Adapted from an interview with Dr. Joe Sutherland, by Alex Detmering, Basis Technology
In this interview, the conversation revolves around the transformative impact of artificial intelligence (AI) on businesses, focusing on how it can lower costs and increase revenue. Dr. Sutherland shares insights from his experiences, emphasizing that while AI is not set to replace human roles entirely, its capacity for advanced prediction and decision-making is revolutionizing various industries.
Key Points:
- AI’s Role in Prediction: At its core, AI excels in prediction, a fundamental aspect of decision-making, whether for minor daily choices or significant business strategies. By improving the accuracy and speed of predictions, AI aids individuals and businesses in making more informed decisions.
- Reducing Costs: AI significantly lowers business costs by automating routine decisions and tasks, thereby enhancing efficiency. Dr. Sutherland recounts an example where an AI system outperformed a team of six in document classification, showcasing how AI can deliver superior results more cost-effectively.
- Enhancing Revenue: Beyond cost reduction, AI contributes to revenue growth by enabling better strategic decisions. It analyzes vast datasets to uncover insights and opportunities that might otherwise be overlooked, supporting businesses in making optimal choices.
- The Challenge of Data Interpretation: While AI can process and analyze extensive data, discerning meaningful relationships from spurious correlations remains crucial. Ensuring scientific rigor in AI’s application is essential to avoid drawing incorrect conclusions from its analyses.
- Strategic Business Opportunity: AI is not just a technological tool but a strategic business asset. Early adopters gain a competitive edge by streamlining processes and identifying new opportunities. However, integrating AI into business operations requires organizational coordination and a strategic approach.
From the interview…
There’s a moment that everyone has when they’re in the middle of a technological revolution and they realize it. You can imagine the first Model T’s rolling out of factories and onto streets having this kind of unique effect on onlookers as an idea took shape: Horses, once the foundation of personal transport, would never truly be needed again.
Not that long ago, I had a similar realization. When I was in graduate school, I worked for a startup that transformed central bank communications into tradable information. To do this, we built an AI system that analyzed the historical relationship between the Federal Reserve’s or the Bank of England’s language and market pricing. The AI then used that analysis to forecast how future communications would impact markets.
Sometime during this process, I was struck by the larger implications of our work: AI could now do higher level processes—something that once only a Ph.D. could do—only cheaper, faster, and (to be honest) with less ego.
The point here isn’t that AI will take over white collar work. That would require another order of technology—artificial general intelligence (AGI)—and we’re not even close to that. The point is that AI has arrived, and it presents a powerful value proposition we’re only beginning to understand.
That said, the broad strokes of its impact are known. AI excels at prediction, and, as the technology is adopted by industry, it’s going to profoundly reduce the costs entailed in running a business while creating opportunities that significantly boost revenue.
Prediction: The Core of the AI Value Proposition
Prediction is fundamental to human activity. Every choice we make requires that we make a prediction about what the outcome of that choice will be. For example, life comes with quite a few big decisions: Whom should I marry? Where should I go to school? Which house should I buy? When making these big decisions, we first predict the potential outcomes, and then we try to make the choice that brings us to the best outcome. […]
