NLU might sound like just another acronym in the AI ecosystem, but it’s integral to making AI understand what we really mean.
How does Siri know when you’re asking for directions versus playing a song?
How does an AI agent know the difference between a product question and a support request?
Let’s break down how NLU works and why it’s necessary for smarter AI interactions.
What is NLU?
Natural language understanding (NLU) is a subset of natural language processing (NLP) that enables machines to interpret and comprehend human language.
NLU is used in AI chatbots, virtual assistants, and sentiment analysis tools. It allows machines to accurately interpret user intent – whether it’s text or voice – so that they can follow up with the appropriate action.
NLU is considered an AI-hard problem (also known as AI-complete), meaning they require artificial intelligence in order to be solved. NLU is impossible without artificial intelligence (AI).
How does NLU work?
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NLU breaks down human language to interpret its meaning and intent. Here’s how it works step-by-step:
1. Pre-Processing the Text
Before analysis begins, the text is cleaned by removing unnecessary elements such as punctuation and stop words to focus on meaningful content.
2. Identifying Key Components
The system extracts entities, keywords, and phrases, identifying the most relevant parts of the text for further analysis.
3. Analyzing Sentence Structure
By examining word relationships and grammar, NLU determines how different words and concepts interact within a sentence.
4. Mapping to Intents and Goals
The extracted components are matched to predefined intents or objectives, helping the system understand the user’s purpose.
5. Refining Understanding with Context
Past interactions and contextual clues help improve accuracy, allowing the NLU system to adjust responses based on conversation history.
6. Generating a Structured Output
Finally, the system produces a structured response that can trigger actions, execute commands, or deliver relevant information.
Real-World Example
Let’s break it down with an example.
Patrick uses an AI agent at work that integrates with all his main applications, including his calendar.
Patrick types to his AI agent: “Schedule a meeting with Anqi for 1pm tomorrow, or sometime similar. Schedule a follow-up for two weeks afterwards.”
In the course of its agentic AI workflow, his agent will:
- Identify the intent: The agent identifies that Patrick wants to schedule a meeting
- Extract key entities: The agent identifies that Patrick is talking about ‘Anqi’ the contact, ‘1pm’ the time, and ‘tomorrow’, the date.
- Utterance analysis: The agent identifies that the action item is ‘scheduling’, and it should be done with Anqi, and the time and day should be 1pm tomorrow.
- Contextual understanding: The agent checks Patrick’s and Anqi’s calendars to ensure availability. If 1pm tomorrow isn’t free, it will propose a similar time, as requested.
- Final action: The agent schedules the meeting and the follow-up by sending calendar invites to Patrick and Anqi.
Real-World Uses of NLU
It’s likely that you encounter NLU in your daily life, often without even realizing it. Here are some of the most common real-world applications:
Lead generation
NLU is a key component of AI lead generation, a form of qualifying leads via conversational AI. Using natural language understanding, chatbots can identify the needs and abilities of incoming leads. They can even book calendar meetings with sales reps directly after qualifying a lead.
Voice assistants
Voice assistants like Siri, Alexa, and Google Assistant rely on NLU to understand the intent behind your spoken commands.
For instance, when you say, "Set a reminder for my nail appointment at 2 PM," the assistant breaks down your sentence, identifies the intent (setting a reminder), and extracts the entities (nail appointment, tomorrow, 2 PM).
NLU allows these assistants to make sense of verbal requests and follow up with the right action.
Customer service chatbots
When you engage with a customer support chatbot and type, "Where’s my package?", the bot uses NLU to determine that your intent is to check the delivery status.
It extracts the necessary entity – your order information – and provides the correct update. This ability to understand and respond to various customer queries is what makes NLU an essential part of modern customer service automation.
Email sorting and automation
NLU is also found behind email automation systems. For instance, NLU-powered tools can read incoming emails, understand the content, and automatically sort them into categories like "urgent," "promotions," or "meetings."
These systems can even generate appropriate responses based on the content of the email, saving businesses time in managing communication.
Text analytics for feedback and surveys
Companies often use NLU to analyze feedback from surveys, reviews, and social media posts.
NLU helps identify patterns and sentiments in written language, making it possible to understand customer needs and opinions.
For example, an NLU system can scan hundreds of customer reviews and determine whether most users feel positively or negatively about a specific feature using sentiment analysis.
Key Components
Tokenization
Tokenization is the process of breaking a sentence into smaller units, like words or phrases, to make it easier for the AI to process.
Example: "Schedule a meeting for 3 PM tomorrow" is tokenized into ["Schedule," "a," "meeting," "for," "3 PM," "tomorrow"].
Part-of-Speech (POS) Tagging
POS tagging identifies the grammatical structure of a sentence by labeling each word as a noun, verb, adjective, etc.
Example: In "Schedule a meeting," the AI tags "Schedule" as a verb and "meeting" as a noun.
Named Entity Recognition (NER)
Named Entity Recognition (NER) detects and classifies important entities like names, locations, and dates within the text.
Example: In "Book a flight to New York next Friday," the AI identifies "New York" as a location and "next Friday" as a date.
Intent Classification
Intent classification determines the user’s underlying goal or purpose behind their input.
Example: "Book a table for two" is classified as the intent to make a reservation.
Dependency Parsing
Dependency parsing analyzes the relationships between words to understand the grammatical structure of the sentence.
Example: In "Send the report to Maria," the AI identifies that "Maria" is the recipient of the report.
Contextual Analysis
Contextual analysis uses surrounding conversations or prior interactions to ensure responses are relevant and accurate.
Example: If a user previously asked about a specific project, the AI may tailor future responses based on that context.
Build a custom NLU agent
With the rapid advancement of AI technology, anyone can build an AI agent with NLU capabilities.
Botpress is an endlessly extensible bot-building platform built for enterprises. Our stack allows developers to build chatbots and AI agents for any use case.
Getting started is easy with our free tier, extensive tutorials, and Botpress Academy.
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