David Malcolm is President of Cal West Apartments and a community leader in San Diego with over five decades of work experience.
I need to begin this article with two important notes:
1. Some of this may be outdated as soon as it is written.
2. This was not written by a machine.
Artificial intelligence (AI) is a game-changer for many businesses, including the real estate industry, which I have been engaged in for 50 years. Its ability to crunch massive amounts of data could be hugely helpful to improve decision making, such as where to invest (neighborhoods and regions) and in what products (multifamily, single-family, commercial, mixed-use).
The latest wildfire in the AI world is generative AI, led by ChatGPT (and its newest iteration GPT-4) and the like. These are programs capable of generating original content, including text, images, audio, videos and more. What will AI and generative AI mean for the business world? Is it an inflection point or the next disruption on the scale of the smartphone?
My take is that these are tools of incredible magnitude and potential value, but they are still just tools. The wheel didn’t change the world…the wheel, coupled with human ingenuity, did.
AI is here to stay.
AI brings the promise of helping us deal with the exponential growth of data, far too much data for humans to process. At lightning speed, AI can crunch data, spot patterns and elevate our decision making—not just in real estate but almost everything—to new levels.
It can also do things that we cannot, or that would take us an inordinate amount of time. Consider the fast-growing field of cybersecurity. While consolidating huge volumes of data can also create risks for data breaches, AI can help address those risks.
AI can spot cyber threats (by seeing patterns) and then backtrack through the data field to find vulnerabilities and even “lock the door” behind it to prevent similar threats in the future.
Are there also threats that should make business leaders worry? Yes! AI making its own decisions and plans—while wandering into the realm of science fiction—is enough of a concern that the U.S. Department of Defense has committed to keeping a “human in the loop” for every action related to the use of nuclear weapons.
For the foreseeable future, we need to be cognizant that AI will need “adult supervision” to mitigate risks that only humans can be sensitive to.
How big is generative AI?
No question—generative AI is a very big deal. McKinsey Global Institute reported that it could add the economic equivalent of the U.K.’s entire GDP, most of that in just four areas. Those are customer operations, marketing and sales, software engineering and research and development. They also conclude that in a midpoint adoption scenario, “about a quarter to a third of work activities could change in the coming decade.”
Businesses of all types in all sectors are scrambling to incorporate generative AI into their processes, sometimes without fully understanding the benefits, risks and limitations.
Benefits include the ability to help us compile data from multiple sources, create first drafts (or thought starters) on almost any topic, assume mundane and repetitive tasks and act as personal assistants managing schedules, e-mails and so on.
The risks are a little more obtuse because we just don’t know that much—yet. But they include workforce disruption. Will we see massive layoffs or more training and “upskilling,” or both? Generative AI is vulnerable to “blind spots,” including built-in biases by the people who create and refine applications and a concerning lack of a moral compass. This could easily cause legal, reputational and other liabilities.
Be mindful of the real-life consequences.
Will generative AI take over all basic tasks? Here is a cautionary tale: An attorney recently submitted a brief to the Southern District of New York that included case law citations, at least six of which were cases that did not exist. Where did those citations come from? ChatGPT.
The term for generative AI making stuff up is “hallucinations.” That is a huge risk, and not just in the legal arena. Just think about the impact on business when facts are not necessarily facts!
Where do we go from here?
As I said earlier, AI and generative AI will likely be immensely valuable and change the landscape in mind-boggling ways. But AI is unlikely to become human, and that is where we need to keep some focus. Remember:
• AI is predictable. Humans are not.
• Humans are emotional. AI is not.
• Humans have insights and “aha” moments. AI does not.
• Humans build expertise over time. AI still has hallucinations.
There is no question in my mind that AI and generative AI will lead us into a brave new world that we can hardly imagine. But like a boat cruising the ocean or an airliner on autopilot, it will still need a human hand on the controls.
What should you, as a businessperson in the 21st century, do?
Recognize that AI and generative AI, like any new tech, will at first be confusing, alien and irritating. And six months after diving in, you may wonder how you lived without it. I would advise you to dip your toe in if you haven’t already and start experimenting now. For sure, your competitors will be doing that.
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