What is generative AI?
Generative AI creates new text, images, or other media from a prompt. An LLM is the usual text engine. Predictive AI, by contrast, estimates a number or a class from past data, such as which jobs might run long. Generation writes. Prediction scores.
Also called: predictive AI
In plain English
The draft email is generative. A spreadsheet formula that adds invoices is not. A model that labels a photo might be either, depending on whether it is writing a caption or scoring a category. Owners mostly meet generative tools in chat apps. The output is a proposal until a person or a source system agrees. It makes a new draft from patterns. It does not look up your ledger unless you connect a source. Use it to get unstuck on wording. Do not use it as a witness for a number, a law, or a promise you have not checked. Predictive scores and generated sentences are different tools. Do not buy one because you needed the other.
How an owner would use it
Use generative tools to produce a first draft you can edit. Do not use them to mint a fact that belongs in a system of record. If a vendor says predictive, ask what number it is scoring and where the past data came from.
Common mistakes
Calling every spreadsheet 'AI' muddies the purchase. Calling every chat answer a prediction muddies the risk. Generative tools invent plausible sentences. Do not put a generated paragraph on a form that has legal effect unless a licensed person owns it. This page is not legal advice.
A worked example
An independent insurance agency
The follow-up is drafted, the dec page is not
This is an illustration, not a customer result. The CSR uses a generative draft for a check-in email after a renewal conversation. The coverage amounts in the email are copied from the policy screen, not written by the model. The model is told to leave a blank if a figure was not provided.
Related terms
Prompts and guides
Questions owners ask
What is generative AI?
Generative AI produces new content, such as a paragraph or an image, from a prompt and a model. It does not look up your books unless you connect them.
How should a small office use generative AI?
Use it for drafts you will edit, with the facts pasted in. Keep official numbers in the system that already owns them.
What is predictive AI?
Predictive AI estimates an outcome or a label from historical data. It is a different job from writing a draft. Ask what data it was fit on before you trust a score.
Product guides are on AI apps for business.