Friday, January 7, 2011

About a microanalytical startup with 'OR Inside'

Continuing with the new year theme, we take a first look at CQuotient, an analytics-driven start-up in the retail industry based in the Boston area. I just finished reading this interview on a business info site. It's interesting to hear what the founder and CEO Dr. Ramakrishnan has to say (he's also got a blog listed on the roll at the bottom right of this tab. I don't expect frequent updates for a while :). A couple of things were eye-openers.

They seem to be among the very first to sharply focus on individual customer behavior. Are we seeing some of the first practically viable applications of microanalytical (copyright, 2011 :) techniques this year ? Retail science normally thrives on aggregating individual customers into sufficiently big bunches so that the law of large numbers kicks in. Then you can reliably analyze statistical and econometric models to realistically predict and optimize based on these high-level purchase patterns. A retail microanalytical approach that drills down to the individual customer level looks pretty challenging to pull off in reality, but looking at the team assembled at CQuotient and the computing power available today, I wouldn't be surprised if they are onto something here.

Next, CQ will provide an 'optimal prescriptive' answer to a retailer. This convinces me that they have an application with "OR Inside" and their 'coolness quotient' just went up :). Rather than just dump a bunch of charts and qualitative insights on a tired, caffeine-deprived store manager-type and wish good luck, CQ seems to take it a step further and provides optimal decision recommendations to the retailer. Practical decision analytics can give you a pretty powerful edge since it can potentially eliminate or minimize a lot of costly guesswork. In the retail industry, which is characterized by wafer-thin margins and brutal competition, such OR-based innovations can be a big deal.

A minor grouse is that the word "OR" doesn't show up in the interview, but the content shows that all the good stuff is likely to be hidden inside. The scope for OR in the new world remains undiminished, especially if somebody is brave enough to dip their hands in messy data and put their money where their model is!

2 comments:

  1. Without prejudice to CQ, about which I know nothing, I'd just like to say that when advertising copywriters and marketing hypemeisters use the word "optimal", they tend to use it in a somewhat looser sense than when OR types do. :-) So perhaps there's "OR" under the hood (beyond the predictive analytics), but I wouldn't necessarily bet on it.

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  2. @Paul, insightful point from you(as usual). The cq founder has an OR practice background, and his blog has talked about going beyond prediction to 'true' optimization, so that gave cause for extra optimism, without denying my strong pro-OR bias :)

    Realistically speaking, what goes into such an analytical offering is hard to predict - very often the "OR inside" technical part is relatively easier and it boils down to having an OR-savvy guy with some ' Billy Mays for Oxy-Clean' like powers of persuasion to convince customers that they really need that extra edge :) In retail, with its tiny margins (1-3%) and intense competition, there's a good chance to make this case even without undue salesmanship.

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