An ungoverned AI is like a chaotic, unpredictable forest. To achieve consistent business value, AI must be 'farmed'—a process of applying governance, organization, and boundaries to cultivate predictable results. This regulated approach is key to harnessing AI for reliable revenue generation.

AI's primary value in pre-buy research isn't just accelerating diligence on promising ideas. It's about rapidly surfacing deal-breakers—like misaligned management incentives or existential risks—allowing analysts to discard flawed theses much earlier in the process and focus their deep research time more effectively.

CPP Investments is tackling AI by first focusing on organizational fluency. They deployed LLMs and training to all employees to foster grassroots adoption and find operational efficiencies. They admit it's 'TBD' whether AI can improve investment decisions, prioritizing a solid foundation of user capability over immediate, high-stakes applications.

An investment team intentionally prohibits using AI to draft the core thesis of an investment memo. The act of thinking through and articulating the risks, potential pitfalls, and core bets is a crucial part of the human investment process that should not be outsourced to a machine.

As AI use matures, the critical task is no longer just picking the best model. It's building a sophisticated internal architecture—including routers, monitors, and guardrails—to manage costs and route tasks effectively, treating AI as a system to be engineered.

Businesses are unlikely to use powerful AI simply to shave a few percentage points off their software spend. The real, high-impact ROI comes from applying AI to improve core business operations, making the actual business more effective and efficient.

For a large asset manager, the most immediate ROI from AI comes from automating repeatable operational work like RFPs and client commentary. This frees up human capital for higher-value strategic tasks, demonstrating that AI's initial impact is often on efficiency rather than core investment decision-making.

To adopt AI without sacrificing accuracy, BlackRock established a "first draft principle." AI can generate the initial version of any document—from client presentations to prospectuses—but it must then pass through the rigorous, multi-layered human review process already in place, ensuring control and quality.

Aggressively adopting AI without guardrails leads to low-quality "slop." AI should be a component that serves a broader strategy, not the entire strategy. It is a powerful tool for informing and consulting, but human judgment remains critical to curating quality outcomes and preventing an increase in remedial work.