Cambridge Business Association
The Transformational Power of Recommendation
Article

The Transformational Power of Recommendation

Recommendation engines are revolutionizing how customers buy and employees work.

Michael Schrage
MIT Sloan Management Review, 2020
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9

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Recommendation

Recommendation engines have come a long way since the early days of Last.fm and Pandora. Expert Michael Schrage offers an overview of recommenders’ role in e-commerce and workplace productivity in a helpful article in MIT Sloan Management Review. The article covers recommenders’ uses, benefits and risks, and offers examples of recommenders’ outsize role in the growth of companies such as Spotify and Stitch Fix. 

Summary

Recommendation engines create value by shaping people’s choices.

Choice has exploded. Platforms such as Amazon, Youtube and Spotify offer thousands or millions of options for watching or listening. For employers and employees, technological innovation creates new opportunities. Recommendation engines, platforms and systems help people make decisions amid vast options.

People now turn to recommenders for help choosing entertainment, writing texts, setting priorities at work, choosing investments, planning their day, selecting food and clothing, and more. Recommenders don’t aim to enforce specific options, but to empower users and increase their agency. 

Recommendations have been central to building profitability and customer loyalty for e-commerce sellers.

Recommendation engines increase customer lifetime value. E-commerce giants such ...

About the Author

Michael Schrage is a research fellow at the MIT Sloan School of Management’s Initiative on the Digital Economy. 

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