by December 20, 2013 0 comments

“Choice Engines will convert complex information and data in standardized, machine readable formats in ways that enable consumers to make informed decisions”

Choice Engines in 2014
– Abundance of choice will lead people to ‘decision paralysis’
– Emergence of new technologies will provide opportunity to leverage personal data
– Choice engines will prove a boon to consumers, to save money, make better choices
– Organizing the world’s information will live alongside organizing the world’s choices.[image_library_tag 442/90442, style=”float: right;” alt=”suresh” ,default]

A Choice Engine is a system that helps you make a choice. It’s a tool that enables consumers to make better decisions at the point they need it, by using algorithms to analyze their personal data like customer usage history, credit score, health and education data etc.

Do we actually need such a thing to make a choice?
Let’s take the Internet, for example. When did we start using Google as a search engine to attain accurate information on the web? It was when the number of websites, covering a single subject, started to grow so large that it became impossible for us to get the right information. Search engines collate information from a number of sources, allowing the user to search or browse through them more efficiently and pick the right one. Similarly, Choice Engines help the users to choose wisely, in the midst of too many choices. For some people, having too many options is an amazing thing; but for others, it’s intimidating — a curse, rather than a blessing. Psychologists like Barry Schwartz believes that abundance of choice leads people to “decision paralysis” (indecisiveness), as decision-making becomes tough because most people feel so uncertain and fearful about how to proceed and avoid making a “poor” choice that they’d rather make no choice than risk regret. He calls it “the paradox of choice.” 

The Choice engine is an answer to this paradox. Like Sheena Iyengar (author of “The Art of Choosing”) says, “when people are given a moderate number of options (4 to 6), rather than a large number (20 to 30), they are more likely to make a choice, are more confident in their decision, and are happier with what they choose”. Choice engines do the same thing. Now, how does a choice engine work? How does it simplify the world’s choices? Can we not do the same thing using existing technologies?

How choice engines will simply the world’s choices
Let’s take the volume of data being generated by each individual through their social media posts, digital pictures and videos, purchase transaction records, cell phone GPS signals etc. The fact is, it is enormous! A recent study states that 70% of data being generated on the Internet every day, is by individuals. Every minute, Apple receives around 47,000 App downloads, Facebook Brands and Organizations receive 34,722 Likes, 571 new websites are created, Facebook users share 684,478 pieces of content, Google receives over 2,00,000 search queries, Twitter users send over 1,00,000 tweets, Consumers spend $2,72,000 on web shopping. Despite this explosion of personal data, consumers don’t always get immediate benefits. Here is where the role of new technologies comes in.

How new technologies will help consumers buy smartly?
The emergence of new technologies has provided an enormous opportunity to create new markets and value of this personal data from “smarter disclosure”. They convert complex information and data in standardized, machine readable formats in ways that enable consumers to make informed decisions. By making the necessary data available to choice engines, we can get better options to decide which book to read or movie to watch, compare flight times and prices and choose credit cards, financial products, schools, energy plans, health care insurance, or any number of other complex consumer services.

Choice engines have an enormous potential. If they succeed, consumers will be able to choose between different credit cards, cell phone plans, or even mortgages as easily and effectively as they search for airplane tickets today. It will be a boon to consumers, helping them both save money and make better choices. And choice engines will help new businesses to understand and serve the consumers needs effectively. 

How easy access to data will make consumers smarter
Experts say that the missing factor is easy access to data. Harvard Business Review’s recent report “Smarter Information, Smarter Consumers” explains this crisis as below: “In many contexts, such as choosing the right calling plan, a choice engine needs two kinds of data. The first is the terms of the sale: prices, penalties, length of time to pay, and so forth. 
The second is usage data. It is not possible to pick a calling plan without knowing all the ways you use your smartphone and how your behavior is likely to change when you upgrade to a phone that offers more ways to consume data. Sure enough, entrepreneurs have built choice engines, such as BillShrink, that analyze your cell phone usage data and provide a cost saving recommendation for your next contract. But today, you need to give BillShrink your username and password at your wireless company’s website – something many customers are reluctant to do.”

How choice engines simply making a smart choice
Choice is inherently complex. It involves a strange mixture of behaviour, tastes, influences and context. Sometimes, past behaviour drives your choice, sometimes it is your tastes or preferences that you may not have expressed in actual behaviour because of various reasons. In many cases, the influence of friends, experts and curators determine your choices. And finally, your immediate context (location, weather, time of day and week, the device you are accessing the web from, etc) can determine it. The challenge is that different organisations have the different data sets required to make this choice, and the only integrator is the individual. What happens often, is that you go to review sites, ask your social network, look at search engines and recommendations from your bank or retailer, or use your mobile to search for location based offers, but finally, you get too much, and often conflicting information, and you are the only one to bring these together. It’s so time-consuming, that often you choose the default option like the restaurant you always go to, or the one closest to you.

How choice engines will make data simple, contextual
A great choice engine will solve these problems by presenting you a simple menu of limited but personalised and relevant choices, based on all available data. The evidences show that 35% of Amazon’s sales and 75% of Netflix’s sales come not from search, but from their recommendation engines. These are largely limited to internal enterprise data sets, and new choice engines will combine the vast amount of social and digital data with enterprise data to provide more meaningful choices to the world’s consumers. In spite of these challenges, choice engines will make tremendous progress in making data simple, meaningful, contextual and promising. I foresee a world where the emphasis will shift from  vision of “organizing the world’s Information” to organizing the world’s choices. 

 

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