Saturday, July 16, 2011

Where are the new OR innovations coming from?

The telephone appears to be increasingly rejected in favor of returning to Morse-code like telegraphic tweets and talk-free 'radio' text messages. Is OR going through a similar cycle? In a prior tab, empirical evidence was provided to suggest that the so-called age of analytics did not really start at Y2K; like the telegraph and the radio, its always been there and only gone digital now.

Our airline customers who pioneered the construction of scalable OR-embedded infrastructure to manage complex revenue and cost issues have seemingly run out of similar low-hanging fruit. Attending a recent INFORMS conference felt like reading a classifieds ad: "thoroughly impressive solutions seek unanswered practical questions to justify time and expense". This does not mean that we are not innovating - far from it; it's just not from within the OR community, where we continue to indulge in our dual laundering cycle of model building and tool polishing. Occasionally we hunt for non-existent (or worse, gullible and real) customers to pay us good money to take the resultant code-scrap off our hands. After all, OR is merely the science of 'better'. It is our customer who did all the hard work of taking it all the way from 'nothing' to 'good'.

The world of retail is one example of a margin-starved, data-rich industry that is driven by a realistic necessity to innovate. Our retail customer has been gratefully but carefully adapting practically useful resource optimization techniques from the airline world. By carefully refining these methods in the demanding retail context, they are generating a bunch of new analytical 'best practices'. Combined with some good old sales techniques, these approaches appear to be on the verge of reigniting similar innovations in other industrial sectors.

On a related note, OR resembles the fast-drawing gunman of the wild west legend whose niche skills are desperately sought after and bid for by a town threatened by outlaws, but one who also becomes a liability for the town once peace has been established. We should avoid outliving our welcome and be more proactive in seeking new 'towns'.

2 comments:

  1. I like the point you are making here about OR as the fast-drawing gunman. One of the quiet dilemmas of OR (and I may blog about this) is that once the OR person has improved the process, the OR person themselves might become superfluous. Most OR people do not wish to become the roving gunman with no consistent town. But I wonder at times if the very nature of the field forces that upon us.

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  2. Yeah, from personal experience: it's tough to continue in an industry-specific OR job for long and still continue to do interesting technical stuff. Sooner or later, the appetite for improvement wanes in the management and we either have to move up the management ladder or to a new position in the same or (more likely) different company/startup. Perhaps its the non-strategic nature of OR-based projects.

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