Ishaan Mookherjee - 25/06/2024
The words ‘artificial intelligence’ have taken the world by storm over its potential capabilities. From generating code to digital marketing, it has revolutionized the way businesses operate in the 21st century. However, the shockwaves have been ambiguous in effect.
Certain firms and small-scale entrepreneurs feel emboldened by the technological revolution, given how it provides a cost-effective and guided approach to their ideas, thus improving their production to levels never seen before. Others, however, find their business visions and industries being the victim of creative destruction. Their economic, social and ethical conditions are being put to the torch by machine automation. Regardless of how entrepreneurs believe ‘AI’ is going to affect their industries, businesses, and most importantly their vision, it has its benefits and harms. What is most important, however, is the fact that steps can be taken by entrepreneurs and 1 executives to prepare for a battle with the progressive developments of technology. It will necessitate a fight for control of ideas, developing adaptive skills, as well as a heightened importance of ethical compliance and regulations.
This article will help shed light on the plethora of positives, negatives, and takeaways from the continuously evolving dawn of the machine and data-driven entrepreneurial age.
Artificial intelligence has bolstered the abilities of entrepreneurial firms. Last year alone, nearly half of all small businesses that started in the United States did so with AI tools. This comes down to a variety of reasons such as time and cost savings, competitive and market pressures, as well as operational and marketing automation. What is interesting to note is that beliefs are also founded upon a ‘word-of-mouth’ basis, meaning that peer influence also has pushed the adoption of technology by small businesses. The data regarding this is all the more definitive. More than a third of emerging enterprises in a survey conducted in 2023 reported a 10-hour reduction in work time thanks to AI adoption, with subsequent swathes of the sample seeing 20 hours and more in time cuts. Annual savings for the same businesses stand at a median of $7,500 with over a quarter of businesses exceeding $20,000.
Crucially, the productivity of the firm has been strengthened thanks to technology. A large portion of firms believe that AI has been effective enough to do the common tasks and work of 2 full-time workers, no doubt mitigating any hiring and cost pressures further. In all of these changes to a firm’s cost, time, and productivity, there is another vital market factor that is harnessed by artificial intelligence, which is firm expansion. Indicators such as a startup’s ability to take on higher-value but also higher-cost work, investment into new equipment and ideas, ability to keep stable prices for products, and debt repayments have all improved thanks to a wide-scale adoption of technology. Regardless of whether they are valued at under $100,000 or above $1,000,000, there is a resolute positive affirmation of technology by entrepreneurship, and the data bears this out.
It is in these various upsides however that genuine concerns lie in entrepreneurship due to artificial intelligence. This is largely based on public sentiment with a significant portion of workers worldwide, 30%, believing that AI will not only replace them in their current work positions, but do so in the next 3 years. These expectations are not completely baseless, as AI is projected to replace 800 million jobs worldwide by 2030. However, beyond fears of future job losses, there is a much larger economic issue at this moment. Despite being 2 years out of the COVID-19 Pandemic recovery, 42% of job losses then have not been made up, rather being replaced by technological advancements. Whilst providing greater efficiency, it sets a dangerous precedent for future economic recessions whereby jobs need not be created for the common individual, instead automation is pursued, leaving the welfare of workers in the air.
Moreover, as many small business owners on average plan to invest more into AI, with 83% of American enterprises doing so, there arises a harder issue to address in data ethics. As Big Data or the usage of large data sets intended for computational analysis that can be used to advance research through revealing trends and associations is adopted by entrepreneurs, the individual’s privacy and autonomy are often violated. This occurs due to the ‘creep factor’ of Big Data, which necessitates the storage of private data in such a way that given inadequate protections, can be used and reused ‘in ways that were inconceivable when the data were collected’. These unthinkable acts can range from a violation of the right to privacy to the identification of private patterns of behavior and as studies have shown, discrimination of the individual. These risks extend towards ideas of equity, where an automated resume scanner can inadvertently discriminate or classify candidates under ethnic, sexual, or cultural categories despite the entrepreneur that utilizes it being sworn to secular and meritocratic hiring processes.
That being said, it is important to identify the state of artificial intelligence integrating into the entrepreneurial network. After all, 41% of small businesses globally are developing AI strategies from the myriad of economic obstacles that exist in the modern era. From labor shortages to climate change, the adoption is inevitable. As such, entrepreneurs must follow many steps in order to put themselves in a position to only benefit from it, rather than being harmed. The first step is a simple one, and that is to identify whether one’s enterprise even needs AI. Even now, large corporations are 100% more likely to adopt AI strategies in comparison to smaller businesses. This is not a particularly negative condition because as certain successful entrepreneurs have shown, it cannot and should not be adopted in certain industries. For instance, in copywriting, speech writing, or visual marketing, the general quality of work as well as the importance of human emotion is not captured by generalized and at times error-prone automation despite being of paramount importance. Though it poses great operational benefits, the compromise of human innovation and product quality for automation could make it too costly for implementation. The entrepreneur here must take a call.
Nevertheless, a considerable amount of investment is being put into understanding technological developments and AI automation. 83% of small business owners in the United States plan to invest in AI in the next 12 months, with 31% planning to make significant investments and 52% choosing small or moderate ones. Here, it will be natural for entrepreneurs to have a pragmatic approach, which could either dictate the entire automation of an enterprise or a gradual conversion depending on the industry. Critically, there has been a massive channeling of investments into the retraining of workers. Over 120 million workers are poised to undergo retraining in the next three years as AI reshapes industry demands. This of course is in response to the great fears of worker job displacement, but also to harness the colossal $15.7 trillion that is projected to be created by digitization and automation of the economy. Be it replacement or retraining the maintenance and improvement of entrepreneurial workers, as well as management, is key.
Finally, there is the urgent question of ethics in automation. Over eight in ten small businesses on average agree that the government must balance regulation and innovation. This prevalent sentiment does not stop at ensuring compliance with regulations and practices but further extends to enforcing transparency and accountability for firms using AI tools and systems, so as to prevent the violation of data privacy and potential grounds for data discrimination. In general, consumers want the government to protect public interests through regulations and strict oversight. In that case, it is also in the common entrepreneur’s best interest to uphold industry-grade standards of data compliance and integrity and ensure ethical vigilance.
Many founders predicted the rise of technology in business operations, but few expected it to have such a monumental transformation. Today, entrepreneurship is catalyzed by efficiency and capability. Cybernetic adaptation of businesses means they can save money in a costlier environment, retain precious time, and maintain productivity despite labor market shortages. It stands to reason then that entrepreneurs can embrace “big tech” with open arms, given its numerous strengths as well as the provision of opportunities for even the smallest of innovative ideas. Yet there remains a myriad of fears that AI will destroy the livelihoods of many, particularly in the primary and secondary sectors on the count of its efficient streamlining. Moreover, there are doubts over the transparency of technological realignment given its ‘creep factor’ of data violation to the extent of discrimination. The unease can no doubt be combatted, however, with individual innovation ensuring creative preservation, industry-wide retraining of vulnerable sector workers to mitigate the digital tsunami, as well as a revised approach to data protection and responsibility. The technological revolution has not only arrived but is continuing to expand, and barring a few exceptions, entrepreneurship must either swim with it or sink down the depths of history.
Works Cited (All images freely-usable courtesy of Unsplash)
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