Should Your Business Use a Generalist or Specialized AI Model?

Harvard Business Review

23-07-2025

The prevailing wisdom in artificial intelligence suggests that bigger models yield better results. In our work for health insurance companies and third-party administrators of health plans, we've discovered that this assumption holds in many cases but breaks down when AI moves from general tasks to specialized professional domains.
We have built generative AI systems for prior authorization: the process that health insurers employ to determine whether a doctor's recommended treatments are covered by the patient's policy. In this article we share what we have learned about how executives evaluating investments in AI for professional problem-solving applications should decide between generalist AI models and specialized ones.
When Scale Delivers the Greatest Value
Well-known generative AI offerings like ChatGPT, Claude, and Gemini are built on large language models (LLMs) and other AI technologies that are trained on text and images from countless domains and therefore seem capable of answering almost any question imaginable. As tempting as it might be for business leaders to actually rely on these generalist models to do just that, however, it's critical to recognize where their broad capabilities create the greatest competitive and operational advantages.
Simply put, these systems excel at many enterprise applications precisely because they don't specialize. Their value derives from their ability to synthesize information broadly across domains, make unexpected connections, and handle the full spectrum of business communications. They can simultaneously draw on legal precedents, technical specifications, and customer psychology.
For organizations seeking to both deepen and accelerate the creativity and productivity of content teams, generalist models offer unmatched versatility. Leaders are well advised to think of them as sophisticated generalists—AI versions of the most valuable utility players on the team—and employ them as such.
In contrast, specialized generative AI models understand not just what information to retrieve but also how that information operates within a specific domain's decision-making framework. These generative AI technologies add highly contextualized training data and methodologies to the core capabilities of generalized AI technologies. The result is that they can generate far more intelligent and accurate outputs in specific domains like healthcare and finance than would be possible for generalist AI models. For example, a specialized model designed to assist a physician making a treatment decision must not only know what aspects of a patient's current clinical status and medical history are relevant but also be able to identify appropriate treatment protocols and the strength of the evidence supporting that protocol.
When AI Must Think Like Experts
First things first: No one in their right mind would question whether generalist models are valuable; they clearly are. When leaders rely on specialized solutions for tasks better suited to generalist models, they waste resources and set the stage for weak performance across important domains. Meanwhile, misapplying generalist AI to specialized professional domains isn't just inefficient; it can create liability, regulatory violations, and an erosion of trust among stakeholders and the public more broadly.
We should know, because we nearly fell into this very trap. When we first applied generalist models to prior authorization, we were confident that their capabilities would translate well. But we quickly encountered a fundamental mismatch between how these systems process information and how healthcare professionals actually make decisions.
This challenge reflects what Martin Reeves and Mihnea Moldoveanu recently described as 'dataism': the false belief that gathering ever more data and feeding it to ever more powerful algorithms alone can help businesses make optimal decisions. Our experience building healthcare AI taught us that this approach breaks down precisely where it matters most: in the nuanced, contextual reasoning that defines professional expertise in medicine and across industries.
Prior authorization requires mapping complex clinical presentations to equally complex insurance policies—a process that involves understanding not just what information is present but also how to interpret that information within specific medical and regulatory frameworks. It's not enough, for example, to understand that a patient with a Stage 2 lung cancer diagnosis would qualify for a specific chemotherapy under an insurer's policy; the system would also need to account for other medical conditions—say, end-stage renal disease accompanied by a recent hospice referral—that would impact a treatment or coverage decision.
This mirrors challenges across multiple professional domains: Legal teams must map case facts to relevant precedents, financial advisors must align client circumstances with regulatory requirements, and engineers must connect design specifications to safety standards.
To solve a prior authorization problem, a generalist AI model would seek to find statistical patterns between symptoms and approval decisions, but this pattern-matching approach misses the underlying clinical and policy logic that drives these decisions—especially with more complex cases like the one mentioned above—just as it would miss similar considerations in legal, financial, and engineering realms.
The breakthrough idea, for us, came in the form of a question: 'Why would we try to make the AI think like a computer when it needs to think like a doctor?' Put another way, we observed that effective professional AI requires understanding not just what information to retrieve but also how that information operates within a specific clinical and insurance coverage framework. This insight led us to replace a pattern-matching approach with one that starts by understanding the prior authorization policy criteria, then searches clinical documents for the specific evidence a clinician would use. We trained our generative AI agents to follow how clinicians read—understanding the structure of charts, moving from sections to subsections, and identifying the right findings in context. To maintain clinical precision, we built specialized agents for distinct tasks, avoiding the cross-specialty overlap that general models often introduce.
What Enterprise AI Solutions Must Deliver
This shift represents more than a technical refinement; it's a fundamentally different philosophy. Rather than retrieving text and hoping the model parses it correctly, effective specialized solutions extract structured professional facts first, then apply domain-specific reasoning to those facts.
Consider how experienced physicians approach a complex case. They don't simply pattern-match symptoms to diagnoses; they systematically evaluate specific clinical criteria, understand how different findings interact, and apply established medical practices to reach conclusions. Clinicians are also able to intuitively and effectively grasp context and, perhaps more importantly, discern irrelevant or out-of-context information. The most effective specialized AI solutions mirror this structured approach rather than relying on the more impressionistic reasoning of generalist large language models.
The broader principle here extends well beyond healthcare. Enterprise decision-making across the other domains we've referenced—and many others—involves precise interpretation of domain-specific data points, not just general language understanding. The thing about generalist models, however is that they're democratic in the worst possible way. They treat all information equally, potentially weighing irrelevant details as heavily as crucial professional findings.
Why Transparency Beats Performance in Enterprise Contexts
Perhaps our most important observation was that in many enterprise contexts, AI applications must offer transparent reasoning for their outputs—something large general models struggle to provide. In healthcare, physicians, patients, and insurers need to understand not just what decision was made but also why specific evidence was prioritized and how different clinical factors were weighted. The same is true in a host of other domains such as structural engineering, financial advising, and legal decision-making.
This transparency requirement also reflects a deeper truth about professional domains: It's not nearly enough to be right most of the time. Enterprises need to trace the logical chain from evidence to conclusion, identify potential weaknesses in reasoning, and understand how new information might affect decisions. As Joe McKendrick and Andy Thurai have noted, AI systems notoriously fail in capturing the intangible human factors—ethical, moral, and contextual considerations—that guide real-life professional decision-making. Generalist models, despite their impressive capabilities, remain largely opaque in their decision-making processes.
We essentially had no choice, then, but to ensure our system generated explicit rationales for every decision, showing which clinical criteria were evaluated and how they mapped to specific policy requirements. This wasn't just about regulatory compliance; it became essential for earning physicians' trust. Transparent reasoning proved vital for enabling effective human-AI collaboration.
Evaluating Adaptability to Enterprise Evolution
Great leaders achieve that status largely because they're able to evolve strategies in lockstep with competitive and regulatory changes in their domain. Reliable AI solutions must be able to do the same; they must be able to perpetually recalibrate how new information affects existing frameworks. This is precisely the kind of contextual reasoning that generalist models find challenging, however. Specialized models, by contrast, are tuned to recognize domain-specific signals and understand when seemingly small shifts might have major implications for industry professionals.
When evaluating AI vendors, leaders should prioritize those that understand the underlying structure of professional decision-making in their domain and can incorporate new information more effectively than approaches requiring complete model retraining. The same principle applies whether you're assessing solutions that understand how new legal precedents apply to particular factual circumstances or those that can quickly contextualize new financial regulatory changes rather than simply optimizing for returns.
Hybrid Architecture as the Path Forward
Our experience suggests that the future of enterprise generative AI implementation lies not only in choosing between generalist and specialized models but also in thoughtful hybrid implementation strategies. The most effective approaches leverage generalist models for tasks they excel at—e.g., customer service chatbots, content creation, document summarization, exploratory data analysis, and internal knowledge management—while relying on specialized vendors for domain-specific reasoning and decision-making in areas like regulatory compliance, health insurance, legal precedent analysis, and financial risk assessment.
This hybrid approach allows enterprises to benefit from the broad capabilities of large models for routine business functions while accessing the specific professional logic that drives expert decision-making in high-stakes domains. Rather than replacing professional judgment, these solutions can enhance it by handling routine applications of established frameworks while flagging cases that require human expertise.
How to Choose an AI Vendor and Avoid Common Pitfalls
Given how well today's biggest LLMs perform across less-mission-critical tasks, it's hard for business leaders to make grave errors when choosing among them for such purposes. That's not the case when evaluating more specialized AI models, however. Through our experience, we've developed several key questions business leaders can ask during specialized AI vendor evaluations to avoid the most common pitfalls:
Can the vendor clearly demonstrate the logic behind its AI and make its reasoning transparent?
The critical question isn't whether AI can process information faster than humans but whether it can reason—i.e., use that information—in ways that your key domain experts can trust, understand, and build upon. This question helps avoid the trap of 'shallow transparency illusions,' which happens when vendors show which criteria were evaluated, for instance, but fail to capture deeper professional reasoning. Look for solutions that embed professional judgment frameworks, not just decision trees, and can explain why they prioritize specific evidence.
Does the vendor maintain ongoing collaboration with domain experts in your field? How does it handle evolving practices?
This requires deep collaboration between AI developers and domain experts—not just to gather training data but also to understand the underlying frameworks that guide professional decision-making. Success comes from vendors that embed this professional logic into their architecture rather than hoping their models will somehow discover it through pattern matching. This question ensures your vendor can adapt as professional standards change, while maintaining access to the domain expertise that drives continuous improvement.
Can the vendor's proposed solution address c ross-domain integration and s cope expansion, or will its offering only function as a point solution?
As researchers from McKinsey highlighted in HBR, the key to capturing AI's full potential lies in understanding and addressing the organizational and cultural barriers that AI initiatives face, rather than simply deploying more powerful general-purpose models. This question helps leaders choose vendors that anticipate how professional decisions interconnect across domains and ones that expand their capabilities as an organization's needs evolve.
The competitive landscape for industry-specific AI may look quite different from the current focus on ever-larger generalist models. Companies that understand the unique reasoning patterns of specific professional domains and can partner with AI vendors that participate effectively in that reasoning will create more sustainable advantages than those competing purely on a model's scale.
In high-stakes enterprise environments, specialized expertise trumps general intelligence—for humans and AI systems alike. Our journey building healthcare-specific AI taught us that the path to effective professional AI lies not in simply choosing bigger models but also in selecting smarter solutions that understand how professionals actually think, decide, and act. The lessons we've learned in healthcare authorization apply broadly: When AI moves from general capabilities to specific professional applications, architecture matters more than scale, transparency matters more than performance, and domain expertise matters more than computational power.