Michael D. Moberly
Algorithmic decision-making (and, operational transparency) are relatively newly prescribed drivers in numerous work (sector) environments today, and both are coming at us, whether we’re ready or not, quite rapidly! This perspective comes largely from Ray Dalio, founder and chair of Bridgewater Associates, the largest hedge fund in the world.
Yes, one would be quite correct to point out that what’s occurring in the hedge fund arena may have yet to ‘trickle down’ to being operational in other sectors or businesses. Is it inevitable these (business operating – functionality) features and drivers will variously meld into the operations of SME’s (small, medium enterprises) and become operational requisites in the not-too-distant future, and in turn, will affect business value, revenues, competitiveness, and sustainability.
To be sure, much has already been written and debated about Dalio’s managerial attributes along with Bridgewater’s sustained growth, and its unique culture, which is self-described as “a believability-weighted idea meritocracy in which people strive for meaningful work and meaningful relationships through radical truth and radical transparency.” All of this is, of course, has been artfully explained in Dalio’s book titled Principles, which still produces curiosity and controversy for its readers.
Focus #1 – What is algorithmic decision-making…?
Accordingly, aspects of algorithmic decision-making and how its further development, refinements, manifestations, growing reliance on – application of, will likely impact, what I refer to as the three pillars of intangible assets, i.e., intellectual, relationship, and structural capital. When intangible assets are effectively developed, monitored, safeguarded, coordinated, and exploited, they can, and routinely do, create value, generate new sources of revenue, and produce sustainable and sector specific competitive advantages.
So, an algorithm, in general, is merely a set of guidelines that describe how a particular task is to be performed. That’s straightforward enough. This definition comes from the online Future Tense: The Citizens Guide to the Future, in an article authored by Jacob Brogan titled ‘What’s the Deal With Algorithms? Interestingly, Brogan’s article is subtitled as ‘your 101 guide to the computer codes that are shaping the ways we live’!
In a computer science context, Pedro Domingos describes, in his book titled ‘The Master Algorithm’, that an algorithm is “a sequence of instructions telling a computer what to do when’. And, Domingos says, ‘algorithms are reducible to three logical operations’, i.e., (1.) and, (2.) or, and (3.) not.
In this context, it’s not terribly dissimilar to my graduate school coursework in which I was endeavoring to learn computer code, i.e., Basic, and Fortran specifically, which now are mere historical footnotes. Of course, today, coding algorithms can chain together in variously complex sorts of ways, but, are often built upon relatively simple and rational associations.
Arguably then, algorithmic decision making is rooted in – evolves from specific sets – sequences of instructions, some which presumably take-into-account (factor) for an issue such as risk, various contexts for product, service, and/or person vulnerability, probability, and criticality and perhaps framed, for example, as good, better, best decisions.
One potential challenge though, through my lens as an intangible asset strategist and risk specialist, is that the human originated intellectual, structural, and relationship capital will amalgamate as algorithmic, and probably apart from the human(s) in which that capital experientially originated or was generated. Effective algorithmic decision making requires, I believe, experiential-based instructions, ala coding.
Focus #2 – Assessing and valuing algorithmic decision-making…
The assessment and valuation of proprietary algorithmic decision-making, i.e. the algorithms themselves, I suspect, will produce challenges as well. Obviously, an algorithms’ stability, longevity, versatility, and proprietary status would be some key factors which I would strongly encourage attention, among others. Now, could these differentiators be inputted as algorithmic, probably so, and as such possess distinguishable, perhaps ‘stand alone’ values, e.g., to a sale, transfer, M&A, etc.
Michael D. Moberly December 7, 2017 St. Louis firstname.lastname@example.org ‘Business Intangible Asset Blog’ where attention span really matters’!
A respectful salute to those who died at Pearl Harbor on this date in 1941 and particularly to those who were able to perform-function effectively and bravely throughout this battle to mitigate further loss of life and damage.