In truth, decisions that are made thousands of times over with the same type of data—such as pricing, loan decisions, risk reviews and so on—can often be handed over to computer algorithms, provided, of course, that your data is clean and flowing well between systems.
Automating decisions is like automating any other business process—you codify a set of rules that create a connection between the data and how the decision gets made. As you see how well the rules work (or not), you fine-tune the process to improve efficiency and accuracy. And you create a feedback loop that constantly analyzes the rules against the results they create to build a self-learning, self-correcting system. Finally, you identify the special cases and exceptions that need special review by the human experts who are best placed to make the most difficult judgement calls.
In doing so, you greatly magnify the impact of your managers. Each person is able to oversee larger and more complex areas than they otherwise would. Without this ability to manage by exception from largely rules-based systems, many companies, like the largest e-commerce companies, would not be able to manage hundreds of thousands of items and millions of customer interactions.
When the process is working properly, the majority of basic decisions are automated, saving the valuable time of your best people for where it really matters.
Many companies will look for the potential to automate their own internal processes and decisions, but you can also directly automate customer interactions, and the prize in terms of lower costs and an enhanced experience is often even greater. Rather than connecting with a broker, for example, who then shops for an insurance policy, a customer can input data and get a direct and immediate quote from a specific carrier. The automation saves both the insurer and the customer time and money. Or a bank could automate loan accreditation. Instead of talking to a bank manager, potential borrowers can connect their business accounts to the bank, proving their financial position, and get immediate approval for loans up to, say, $50K, with only exceptions directed to a bank officer.
The beauty of “management by exception” is that managers can spend more time on the tricky situations—either unusually tough calls or very gray areas—where their expertise is more valuable. If there are too many exceptions, of course, you are essentially back to square one, operating “manually.” But when the process is working properly, the majority of basic decisions are automated, saving the valuable time of your best people for where it really matters.