Who’s the Boss?

Sorry to break it to you, but computers make better decisions than you do.

“I have the data to prove it,” says Chris Snijders, a professor at Eindhoven University of Technology in the Netherlands, who studies whether computers can make technology purchases as well as purchasing managers do. He’s found that computers are better at judging specifications, budgeting and how quickly products will be delivered. Making good decisions requires being “able to store information, retrieve information and combine it in a sensible manner,” Snijders says. “Humans aren’t good at that.”

Could this apply to other types of managers, as well? Increasingly, companies are using computer-based mathematical models to determine credit risk, make stock trades, scan resumes and analyze medical treatment options, among other tasks. “The more the work goes online, the more unobtrusively the machines are able to monitor, help and even take over if you want them to,” says Mark Nissen, a professor at the Naval Postgraduate School in Monterey, California, and author of Harnessing Knowledge Dynamics: Principled Organizational Knowing & Learning.

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The practice faces barriers, however. For one, overconfident managers doubt these computer models. “We think we can do better than the formula,” says Michael Bishop, professor of philosophy at Florida State University.

Computer-based models work best when decisions are quantifiable and made frequently (say, repeatedly hiring for the same position) and when there is a lot of data available to help make predictions. Nissen believes computer-based decision making can be applied to procurement decisions, logistics, shipping, marketing, customer tracking and inventory control, and it will eventually be embedded in the applications entrepreneurs use, too. “As companies become increasingly paperless,” Nissen says, “we’ll see more computer-based decision making and decision support.”