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Decisions, Decisions – There’s an Algorithm for That March 20, 2017

Posted by Peter Varhol in Software development, Strategy, Technology and Culture.
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I remember shoveling sh** against the tide. Yes, I taught statistics and decision analysis to university business majors for about 15 years.  It wasn’t so much that they didn’t care as they didn’t want to know.

I had more than one student tell me that it was the job of a manager to make decisions, and numbers didn’t make any difference. Others said, “I make decisions the way they are supposed to be made, by my experience and intuition.  That’s what I’m paid for.”

Well, maybe not too much longer. After a couple of decades of robots performing “pick-and-place” and other manufacturing processes, now machine learning is in the early stages of transforming management.  It will help select job candidates, determine which employees are performing at a high level, and allocate resources between projects, among many other things.

So what’s a manager to do? Well, first, embrace the technology.  Simply, you are not going to win if you fight it.  It is inevitable.

Second, make a real effort to understand it. While computers and calculators were available, I always made my students “do it by hand” the first time around, so they could follow what the calculations were telling them.  You need to know what you are turning your decisions over to.

Third, integrate it into your work processes. By using machine learning to complement your own abilities.  Don’t ignore it, but don’t treat it as gospel either.

There are many philosophical questions at work here. Which is better, your experience or the numbers?  Kahneman says they are about the same, which does not bode well for human decision-making.  And the analysis of the numbers will only get better; can we say the same thing about human decision-making?

Of course, this has implications to the future of management. I’ll explore my thoughts there in a future post.

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