“Last month, revenue went up, but gross profit went down. What happened?” “Who are our least profitable customers, how much are they costing us and what can we do to improve their profitability?” “Which investments should we make?” “What are the chances of our running out of cash next quarter and how can we reduce that risk?” “Should we acquire company X or Y?”

Business leaders want answers to these types of questions, and many more. Imagine if you could ask these questions of a computer-based intelligent system, aloud, in plain English language, and get answers in spoken plain English language in addition to conventional practice?

What if the intelligent system had a detailed understanding of your business model and held financial, operating and marketing data down to an atomic level?

What if the system could “read” and understand thousands of relevant documents, images and videos and relate that information to the questions you ask?

What if the intelligent system applied advanced analytics to all of that data to help figure out what might happen in the near future and what the best options might be to follow?

What if the intelligent system could learn? What if you could teach that system what your special business terms mean, what different processes and outcomes mean in your business context and what is important?

Imagine if the system could actually learn by itself and get smarter and smarter with each interaction?

While all of this may sound like a science fiction movie plot, all of the requisite technologies are advancing at such a pace that intelligent systems are emerging to herald a new dawn on a fresh competitive landscape.

The fast-growing cultural adoption of data-driven business decision-making is making artificial intelligence the new frontier of competitive advantage. Of course, the 50 year old adage of “garbage in, garbage out” has never been more relevant. Many firms have “polluted” data which must be cleaned before intelligent systems can be effective.

Business leaders, when they understand the power of advanced analytics, enhanced by artificial intelligence and made eminently useful by the ability to converse with natural English questions and answers, quickly recognize the extraordinary value to be captured.

Leading-edge firms are adopting these systems to seize competitive advantage. The competitive gains are potentially exponential, meaning that the benefits will be slow to see initially, but will then soar up the vertical section of the curve, creating big winners and leaving big losers in their wake.

Does this mean that artificial intelligence will replace business leaders any time soon? Of course not. No computer can motivate a team, empathize with unhappy customers, grow talent, negotiate a deal, develop a vision for the future or think creatively.

Business leaders will benefit in at least two important ways.

Firstly, they will be able to ask good questions. The answers provided will be well reasoned and explained in terms they understand. Many executives are not familiar with advanced analytics and “big data”, so complexity can be rendered into more simple, understandable outcomes.

Secondly, an intelligent system will likely know that you have a problem long before traditional reporting tells you so. This allows a rapid response to attack exceptions.

After years of promise and hype, the confluence of advances in several technologies, including computational speed, advanced analytics, machine learning and natural-language processing means that computers are now becoming capable of doing work that was previously thought to be limited to humans.

Computational capability continues to dance to Moore’s “law”, doubling performance every eighteen months or so, for the same investment. Cloud computing has put supercomputer processing power at the end of a credit card.

With machine learning, you give the system some examples and it figures out the rest, creating knowledge-based “building blocks” as a result. The more you use and refine such an intelligent system, the better it becomes, and the wider the gap that may be created between you and your competitors.

The phenomenal growth in the number of sensor devices, connected to the Internet and communicating wirelessly, help to power the tracking of every dollar and every minute of usage of every resource, whether machine or human, thus generating internal “big data” for the system.

Natural language communication, illustrated by Apple’s Siri and Google’s Now, enable a conversational relationship with the intelligent system.

Intelligent systems may also be described as cognitive computing. Cognitive computing deals with complexity, uncertainty and ambiguity. By comparison, expert systems are effectively hard-coded with pre-determined answers to questions. Cognitive computing acts more in the way that humans do, learning from experience, building knowledge and adapting to new information.

Unlike traditional artificial intelligence, cognitive computing involves humans and computers working together to extend what either one could do alone.

The current exemplar of cognitive computing is IBM’s Watson, whose storied lineage of chess championships and Jeopardy!-winning feats have progressed to a cognitive computing cloud service which is now available to power the intelligent systems described above.

In essence, intelligent systems empower business leaders to almost always do better than they could without them. While the value proposition may initially seem far-fetched, visionary leaders know that the speed of technology advances compels early adoption to gain a new competitive advantage that will be very difficult for laggard competitors to match.

Published in the National Business Review, November 14, 2014

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