The 5-Es of AI potential: What do executives and investors need to think about when evaluating Artificial Intelligence?

I spent last week in Berlin as part of a small international delegation of AI experts convened by the Konrad-Adenauer Foundation[1]. In meetings with politicians, civil servants and entrepreneurs, over dinners, conferences and a meeting in the Chancellery[2], we discussed in detail the challenges faced in developing AI businesses within Germany.

A strong theme was the difference between AI as a “thing” and as “component”. Within most commercial sales-pitches AI is a “thing” developed by specialist AI businesses to be evaluated for adoption. Attention is focused on what I will term efficacy. Such efficacy aligns with pharmacology definitions as “the performance of an intervention under ideal and controlled circumstances” and is contrasted with effectiveness which “refers to its performance under ‘real-world’ conditions.[3]. AI efficacy is demonstrated through sales-pitch presentations based on specially tagged data or upon human-selected data-sets honed for the purpose.

As a “component” however, AI only becomes when it is incorporated into real-world consequential and ever evolving business processes. To be effective not just efficacious, AI must bring together real-data sources in real-world physical technology (usually involving cloud services, complex networking and physical devices) for consequential action. AI “components” then become part of a complex digital ecosystem within the Niagara-like flow of real businesses rather than a “thing” isolated from it. Since business processes, data-standards, sensors and devices, evolve and change so the AI must evolve as well while continuing to meet the needs of this flow.

To be effective (not efficacious) AI components must also be:

  • efficient in terms of energy and time (providing answers sufficiently quickly as to be useful.
  • economic in terms of cost-benefit for the company (particularly as the cost of human tagging of training data can be extreme),
  • ethical by making correct moral judgements in the face of bias in data and output, ensuring effective oversight of the resultant process, and transparency of the way the algorithm works. For example resent research shows image classifier algorithms may work by unexpected means (for example identifying horse pictures from copyright tags or train types by the rails). This can prove a significant problem when new images are introduced.
  • established in that it will continue to run long-term without disruption for real world business processes and data-sets.

The final two of these Es are particularly important: Ethics because business data is usually far from pure, clean and will likely include many biases. And Established because any process delay or failure can cause a pile-ups and overflow to other processes, and thus cause disaster. In my opinion, only if all these 5Es are achieved should a business move AI into core business processes.

For business leaders seeking to address these Es the challenges will not be in acquiring PhDs in AI-algorithms but instead in (1) hiring skilled business analysts with knowledge of AI’s opportunity but also knowledge of real-world IT challenges, (2) hiring skilled Cloud-AI implementors who can ensure these Es are met in a production environment and (3) appointing AI ethics people to focus on ensuring bias, data-protection laws, and poor data quality do not lead to poor ineffective AI. Given the significant competition for AI skills, digital transformation skills and for cloud-skills [4] this will not be easy.

So while it is fun to see interesting wizz-bang demos of AI products at industry AI conferences like those in Berlin this week, in my mind executives should remain mindful that really harnessing the potential of AI represents a much deeper form of digital transformation. Hopefully my 5Es will aid those navigating such transformation.

(C) 2019 W. Venters

[1] https://www.kas.de/ also https://www.kas.de/veranstaltungen/detail/-/content/international-perspectives-on-artificial-intelligence

[2] https://en.wikipedia.org/wiki/Federal_Chancellery_(Berlin)

[3] Efficacy : https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3912314/  Singal AG, Higgins PD, Waljee AK. A primer on effectiveness and efficacy trials. Clin Transl Gastroenterol. 2014;5(1):e45. Published 2014 Jan 2. doi:10.1038/ctg.2013.13. I acknowledge drawing on Peter Checkland’s SSM for 3Es (Efficacy ,Efficiency and Effectiveness) in systems thinking.

[4] Venters, D. W., Sorensen, C., and Rackspace. 2017. “The Cost of Cloud Expertise,” Rackspace and Intel.

[5] https://en.wikipedia.org/wiki/Industry_4.0

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