When I was working on my book, I stopped by the Fair Isaac research labs in San Rafael, Calif. After all, when it came to modeling individuals through their data, Fair Isaac (now FICO) was a pioneer. It practically invented credit-risk scoring.

In its work for banks, FICO fine-tuned the champion-challenger testing that's now rampant on the Internet. It would try hundreds of different offers with different pools of customers, eventually coming up with something close to a customized come-on for each address. This turned the traditional credit risk market on its head. Instead of people struggling to meet a bank's inflexible standards, the bank fitted its offer to the customers. High risk customers, in theory, weren't blocked out. They simply had to pay more to insure against failure. (I write "in theory," because during the last bubble, the second part of the formula--ie. paying more--was obscured by financial gimmickry, leading to disaster.)

Now that these analytic methods are stretching across the economy, FICO is doing some stretching of is own--offering models, simulations and optimizations of businesses and their operations. Customers include Coca-Cola and Best Buy. I recently discussed FICO's "business rules management" with Don Griest, senior director of product management at the company. I tried out a new phone jack for the podcast. See what you think.          

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