Artificial intelligence or “AI” is transforming business. But technical jargon often makes AI hard to understand for non-experts. This article explains AI and its real-world impacts in plain English so leaders can make informed decisions.

What is AI Exactly?

AI refers to computer programs that can perform tasks that normally require human intelligence. Key examples include:

  • Seeing patterns in data to make predictions
  • Understanding and generating human language
  • Recognizing images and objects
  • Automating routine physical and mental tasks

So AI is software that can simulate abilities like learning, reasoning, perception, communication and action. Its skills are limited compared to humans. But AI exceeds people on narrow tasks like calculating huge numbers or remembering billions of facts.

How Does Machine Learning Work?

A major type of AI is machine learning. This means software that improves its abilities based on experience, without needing humans to explicitly program rules.

For example, a machine learning program can study thousands of x-ray images to learn how to spot lung cancer. The more images it reviews, the better it becomes at recognizing cancer automatically in new x-rays.

So machine learning mimics how people learn – by studying examples rather than memorizing rules. This approach is faster and more flexible than having programmers code every scenario by hand.

What Can AI Do for Business?

AI offers many benefits for companies:

  • Review documents and data much faster than people
  • Respond to customer questions 24/7 through chatbots
  • Translate languages instantly during international calls
  • Spot signs of equipment failure before breakdowns happen
  • Recommend products based on individual shopper preferences
  • Forecast future sales more accurately using past data patterns
  • Optimize scheduling and logistics as conditions change

These applications save costs, boost sales, and improve services by automating manual work and enhancing decisions.

What Are the Risks and Challenges?

However, AI also comes with major risks and difficulties:

  • AI can perpetuate biases if historical data is unfair
  • Transparent AI design is needed to build trust
  • Massive amounts of data are required for best results
  • Specialized skills are scarce to build and run AI systems
  • Integrating AI into existing tools and processes is complex
  • Continued monitoring for accuracy and ethics is essential
  • Job losses from automation require transition planning

Managing these issues takes diligent work and long-term commitment. Leaders cannot simply buy AI products and expect immediate benefits. But risks can be mitigated through responsible practices.

How Should Leaders Guide AI Efforts?

To maximize success, leaders should:

  • Clearly explain the business goals AI projects must meet
  • Be realistic about timelines, costs and capabilities
  • Support collaboration across teams to improve data, practices and adoption
  • Promote transparent AI design and monitoring for fairness
  • Plan to adapt as models interact with the real world
  • Listen to concerns and communicate changes thoughtfully

With pragmatic expectations and sound strategies, AI can transform businesses for the better. Leaders who invest wisely while proactively managing risks will turn AI into a competitive advantage.

The Future with AI

AI adoption is still early, with huge progress ahead. Forward-thinking leaders have a tremendous opportunity to position their companies for success in an AI-powered world. By maintaining a clear-eyed perspective on the technology, companies can steer their AI journey in a direction that benefits both business and society.