Friday, December 23, 2016

Bridgewater: The AI-dominated firm of the future?

The Wall Street Journal has an interesting article about Bridgewater Associates LP, the world's largest hedge fund. By Rob Copeland and Bradley Hope, it is entitled "The World’s Largest Hedge Fund Is Building an Algorithmic Model From its Employees’ Brains." Whoa! 
The goal is technology that would automate most of the firm’s management. It would represent a culmination of Mr. Dalio’s life work to build Bridgewater into an altar to radical openness—and a place that can endure without him.

At Bridgewater, most meetings are recorded, employees are expected to criticize one another continually, people are subject to frequent probes of their weaknesses, and personal performance is assessed on a host of data points, all under Mr. Dalio’s gaze. ...

Rules for Bridgewater’s staff are laid out in a 123-page public manifesto known as the “Principles,” which every employee is expected to know and diligently apply. Along with maxims such as “By and large, you will get what you deserve over time,” the Principles are filled with advice from Mr. Dalio such as “Don’t ‘pick your battles.’ Fight them all.”
I wonder if this "fight them all" culture has means to prevent truth-seeking from devolving into win-or-lose debates? And those data points are being entered into the new software under development:
At the core of the technology project now under way is a walled-off group called the Systematized Intelligence Lab, headed by David Ferrucci, who led development of the artificial-intelligence system Watson at International Business Machines Corp. before joining Bridgewater in 2013.

Though outsiders expected Mr. Ferrucci would use his talents to help find hidden signals in the financial markets, his job has focused more narrowly on analyzing the torrent of data the firm gathers about its employees. The data include ratings employees give each other throughout the work day, called “dots.”

The Systematized Intelligence Lab is involved in several iPad applications that are part of employees’ everyday lives, among them the “Dot Collector.” It allows employees to rate each other on dozens of attributes and to hold snap polls on issues during meetings, including asking blunt questions such as whether a current conversation is a waste of time.

The data blend with others to produce “Baseball Cards” that show people’s strengths and weaknesses in various categories, such as “touching the nerve,” a prized attribute.

A job advertisement for the Systematized Intelligence Lab said it sought to “extract meaning and domain understanding from the wealth of text-based data our innovative applications generate.” Several employees said they have felt that working at Bridgewater was as much experimental research into human decision-making as it was investing.

New apps in recent months shed light on Mr. Dalio’s expanding technological vision. Software called “The Contract,” loaded on staff iPads, instructs employees to formalize goals to be achieved over time and tracks how reliably they follow through.

An app called “The Coach” lets people input a question and directs them to the relevant passage in Mr. Dalio’s Principles document. The goal is an evolution of The Coach into an intelligent system that can assist in decision-making.
Ferucci is a smart guy – I worked with him a bit years ago at Rensselaer Polytechnic Institute – but color me skeptical.

As counterpoint to all this – which, BTW, is fascinating – I suggest a recent article in Hackernoon, A guide to giving your cats their annual performance review, which contains such advice as:
Help your cat understand the consequences if performance does not improve. It may be necessary to remind her just what a lucky SOB she is to have food and a warm place to sleep on these cold winter nights. As your cat’s manager, you should also be aware of your own role in her performance. Are you present enough? Does she get adequate space to grow, play? Have you provided the necessary toys and furniture to scratch? It’s unfair to punish your cats for scratching the couch and destroying your nice things if you haven’t given them a proper scratching post.

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