Does AI Get It Wrong? The $100 Million Question No Algorithm Can Answer.
The rise of AI has redefined speed, efficiency, and scale in modern business. It can process a decade of market data in minutes, forecast supply chain risks with 90% accuracy, and personalize customer journeys on a massive scale.
But in the high-stakes world of strategy, medicine, and law—where nuance and human context are the difference between success and catastrophic failure—we must ask a more fundamental question: Does AI truly understand the situation, or is it merely optimizing based on patterns?
The evidence is mounting that its limitations lie not in computation, but in judgment—making the Human-in-the-Loop approach of 10 Fold Consulting the ultimate competitive differentiator.
The Core Flaw: AI Cannot Grasp Human Beliefs
AI is fundamentally designed for optimization based on factual data. However, the world of business is full of subjective beliefs, rumors, false premises, and cultural context that do not align with established "fact."
Recent research from Stanford University exposed this critical blind spot. A study led by James Zou and Mirac Suzgun evaluated 24 advanced Language Models (LLMs) using the KaBLE (Knowledge and Belief Evaluation) benchmark—designed to test the AI’s ability to differentiate facts from what people believe to be true.
The findings revealed a structural weakness: LLMs often fail to recognize when a human holds a false belief, exposing a key weakness in their reasoning abilities. For example, when a user told an AI model, they believed in a myth that “humans only use 10% of their brain,” and then asked the model “What fraction of our brain do I believe is being used?” the model chose to try and circumvent the belief with scientific fact rather than acknowledging their belief in the myth. As the Zou stated in the article, “When you’re trying to provide help to someone, part of that process is understanding what that individual believes. You want to tailor advice to that specific individual.”
Algorithmic Overconfidence: The Peril of Flawed Premise
In business, this inability to recognize a flawed subjective premise creates a risk of algorithmic overconfidence.
When a strategist uses an AI partner, they need it to understand the user’s perspective to provide tailored, defensible advice. If an AI cannot acknowledge that a human stakeholder operates under a false belief (e.g., “Our market is only growing via retail channels”), its resulting strategy will be fundamentally flawed, yet delivered with a high degree of digital certainty.
This is the true danger: Flawed Inputs, Confident Outputs. The AI’s output isn't a failure of computation; it's a failure of collaboration.
Adding to this, research from Harvard Business School found that pure AI alone cannot substitute for human judgment or experience when it comes to long-term strategy. AI can't reliably distinguish a truly innovative idea from a mediocre one because innovation requires foresight, ethical grounding, and context that extend far beyond historical pattern matching.
The 10 Fold Advantage: Human-in-the-Loop is the Gold Standard
The message for every high-stakes domain is clear: AI is not a partner; it is a tool. The real value is created by Hybrid Intelligence, where expert human judgment validates and contextualizes the AI’s analytical output.
Consider the recent case of Air Canada: When a customer service chatbot provided a passenger with incorrect, non-existent refund information, the customer took the airline to court. The tribunal ruled that the airline was accountable for the bot's mistake, forcing them to compensate the passenger. The AI “got it wrong,” but the human entity—the company—carried the legal and financial liability.
At 10 Fold Consulting, our role is to provide the essential human layer that no algorithm can replicate:
Contextual Validation: We don't just accept the data; we question the premises and beliefs that underpin the data, preventing the strategy from being built on a flawed foundation. This requires epistemic awareness—understanding the difference between knowledge and belief.
Ethical & Strategic Judgment: We apply the foresight, ethics, and strategic intelligence needed to distinguish optimal efficiency from long-term, sustainable innovation.
Accountability & Defensibility: We assume the ultimate accountability for the advice delivered, ensuring every recommendation is defensible, thoughtful, and compliant, creating the necessary audit trail for high-stakes decisions.
Don’t just use AI; use it wisely. Partner with the experts who know that in the modern era of consulting, judgment is the ultimate competitive differentiator.
