Computer says no

The current high inflation rates have caught almost all economists by surprise. Though obvious in hindsight, the most common excuse is that none of the economic models predicted this effect.

This tells us two things. First, all models of the future are wrong. The issue is that second and third order effects are almost impossible to predict, but have an extraordinary impact on the behavior of a complex system.

Second, it illustrates a giant weakness in our current approach to decision making: We are outsourcing more and more of our thinking to flawed models, incomplete systems, and arrogant experts.

In the British comedy series Little Britain, a customer asks a travel agent to provide him with options to travel to a specific destination. The travel agent turns to her computer, briefly plays with her keyboard, turns back to the client and answers: “Computer says no….”

Replacing common sense with outsourced thinking is widespread: For example, we have created complex ERP systems to take away routine decisions from employees. This inflexibility unfortunately makes non-routine decisions consistent, predictable and, too often, wrong.

Another example is business strategy: Strategy decisions are increasingly outsourced to strategy consultants, instead of actually being taken by the senior leaders of an organization.

We are paid for the quality of our judgment. It’s therefore time we stop to let others do our thinking, and put our own brains in the drivers seat again.

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