What is AI?

Artificial intelligence, in the way most people use the term today, refers to software that can read, write, and reason about text. That is it. No sentience. No consciousness. Just very capable software.

What large language models actually are

The AI tools you hear about - ChatGPT, Claude, Gemini - are built on something called a large language model (LLM). Here is what that means in plain terms:

An LLM is software that was trained on enormous amounts of text. Books, articles, websites, code, conversations. Through that training, it learned patterns - how sentences work, how ideas connect, how to answer questions, how to follow instructions.

When you type a prompt, the model generates a response word by word, drawing on those patterns. It does not “know” things the way a person does. It predicts what text should come next based on what it has learned.

What AI does well

Summarizing - Paste a 50-page contract and ask for the 5 biggest risks. You will get a useful answer in seconds.
Drafting - First drafts of emails, proposals, reports, job descriptions. Rough but fast.
Analyzing - Finding patterns in data, comparing options, spotting inconsistencies.
Translating - Between languages, but also between formats. Turn meeting notes into action items. Turn a spreadsheet into a narrative report.
Brainstorming - Generating options, alternatives, and angles you had not considered.

What AI cannot do

Make decisions for you - It can lay out options. The judgment call is yours.
Guarantee accuracy - LLMs sometimes generate plausible-sounding nonsense. Always verify anything critical.
Replace expertise - AI is a tool for experts, not a substitute for them. A good accountant with AI is powerful. AI without the accountant is dangerous.
Access your systems - Unless specifically connected, AI cannot see your files, your CRM, or your bank account. It only works with what you give it.

The right mental model

Think of AI as a capable assistant. Fast, tireless, surprisingly good at many tasks, but not infallible. It works best when a knowledgeable person directs it, reviews its output, and makes the final call.

The businesses getting the most from AI are not the ones replacing people. They are the ones giving their people better tools.

Check your understanding

Software trained on enormous amounts of text - books, articles, websites, code. Through that training it learned patterns, and it generates responses word by word by predicting what text should come next. It does not “know” things the way a person does.

Any three of: summarizing long documents, drafting first versions of emails and reports, analyzing data for patterns, translating between languages or formats, and brainstorming options you had not considered.

LLMs sometimes generate plausible-sounding nonsense, and they cannot guarantee accuracy. AI works best when a knowledgeable person directs it, reviews its output, and makes the final call.

Next steps

See where AI fits in your business: AI for Your Business