Digital Transformation, Innovation and The AI Dialectic

The last half-century is a rich illustration of how digital innovations drive business growth. The next phase in this cycle promises to be turbo-charged by AI to learn business outcomes at hyperscale[4] orchestrated via cloud, where the geometric growth in data powers transformations in apps, and vice versa. At FatBrain, we call this cycle the “AI Dialectic”.

Digital Transformation, Innovation and The AI Dialectic

By Peter B. Ritz and Dr. Rajarshi Das

In 1964, IBM announced S/360 computer system and showed early examples of artificial intelligence (AI) with demos for handwriting recognition and language translation at the New York World’s Fair.[2] IBM S/360 was an early general-purpose computing platform designed to drive a full range of commercial and scientific apps. Falling short of Stanley Kubrick’s hyper-intelligent if psychotic villain HAL 9000[3] in his 1968 masterpiece, 2001: A Space Odyssey, IBM S/360 became the initial member of the world’s most transformative business growth enabler. Outside of Hollywood, AI played only bit roles during the decade plus when Intel and Microsoft joined IBM in democratizing the personal computer for the business masses. This marginal role for AI ensued while the disruptive advances in client server, Internet, mobile, social and cloud drove a virtuous innovation cycle. Enterprise resource planning (ERP), customer relationship management (CRM), financial and collaboration apps also grew without significant AI impact to optimize the digital economy. Yet, the world’s business infrastructure was revolutionized and global productivity exploded.

The last half-century is a rich illustration of how digital innovations drive business growth. The next phase in this cycle promises to be turbo-charged by AI to learn business outcomes at hyperscale[4] orchestrated via cloud, where the geometric growth in data powers transformations in apps, and vice versa. At FatBrain, we call this cycle the “AI Dialectic”.[5]

The latest turn in this Dialectic revolves around software that learns rather than counts and fundamentally aims to automate the scientific process[6]. These principled innovations are driving a radically different way to use software, dubbed machine learning (ML) and business AI[7]. At their core, business AI services package algorithms with modern architectures to enable enterprises to make predictions and recommendations, to process images, speech and natural language, to infer optimal strategies and learn outcomes without the legions of PhD cloud engineers and data scientists, obviating the associated costs and hiring hassles.

Just as the last century’s IT systems revolutionized productivity, so the combination of AI, big data and cloud will transform[8] not only how enterprises develop apps, but also how they achieve business outcomes and overtake competitors. The data geometry and scale connecting the millennial world are breaching the hardcoded limits of enterprise IT systems unable to cope with real-time, “celebrity treatment” customer experience demands. Multi-trillion dollar markets comprising digital transformation enabled by the business AI services are up for grabs[9].


Data, compute and software have been evolving in a geared push-pull relationship since the 1960s. Driven by markets and science, innovations in these systems have made computing cheaper and faster. These shifts subsequently spark modernization in app architectures and customer experience, which in turn fuel optimizations in infrastructure and devops fabric to support the new app paradigms at hyperscale.

The figure above highlights how the app architectures evolved from mainframes and monolithic apps to open systems in the 1990s, triggering software innovations comprising client-server as well as N-tier design with web front-end, business logic modules, app server middleware and database back-ends. In 2000s, virtualization further drove IT makeover, enabling businesses to share compute between apps and laying the foundation for public and private clouds. Recently, the microservices and container tech underpinning composable and serverless modern architectures started to enable the cloud-first/native efforts of enterprise devops transformation.

Minimal change to the enterprise workloads and data was a key success factor in virtualization and early cloud deployments. This will not work with the millennial data geometry and scale. Enterprise app development cycles take too long and cost too much because they need hard-coded rules to keep up with the firehose of unstructured onslaught of data. Outside the enterprise comfort zone, hyperscale giants such as Google, Amazon, Facebook and Microsoft are leading the way to commercialize AI, forced to meet their own needs for scale and speed via internal R&D efforts, open sourcing the results such as Google’s Tensor Flow[10] deep learning.

Practical AI initiatives for the enterprise

What will the transition to business AI thinking[11] mean in terms of practical steps towards digital transformation and innovation for the enterprise? The strategic corporate push by Google into the “AI-first” cloud gear[12] is a strong signal that an arms race is under way to capture the cognitive enterprise markets, where other contenders include AWS and IBM Watson at the AI-friendly cloud level, as well as Palantir leading the usual cadre of consultants aiming for the professional services and systems integration business. Significantly, none of these players control a critical tech toll point[13] – rather, value resides in orchestrating and packaging business AI thinking to marshal the millennial data geometry to continuously effect business outcomes. This all sets the stage for a new wave of software services purpose-built for the emerging reality. At FatBrain, we use the term “Structured Theme Substrates” or STS[14] to describe the family of Cognitive Theme technologies underpinning these innovations. Here are some early examples of using Theme tech to get started and to operationalize business AI thinking within the enterprise.

The figure above illustrates a classic enterprise goal of attaining lifetime loyalty from clients during their customer journey and beyond. FatBrain’s STS services enable any enterprise to quickly and cost-effectively deploy a principled way to understand and rank one or more areas of the journey e.g., churn risk or spending trends. Moreover, over time and as driven by business priorities, other sources of business data independent of its geometry or scale may be transitioned onto the same common STS denominator. This means principled, automated and strategic decision-making which spans both “what is” and “what if” to drive the desired business outcomes, neither changing or refactoring existing enterprise software nor using an army of T&M consultants.

Eyes on the AI prize

Prior phases of the AI Dialectic have given rise to new sets of companies with significant market clout due to productivity and technology differentiation. We predict this cycle will yield similar results. The opportunity is now for many leading enterprises and technology innovators to engage with business AI thinking to purposefully and strategically take advantage of the millennial data geometry and its corresponding customer demands. This is when the most enterprise value is created. We’ve all seen such trends sustain disruptive growth before: the open systems movement; the commercialization of the Internet; the virtualization and cloudification of enterprise IT.  Now the multi-trillion dollar fabric of business transformation itself is in play—and the opportunities couldn’t be more exciting.


[1] Peter and Rajarshi are co-founders at FatBrain, LLC, a cognitive cloud services company based in New York City, commercializing innovative applications of linear algebra on concepts to drive business outcomes (

[2] Luke Dormehl, Thinking Machines: The Quest for Artificial Intelligence — and Where It’s Taking Us Next (2017)

[3] Aisha Harris, Is HAL Really IBM? Slate’s Culture Blog, Slate (January 7, 2013),

[4] See, FatBrain’s blog post “Google’s GCP Next Signals Hyperscale AI for the Enterprise: Modern Enterprise Architecture means Software that Learns Business Outcomes,” highlighting Google’s long-game corporate commitment to enterprise, poignantly and pointedly reaffirmed by its executive chair Eric Schmidt, in the keynote address (March 26, 2017)

[5] The approach was inspired, in part, by Karl R. Popper’s “Conjectures and Refutations,” Routledge & Kegan Paul, London (1963), p 312-355, first published in Mind N.S., vol. 49 (1940), as well as a presentation by Kathryn Hume at NYU Future Labs AI Summit (April 5, 2017) and a thoughtful paper by Peter Wagner and Martin Giles, “Microservices, Containers and The Digital Dialectic”,, (2016)

[6] At least one ancient meaning of Dialectic goes back to Plato, reflecting a ‘scientific method’ used to construct explanatory theories and the critical discussion of these theories to account for the empirical observations. Id, Popper, fn. 4

[7] We distinguish business AI from general AI, compare for example Netfilx’ movie recommendations (business AI) vs. HAL in 2001: Space Odyssey, Ibid., and in ex-Machina (general AI)

[8] Matt Turck reaches a similar conclusion in Firing on All Cylinders: The 2017 Big Data Landscape, “With the killer combination of Big Data and AI, we’re heading towards the “harvesting” part of the cycle.  Beyond all the hype, the possibilities are enormous.” (April 7, 2013),

[9] CB Insights, State of AI Report, e.g., quoting Andrew Ng, former Chief Scientist at Baidu and co-founder at Coursera, “Just as electricity transformed everything almost 100 years ago, I actually have a hard time thinking of an industry that AI will not transform in the next few years.” (March 2017), see, also, Id. Turck

[10] Google Research Blog (Nov 9, 2015),, see also,

[11] The term ‘business AI thinking” or BAIT is inspired in part by Twilio CEO Jeff Lawson’s 2016 AWS (re) Invent Keynote presentation, alluding to the next generation of Design Thinking (see, e.g., IDEO Tim Brown’s Jun 2008 HBR eponymous article), which Lawson coined as Software Thinking, explaining it means “using software to build a competitive advantage in business”

[12] See Ibid fn. 4. See also, Ibid, CB Insights, State of AI Report and Id. Turck

[13] This, as expected, generally parallels the dynamics of the open source and cloud-native movements in modern architecture app development cycle

[14] Themes bind words and behavior into signals and insights based on billions of web pages and decades of search intent, reflecting digital pathways of transactions and engagement, while also enabling a principled monetization of hyper-personal narratives by brand, goal, category, or demographics.

Digital Transformation, Innovation and The AI Dialectic