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Solving the Industry Classification Code Conundrum
Estimated reading time: 4 minutes, 7 seconds
At Brainnwave, we delve deep into the world of data, utilizing a combination of data science and cloud technology to gather, process and breathe life into raw information. This enables you to harness relevant data and properly understand it to make better business decisions, in a robust and consistent manner.
Designed by data scientists and leading economists, Mosaic Inward Investment is an AI-powered, purpose-build platform that, over time, will solve some of the most fundamental barriers to enable economic developers to adopt a more consultative, data-driven approach with greater accuracy and efficiency.
Through our research and Hatch’s deep expertise working with government and private clients across the globe, we’ve mapped out 5 key vectors for the application of AI that are common challenges faced by economic and investment promotion agencies, and where we feel that AI has a true transformative role to play.
The first of these is the daily guessing game challenge of industry classification codes. A problem that our innovative solution, Mosaic Smart Sector Intelligence is built to resolve.
Codes and classifications, as they stand, are marred by vagueness and lack the nuance required for today’s diverse and evolving businesses. Consider Meta (formerly known as Facebook) and Standard & Poors (S&P) – are they genuinely similar entities? Their primary NAICS code, “Web Search Portals and All Other Information Services 519290,” would suggest so, but this code barely describes their operations.
For instance, the burgeoning Machine Learning industry is shoehorned into the NAICS code “541715: Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology).” This classification spans a wide array of scientific fields, from agriculture to physics. Such a broad stroke does a disservice to the specificity and uniqueness of Machine Learning endeavours and makes it particularly difficult for an agency to understand the difference between companies in this space, preventing the assessment of opportunities and strengths when developing sector policy or building a compelling marketing narrative.
Accurately authenticating the nature of a business
Herein lies our solution: Mosaic Smart Sector Intelligence, a groundbreaking innovation. Through the power of AI, and some very smart data scientists, we analyze the website of every active company within your geographic vicinity. By discerning the language these businesses use to describe themselves and employing our formidable AI model, we craft a classification that authentically reflects their core activities. Rather than relying on a limited list of self selected categories, we use the very words and terms the business uses to explain who they are and what they do – which in our opinion, is the most accurate and valid source data.
Taking this more accurate source information, we now apply the magic of AI to create topic areas. This semantic meaning is like categories but much richer and with the ability to determine how strong the similarity is between companies. By shunning the confinement of rigid classification codes and embracing semantic meaning, companies are liberated from their pigeonholes. When you seek information about a business, you can be as precise as you wish. Going back to our Machine Learning example, this semantic approach means you can now explore the realm of medical companies applying Machine Learning for innovative treatments and rest assured that our AI models will accurately pinpoint the relevant companies in any locale.
Part of the challenge with AI is that if you train a model on poor data, you will get poor results. Such is the experience with many having tried ChatGPT and found it can confidently return incorrect information. Brainnwave places significant emphasis on the “human in the loop” element, throughout the process. We carefully define specific topic areas to create accurate descriptions and keywords that clients associate with the specific sectors and businesses of interest. We carefully review the outputs generated by Mosaic to ensure they closely match the desired sector and use the output from this review to fine tune the models at multiple points.
Benefits throughout the inward investment lifecycle
Why does this matter to Economic Development & Investment Promotion agencies? The answer is multifaceted. Understanding the fabric of businesses within a locality and how this changes over time is pivotal for a host of challenges that agencies grapple with daily.
- For business attraction, identifying the types of businesses that harmonize with the opportunities and strengths of a particular locale, enables a focused strategy for attracting the right kind of enterprises.
- For sector policy development, recognizing the presence of companies in emerging sectors equips agencies with the insights needed to develop tailored sector policies and weigh the opportunities available, enhancing return on investment and nurturing industry growth.
- For business retention, pinpointing companies with the highest paying jobs facilitates targeted outreach, safeguarding valuable employment and bolstering city tax revenues.
At Brainnwave, we’re not just solving tough problems; we’re redefining the way businesses and agencies perceive and interact with data. Our Mosaic Smart Sector Intelligence is the compass guiding you toward a more confident, data-driven future.
