AI and Future of Management

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Here’s a story that slipped under my pre-Christmas radar:

https://www.theguardian.com/technology/2016/dec/22/bridgewater-associates-ai-artificial-intelligence-management

This article provides an update on Bridgewater’s efforts to introduce “AI” as a management tool.  (Bridgewater is the world’s largest hedge-fund, with a leading performance-record). Founder Ray Dalio wants software “to make three-quarters of all management decisions within five years”, so that “the company can run according to his vision even when he’s not there”. The Guardian’s article reframes reports from 2015 that Bridgewater intended to use AI to make investment decisions:

https://www.bloomberg.com/news/articles/2015-02-27/bridgewater-is-said-to-start-artificial-intelligence-team

(Of course, how exactly Bridgewater is using AI is proprietary, so news reports are a little speculative! I’ll be writing separately about the application of AI to investing later this year, including a piece on Numerai: https://techcrunch.com/2016/12/12/numer-ai-is-a-crowdsourced-hedge-fund-for-machine-learning-experts/.)

Can ‘AI’ replace managers? Certainly there are a lot of routine tasks that managers do, and computers could do them as well or better. This HBR piece emphasizes that computers should free managers to do things computers aren’t good at:

https://hbr.org/2016/11/how-artificial-intelligence-will-redefine-management

Free managers to do things like …? Making judgment calls, and generating creativity! As I’ve said before, if ‘AI’ can’t do judgement and creativity … should we really call it intelligence? Is this just nit-picking, pedantic, semantics? Not really. As I’ve said elsewhere, “… tell humankind often enough that machines are more intelligent (even that they will be), and humans will fail to realize those capacities in themselves that machines are incapable of”:

https://emergingfuture.com/intelligence-ai-and-the-future-of-economy/

Interestingly, the HBR note calls for managers to treat computers as colleagues (although it insists on calling these machines ‘intelligent’!) As I’ve said before, the future is likely to be best served by a marriage of human intelligence with computer cognition.

The Bridgewater initiative will be a really interesting test. Dalio is known for his results-focus, and financial markets are an unrelenting taskmaster for measuring results. He’s also known for emphasizing the machine-like character of the economy, and a principles-based approach to life. These latter characteristics might suggest a reductionist worldview. At the same time, Dalio is a meditator, and has written of the infinity of laws that govern the Universe. Bridgewater’s mix of rigorous measurement with reductive and non-reductive stances (and non-dogmatic thinking!) looks like a really promising environment for exploring the integration of humans and machines.

Perhaps Dalio will share the results of his AI experiments with the world at large, as he has with some of his economic theories. It would be fascinating to see how Bridgewater attempt to balance the distinct competencies of people and programs!

Nicholas Wright
Nicholas Wright
Economist

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