Algorithms Need Managers, Too

by Michael Luca, Jon Kleinberg, and Sendhil Mullainathan

MOST MANAGERS’ JOBS involve making predictions. When HR specialists decide whom to hire, they’re predicting who will be most effective. When marketers choose which distribution channels to use, they’re predicting where a product will sell best. When VCs determine whether to fund a start-up, they’re predicting whether it will succeed. To make these and myriad other business predictions, companies today are turning more and more to computer algorithms, which perform step-by-step analytical operations at incredible speed and scale.

Algorithms make predictions more accurate—but they also create risks of their own, especially if we do not understand them. High-profile ...

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