The world’s largest hedge fund, Bridgewater Associates, is dabbling with artificial intelligence that will go beyond the already existing financial algorithms that guide trade in the financial markets. The firm 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 has a team of software engineers working on the project at the behest of it’s billionaire founder, Ray Dalio, who wants to ensure the company can run according to his vision, even when he’s not there.
The ‘manager’ algorithm is being built by identifying those managerial functions that the software aims to take over. Ray Dalio has prepared a 123-page manifesto, titled ‘The Principles’, as a guideline for building the software. The basic principles by which the algorithm shall work will be the same as those that talented managers operate by, namely…..
1. Have clear goals.
2. Identify and don’t tolerate the problems that stand in the way of achieving your goals.
3. Accurately diagnose these problems.
4. Design plans that explicitly get you around your problems and on to your goals.
5. Implement these plans
Each step is further fleshed out in elaborate detail in his manifesto. An app, dubbed ‘The Contract’, gets staff to set goals they want to achieve and then tracks how effectively they follow through.
A team of coders is building ‘PriOS’, the software that is aimed at making three quarters of all management decisions within five years. To build the logic underlying the software, vast amounts of data are being constantly collected. Meetings are recorded and people are encouraged to challenge and grade each other constantly, which shows up as their strengths and weaknesses. Dalio is investing the brute power of his financial empire to make this dream a reality. People would be rated based on a million data points. The software will make managerial decisions that the subordinates (real people) shall have to execute.
Ray Dalio believes that there is an impediment to a complete switch-over to robots in managerial decision making – human emotions. If only human emotions could be left out of the workplace, it would make it possible to run an organisation most efficiently. He further foresees that since people will resist taking orders from a machine, a human manager will have to be hired only to convey the machine’s decisions to the employees, for execution.
Over the next decade, managers could become dinosaurs (and maybe they will), but still there may remain managerial functions that require human emotions and this is why……
The role of a manager has always been part science and part art. While the algorithm will take care of the science part of the conduit manager’s tasks, the other part (the art) will still have to be performed directly by the manager – persuading employees to go above and beyond, something that no machine can imbue in a human (at least not in the near future). Two managers can convey the same performance rating to the same employee and have very different outcomes. One manager can leave the employee devastated, convinced he is a loser, while the other manager can leave the employee fired up with the motivation to excel.
At least as of now it looks as if the machine is going to take a long time to learn one simple fact – that in the end, performance is forged in the fire of emotion. Will that change and if so how soon?
The above piece is based on source material from google as well as the following write-up :
Author : Abhijit Bhaduri / Blog : Just Like That (IndiaTimesBlogs Jan 2017)