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How to have business success in computer-driven world? Try being an ‘Algorithmic Leader.”

unnamed-9The world is now increasingly dominated by algorithms, processes or rule sets that make calculations that affect real people. When you see digital advertisements that appear to be targeted to your interests, an algorithm chose those ads for your. When entertainment companies are deciding which projects to fund, an algorithm helps them pick a winner. When an airline can’t find a volunteer to give up their seat on a flight, an algorithm does that, too.

As computers increasingly make decisions, survival doesn’t mean you need to be smarter than machines, says Mike Walsh, author of “The Algorithmic Leader.” Rather, you need to know what it takes to be smart, to transform yourself and your business into something new.

Walsh, the CEO of a firm called Tomorrow, aims to give clear advice to leaders who want to harness the power of AI for their businesses. He argues that every company is an algorithmic company, whether it knows it or not, and that the algorithms are inescapable.

Walsh organizes his book in three parts. Part I, “Change Your Mind,” encourages readers to consider what the future will look like with stronger, more robust algorithms, then focus a business on being dramatically better than alternatives, rather than marginally better. By thinking about problems in ways that computers can be applied to solve them, and by embracing the increase of uncertainty, a leader can set a company up to find unexpected correlations and capitalize on them.

Part 2, “Change Your Work,” is a guide to preparing the people in your business to work in the AI environment by giving them principles to adhere to and the freedom to work without fear. Follow that up by designing work: keep asking whether the approach to work is the right one, and then use automation to find the new jobs that were hiding inside older ones, Walsh advises.

Part 3, “Change The World,” is about making sure your future-ready business does “the right thing” in the future. By sticking to a moral code and remembering to ask why computed results are as they are, a company can guard against automating bias at scale. The companies that will succeed most in the algorithmic age will understand the complexity of human behavior and leverage computers for individualized experiences, Walsh says.

One recommendation Walsh has for algorithmic leaders is to build an “algorithmic brain trust.” He uses the example of a Japanese e-commerce company, Rakuten, for how to start one. Rakuten, which has 30 million customers and also has 12 million users of its credit card, lives on data.

The company wanted to be more selective about the way it marketed products to its customers, and planned to use algorithms and machine learning to get that right.

Each division of Rakuten has its own chief data officer, and each quarter, the chief data officers share with senior leaders how they plan to improve their use of data, as well as what new data initiatives have been working. The intent is to get business and technology leaders onto the same page so they can look for new patterns and look at whether one division’s approach might work well in another division.

Another principle Walsh raises is to focus on massive, rather than incremental growth. Too often, he says, a digital transformation is merely digital incrementalism. Industries that are powered by data and algorithms are often in a “winner-takes-all” market, he says, so preparing your business for the algorithmic age can set you up to be that winner.

The Algorithmic Leader

How to be smart when machines are smarter than you

By Mike Walsh

Page Two Books. 256 pages. $25.

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