Generative AI for business

It didn’t take long for Tom Fishburne’s cartoon to come true: Generative AI is increasingly treated as a magician’s trick. Most tricks aren’t really useful or truly “real,” yet they remain entertaining until we figure out, often the hard way, how the illusion is performed.

My conversations show that some executives are cautiously optimistic, integrating only what is truly useful into their business processes and project workstreams, while others are applauding the tricks and wanting more. The former group is already AI-literate, using machine learning and algorithms to augment and automate processes in the broader, more accurate definition of AI. The latter, more easily impressed group, seems to lack this foundation.

We can expect that more of the applauding executives will eventually join the cautiously optimistic ones once the magic show ends and we move past the peak of the hype cycle.

A history of LLMs

This is an (almost) complete picture of LLMs, highlighting the underlying math for probability calculations. It’s a great companion for the 64-picture visual summary I curated for a talk earlier this year.

Good reminder that “Life’s most important questions are, for the most part, nothing but probability problems.” Pierre-Simon Laplace in Théorie Analytique Des Probabilités

Using LLMs for text extraction

I once quoted Abraham Maslow in my note “Using predictive modeling as a hammer when the nail needs more thinking“, a problem that has since eased as focus shifts to causal modeling and optimization.

Now, if the problem is extracting handwritten digits from a PDF or an image, what’s the solution? I guess good old reliable OCR? There is nothing generative about extraction, so using an LLM may be moot, if not actively detrimental (due to hallucinations). OCR is widely available through cloud like AWS Textract and Google Cloud Vision, some of which also offer human validation.

Instead, the Reuters team intriguingly chose the shiniest hammer, an LLM, to extract data from handwritten prison temperature logs. They uploaded 20,326 pages of logs to Gemini 2.5 Pro, followed by manual cleaning and merging. One big problem with this approach is the inevitable made-up text (hallucinations), which required the team to hand-code 384 logs.

So why not OCR but an LLM? All I can think of is, LLMs may be useful in extraction when the text is highly unstructured and contextual understanding is needed, neither of which seems to apply here. Surprisingly, the methodological note doesn’t even mention OCR as a solution.

Putting the tool choice aside, though, Reuters asks an important question here: “How hot does it get inside prisons?” and the answer is “Very.” I applaud the effort and data-centric journalism, and I recommend reading the story.

Credit for the image goes to Adolfo Arranz.

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New Data Duets post: A look back to look forward

How do you get to new ideas when data is always looking back?

In this latest Data Duets post, we discuss a case from United Airlines and share five key lessons from an interview with Patrick Quayle, Senior VP of Global Network Planning.

The post explores how to go beyond historical data by using:

  1. Transfer learning and clustering
  2. Data triangulation (Spoiler: HBO’s White Lotus informs a business strategy here)
  3. More frequent experimentation
  4. Real-time falsification of new ideas
  5. Combining data science with the art of creativity

Our Director’s Cut expands the discussion to offer insights for retail merchandising.

Enjoy the read and feel free to leave your comments on LinkedIn here.

You’re absolutely right!

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This is so hilarious I had to share. A major issue with using LLMs is their overly obsequious behavior. They aren’t much help when I’m right; I don’t want to be right, I want to be corrected.

This project uses a Python script to count how often Claude Code says you’re “absolutely right.” The script doesn’t seem to normalize the counts by usage, which might be a good next step.

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Student learning with LLMs

In January, I wrote a short note based on one of my talks: “How to use LLMs for learning in 2025.” In that note, I differentiated between using LLMs (1) to learn and (2) to do. With the new semester now underway, I’ve checked some usage numbers and read the Ammari et al. (2025) paper on how students use ChatGPT. I was particularly interested in the second RQ: “Which usage patterns correlate with continued or increased reliance on ChatGPT over time?”

An over-reliance on any tool, regardless of what it is, is a potential red flag for persistent learning, especially when the goal is comprehension. For example, understanding derivatives and calculating them using a computer are two distinct learning objectives. If the reliance on a tool substitutes for understanding, long-term implications may not be a net positive.

The article does not really answer the reliance part of the question. It does, however, report some interesting correlations between LLM behavior and student engagement. Notably, when ChatGPT asks for clarifications, provides unintended or inconsistent answers, or communicates its limitations, students are less likely to continue using it.

Plausible, but what these correlations mean for learning and comprehension is unclear. What is the next step after disengagement? Do they switch to another LLM to get a direct answer without having to answer follow-up questions, or do they go back to figuring it out on their own?

Class of 2029, I guess the answer lies with you. Welcome!

SourcePaper

Using AI at work: Hype vs. reality

A recent New York Times story offers insights.

Using LLMs as a “second pair of eyes” or as a fallible assistant seems to work well. Automation also works effectively when the instructions are clear and the objectives are defined unambiguously. In both cases, human agency remains central.

Use case #15 in the article, “Review medical literature,” reminded me of a study I shared earlier (How do LLMs report scientific text?). The study showed that LLMs systematically exaggerate claims they found in the original text. The user in this case is a medical imaging scientist and is aware of the danger. When a tool isn’t foolproof, the user’s expertise and awareness make all the difference.

The high-demand use cases are quickly scaling into independent businesses with more standardized output, often with LLMs as the core wrapper. I suspect some are marketed as “magic,” and to resist that hype, users will need a combination of expertise and awareness.

AI in 64 pictures: A visual journey

If you’re a visual learner looking to deepen your understanding of AI and language models:

I’ve just made the deck from my recent talk, “AI in 64 Pictures,” available. It’s a visual journey through language processing: from word embeddings to RNNs, attention, and transformers.

Understanding AI models better helps us discover more use cases and navigate their limitations. And if you’re looking to dive deeper, you can follow the links in the slides.

AI agents and failing projects

Nearly half of all AI agent projects are set to fail (as Gartner predicts here). Why? Unclear business value, inadequate risk controls, and escalating costs.

As I see it, much of this is fueled by hype, leading to existing solutions being relabeled as “Agentic AI” without any rethinking of business processes.

Human creativity is missing in this picture. It’s this creative thinking that should move agent use beyond just automating or augmenting individual tasks with LLMs, leading instead to the redesign of business processes and a vision for how humans and AI can truly complement each other.

The risks and costs are more straightforward to resolve:

– Managers who are most excited about AI agents often do not fully understand the risks and limitations of LLMs. They should invest as much in understanding these models as they do in using them.

– The true cost of scaling proof-of-concept GenAI solutions is often underestimated. This is on selecting the right vendor. Gartner estimates only about 130 of the thousands of agentic AI vendors are real.

Everybody lies, but why?

Andrew Gelman’s latest “rant” is worth a read. Everybody lies, but why, even when data clearly refutes it?

It’s interesting to think a little bit more and understand why and how people lie, especially when it comes to scientists, medical doctors, and law enforcement officials. Spoiler is, the answer is not always money.

LLM training and fair use

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Turns out Anthropic literally purchased and scanned millions of print books to train its language model Claude.

The judge finds that the scanning of these purchased books is “fair use” even without licensing, and goes on to say:

Everyone reads texts, too, then writes new texts. They may need to pay for getting their hands on a text in the first instance. But to make anyone pay specifically for the use of a book each time they read it, each time they recall it from memory, each time they later draw upon it when writing new things in new ways would be unthinkable. For centuries, we have read and re-read books. We have admired, memorized, and internalized their sweeping themes, their substantive points, and their stylistic solutions to recurring writing problems.

This is quite interesting, as it draws an analogy between how humans read, comprehend, and write text and how a language model operates.

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How to use LLMs as coding assistants

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One way is hitting that accept button until the code works. This is like gambling: it works until it doesn’t, and you never know why in either case.

Another way is intentional use. Intentional use is:

  • Telling LLMs exactly what to do.
  • Inspecting their code, line by line, before accepting.
  • Unit testing the solution before it ever sees production.

This means treating LLMs as over-confident, lightning-fast assistants. They are incredibly helpful in boosting productivity, quickly looking things up and delivering operational code. They can search a 100-page API documentation and find a solution to your problem in seconds.

Unless we see a structural breakthrough in how language models are built, this is also the best we can have: an over-confident assistant. LLMs don’t think or reason; they achieve (shallow) deductive closure at best. While the debate over whether LLMs “think” can be unproductive, there is a practical implication: LLMs make profoundly inhuman coding mistakes.

The errors LLMs make aren’t the errors a human assistant would make, so working with LLMs takes another perspective shift. Understanding this distinction is key to effectively using them: our coding assistant is deeply inhuman.

Otherwise, LLM-driven coding will inevitably lead to more failures in data science. Expect to hear more stories about models breaking unexpectedly.

This post was inspired by the write-up “Here’s how I use LLMs to help me write code,” which nails many other crucial points. It’s worth checking out.

Using LLMs for IV discovery and data

LLMs excel at search and discovery. Why not use them to find IVs for causal models?

In a new section in Causal Book, Using LLMs for IV discovery and data, we offer a prompt template to help discover candidate IVs and their actual data. We tested it with the latest Gemini (2.5 Pro Preview 06-05-2025) and the results are promising.

This section is the latest addition to the IV design pattern chapter of Causal Book. The book itself aims to:

  1. provide solution patterns and their code implementations in R and Python,
  2. discuss different approaches to the same pattern on the same data (Statistics, Machine Learning, Bayesian),
  3. demystify some surprising (or seemingly surprising) challenges in applying the causal design patterns.

See the full table of contents here.

We’ll next dive into the regression discontinuity design pattern, which I hope will be even more fun with the newly added support in DoubleML.

How do LLMs report scientific text?

In short, by exaggerating.

It seems so convenient: when you are short of time, asking ChatGPT or another chatbot to summarise a scientific paper to quickly get a gist of it. But in up to 73 per cent of the cases, these large language models (LLMs) produce inaccurate conclusions…

Over a year, we collected 4,900 summaries. When we analysed them, we found that six of ten models systematically exaggerated claims they found in the original texts.

This prompts the question: why? My initial thought was that since these models are built to generalize, and exaggeration is a form of faulty generalization, they might actually be working as intended. This aligns with the study’s finding that LLMs are nearly five times more likely to produce broad generalizations than humans.

More interestingly, attempting to prompt LLMs for accuracy often backfires. They tend to double down on generalizations, becoming twice as likely to produce overgeneralized answers when asked to stick to the facts.

On the bright side, LLMs can quickly replace the media for reporting of science.

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What an A/B test is not

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The founder of this Shark Tank backed company (thinks he) did an A/B test on the impact of tariffs on customer behavior (demand for a showerhead): “Made in USA” vs. “Made in Asia”.

There’s so much wrong here that I’m just going to share it without comment. But one thing is clear: Outside of tech and other companies that are invested in data science, we’re still in the early days of business analytics education. When it comes to causal modeling, inference, and experimental design, we seem to be just getting started.

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AI as a disguised customer service agent

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This is ironic and offers a valuable lesson.

Cursor, an AI-powered integrated development environment (IDE), started kicking users out when they logged in from multiple machines.

I use Cursor on a daily basis, and I know how frustrating and disruptive this limitation can be for most users.

So many Cursor users rushed to email the support team to ask if this was a new policy. In response, the support team explained that this was “expected behavior” as part of a new security feature.

But, in reality, there was no support team. Sam is a bot designed to “mimic human responses.” That answer, which was completely made up by the bot, quickly went viral, and users started canceling their subscriptions.

By the time Cursor’s “real humans” stepped in, the damage was done. Here on Reddit, Cursor is doing damage control.

Pretty remarkable that the AI company got hit by the AI and no one noticed until users canceled their subscriptions in droves.

And this could have been largely avoided if Cursor had disclosed that Sam was a bot.

Agent2Agent Protocol for LLMs

Google has just announced the Agent2Agent Protocol (A2A). A2A is open source and aims to enable AI agents to work together seamlessly, potentially multiplying productivity gains in end-to-end business processes.

As I understand it, A2A is to agent communication what MCP is to tool use. At the time, I saw MCP as an opportunity to reduce frictions in agent deployment while maintaining a level of security (see here), and it has taken off since then. Google’s A2A seems to take it to the next level, providing more security in the cloud for multiple agents to communicate and collaborate:

A2A focuses on enabling agents to collaborate in their natural, unstructured modalities, even when they don’t share memory, tools and context. We are enabling true multi-agent scenarios without limiting an agent to a “tool.”

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Collapse of trust in digitized evidence

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How much longer will we have non-zero trust in what see on a computer screen?

Generative models are eroding trust in the digital world at an astonishing rate with each new model released. Soon, pictures and videos of events will no longer be accepted as evidence.

Insurance companies won’t accept pictures and videos of damage after accidents, and accounting departments will no longer accept pictures of receipts. This may be an easier problem to solve. We’ll likely develop more ways to authenticate digital files. More algorithms will verify authenticity, and companies may simply ask customers to use dedicated apps.

But the shift in public trust in digital files is less easily repairable and may even be permanent. We may be leaving behind pics or it didn’t happen for I only believe what I physically see.

No-code as a cure for understanding

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Some tasks require understanding, not just knowing how to do. Tools can’t fill the gaps in understanding. For these tasks, time is better spent learning and understanding. No-code development is useful for building without understanding, but understanding is most critical when things fail. And things fail while building products, be they data products or otherwise.

Here the user switches from Cursor (automated coding) to Bubble (a no-code tool) to address the lack of understanding, not realizing that switching tools is solving the wrong problem.

We often make the same mistake in data science, especially in predictive modeling, where a new off-the-shelf library or method is treated as a prophet (pun intended), only to find out later that it was solving the wrong problem.

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Coding vs. understanding the code

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Doing is not understanding. Even LLMs seem to know the difference.

I’ve written and spoken a lot about this (link to the talk). Naturally, the exchange here was too good not to share. Here is Claude in Cursor lecturing a user on the difference between having something coded by an LLM vs. coding it yourself so you learn and understand.

The better we separate things we need to understand from things we just need to do, the more effectively we will benefit from LLMs. We certainly can’t understand everything (nor do we need to), but it’s a good idea to avoid the illusion of understanding just because we can do it.

To paraphrase Feynman, we can only understand the code we can create.