Own Your Own Intelligence Before Your Vendor Learns It

Episode Summary

Speaking in September 2024, Paul Baier, chief executive of GAI Insights, makes the case that a company using someone else’s model is teaching that supplier how its business works. His example is Toys R Us, which handed its online toy business to Amazon for a few Christmases and got it back after Amazon had learned how to position and market toys; no contract was broken and decades of process knowledge changed hands anyway. He asks what the same exchange now means inside drug discovery, oil and gas refining and stock trading, and says the first job is working out which parts of a business are genuinely its own intelligence. What he recommends is not caution: he tells companies to accelerate their learning rather than their spending, to treat an AI center of excellence as a learning hub rather than a place to send the problem, and to get their boards asking whether anyone has looked at what could leak.

Key takeaways

  • His starting point is not the technology but who owns it, and he treats that as the underexamined half. Running parallel to the societal impact of AI is what he calls the unprecedented market power of the big technology firms, where he said in September 2024 that the top five or six were larger than the third and fourth economies combined

  • He puts numbers to that power and then says nothing is coming to check it. He said in September 2024 that those firms were throwing off about 480 billion dollars of free cash flow a year, with Microsoft at 2 billion a week, that there was no trust busting coming in sight, and that the technologies involved scale exponentially

  • His warning is that the thing being collected has changed, and he reaches for a pre-AI example to show it. What moves now, he says, is an understanding of processes, and his illustration is Toys R Us executives deciding nobody would buy toys on the internet

  • The point of the example is that nothing improper happened, and he says so explicitly. In three years Amazon learned how to position toys, how to sort them by age, the graphics, the communications and the coupons; no contract was broken, and decades of process knowledge had changed hands

  • He says the same question is now being asked by big companies and not just by analysts like him, about the parts of a business that are cognitively advanced. He puts it as open questions rather than as findings: what does this mean for people doing drug discovery, oil and gas refining and stock trading

  • His own framing for the problem is deliberately larger than a procurement question. Using public models makes it hard to avoid conversations with a supplier about what the roadmap should be for your own field, and in September 2024 he wanted your own intelligence, as he puts it, discussed across 194 sovereign countries, 235 million companies and 8 billion-plus citizens rather than left to regulators

  • Before he numbers anything he says the work starts with an inventory, and that some industries have already done it. Part of it, he says, is assessing what is genuinely your intelligence and your core digitally based competitive advantage; insurance companies already have advanced AI groups and have found generative AI a natural extension

  • He names the companies he thinks are most exposed and the phrase he uses for them is his own. Companies in the crucible, he said in September 2024, were those particularly at risk of revenue decline from generative AI over the following three years, and his example is law firms, most of which have never thought of themselves as a technology partner

  • The steps he numbers start here, and the first two are both in one breath. One is to have the discussion and get alignment on the delineation; two is to work out which data and which models sit behind your firewall or inside a private trust environment, and which can sit in a public cloud for cost reasons

  • His third numbered step is to ask a lot more tougher questions, and the one he supplies is about a word. Open source in a large language model is totally different from open source in Apache or Linux, where you got the full source code and every element of it

  • He expects the management problem to arrive before the technology problem is solved. He said in September 2024 that every employee would come to have a digital twin, with thirty, forty, fifty or eighty different models running, and that managing intelligence across humans and machines is a topic companies will need time even to understand

  • Asked whether companies should slow down and answer these questions first, he says the opposite, with a caveat. This is like swimming: get in the water, start at the baby pool, and accelerate your learning processes, which he is careful to distinguish from accelerating your spend

  • His cheapest suggested starting point is a real one rather than a gesture. He said in September 2024 that there was a whole slew of great products that could put a chatbot with public data on your website for under five hundred dollars and about two hours, on a knowledge base you already have

  • His analogy for organizing all this is the quality movement, and he uses it to argue against concentration. Quality needed levels of expertise, white belts and black belts, and it needed to live at the process level rather than in one team

  • His own line for the failure mode is that the work becomes his job and not my job, said of the VP of quality. He carries it straight over: an AI center of excellence read as a learning hub supporting learning across the organization is a good model, and one where all the decisions and all the learning sit in that group is not, in his view

  • Asked whether org structure changes the answer, he thinks it does not. Loosely coupled or top-down, he says it comes down to leadership: whether the leadership encourages experimentation, learning and rapid adoption. Org structure, in his view, does not solve the imperative of leadership

  • His challenge to a board is an argument by analogy, and he says he means it to be dramatic rather than controversial. He asserts it would be irresponsible for a board to hire a VP who has never used a browser, and then asks the board to accept the same standard for anyone opining on generative AI strategy who has not personally used the technology for three hours

  • His framework for boards is an acronym and he expands it on air. WINS is words, images, numbers and sounds, a subset of knowledge work, and it is meant to help an industry, a company or a job work out whether this is urgent for them

  • What he actually wants from a board is a question rather than a decision. How are we thinking about our cognitive assets, do we even know what they are, how much can be automated, how much can leak out, and he says in most cases that conversation has not started

  • His test for whether the technology has landed with someone is a phrase they start using. Hey, have you asked your robot, which he calls a good question and treats, in his view, as the critical path in moving this from parlor trick and novelty to indispensable tool

  • His closing recommendation replaces one-off reengineering with something continuous. Take every process down into subtasks and ask of each one whether the human or the robot leads, then accept that the answer may reverse six months later

About Paul Baier

Paul Baier is chief executive and a co-founder of GAI Insights, which the host introduces on this episode as the leading GenAI analyst firm. He co-wrote the Own Your Own Intelligence framework this episode is built around with John Sviokla, who is the guest on episode 34. His argument here is that the market power of a handful of large technology firms has changed what it means to buy software: a supplier processing your data learns how your business works, and that knowledge does not come back. He ran learning groups for member companies and advised boards at the time of this conversation in September 2024, and he is more interested in getting executives to use the technology personally than in getting them to read about it.

 

In this episode

00:35 Welcome, and who Paul Baier is
00:58 The question: what own your own intelligence means
01:23 Market power as the parallel story
01:46 Free cash flow, and no trust busting in sight
02:16 Toys R Us decides nobody buys toys online
02:48 What Amazon learned, and what no contract covered
03:12 Drug discovery, refining and stock trading
03:32 A conversation for countries, companies and citizens
04:11 The question: practical steps
04:34 Before the list: assess what your intelligence is
04:56 Companies in the crucible, and law firms
05:14 His steps one and two: alignment, then what sits behind the firewall
05:35 His step three: ask harder questions about open source
06:31 A digital twin for every employee
07:14 The question: slow down, or start now
07:29 Not slowing down: this is like swimming
07:34 Get in the water, and accelerate learning not spend
07:54 A chatbot for under five hundred dollars
08:31 The question: is that a fair summary
08:58 The question: an AI center of excellence
09:19 The quality movement, white belts and black belts
10:02 Learning hub or outsourced destination
10:22 The question: does org structure matter
10:38 It comes down to leadership
11:03 The question: advising a board
11:11 The VP who has never used a browser
12:20 The WINS framework
12:58 The question: should the board lead this
13:33 The board is there to ask good questions
13:42 Cognitive assets, and what can leak out
14:22 The AGI question he says boards should at least ask
15:05 The New York Times story he calls breathtaking
15:39 The question: where to learn
16:00 Living in a hurricane of change
16:47 Have you asked your robot
17:39 The question: the closing takeaway
18:19 Every process into subtasks, human or robot

In Paul’s words

“There is no trust busting coming in sight, and they are on a roll”

Paul Baier   (01:46)

“every one of our employees is gonna have a digital twin”

Paul Baier   (06:31)

“You have to get in the water and learn, and you’ve got to start at the baby pool”

Paul Baier   (07:34)

“It’s his job and not my job.”

Paul Baier   (10:02)

“the key question for the board is ask good questions”

Paul Baier   (13:33)

“how are we thinking about our cognitive assets? Do we even know what they are?”

Paul Baier   (13:42)

“we kinda gonna live in a hurricane of change”

Paul Baier   (16:00)

“parlor trick and novelty to indispensable tool”

Paul Baier   (16:47)

 

Resources

Named on air

  • Toys R Us and Amazon: His worked example from 02:16 to 03:12, of process knowledge transferring to a partner without any contract being broken

  • Llama 3: Named at 05:55 as his example of a model where the weights are published and the training data is not

  • Apache and Linux: Named at 05:35 as what open source used to mean, where you got the full source and every element of it

  • The New York Times: His attribution at 15:05 for the story he calls breathtaking, about a man with ALS able to speak with his family again

  • The GAI Insights weekly learning lab: Named at 16:28. He said in September 2024 that three thousand members took part

Ideas and terms discussed

  • Own your own intelligence: His framework: a call for countries, companies and individuals to keep control of the knowledge that makes them distinctive

  • Companies in the crucible: His term at 04:56 for firms he said in September 2024 were particularly at risk of revenue decline over the following three years, where law firms are his example

  • Free source models: His phrase at 05:55 for models published as open source where the weights are available and the training data is not

  • The WINS framework: Words, images, numbers and sounds. His tool at 12:20 for judging how urgent this is for a given industry, company or job

  • Cognitive assets: His term at 13:42 for what a board should be asking about: what they are, how much can be automated, and how much can leak out

  • Digital twin: His September 2024 forecast, at 06:31, that every employee would come to have one, alongside thirty to eighty models running in the organization

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