Management by Numbers

Numbers generally make for dull reading, but not The Numerati, a book about math and how it's driving the future of business.

The book is by Business Week writer Stephen Baker, who expands on a 2006 cover story he wrote on the rise of math. It gets high praise from BNET's The Corner Office, which says of the Numerati "It's been a while since I've read a business book this good." (The full review from The Corner Office)

[The author] addresses the good and the bad that can come with the Numerati's growing ability to watch us and predict our next moves.

My only criticism is that the book is a little too short. I wanted Steve to draw even more detailed sketches of the individual Numerati. All in all, though, his book is excellent.

Business Week has an excerpt from the introduction and a section on how IBM is managing its operations by the numbers.

Why do the Numerati matter? As Baker says in the introduction,

In a single month, Yahoo! (YHOO) alone gathers 110 billion pieces of data about its customers, according to a 2008 study by the research firm comScore. Each person visiting sites in Yahoo's network of advertisers leaves behind, on average, a trail of 2,520 clues. Piece together these details, you might think, and our portraits as shoppers, travelers, and workers would jell in an instant. Summoning such clarity, however, is a slog. When I visit Yahoo's head of research, Prabhakar Raghavan, he tells me that most of the data trove is digital garbage. He calls it "noise" and says that it can easily overwhelm Yahoo's computers. If one of Raghavan's scientists gives an imprecise computer command while trawling through Yahoo's data, he can send the company's servers whirring madly through the noise for days on end. But a timely tweak in these instructions can speed up the hunt by a factor of 30,000. That reduces a 24-hour process to about three seconds. His point is that people with the right smarts can summon meaning from the nearly bottomless sea of data. It's not easy, but they can find us there.

Of course, Yahoo can't yet tell whether you're watching TV or reading a book when you're surfing the Web, nor what you bought at the grocery store. But every company has data that it can use, and there will be more coming. "The Numerati" looks to be a thorough preview of what businesses need to be getting ready for.