Can business intelligence software and analytics replace human beings?  In other words, can we automate decision making using algorithms.

Well…let’s talk about the financial industry and their “success” with automating their decisions.

Long Term Capital Management.  Oops.

The entire mortgage securitization business.  Massive Oops.

What went wrong?  In all cases they mistook trends for truth.  Say it out loud with me….”Past performance is no guarantee of future results”.

And that’s it.  They forgot the human element.  They forgot that humans say one thing and mean another.  They are emotional.

Those algorithms just don’t have a lick of common sense.

Now I’m a big fan of Ray Kurzweil and his various predictions regarding the merger of man and machine.  His track record is solid.  He thinks that over time mankind and machines will merge.

Now maybe at some point humans/machines/borgs will someday think in a more logical fashion.  Then we can eliminate all the manias, the panics…all the emotion that accompanies human nature.

Sounds boring as hell.

However, for now we need to understand that while business intelligence tools and complex statistical formulas can help inform our decisions, they cannot make decisions for us.

It’s still critical to get out there and understand socioeconomic trends that lie outside of your business intelligence system.

For example:

-Talk to your customers.

-Talk to your non-customers.

-Study macroeconomic indicators.

-Read a book or two that have different points of view on the same topic.

-Spend a little less time listening to the hyperbole of the major news networks.

Then you can see all sides of the story and have a better chance of making the optimal decision.

Better chance than any robot at least.