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Cyborg or Human?

Refreshing Our Vision for Our Work

Appraisal is one of the oldest and most universal human habits. Humans have been appraising since the beginning of time. Appraisal is also a uniquely human habit requiring a spectrum of skills and thought processes that are not found in nature or machines. While often impugned for being faulty and having a variety of biases, our ability to “appraise,” assess, form judgments, and complex connections is the essence of the arts and humanities, crafts and trades, sciences, data sciences, and commercial activities. It is one of the foundational attributes of human intelligence. Yet, we appraisers have become increasingly enamored of offloading our privileged position and skillset to computers, via programs, apps, and artificial intelligence. In this article, the author reflects on why this is happening, discusses the danger of making the servant (technology) into the master, and the value that mindfulness offers professionals in the appraisal community.

Cyborg or Human? Refreshing Our Vision for Our Work

Within 30 years, we will have the technological means to create superhuman intelligence. Shortly thereafter, the human era will be ended.

– Vernor Vinge (1993)

The word “intelligence” continues to escape a true definition which is agreed upon by all. Two researchers reviewed the literature in an attempt to generate one definition that could receive the approval of the largest number of academicians and scientists. The summation of the work led to a discovery of over 70 separate definitions, which they conceptualized into one defining statement: “Intelligence measures an agent’s ability to achieve goals in a wide range of environments” (Legg and Hutter, 2007).[1]

Intelligence in psychology refers to the mental capacity to learn from experiences, adapt to new situations, understand and handle abstract concepts, and use knowledge to manipulate one’s environment. It includes skills such as problem-solving, critical thinking, learning quickly, and understanding complex ideas … Intelligence has been defined in many ways: higher level abilities (such as abstract reasoning, mental representation, problem solving, and decision making), the ability to learn, emotional knowledge, creativity, and adaptation to meet the demands of the environment effectively.[2]

Appraisal is one of the oldest and most universal human habits. Humans have been appraising since the beginning of time. Appraisal is also a uniquely human habit requiring a spectrum of skills and thought processes that are not found in nature or machines. While often impugned for being faulty and having a variety of biases, our ability to “appraise,” assess, form judgments, and complex connections is the essence of the arts and humanities, crafts and trades, sciences, data sciences, and commercial activities. It is one of the foundational attributes of human intelligence.

Yet, we appraisers have become increasingly enamored of offloading our privileged position and skillset to computers, via programs, apps, and artificial intelligence. Why? Could humanoids exist without humans to build them? What would Galileo, Euclid, Einstein, or von Neumann think about our growing preference for mountains of data stored and sorted by an inanimate chip over the incredible power of the human mind and imagination?

It seems we are forgetting what we are and what we do. It also seems we are in danger of making the servant (technology) into the master.

What characterizes appraisal work product generated via machine minds substituted for human intelligence and judgment? First, it tends to be poorly written, uninteresting, and unimportant, replacing real substance and a good story with an excess of canned information and standard language/models. Then, while it emphasizes technical prowess, the assumptions and content it utilizes are often questionable and may not withstand scrutiny. The increasingly complex analytic models that underly its conclusions can and do fail the test of logic and accessibility. In fact, they are often erroneous, but this is hidden in model complexity. Finally, this work product demonstrates decreasing interest in crucial intangible concerns (such as strategy) that offer clients truly defensible, insightful, sensible results. The value conclusion becomes a blind stare and the report supporting it becomes a soulless, empty suit.

How can we remedy these shortcomings and re-envision ourselves?

We could begin by revisiting what we are. So, what are we? Most business appraisers answer this question by immediately defining themselves as “technical”. We will admit there is an art and a science to what we do, but these quickly get subsumed by “technical”. It is as though being technical is more impressive than being able to apply more irreplaceable capabilities.

In addition, we consider ourselves “experts”. What is it that experts do? They:[3]

    • Mediate between production of knowledge and its application;
    • Define and interpret situations;
    • Can set priorities for action because knowledge becomes the capacity to act;
    • Are primarily judged by clients (not peers) and rely on expert-client trust; and
    • Trade on personal experience, judgment, credibility, and trustworthiness as more relevant than comprehensive specialized knowledge.

Very human-centric activities. Probably not performable by a cyborg.

I suggest that, while we are most certainly “technical” and experts, we are also something more fundamentally human. We are historians, ethnographers, bards, and prophets who tell stories about the past, present, and future—with a quantitative twist. Mathematical calculations are only one way of expressing these stories and capture only one piece of an overall picture.

Yes, we estimate a numeric value that clients can use in some form of transaction, regulatory matter, or dispute. But we can and should do more than this. Our appraisal stories should capture our readers’ and listeners’ attention and imagination as we present our assessment of what we can reasonably know and prove looking back, and what we can reasonably extrapolate into the future. This is what makes them credible and defensible.

Credible storytelling does not include telling a 100 percent factually-verifiable story; an impossible, laughable task. It does not include avoiding telling a story at all through data-entering information into a model that rolls into an automated point estimate of value, accompanied by a pre-scripted report. It does include rigorous research and analysis, structured by the story itself. But the story cannot be a marginal consideration (or no consideration at all).

What does it take to become a great storyteller? First, become a great listener. Train yourself to hear more than factual data during your work with clients and their advisors. Begin listening for the story and asking questions that will help it unfold. Everything clients tell us—and everything they fail to tell us—belongs to a story. Their employees and company culture tell a story. Indeed, so does their financial information. Events in their industries and among their most direct competitors tell us part of a story.[4] There are many places to listen if you use a storyteller’s ear.

Then, spend some time reading up on storytelling techniques. These abound and are easy to find. Even reading a novel can help to pick up the flavor of a good story.

Pick one technique that suits your personal style and practice it on a client matter you already know well; perhaps a completed engagement. Bullet point the story outline you think you are telling. See if you can easily follow this story from the beginning to the end of the report and from your first quantitative table to the final one. See if your report tells the same story as the numbers you used (sometimes/often they do not!). If you cannot do either of these, identify where the story breaks down. Take the time to reframe, reorganize, and rewrite this client’s story so you can use it as a pattern for your future work. Then, try to perform your next engagement with fresh listening perspectives and new storytelling habits.

At first, it will take time and additional effort. But the rewards will be great and soon, it will become automatic. Your work will be 100 percent credible, accessible, clear, and defensible because the underlying story will be. Your clients will be happy and never forget you. They will enjoy reading your work and want to know more. You and your staff will enjoy performing assignments. Data entry, research, and quantitative modeling will come alive as elements of sleuthing and storytelling. Your staff will find an incentive to learn to write well. After all, they are writing history! And we can all, as a profession, remain fully human, rather than morphing further into cyborgs.

The machine will remain servant. We, the master.

This, our story, will have a happy ending!

 

[1] https://louis.pressbooks.pub/intropsychology/chapter/defining-measuring-intelligence/

[2] https://www.simplypsychology.org/intelligence.html

[3] Paraphrase of Grundmann, Reiner. “The Problem of Expertise in Knowledge Societies.” Minerva (2017) 55:25-48.

[4] Note that this part of the story is rarely gained by reading canned industry reports. These are too generic, too predigested to provide much insight.


Sarah B. von Helfenstein, MBA, CVA, is the founder and CEO of Value Analytics & Design, One Broadway, 14th Floor, Cambridge, Massachusetts, 02142. Ms. von Helfenstein is a more than 30-year veteran of the start-up wars and has created, launched, and managed numbers of new initiatives. For the past 25 years, she has held a variety of positions within the financial valuation sector. She has spent the last 12 years as a practicing business appraiser. Ms. von Helfenstein has published and presented academic papers on valuation, theoretical finance, economics, and real options in the U.S. and internationally. She has also authored valuation courses and exams, developed valuation curricula and conferences, and edited several key valuation books.

Ms. von Helfenstein can be contacted at (617) 401-1122 or by e-mail to svonhelf@valueanalyticsanddesign.com.

The National Association of Certified Valuators and Analysts (NACVA) supports the users of business and intangible asset valuation services and financial forensic services, including damages determinations of all kinds and fraud detection and prevention, by training and certifying financial professionals in these disciplines.

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