Tuesday, July 18, 2006

Computer models outperform humans in decision-making--surprising?

The New York Times today has an article about a Dutch researcher, Chris Snijders of Eindhoven University of Technology, who has completed a study asserting that, in many situations, computer algorithms make better decisions than human managers.

The computer models' dispassionate evaluation and selection of alternatives, according to Snijders, are faster and more accurate than people's inconsistent decision-making.

As I reflect on my experience, both with computers and managers (including myself), I tend to agree with Snijders. Even now, as metrics-gathering has gotten better and information dashboards abound, managers still discount the evidence they see, or apply their experience selectively, or are too risk-averse, to make the most effective decisions for the business.

And don't the Toyota Production System and Intel's "Copy Exactly" approach attempt to remove human variability from processes to achieve better consistency, cost and quality?

Let's crank up the computer models and see what they can do. If they work for the quants, how about trying them elsewhere?

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