THE AI ADVANTAGE Management on the Cutting Edge Paul Michelman, series editor The AI Advantage: How to Put the Artificial Intelligence Revolution to Work, Thomas H Davenport THE AI ADVANTAGE How to Put the Artificial Intelligence Revolution to Work Thomas H Davenport The MIT Press Cambridge, Massachusetts London, England © 2018 Thomas H Davenport All rights reserved No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from the publisher This book was set in Stone Serif by Westchester Publishing Services Printed and bound in the United States of America Library of Congress Cataloging-in-Publication Data Names: Davenport, Thomas H., 1954- author Title: The AI advantage : how to put the artificial intelligence revolution to work / Thomas H Davenport Description: Cambridge, MA : MIT Press, [2018] | Series: Management on the cutting edge | Includes bibliographical references and index Identifiers: LCCN 2018014665 | ISBN 9780262039178 (hardcover : alk paper) Subjects: LCSH: Artificial intelligence Economic aspects | Artificial intelligence Industrial applications | Technological innovations Economic aspects Classification: LCC HC79.I55 D369 2018 | DDC 658/.0563 dc23 LC record available at https://lccn.loc.gov/2018014665 10 9 8 7 6 5 4 3 2 1 Contents Series Foreword Preface vii ix Artificial Intelligence Comes of Age—Slowly AI in the Enterprise 23 What Are Companies Doing Today? What’s Your Cognitive Strategy? 39 61 AI Tasks, Organizational Structures, and Business Processes 99 Jobs and Skills in a World of Smart Machines 129 Technical Approaches to Cognitive Technologies Managing the Organizational, Social, and Ethical Implications of AI Notes 199 Index 219 171 149 Series Foreword The world does not lack for management ideas Thousands of researchers, practitioners, and other experts produce tens of thousands of articles, books, papers, posts, and podcasts each year But only a scant few promise to truly move the needle on practice, and fewer still dare to reach into the future of what management will become It is this rare breed of idea — meaningful to practice, grounded in evidence, and built for the future — that we seek to present in this series Paul Michelman Editor in chief MIT Sloan Management Review Preface I’ve been interested in artificial intelligence for a long time In 1986, for example, I was head of a technology management research center called PRISM (Partnership for Research in Information Systems Management) Working closely with the late MIT professor and business reengineering guru Michael Hammer, we researched a variety of topics that year, but I was particularly excited about one Called “Expert Systems: Prospects and Early Development,” it addressed the fast-growing area of artificial intelligence (AI) — the precursor term for what is often called “cognitive technologies.” Expert systems were the AI technology that most excited businesses at the time PRISM had fifty or so large corporate sponsors, and many of them had expert system pilots The technology seemed ready for prime time All around the Kendall Square neighborhood of Cambridge, Massachusetts, where I worked, the excitement about AI was palpable My company, Index Systems, was primarily a consulting firm, but we had just spun off a startup, Applied Expert Systems (Apex), to develop an expert system for financial planning Next door, MIT started the Computer Science and AI Lab (CSAIL), which continues today Just down the street from my office was the headquarters of Symbolics, the leading company that built dedicated Lisp (a programming language well suited to AI applications) machines As something of an aside, I remember reading on March 15, 1985, that Symbolics had just registered the first internet domain name — ​ Symbolics​­.com Over the decades I remained interested in the technologies and how companies were using them During the 1990s and early 2000s I was