During the hour-and-a-half or so of interview, I was asked to do a few things:
1. explain my technical background, projects I've worked on 2. explain one project in depth, from entry-point to client 3. discuss future features of that project 4. let me implement one feature in that list while they go have some coffee 5. show off my new feature!
Even though the technology I used was not the technology they use, I think my employer wanted to see how well I communicate technically, how well I understand, and how fast I can put things together. He seemed to like the fact that I had a lot of failed iterations and Googled to get through snags.
Another interview process I was quite fond of had me working on one of _their_ pet projects; looking through their code base, identifying possible improvements/features, and implementing those improvements in a new git branch.
Of course, that process may not work with EVERY technical interview, but my bet is that practical interviews like these are more likely to show an employee's technical prowess than a person simply memorizing algorithms. While I agree that there is a place for algorithms, it should not be the focus of an interview.
The example is a checkout register at a store.
They submit their example, and we review it, make notes, and when they come in, we go over it and talk about it. What we look for is the code itself and also how they explain their decisions along the way.
We find that this really paints a very vivid picture of the candidate, far more than white boarding exercises, stand behind them coding exercises or trivial bs questions.
I.e: "So you want to join our product security team and say that you know xml. How would you go about finding an exploit in an app that you can get to parse an xml file?"
And I have heard several stories from several people doing interviews, where the candidate failed this sort of question particularly badly :)
So simple questions in vein of "I see you tell us you know x, that might help you solve problem y we deal in our team often, how would you do it?"