The Economist: Algorithms: Business by Numbers
Consumers and companies increasingly depend on a hidden mathematical world.
ALGORITHMS sound scary, of interest only to dome-headed mathematicians. In fact they have become the instruction manuals for a host of routine consumer transactions. Browse for a book on Amazon.com and algorithms generate recommendations for other titles to buy. Buy a copy and they help a logistics firm to decide on the best delivery route. Ring to check your order's progress and more algorithms spring into action to determine the quickest connection to and through a call-centre. From analysing credit-card transactions to deciding how to stack supermarket shelves, algorithms now underpin a large amount of everyday life.
Their pervasiveness reflects the application of novel computing power to the age-old complexities of business. “No human being can work fast enough to process all the data available at a certain scale,” says Mike Lynch, boss of Autonomy, a computing firm that uses algorithms to make sense of unstructured data. Algorithms can. As the amount of data on everything from shopping habits to media consumption increases and as customers choose more personalisation, algorithms will only become more important.
Algorithms can take many forms. At its core, an algorithm is a step-by-step method for doing a job. These can be prosaic—a recipe is an algorithm for preparing a meal—or they can be anything but: the decision-tree posters that hang on hospital walls and which help doctors work out what is wrong with a patient from his symptoms are called medical algorithms.
This formulaic style of thinking can itself be a useful tool for businesses, much like the rigour of good project-management. But computers have made algorithms far more valuable to companies. “A computer program is a written encoding of an algorithm,” explains Andrew Herbert, who runs Microsoft Research in Cambridge, Britain. The speed and processing power of computers mean that algorithms can execute tasks with blinding speed using vast amounts of data. ...
It may interest you that an actual person does not write Kruse Kronicle. Kruse Kronicle is generated from a computer algorithm that searches for stories that are sure to tick off certain constituencies and then posts those stories here. It frequently works quite well, as evidenced by many comments.
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