The Blog

  • September 27, 2016
  • AI’s moment

    halThere’s lots of talk pro and con these days about bots, AI, and intelligent assistants. A lot of this talk is not necessarily new; it’s been percolating around the industry for decades. Vinnie Mirchandani, a friend and truly gifted analyst, wrote a book recently, Silicon Collar that accepts that this automation might be eliminating jobs but optimistically holds out for the silver lining. Mirchandani firmly believes and documents how businesses and individuals are taking advantage of an opportunity to build new human mediated processes (and jobs) that leverage intelligent systems.

    Another friend, Esteban Kolsky who is also a gifted analyst, says not so fast. Like many of us Kolsky has seen this movie before. He points out that adoption has been painfully slow—so slow in fact that AI fails what I call the Gates Test. You might recall that Bill Gates once said that we over-estimate what we can do in two years and underestimate what we can do in ten. Indeed, the gestation period for an overnight success seems to be ten years these days.

    But as Kolsky points out in a recent post, “The latest survey, to be shared at Dreamforce 2016 and published soon thereafter, says that from the single digits in adoption they enjoyed for the entire 2002-2012 decade we are seeing adoption nearing 15% now for automated bots and intelligent assistants.” Slow indeed. What’s been holding things back has been a lack of two things: 1) not enough computing power and 2) a clear need.

    We can all think up scenarios where a little help from something with AI embedded might be good but on closer inspection we realize there are other ways to get the job done. AI is a heavy lift, or at least it was once. Back when the working models of AI were set down, computing power was not up to the job but really fast processors, multiple cores, flash memory, and the cloud have made it possible to concentrate the power needed to drive AI. But this still leaves us with finding a clear need.

    I offer the following analogy: we live in a spreadsheet-dominated world with a linear mindset but we are moving to a world where the lines are anything but straight. To make sense of curved lines you need calculus. It’s calculus, especially the integral variety that tells us what’s going on in a process that has plenty of funky ups and downs. In the spreadsheet era, which I firmly believe is ending or at least transitioning, we searched for averages and made straight-line derivatives from them.

    This led to some dumb ideas like calculating what an average deal is and trying to fit all deals into it as if it were a straight-jacket. It also harkens back to the statistical awakening in the 19th century when the term “average man” first came into use. The average man is a fiction but a highly usable one that gives us a basis for modeling.

    But when you go for an average you have to ignore some profitable outliers or other things that don’t fit your model. In the age of business by transaction, the straight-line model was good enough. Nonetheless over most of this century so far, we’ve seen that model become less effective as the vendor-customer relationship moved toward the micro-transactions of subscriptions. A straight-line model doesn’t work very well in subscriptions because at a micro level all transactions look the same. It’s only when you expand your view that you can see the micro-transactions that show trends that might be good or bad. As a result we’ve been left without a model.

    A model for the vendor-customer relationship that works involves calculus, at least at the metaphorical level. Calculus gives us the flexibility to model many variables involving customer demographics, purchase history, life-cycle stage, and of course the transaction before us.

    I think many people in business have a working appreciation of all this, though they are certainly still in the minority and this is where AI comes in because I see its algorithms as calculus in a box. AI gives the average businessperson who has no interest in calculus, or who might have studied it decades ago, the ability to apply more sophisticated modeling to increasingly complex business.

    So this is a long-winded attempt to say that at last we have a clear need for AI as well as the horsepower to run it. The need is all around us and if you’ve ever caught yourself wondering at how sophisticated business and our supporting systems have become, you’ll likely be grateful that there’s a new weapon in the arms race.

     

     

    Published: 1 year ago


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