The rise of the algorithm

We look at the little strings of code that are taking over the world — from writing music to dealing on the stock exchange

In its earliest years, science was investigative. In the seventeenth century we observed the march of the skies to learn how to calculate our position on the globe. Then we began to theorise and to add rules to our life. Finally we discovered DNA (Deoxyribonucleic acid molecules) - the very building blocks of our biological existence.

Not content with splitting the atom or discovering the fountain of life we began to change it. The power of the atom is already well-acknowledged and DNA has been used to develop genetically modified (GM) crops. But there is a quieter revolution that is largely unknown, yet potentially will change life in much the same way as the other two building blocks of life.  Welcome to the world of the the unglamorous - but vitally important -  algorithm.

In fact, there is a strong Middle East connection with algorithms. The word algorithm comes from Abu Abdullah Muhammad ibn Musa Al Khwarizmi, a Persian mathematician from the ninth century. The first recorded algorithm comes from Shuruppak, near Baghdad.

How do algorithms affect you? Well, those of you who came to work on the metro today were driven not by humans but by algorithms. If you send money home, algorithms will decide exactly how much you get for your dirham and convert it into your home currency. Those are the ways that you can see the computer code working. But this science is in its infancy and you will find it not just entering your life but controlling it in the very near future.

Where algorithms work best at their lowest level is at the point where repetition is likely to cause humans to make mistakes. In Wall Street trading, algorithms started with very simple instructions - ‘if a price is here buy, and if the price reaches here, sell’. This simple instruction can be repeated several times a second and never makes a mistake. It’s simple ‘bot’ logic is never distracted and never goes to the bathroom.

But it can work on more advanced platforms too. Let’s say you are in Europe and see that a large amount of money has been taken from your account without your knowledge. You ring the helpline and you are furious.

Algorithms can help here. At the first point of contact, certain key words can tell the system that you are angry. One company called eLoyalty has now analysed more than 750 million conversations and logged certain keywords to trigger operative reaction to your conversation. They have broken humanity down into six major types. It will quickly work out your personality type and put you in touch with an operative that has the same personality type as you.

The result is that busy people are dealt with quickly but old ladies are allowed to talk about their cats.

Sounds flaky? Vodafone took the eLoyalty model based on the six personalities and applied it to their marketing. Each of the personality types had a sales pitch directly targeted at them. The result was an 8,600 percent increase in sales. The types of personality are identified by key words.

NASA used the six personality types to analyse those who would do well in space. In such confined spaces, and in such close proximity, human frailties are likely to develop and cause friction. In order to save not only mutiny but endorse team-working, NASA employs rigorous testing of its crews.

Amazon uses algorithms to suggest books you may enjoy. At its simplest level an algorithm is just a set of ‘what if’ instructions. For example, users often make mistakes when they key in their credit card numbers online. The numbers identify the card, type, where it is issued and so on. The Lunn algorithm weeds out false or mis-keyed numbers by mathematical formula and thus saves millions of dollars in processing times.

UPS uses algorithms to help deliver millions of packages every day. If a driver has only three destinations to visit, he can take only six possible routes. But the number of possible routes explodes as the destinations increase.

There are more than 15 trillion, trillion possible routes to take on a journey with just 25 drop-off points — and an average day for a UPS driver in America involves 150 destinations. “Algorithms provide benefits when the choices are so great that they are impossible to process in your head” says UPS’s Jack Levis.

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