Algorithms and data as creative building blocks

The idea that “algorithms are a commodity” seems to misrepresent their purpose: to capture an unique explanation of how the world works. Your initial competitive advantage isn’t algorithms or data or even executional excellence in maintaining these assets over time. It’s found in a creative insight, derived from your expertise in a particular domain.

For example, in building a language translation system, you might have an insight into the universality of language, the existence of some “universal interlingua”. This creative insight may lead you to build your system in a counterintuitive way, to blend data and algorithms in a proprietary design. This creative insight may in turn have other unexpected, even paradoxical benefits, such as reducing your need for other commodities (competitive advantage).

Executional speed and excellence is certainly a competitive basis. The pursuit of a better explanation over time, informed by both domain knowledge and data, is also critically important for carving out white space and long-term advantages.