Inhalt

Algorithmisation

08. November 2019, Editorial

How often do we wish that someone would take annoying decisions for us and intuitively know exactly what we want, even if we aren’t all that sure ourselves?

Thema:

Algorithms
Amazon
Artificial Intelligence
digital
future
loyalty cards
Social Media

Not a problem these days, thanks to algorithms. Anyone having flashbacks of maths classes or conjuring up images of hieroglyphics and computer labs needs to sit up and pay attention: once the exclusive preserve of boffins, these calculations are increasingly determining our circumstances and having an ever greater influence on our day-to-day lives. But what are algorithms and how do they shape our everyday experiences?

Algorithm? All right!

Cited as the latest megatrend and cloaked in controversy, it seems like everyone’s talking about algorithms these days. As every aspect of our lives becomes more and more digitalised and computers increasingly cross over into our physical environments while shrinking in size and forming ever closer networks, the importance of algorithms has advanced massively. Kitted out with sensors and artificial intelligence, they log and interpret everything going on around them. Algorithms are learning to respond to us and get to know us better so that they can take decisions on our behalf – or influence our behaviour.

Algorithms in everyday life

As we go about our day-to-day business, we leave behind a constant stream of data with every step, swipe and action we perform. When a digital step counter tracks our movements, when we withdraw money from an ATM, or whenever we book a holiday: whether we are aware of it or not, our digital footprints are growing all the time and say far more about us than we would probably like to think. All the while we are feeding the algorithms that live off this data while constantly increasing their reach. The personal information we share with them helps algorithms to learn more about us and customise the world around us to meet our needs. Nowadays, these algorithms are so advanced that in some cases they are already being used to take potentially life-changing personal decisions, such as loan approvals and job offers. And they are also being used more and more in the healthcare sector: algorithms help doctors to make diagnoses, and organise working processes and hospital staff in a bid to improve efficiency.

But people are mainly aware of algorithms in connection with social media and the internet.

The content that appears on our Facebook pages, our Google searches, our Spotify playlists and our Amazon shopping cart is all managed and influenced by algorithms. Although algorithms know a lot about us, we really don’t know much  about them. And this is because the precision with which Facebook chooses the factors that influence the Google and Facebook ranking algorithms is deliberately kept top secret. That said, it appears that the famous “like” button has a greater hand to play than previously thought. One “like” and the algorithm learns a little more about what we like and how that information can be used. And this is something that can be more than a little disconcerting, to take Amazon as an example: the platform appears to be omniscient when it comes to our wishes and preferences. Amazon’s algorithms know what we want before we do, and gives us the chance to get our hands on it with a single click. And – obviously – it’s not just for our benefit: the algorithm has the power to make Amazon rich beyond all imagination by using our data to manage things like dynamic pricing, in some cases changing prices from one hour to the next.

The best example? Amazon is at its most expensive in the evenings when hard-working professionals finally have time to shop online. We convince ourselves that Amazon just happens to come up with the right product at the right time, but it is actually down to that ominous algorithm. And the money just keeps on rolling in! But algorithms are not always bad, as they can help predict customer behaviour and enhance the efficiency of retail experiences. In some ways, Amazon shopping carts can also be seen as a form of customer feedback.

And far from being a flash in the pan, this is one trend that is here to stay.

Bricks and mortar retail, like its online counterpart, is increasingly dependent on data. So it is essential that businesses align their offerings to the customer and their needs. Self-scanning systems and loyalty cards are set to play a more prominent role in future as retailers work to better understand their customers and increase efficiency. Statistical analysis and artificial intelligence can also be used to enhance and improve the efficiency of follow-up ordering. Algorithms will be able to predict how special offers will be received and automatically adjust orders in response. This guarantees a dynamic pricing policy that can help retailers to boost profits.  

Human or machine?

“We are caged in simulations. Algorithms evolve, push us aside and render us obsolete…”: the lyrics of Muse’s song Algorithms provide a pretty clear picture of the reservations surrounding the subject. While algorithms are extremely useful thanks to the way that they shoulder the decision-making burden for us and make processes more efficient overall, the moral and legal implications mean they definitely warrant closer scrutiny. Greater awareness when it comes to handling data and an understanding of the implications of increased digitalisation are becoming increasingly important.

The future is all-knowing – and digital

In future, more data and algorithms than ever will be used to inform our purchasing decisions and influence our preferences. The buzzwords are ‘intelligent shopping assistants’, ‘in-house navigation systems’, ‘dynamic price tags’, ‘customer-specific discounts’ and ‘personalised product suggestions’. Soon enough, artificial intelligence won’t be that artificial after all!

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