Algorithmic Decision-Making: A New Level of Intellectual Capital

Algorithmic decision-making, a new category of intellectual capital…are relatively new drivers in numerous work- sector environments today. Both are emerging, quite rapidly, whether businesses ready or not, at least that’s what Ray Dalio, founder and chair of Bridgewater Associates, the world’s largest hedge fund believes.

But, what’s occurring in the hedge fund arena, obviously, may not yet be quite operational in other sectors and businesses…however, there is an inevitability that algorithmic decisions-making is soon to meld into main stream operations of SME’s (small, medium enterprises) and become operational requisites in the not-too-distant future.  In turn, algorithmic decision-making, will, I am confident, favorably affect business value, revenue generation, competitiveness, sustainability, and resilience.

Much has already been written and debated about Dalio’s managerial attributes…along with Bridgewater’s sustained growth, and its unique culture, which is often described as a…

  • “believability and weighted ideas of meritocracy in which people strive for meaningful work and meaningful relationships through radical truth and radical transparency.”

All of this has, of course, been artfully explained in Dalio’s book titled Principles, which, as one may expect produces both curiosity and controversy for 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.

Algorithms, in general, are sets of programmed guidelines ala codes that collectively describe how a particular task is to be performed. That’s straightforward enough. This definition comes from an online article authored by Jacob Brogan titled ‘What’s the Deal With Algorithms? (Future Tense: The Citizens Guide to the Future). Interestingly, Brogan’s article is subtitled ‘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 and when to do it’.  Domingos says, ‘algorithms are reducible to three logical operations’, i.e., (1.) and, (2.) and (3.) or not.

In this sense, it’s not terribly dissimilar to my graduate school coursework…in the early 1980’s, in which I endeavored to learn the common computer codes of the time, i.e., Basic and Fortran. Ancient history right? Both have been relegated to mere historical footnotes. Today, coding algorithms can chain together in complex sorts of ways, but, are often built upon relatively simple and rational associations.

Algorithmic decision making is rooted in – evolves from specific sets – sequences of (coding)instructionssome of which presumably take-into-account (factor for) particular issues, e.g., risk, product, service, and/or person vulnerability, probability, and criticality and perhaps framed, for example, as good, better, best decisions.

A potential challenge for this 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 also produce some challenges.  Obviously, an algorithms’ stability, longevity, versatility, and proprietary status would be some key factors which I encourage attention be drawn.

A subsequent question is, could these differentiators be inputted, as algorithmic?  Probably so, and as such, possess distinguishable, perhaps ‘stand alone’ values, e.g., to a sale, business transaction, merger-acquisition, etc.

Michael D. Moberly December 7, 2017 St. Louis [email protected] ‘The Business Intangible Asset Blog’ since May 2006  ‘where one’s attention span, intangible assets and solutions converge’! 

Readers are invited to explore other relevant papers, blog posts, and books I have published at

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 decisively throughout the attack to mitigate further loss of life and damage to the U.S. Navy’s mid-Pacific defensive line.

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