Generative AI Is Still Just a Prediction Machine

To understand the strategic implications of AI’s new capabilities, managers need a framework for when AI will be helpful and when it might fail. Under the hood, generative AI tools are still prediction engines, enabled by improvements in computational statistics and large amounts of data. Using AI well requires understanding that today’s AI uses data to make statistical predictions and it’s up to humans to provide judgment about when and how AI should be used. This has not changed with generative AI. Its applications depend on data. Also, judgment is integral to the selection of data, the training of models, and the overall implementation.