Technology & Innovation

Demystifying Algorithms and how they work for you and your business


30 Sep 2022

Algorithms have long been around us. The word, in-fact, was first coined in the 9th century. It is defined as a set of step-by-step procedures, or a set of rules to follow, for completing a specific task or solving a particular problem. To follow the steps, of course, you have to have their mathematical sequence in order and observe the minutes involved in each procedure.

Here are some common examples: a recipe for baking a cake, the method of cooking your favourite dish, or the method used to solve a long mathematical problem, driving a car, how search engines work, etc., all of which use algorithms.

In computers, algorithms work via the input and output method. The machine takes the input and applies each step of the algorithm to that information to generate an output. A simple explanation for this could be how a search engine works. A person types in a search query which the algorithm takes in as an input, then, it searches its database for items relevant to the words in the query.

According to “How Stuff Works”, to make a computer do anything, you have to write a computer program. To write a computer program, you have to tell the computer, step by step, exactly what you want it to do. The computer then "executes" the program, following each step mechanically, to accomplish the end goal. When you are telling the computer what to do, you also get to choose how it's going to do it. That's where computer algorithms come in. The algorithm is the basic technique used to get the job done.

The media outlet cited the procedure that a person follows in getting a ride as an example of what it dubs as “The Taxi Algorithm.” This is the sequence: 1. Go to the taxi stand; 2. Get in the taxi, 3. Give the driver the destination address.

That’s right, our brain uses algorithms even in getting a taxi ride. So, it’s a fact that we are certainly using algorithms in whatever we do but we’re not conscious of it.

We actually use algorithms and algorithmic thinking all the time to define clear steps in solving a problem which is crucial in our personal lives, different situations, fields and industries.

In technology, algorithmic thinking has been successfully applied to solve different complex problems in various businesses and systems. Algorithms are used for calculation, data processing, and automated reasoning such as AI-powered machines. The downside: You certainly can’t argue with machines with pre-programmed or wired brains.

In today’s digital world, computer software generally utilises the power of AI and algorithms combined. In this context, AI algorithms are defined as calculations or commands used in mathematics for computer software formulas. The software then extracts and analyses data to solve a set of problems on its own.

Incredibly enough, this concept is not used only in large manufacturing companies or factories but in small and medium enterprises as well. For example, retailers gather customer data to analyse their demographics for specific products or market trends.

While there are many algorithms currently used in AI, when it comes to machine learning, these three are the most used:

1. Regression - Variables are imputed to predict the value of a target. Regression codes are divided into linear and logistic regressions. Example Uses: predicting retail sales, scoring insurance customers’ risk,


2. Decision Trees - These algorithms mimic the way humans make decisions. They basically draw a map of all possible paths along with results in each case. Example Uses: automated customer communication, automated workflows


3. Clustering - Data is grouped together with like data. Example Uses: product recommendations, search engine results.


Well, we’ve demystified algorithms for you. Time to harness more of its potentials for your business.