In the first article of this series, we explored how AI is present in businesses through tools and staff use. Once organisations realise this, the next challenge usually appears: the language.
Conversations turn to terms like LLMs, generative or agentic AI, and hallucinations. Like a lot of technical subjects, the vocabulary appears overnight. It becomes embedded and ingrained in discussions, and it’s often alienating.
Luckily, you don’t need to be tech savvy to understand the terms, nor make good AI decisions. All you need is to understand the most common ones in plain English, which we’ve done below.
Large Language Models (LLMs)
This is the most common AI at the moment, and the most recognisable. It powers the big names like ChatGPT, Gemini and Claude. It’s also built into many AI assistants and business software tools.
LLMs are systems trained of vast amounts of text. This allows them to spot patterns in language and generate human-like replies. These systems don’t and can’t think for themselves like humans do. Instead, they predict what words are likely to come next based on what they have seen before.
It’s why LLMs are good at drafting emails, summarising text and answering questions.
Generative AI
Generative AI creates new content rather than analysing information. They’re built on LLMs.
So, massive volumes of text train LLMs so it learns language patterns. Once trained, that model can write text, summarise documents or answer questions. That output is Generative AI. When someone uses Copilot to write a report, they’re using a Generative AI tool powered by an LLM.
When used well, Generative AI can automate repetitive work. When used without oversight it introduces errors or exposes data, among other things. This is why Generative AI is a good support tool, but not a good decision maker. It can speed up daily tasks, but human review and judgement are essential.
Agentic AI and Multi-Agent Systems
These are more advanced systems that can take actions within defined processes. They can act on their own, and don’t only respond to requests.
These systems can:
- gather information
- process it
- trigger follow-up tasks
- report results
A multi-agent system means several AI components working together. Most often this is to complete more complex workflows. For SMEs, this level of AI is still emerging rather than an everyday reality. So, while it has a lot of potential, its current use isn’t well established or justified for SMEs.
Hallucinations
This the term is used for when AI produces incorrect or made-up answers. It does so with confidence, creating a false sense of trust with users. It doesn’t do this on purpose. But because it’s designed to be helpful, its answers appear trustworthy. This is why human review and verification are essential. It reinforces that while AI can support work, it isn’t a guaranteed source of truth.
AI ethics
Ethics in AI focuses on using these tools well. This includes:
- protecting sensitive data
- avoiding bias or unfair outcomes
- being transparent about AI use
- ensuring accountability remains with people
For businesses, ethics isn’t about complex philosophy. It’s about sensible data handling, clear policies, and responsible decision-making.
A note on AI-washing
AI is everywhere. It’s exciting. It’s also a buzzword. This means companies are marketing AI-powered products, even when they’re basic automation tools. It’s misleading because not every tool labelled as AI uses advanced intelligence. And not all AI features deliver value.
That’s why understanding the basics is important. It helps you to ask better questions, see past the hype and make informed choices. Remember, AI isn’t only a technical topic for IT teams. It’s becoming a part of everyday business operations. It’ll touch everything from supplier conversations to staff workflows.
When you understand the basics, you can:
- set sensible policies
- assess risk
- spot exaggerated claims
- guide responsible adoption
- and support teams
You don’t need deep technical knowledge; you need the clarity to make good decisions.
Confused by AI? Our free webinar Demystifying AI for Business will help. It’ll cut through the hype and give you practical steps to install AI in your business. You can find more information and sign up here