Another interesting detour that my brain took last week: to what degree, if any, was computer technology involved in the causes of the financial meltdown? I don’t necessarily buy the simplistic arguments that it was all due to corporate greed, or consumer over-reaching, or even a lack of suitable oversight. I think part of the crash can be attributed to how easily we can confuse data with meaning.
Many of us deal every day with various forms of data: words, numbers, graphs, charts. The systems we have developed for manipulating data have become remarkably complex. (Spend a few minutes with your on-line brokerage’s analytical tools if you have any doubt!) However, all that data can obscure the underlying meaning. The data showing an ever-increasing housing boom obscured the fact that it was built on quicksand, and therefore not only unsustainable, but destined for collapse.
Another issue is data analysis, or the lack thereof. I have spent a lot of time over the years consulting with various companies on the issue of end user support. Some firms invest huge sums in tracking systems, only to accumulate lots of data that may never be analyzed and/or properly acted upon. One has to believe that all the data was available to predict the recent financial crisis, but we seem to have a lack of people with the ability to analyze that data and draw meaning from it. My guess is that software that helps managers draw meaning from data, for which we have the generic term “business intelligence,” will be increasingly important in future years. But just as important will be people who can tell a solid trend from wishful thinking.
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