Proceedings of the 3rd European Conference on Intellectual Capital

John Girard
Consider <strong>the</strong> following example <strong>of</strong> data mining in action. According to NCR Corporation, one <strong>of</strong> its
divisions (Teradata) “pioneered <strong>the</strong> field <strong>of</strong> data mining by looking at sales data from a retailer and
discovering that in <strong>the</strong> evening hours, beer and diapers are <strong>of</strong>ten purchased toge<strong>the</strong>r. This
relationship, called a data mining affinity, captured <strong>the</strong> imagination <strong>of</strong> industry watchers, spawning a
legend that has been recounted hundreds <strong>of</strong> times and is frequently cited as <strong>the</strong> textbook example <strong>of</strong>
data mining.”(Michael, 2002) Much has been written about this example <strong>of</strong> data mining in action.
Many <strong>of</strong> <strong>the</strong> articles describe <strong>the</strong> technology used to discover this relationship while o<strong>the</strong>rs describe
<strong>the</strong> ma<strong>the</strong>matics used to develop <strong>the</strong> algorithms.
However, <strong>the</strong> aspect <strong>of</strong> most interest is what <strong>the</strong> retailer did with this valuable information. Imagine
that you are at <strong>the</strong> helm <strong>of</strong> a large retail operation and you are presented with <strong>the</strong> findings <strong>of</strong> this
experimental research. At an executive meeting <strong>the</strong> Vice President <strong>of</strong> Sales, supported by <strong>the</strong> Chief
Information Officer, describe <strong>the</strong>ir findings. They tell a story that every Friday evening most people
that purchase beer also purchase diapers. They have <strong>the</strong> data to prove it, each and every Friday
<strong>the</strong>re is a very clear relationship between beer sales and diapers sales.
The question is, what do you do armed with this knowledge? Most executives would consider how
<strong>the</strong>y could use this knowledge to create a competitive advantage. They would realize <strong>the</strong> value <strong>of</strong> this
knowledge is time limited. In o<strong>the</strong>r words, once <strong>the</strong>ir competitors discover <strong>the</strong> relationship, <strong>the</strong> value
<strong>of</strong> <strong>the</strong> knowledge will be diminished. Before answering <strong>the</strong> question, how many executives would stop
to ask this question, am I dealing with data, information, or knowledge? None. Well no executive that
wants to remain competitive. The reality is executives are not concerned with <strong>the</strong> nomenclature, but
ra<strong>the</strong>r with <strong>the</strong> results.
So what really happened? What did <strong>the</strong> retailer do? Well this is where <strong>the</strong> urban myth part <strong>of</strong> <strong>the</strong> story
starts. Many tales have been told about <strong>the</strong> unnamed retailer, so many so, that many skeptics
suggest <strong>the</strong> whole event may not have existed. Like many great stories, <strong>the</strong> most important thing is
<strong>the</strong> story must be believable; it does not have to be true, but it does have to be believable. The most
important point in this story is that <strong>the</strong> CEO had <strong>the</strong> data, information, or knowledge (whatever you
wish to call it) that she needed to make <strong>the</strong> decision. We can debate <strong>the</strong> decision but at <strong>the</strong> end <strong>of</strong> <strong>the</strong>
day, <strong>the</strong> most important issue is that <strong>the</strong> CEO had what she needed to make an important corporate
decision. Knowledge management is about making sure that senior executives know what <strong>the</strong>y need
to know to make <strong>the</strong> decisions that <strong>the</strong>y must make.
2. Unknown unknowns – gibberish or wisdom?
The Plain English Campaign is a United Kingdom-based organization that describes itself as “an
independent pressure group fighting for public information to be written in plain English.”("Plain
English Campaign,") Annually, <strong>the</strong> Plain English Campaign presents a variety <strong>of</strong> awards focusing on
<strong>the</strong> use <strong>of</strong> English. One <strong>of</strong> <strong>the</strong>ir awards is entitled <strong>the</strong> Foot in Mouth, which <strong>the</strong>y present to a public
figure for a baffling quote. In 2003, <strong>the</strong> recipient <strong>of</strong> <strong>the</strong> Foot in Mouth award was former US Defense
Secretary Donald Rumsfeld for saying <strong>the</strong> following during a Pentagon press conference on February
12 th , 2002:
. . . as we know, <strong>the</strong>re are known knowns; <strong>the</strong>re are things we know we know. We also
know <strong>the</strong>re are known unknowns; that is to say we know <strong>the</strong>re are some things we do not
know. But <strong>the</strong>re are also unknown unknowns -- <strong>the</strong> ones we don't know we don't know.
And if one looks throughout <strong>the</strong> history <strong>of</strong> our country and o<strong>the</strong>r free countries, it is <strong>the</strong>
latter category that tend to be <strong>the</strong> difficult ones.("DoD News Briefing - Secretary
Rumsfeld and Gen. Myers," 2002)
Say what? What do you mean <strong>the</strong>re are known knowns, known unknowns, and unknown unknowns?
This sounds like gibberish at best or perhaps just pure nonsense. Many journalist poked fun at Donald
Rumsfeld and a series <strong>of</strong> Internet sites emerged to document <strong>the</strong> poetry <strong>of</strong> Rumsfeld. Surely, <strong>the</strong>
Secretary misspoke or was misquoted. In fact, nothing could be fur<strong>the</strong>r from <strong>the</strong> truth as Donald
Rumsfeld very concisely described a major complex management challenge. The challenge is best
illustrated using a 2 x 2 matrix:
The point that Secretary Rumsfeld so eloquently articulated in just 20 seconds has since been <strong>the</strong>
subject <strong>of</strong> a variety <strong>of</strong> articles and book chapters. Take for example Alex & David Bennet’s chapter
entitled Exploring <strong>the</strong> Unknown in <strong>the</strong>ir book Organizational Survival in <strong>the</strong> New World: The Intelligent
Complex Adaptive System. This chapter focuses on “how do we identify things that we don’t know we
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