The Strategic Attributes of Algorithms

Companies used to become leaders in their industries by establishing an unbeatable brand or by having a supply chain that was more efficient than anyone else’s. Now leading companies are investing in algorithms to improve their position.


Algorithms Have Become Critical Assets

Algorithms, those pieces of code that use data to improve a business process or create insights, have become critical assets just like factories, corporate headquarters, and human capital.

Here are four ways to elevate algorithms to the strategic level:

no1 iconUse algorithms to disrupt the industry before competitors do it for you

Algorithms are already a necessity in some industries. Stock-trading firms, for example, have adopted analytics to assess market conditions and to guide computer-assisted trading.

no2 iconIncrease customers’ willingness to pay

Online shoppers deliver signals beyond their purchases: how long they spend on a page, what they click on, or what they put in a cart only to abandon it before completing a purchase. These are all useful data points that, when fed into algorithms, can help retailers manage promotions, offers, and prices.

no3 iconImprove strategic planning

When you’re asking questions about future investments, the right algorithm, with good data and a model that takes possible market swings into account, can score the relative probability of success of several different moves.

no4 iconAlgorithms are only as good as the goals you define

Use key performance indicators (KPIs) to judge the success of your algorithm strategy. Grow revenue. Increase yield from agricultural fields. Elevate market capitalization. KPI data and historical results will tell you what’s going on.


download arrowTo learn more about how algorithms can improve business results, read the in-depth report Algorithms: The New Means of Production.