In the midst of absorbing all of the holiday cheer, I was alerted to this blast of good news from The Guardian:
World’s largest hedge fund to replace managers with artificial intelligence
Bridgewater Associates has a team of engineers working on a project to automate decision-making to save time and eliminate human emotional volatility
The world’s largest hedge fund is building a piece of software to automate the day-to-day management of the firm, including hiring, firing and other strategic decision-making.
Bridgewater Associates has a team of software engineers working on the project at the request of billionaire founder Ray Dalio, who wants to ensure the company can run according to his vision even when he’s not there, the Wall Street Journal reported.
“The role of many remaining humans at the firm wouldn’t be to make individual choices but to design the criteria by which the system makes decisions, intervening when something isn’t working,” wrote the Journal, which spoke to five former and current employees.”
For anyone excited about the prospect of Skynet-like Terminators taking on middle management jobs, this headline served as an early holiday gift. For this human, however, the premise falls a bit flat. Here are three big reasons why I believe that management jobs will remain the domain of carbon-based lifeforms.
Emotions matter. For Bridgewater, the hypothesis is that management is largely an exercise in sorting through information to get the ‘best decision.’ I agree. However, human beings come pre-wired with emotions ranging from the primal (fear that I’m about to be eaten by that sabre-toothed tiger) to those that may have evolved more recently (inferring the true meaning of a message through non-verbal cues).
Human beings will always produce broad ranges of emotions as a result of their experiences in the workplace, and a rational, AI-based management system that doesn’t account for the human, emotions-based reactions to what they’re being asked (or told) to do will result in worse outcomes. On the other hand, human beings managing other human beings can overcome just about any incorrect decision and motivate their team to correct the mistake based entirely on an emotional argument (“We can do it!”).
Humans produce breakthroughs. Algorithms are, by their nature, a reflection of information gathered in the past. True, AI systems are evolving at an accelerating rate and will be capable of making increasingly complex decisions each and every year. But what an algorithmic model cannot ever do, in my opinion, is produce the bolt of inspiration that the human mind is capable of delivering. AI-based managers can govern basic decisions based on facts; they cannot dream up the iPod.
Nick Seneca, author of Breakthrough Biodynamics, sums it up nicely in saying, “I am convinced that no computer, no matter how powerful, will ever be able to purposefully innovate an artistic breakthrough like Hip Hop; or a commercial one like Instagram. Breakthrough creativity is fundamentally organic, not algorithmic. Whilst computers and the businesses that run on them are breakthroughs; they themselves will never make them.”
Only humans can determine the “why.” The best-run companies inspire their workforce with a firm understanding of why the company exists. Human beings can program AI systems to do many things, but one thing AI systems cannot do is decide this “why.” And since that AI-based manager can’t inspire their team with authentic leadership that’s rooted in the company’s reason for existence, it will therefore underperform human managers over the long run.
Said differently – algorithms might be better at picking individual stocks, but humans will be better at building wealth management companies.