Orley Ashenfelter is a Princeton economist and a wine lover. During the day he crunches numbers. He looks for variations in large data sets and reveals the secrets they hold. Kinda like what a reliability engineer does.
When it comes to wine he uses computation instead of savor and sensation to determine the quality of a Bordeaux. "Wine is an agricultural product dramatically affected by the weather from year to year." In his excellent book, "Number Crunchers; Why Thinking-by-Numbers is New Way to be Smart", econometrician and lawyer Ian Ayres, describes how Orley attacks a large set of weather data. He "has used statistics to find out what characteristics of vintage are associated with higher or lower auction prices" (P. 2) "It's really a no-brainer", said Orley (okay, maybe for a Princeton economist...).
With those of us involved in developing asset management strategies this really does seem to make Image may be NSFW.
Clik here to view.
sense. Use data to find where we might be able to generate more bottom line. Sounds like something asset performance management people do all day long.
But when Orley gave a presentation of his formulaic approach to Christie's Wine Department, wine dealers openly hissed at him. The so-called experts regarded his approach to be a complete sham and they all pushed back with both hands. Suddenly the mysteries were revealed. Cold calculations had intruded on the sublime and setting of wine snobbery.
Orley's story might resonate in the world of reliability analytics. Terry Wireman's blog says a reliability engineer is a, "professional who understands the principles of performance evaluation and prediction to improve product/systems safety, reliability and maintainability". The domain of a reliability engineer is property, plant, and equipment. The RE tries to find variations in a large data set to find the hidden plant. But when she is successful, there is often push-back from executive management questioning the validity of the recommendation (usually because her well-reasoned recommendation requires an investment).
Orley DID find a quiet growing audience. Though he was seen as a heretic, there were many collectors who observed his predictions and took them under advisement. His prediction of the 1989 Bordeaux was correct. It was, at that point, the wine of the century and fetched a tremendous price. He made this prediction when the wine had been in the barrel for barely three months. At this state the wine is un-tastable. It would be a couple of years before it would even be in the bottle!
Leveraging historical data is a no-brainer. Reliability engineers are the few people in this world who have the skill to process the flood of data coming from the plants. Put their excellent minds togther with the knowledge of the plant operators, asset managers will be able to "predict the vintage of the century".
So here is my prediction. The econometrics of the hidden plant will determine the viability of asset intensive businesses and will be the linchpin of profitability for the next twenty years. The difference-makers will be the reliability engineers. Those who will profit will be the quiet audience of executives, investors, and stock analysts who take their recommendations under advisement.
When it comes to wine he uses computation instead of savor and sensation to determine the quality of a Bordeaux. "Wine is an agricultural product dramatically affected by the weather from year to year." In his excellent book, "Number Crunchers; Why Thinking-by-Numbers is New Way to be Smart", econometrician and lawyer Ian Ayres, describes how Orley attacks a large set of weather data. He "has used statistics to find out what characteristics of vintage are associated with higher or lower auction prices" (P. 2) "It's really a no-brainer", said Orley (okay, maybe for a Princeton economist...).
With those of us involved in developing asset management strategies this really does seem to make Image may be NSFW.
Clik here to view.
sense. Use data to find where we might be able to generate more bottom line. Sounds like something asset performance management people do all day long. But when Orley gave a presentation of his formulaic approach to Christie's Wine Department, wine dealers openly hissed at him. The so-called experts regarded his approach to be a complete sham and they all pushed back with both hands. Suddenly the mysteries were revealed. Cold calculations had intruded on the sublime and setting of wine snobbery.
Orley's story might resonate in the world of reliability analytics. Terry Wireman's blog says a reliability engineer is a, "professional who understands the principles of performance evaluation and prediction to improve product/systems safety, reliability and maintainability". The domain of a reliability engineer is property, plant, and equipment. The RE tries to find variations in a large data set to find the hidden plant. But when she is successful, there is often push-back from executive management questioning the validity of the recommendation (usually because her well-reasoned recommendation requires an investment).
Orley DID find a quiet growing audience. Though he was seen as a heretic, there were many collectors who observed his predictions and took them under advisement. His prediction of the 1989 Bordeaux was correct. It was, at that point, the wine of the century and fetched a tremendous price. He made this prediction when the wine had been in the barrel for barely three months. At this state the wine is un-tastable. It would be a couple of years before it would even be in the bottle!
Leveraging historical data is a no-brainer. Reliability engineers are the few people in this world who have the skill to process the flood of data coming from the plants. Put their excellent minds togther with the knowledge of the plant operators, asset managers will be able to "predict the vintage of the century".
So here is my prediction. The econometrics of the hidden plant will determine the viability of asset intensive businesses and will be the linchpin of profitability for the next twenty years. The difference-makers will be the reliability engineers. Those who will profit will be the quiet audience of executives, investors, and stock analysts who take their recommendations under advisement.
