Artificial intelligence (AI) is valuable because it captures intellectual capital.
Intellectual capital is defined as the “collective knowledge of the individuals in an organization”. Traditionally, it is the intangible value of a business.
When a company invests in professional development, conferences, and continuing education, it invests in individual employees. This only temporarily increases the intellectual capital of the team. When an employee departs from a company, the intellectual capital that person acquired, leaves with them. Unfortunately, a company loses valuable (and expensive) expertise every time an employee leaves.
AI solves this problem. AI retains intellectual capital by extracting and capturing ideas in an automated system. This ability to capture knowledge is the real power of AI.
AI is defined as the “behavior characteristic of human minds exhibited by man-made machines, and also the area of research focused on developing machines with such behavior.” Within AI exists machine learning, or the algorithms that equip software with the ability to improve over time as they obtain more data. In short, AI and machine learning acquire knowledge and continually improve.
As employees collaborate with machine learning tools, AI becomes smarter and more valuable. Since the value increases over time, AI is an appreciating asset.
The spam filter on your email account is an example of AI. Spam filters continuously learn how to categorize spam by analyzing words in messages, the sender, and where the message is sent from. As a user, every time you label a message as spam (or “Not Spam”), you teach the machine.
Or, take DealRoom’s artificial intelligence for example. Our machine is learning how to answer diligence requests in M&A processes. The machine teaches itself how to respond to due diligence requests by using algorithms and observing human behavior. Our AI continually gets better at predicting buyer concerns, identifying risks, and pinpointing deal opportunities.
AI acquires and retains knowledge beyond what a human is capable of doing. When an employee leaves a company, the intellectual capital captured by the company’s AI is not lost. This makes AI beneficial at two stages:
AI compounds in value because of its ability to teach itself (i.e. machine learning), collaborate with humans, observe examples, and make predictions based on a growing data set.
To remain competitive, you must invest in AI and machine learning early. The longer you wait to invest in AI, the harder it will be to compete with early adopters. The companies who adopted AI early, are already accumulating knowledge. AI is an investment you cannot afford to ignore.
AI captures what was once intangible organizational knowledge. In doing so, it creates something entirely new: tangible intellectual capital. You must stay ahead of the machine learning curve.
DealRoom is a secure, cloud-based M&A due diligence management platform that replaces overpriced data rooms, email clutter and manual spreadsheet trackers.