitter etc. • Data are transformed -> they do not look like data in the end – Telematics, booking systems etc. • Example: Music now lives on the cloud – Amazon, Apple, Google, or Spotify Slide 61 of 66
  62. 62. The future • Optimization taught in business schools & statistics departments. • Data scientists ship products designed to produce desirable business outcomes Risk: Models using data to create more data, rather than using data to create actions, disrupt industries, and transform lives. Slide 62 of 66
  63. 63. To keep in mind for future big data products • when building a data product, it is critical to integrate designers into the engineering team from the beginning. • Data products frequently have special challenges around inputting or displaying data. Slide 63 of 66
  64. 64. What to expect in the future? Google needs to move beyond the current search format of you entering a query and getting 10 results. The ideal would be us knowing what you want before you search for it… Eric Schmidt Executive Chairman of Google Slide 64 of 66
  65. 65. The future is near! 25/11/2013 Slide 65 of 66
  66. 66. References • Big Data Now: 2012 Edition. O’Reilly Media, Inc. • O’Reilly Strata: Making Data Work ( • Jeremy Howard - The Drivetrain Approach: A four-step process for building data products ( • Mike Loukides - The evolution of data products ( • Wikipedia: Big data ( Slide 66 of 66
  67. 67. Thank you! Vassilis Protonotarios Agro-Know Technologies