Human (in the loop) lives matter
What is a Human in the Loop? Why does it matter?
Welcome to the first ever newsletter on AI in SMB Finances.
Disclaimer: No part of this newsletter is edited or scripted using ChatGPT. We’re 100% human.
The Concept
HITL (Human in the Loop). Think of it like this, you ask AI to review your financial statements, so it finds all the mistakes, drafts up the solutions to those mistakes, and PAUSE. This is where you, the human, jump in and double check what are those mistakes and what are those solutions before implementing them.
Now it’s important to recognize that anything that has a high cost of error will always need to have a human in the loop. It’s okay if your Grade 12 essay on Shakespeare misses a point, but accidentally missing a point on validating a customer invoice that accounts for 70% of revenues in an audit is a whole other ball game.
Key 1: Anything with a high cost of error needs a human in the loop
The “Why does this matter?”
As you can see, this is super important, because just like Junior Accountants would do the work and the Senior Partners would review it before finalizing it to the client, the human is now the Senior Partner.
There’s a few main reasons why this matters:
Accuracy - of course AI is not always right, many times it hallucinates an answer, which by the way humans do as well, we just call it “bullshit” not hallucination.
Feedback Loop - think of this a little like training, when the Junior Accountant brings you a file, you are able to walk through review notes with them, essentially guiding them through their mishaps and they (hopefully) adapt to your preferences and logic for the next time around.
Judgement - this is where humans get paid, and will continue to get paid, the big bucks. Understanding context, nuances, social cues and making the right decision accordingly is why a human in the loop is important.
So, what now?
To keep with the same example, essentially this is where you provide the value as the human and AI cannot take your job. You control the AI and create the workflows around what they can and cannot do and most importantly: where you the human come into the workflow and check things before it moves forward.
Key 2: Remember that AI is simply a smart, little minion you still need to command, control and flow at your whim
Something you can do right now:
Write down the biggest tasks that you do on a daily, weekly and/or monthly basis
Find the one you hate the most, then draw out the process from start to finish. I mean you shouldn’t forget any specific item, even if it’s a click of a button or an email reminder to a manager, write out the entire process.
Now it’s time to see which of these can be done by AI and which can be done by you, the human. Pro tip: any low risk, tedious task definitely put AI on it, anything high risk of error put yourself in the loop at the very least. I’m not saying AI can’t do high risk items, but as long as you get to see the final product before it going out the door, you’re setting yourself up for success.
Then build the workflow!
Then test the workflow!
Then implement the workflow!
Then ask your boss for a 20% raise!
A picture is worth a thousand words, so here’s my best non-AI drawing at a workflow that involves a HITL:
Stay intelligent, not artificial.