IESE Insight

How prepared is your business to make the most of AI?

To make the most of AI, you need to know the basics: what data do you need, and do you have the right people in place?

AI can help organizations to create new value propositions.

January 1, 2019

Artificial intelligence (AI), once the sole preserve of dystopian novels and sci-fi movies, is now a hot topic among business leaders wondering how it might transform or impact their business models. But what does "artificial intelligence" mean?

The late John McCarthy, credited with coining the term in the 1950s, defined AI as "the science and engineering of making intelligent machines, especially intelligent computer programs." But what is intelligence? And can it be separated from human intelligence?

McCarthy's contemporary, Marvin Minsky, believed this was extremely difficult, partly because "words we use to describe our minds (like 'consciousness,' 'learning' or 'memory') are suitcase-like jumbles of different ideas formed long ago, before 'computer science' appeared" and which are inextricably linked to human beings.

For our purposes, we will use psychologist Howard Gardner's definition of intelligence as "the ability to solve problems, or to create products, that are valued within one or more cultural settings." This definition expresses how AI can help organizations create new value propositions, as we will explain in this article.

A brief history of AI

In 1950, the English mathematician Alan Turing first devised a method of inquiry — known as the Turing Test — for gauging whether or not a computer was capable of thinking like a human being. The official beginnings of AI as a discipline didn't arrive until six years later, however, when a select group of scientists and academics, including McCarthy, Minsky and Nobel laureate Herbert Simon, gathered at Dartmouth College in Hanover, New Hampshire, over the course of a summer to advance a research agenda on artificial intelligence. Among their lofty ambitions was "to find how to make machines use language, form abstractions and concepts, solve kinds of problems now reserved for humans, and improve themselves."