The Algorithmic CEO

Algorithmic_CEO_FINALHere is a brief excerpt from an article by Ram Charan for FORTUNE magazine in which he urges his readers to get ready for “the most sweeping business change since the Industrial Revolution.” To read the complete article, check out others, and obtain subscription information, please click here.

* * *

The single greatest instrument of change in today’s business world, and the one that is creating major uncertainties for an ever-growing universe of companies, is the advancement of mathematical algorithms and their related sophisticated software. Never before has so much artificial mental power been available to so many—power to deconstruct and predict patterns and changes in everything from consumer behavior to the maintenance requirements and operating lifetimes of industrial machinery. In combination with other technological factors—including broadband mobility, sensors, and vastly increased data-crunching capacity—algorithms are dramatically changing both the structure of the global economy and the nature of business.

Though still in its infancy, the use of algorithms has already become an engine of creative destruction in the business world, fracturing time-tested business models and implementing dazzling new ones. The effects are most visible so far in retailing, creating new and highly interactive relationships between businesses and their customers, and making it possible for giant corporations to deal with customers as individuals. At Macy’s, for instance, algorithmic technology is helping fuse the online and the in-store experience, enabling a shopper to compare clothes online, try something on at the store, order it online, and return it in person. Algorithms help determine whether to pull inventory from a fulfillment center or a nearby store, while location-based technologies let companies target offers to specific consumers while they are shopping in stores.

Now the revolution is entering a new and vastly expansive stage in which machines are communicating with other machines without human intervention, learning through artificial intelligence and making consistent decisions based on prescribed rules and processed through algorithms. This capability has rapidly expanded into potential connections between billions and billions of devices in the ever-expanding “Internet of things,” which integrates machines and devices with networked sensors and software, allowing the remote monitoring and adjustment of industrial machinery, for instance, or the management of supply chains.

* * *

Here is a direct link to the complete article.

Ram Charan is a veteran adviser to many Fortune 500 companies and co-author of the bestselling book, Execution: The Discipline of Getting Things Done. His next book, The Attacker’s Advantage: Turning Uncertainty into Breakthrough Opportunities, will be published by PublicAffairs (February 24. 2015).

To learn more about him and his work, please click here.

Posted in

Leave a Comment





This site uses Akismet to reduce spam. Learn how your comment data is processed.