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The Systems Paradigm: Overview
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The Systems Paradigm: Overview
Hierarchical authority
The paradigm is based on a hierarchical structure endorsed by some pre-existing authority. A valid or invalid understanding of the world is decided by an authority at higher level.
Example
https://filedn.com/lJpzjOtA91quQEpwdrgCvcy/Foundations%20of%20Business%20Intelligence%20and%20Analytics/Module%201/Systems%20Paradigm%3A%20A%20New%20Analytical%20Perspective/The%20Systems%20Paradigm/39%20photos%20that%20show%20how%20Steve%20Jobs%20saved%20Apple%20from%20disaster%20and%20set%20it%20on%20the%20path%20to%20a%20a%20%241%20trillion%20valuation.pdf
Analytical
Our world is entirely governed by objective physical laws, which can be written in mathematical language. Furthermore, we can understand natural laws by testing various hypotheses by scientific models built from empirical data.
Analytical
https://sloanreview.mit.edu/article/automated-decision-making-comes-of-age/
Example
All data-driven analytical models, including most cutting-edge models are ultimately based on the fundamental presumption of linear causality, a significantly simplified assumption about the real world to decompose real-workd entity into different components through analysis .
Linear Causality
Under this presumption, many analytical models are typically based upon excluding a changing environment as described by the term "Ceteris Paribus," which means all other things remain constant.
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Example
https://filedn.com/lJpzjOtA91quQEpwdrgCvcy/Foundations%20of%20Business%20Intelligence%20and%20Analytics/Module%201/Systems%20Paradigm%3A%20A%20New%20Analytical%20Perspective/The%20Systems%20Paradigm/Wage%20Disparity%20Continues%20to%20Grow%20-%20The%20New%20York%20Times.pdf
From 2000 to 2013, the median US wage has risen about 1%, adjusted for inflation.
But over the same period, the median wage for:
high school dropouts,
high school graduates with no college education,
people with some college education, and
people with Bachelor's or higher degrees
all have all decreased!
In other words, within every subgroup of people with the same education level, the median wage was lower in 2013 than it was in 2000.
Ceteris Paribus
https://filedn.com/lJpzjOtA91quQEpwdrgCvcy/Foundations%20of%20Business%20Intelligence%20and%20Analytics/Module%201/Systems%20Paradigm%3A%20A%20New%20Analytical%20Perspective/The%20Systems%20Paradigm/Can%20Every%20Group%20Be%20Worse%20Than%20Average_%20Yes.%20-%20The%20New%20York%20Times.pdf
Simpson's Paradox
However, the business world cannot be simply breaken down into different pieces, and then we understand how the business world is operating only based on the linear causality.
Nonlinear Causality
This is because business operations are driven by human behaviors, and most, if not all, business data are generated by human behavior through a subjective cognitive process.
The human behavior never strictly follows the linear causality
One mortgage loan borrower defaulted on loan payments—the data observation results from the loan borrower's cognitive decision to default on his loan payment.
Example
So, the human cognitive process (i.e., how he sees the world) creates observable empirical business data (i.e., how he acts in the world). Then, large-scale business data collection (e.g., mortgage loan data) presents us with the challenges of how to make better business decisions (which is subjective judgment) through processing the big and complex data collection (e.g., what are causing some loan borrowers to default on their loan payment?).
Example
Wanted: The ‘perfect babysitter.’ Must pass AI scan for respect and attitude
https://filedn.com/lJpzjOtA91quQEpwdrgCvcy/Foundations%20of%20Business%20Intelligence%20and%20Analytics/Module%201/Systems%20Paradigm%3A%20A%20New%20Analytical%20Perspective/The%20Systems%20Paradigm/Wanted_%20The%20%E2%80%98perfect%20babysitter.%E2%80%99%20Must%20pass%20AI%20scan%20for%20respect%20and%20attitude.%20-%20The%20Washington%20Post.pdf
Google Flue Trend project
https://filedn.com/lJpzjOtA91quQEpwdrgCvcy/Foundations%20of%20Business%20Intelligence%20and%20Analytics/Module%201/Systems%20Paradigm%3A%20A%20New%20Analytical%20Perspective/The%20Systems%20Paradigm/Why%20Google%20Flu%20Is%20A%20Failure.pdf
Example
YouTube's automated content recommendation system was found to push children's videos to pedophiles
https://filedn.com/lJpzjOtA91quQEpwdrgCvcy/Foundations%20of%20Business%20Intelligence%20and%20Analytics/Module%201/Systems%20Paradigm%3A%20A%20New%20Analytical%20Perspective/The%20Systems%20Paradigm/On%20YouTube%E2%80%99s%20Digital%20Playground%2C%20an%20Open%20Gate%20for%20Pedophiles%20-%20The%20New%20York%20Times.pdf
Systems
The practice of business intelligence and analytics should have the systems paradigm as its philosophical foundation, developed in the third and the most recent stage. The most significant feature of this paradigm is that it formally breaks down the barrier between Subjectivity and Objectivity and emphasizes the equal importance of the two for our understanding of the world.
Systems
By processing a large amount of mortgage loan data using some machine learning algorithm, we identify that a low FICO score is one critical factor causing mortgage loan borrowers to default on loan payments. Then, mortgage lenders will decide not to approve loan applications from applicants whose FICO score is lower than a certain level (say, 600).
Example
Suppose one loan applicant has a FICO score of 550. We should reject his application according to the automatic decision rule. However, a further study of this applicant shows he has a low FICO score just because of his short credit history. Moreover, we find he is a recent law school graduate with excellent academic credentials and has already been extended a job offer with a six-digit salary by a top law firm. Then, it is a reasonable human subjective judgment that we should exempt him and all other applicants with comparable backgrounds from this decision rule based on FICO.
https://www.myfico.com/credit-education/what-is-a-fico-score