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Photo: archy13, Shutterstock.com

Photo: archy13, Shutterstock.com

Management and machine learning

15 January 2019

Visiting Stanford academic, Professor Kathryn Shaw, says that AI gives organisations the ability to predict who will stay, based on such variables as where they live, if they had kids, or are divorced, and their past job histories. 

This research intersects and overlaps with many of the changes occurring within organisations and management as a result of automation and machine learning algorithms. 

Professor Shaw explains, “If the company goal is to hire people who will stay a year and not three weeks, then with big data you have information on all of the people in the organisation, sometimes with over 200-300 variables.” AI can sort out which variables matte the most. 

There are challenges with AI systems, such as where they run against the feelings and intuition of the people in traditional decision making positions. Professor Shaw uses Netflix as an example, positing that if Netflix machine learning algorithms showed that the second season of a program were unlikely to do well, the logical conclusion would be to cancel that program. But computerised predictions may leave out essential elements of running an organisation.

Kathryn Shaw

Professor Kathryn Shaw and Professor Kieron Meagher

“The people who run Netflix could say that this is only the second show from that producer and they have great promise. Let’s give it one more try – we want the producer and we don’t want them to flee. That is a people decision and to retain our talent in the organization, it may be wise to override the big data algorithms that cannot predict the future regarding talent needs. Firms need to balance different recommendations in their organisation when making decisions.”

Much of Professor Shaw’s recent work has focussed on the importance of bosses in improving the productivity of their subordinates and she has also developed an interest in entrepreneurship, showing that serial entrepreneurs develop intangible capital that they take with them as they move from their first firm to a new more productive firm.

Professor Shaw was in Australia to present as the guest speaker at the 12th Annual Organisational Economics Workshop, hosted last week by the Research School of Economics. The workshop brought academics from around the country and the world, to discuss subjects such as organisational design and task sequencing. Professor Shaw addressed the workshop on the topic of management in the age of AI. She traced the proliferation of automation and machine learning methods in mainstream organisations, and looked at how they affected management.

Kathryn Shaw is the Ernest C. Arbuckle Professor of Economics at the Graduate School of Business, Stanford University and served as a Senate-confirmed Member of President Clinton’s Council of Economic Advisers between 1999 and 2001.

See here for more information about upcoming events and seminars at the Research School of Economics.

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Updated:   23 January 2019 / Responsible Officer:  CBE Communications and Outreach / Page Contact:  College Web Team