# Business Dynamics in KPI Space. Some thoughts on how business analytics can benefit from using principles of classical physics

**Authors:** Alex Ushveridze  
**arXiv:** [1702.01742](https://arxiv.org/abs/1702.01742)  
**Date:** 2017-02-05  
**Summary page:** https://www.summarizepaper.com/en/paper/1702.01742v1/

## Key points

- Machine learning methods are widely used in business analytics but often fail to generalize well and perform poorly when applied to new data.
- Researchers propose enriching statistical algorithms with deterministic principles borrowed from theoretical physics to address this issue.
- One approach involves dividing a business's KPIs into two distinct groups: highly volatile KPIs primarily determined by external factors and relatively stable KPIs controlled by the business itself.
- Statistical methods can still be used to study the dynamics of the first group, while deterministic principles similar to classical mechanics' Principle of Least Action may better optimize and analyze the second group's dynamics.
- This approach opens up new opportunities in business analytics, including operational and strategic planning, change management, ROI optimization, and more.
- By uncovering and utilizing dynamical laws of controllable KPIs, businesses can use dynamical invariants as natural sets of risk and performance indicators.
- Using effects of parametric resonance with natural business cycles can facilitate business growth.
- The proposed method offers a promising solution to improve machine learning methods' generalization capabilities in business analytics while providing practical applications for optimizing performance indicators and managing risks effectively.

## Summary

In the field of business analytics, machine learning methods are widely used but often fail to generalize well and perform poorly when applied to new data. To address this issue, some researchers propose enriching these statistical algorithms with deterministic principles borrowed from theoretical physics. One such approach involves dividing a business's Key Performance Indicators (KPIs) into two distinct groups: highly volatile KPIs primarily determined by external factors and relatively stable KPIs controlled by the business itself. While statistical methods can still be used to study the dynamics of the first group, deterministic principles similar to classical mechanics' Principle of Least Action may better optimize and analyze the second group's dynamics. This approach opens up new opportunities in business analytics, including operational and strategic planning, change management, ROI optimization, and more. By uncovering and utilizing dynamical laws of controllable KPIs, businesses can use dynamical invariants as natural sets of risk and performance indicators. Additionally, using effects of parametric resonance with natural business cycles can facilitate business growth. The proposed method offers a promising solution to improve machine learning methods' generalization capabilities in business analytics while providing practical applications for optimizing performance indicators and managing risks effectively.