TL;DR
Entrepreneurs who embrace AI can unlock a wealth of business opportunities, such as enhanced customer experiences, increased productivity and smarter decision-making. However, it’s important to consider the ethical and legal considerations associated with data usage when leveraging AI technology.
Intro
Ever since generative AI burst into the business scene in late 2022 with the introduction of ChatGPT by OpenAI, leaders across every sector have pondered what the revolutionary technology would mean for their businesses.
Some thought leaders, including Elon Musk, have gone as far as to say that AI advancing at this rate will usher in the end of civilization.
Others, however, have optimistically predicted that the technology will soon become indispensable to businesses.
Every day, there’s a new groundbreaking development in AI. As of April 2023, both NVidia and Google have teased AI-based text-to-video generators, which have been the stuff of fantasy until now.
Since there’s no evidence that AI scaremongers will be able to halt the impending AI revolution, businesses have one option — weather the storm of new advancements, embrace relevant tech, and come out stronger.
There’s simply no other option.
Read on to know how you as an entrepreneur can stake your claim in this AI-first world.
The AI Revolution is Underway
Let’s review the numbers.
Grand View Research, a market research reports and consulting firm, estimated that the global AI market valued at $93.5 billion in 2021 will grow at a compound annual growth rate (CAGR) of 38.1%. from 2022 to 2030.
54% of leaders have already confirmed that AI has bolstered productivity at their company. Crucially, 72% of company executives believe that AI implementation has allowed their employees to engage in more meaningful work.
The return on investment from AI implementation also speaks volumes; companies using AI in their sales and marketing efforts witnessed a 50% increase in lead generation, a 40–60% reduction in costs, and a 60–70% drop in call times, per a report by Harvard Business Review. Notably, companies using AI chatbots have reported increased sales of up to 67%.
AI-powered startups have also seen massive spikes in funding. Startups using the technology were able to raise over $7.4 billion in funding in a single quarter. It is further worth mentioning that Netflix’s AI recommendation function was valued at over a billion dollars a year.
Now, this penetration of AI into every aspect of a business is far from being a fad. Bill Gates, one of the leading tech visionaries, writes in his blog, “The development of AI is as fundamental as the creation of the microprocessor, the personal computer, the Internet, and the mobile phone.”
Another prominent tech pioneer, Former Google CEO Eric Schmidt who has invested around $2 billion in AI companies feels that modern-day entrepreneurs should, “run as fast as they can to this. If you don’t get there first, somebody else will, and then you’re going to be in trouble.”
How the AI revolution will impact large businesses
AI is transforming the way large corporations conduct business.
From retail to transport, AI has shown promise in solving a variety of problems.
One of the key areas AI is revolutionizing is the energy sector, where the technology is used to predict and identify faults in power plants and forecast the weather to plan offshore wind energy projects. Retail energy suppliers are also trusting AI to take on their customer support requests via chatbots, as it has been proven to reduce call times. Energy companies are hoping that soon the technology will power smart grids, streamlining the supply of power. Since AI algorithms are great at crunching numbers, they could even find applications when it comes to tracking carbon emissions based on real-time data of countries and major corporations, according to the Boston Consulting Group. It is not all good news for the penetration of AI in the energy sector; jobs, including supply analysts, meter readers, and engineers are expected to be slashed because the automated systems will be better at these tasks.
Another industry facing massive disruption is the news media. Companies are already trying out machine learning and artificial intelligence algorithms to figure out what headlines, stories, and topics will drive the most engagement. Lisa Gibbs of the Associated Press mentioned in a study undertaken by the London School of Economics that the organization could soon use AI to find and break news faster.
In the finance sector, AI implementation will go a long way in catching potential loan defaulters, money laundering risk, and even potential investment opportunities.
Government forecasts worryingly also point to the fact that people in the finance industry, such as those involved in customer onboarding, loan underwriting, etc. will lose their jobs. Other than that, finance companies will save a ton of time by using sophisticated AI algorithms to verify whether they are compliant with regulations, rather than checking them manually.
AI has the potential to offer many benefits for large businesses, such as:
Driving innovation and growth by creating new products, services, and business models through personalized recommendations, smart assistants, and autonomous vehicles.
Enhancing efficiency and productivity by automating and optimizing business processes in areas, such as manufacturing, logistics, and accounting.
Improving customer satisfaction and loyalty by delivering better products, services, and experiences via chatbots, voice assistants, and facial recognition.
Increasing revenue and profitability by generating new insights, opportunities, and strategies by means of AI applications, like dynamic pricing, demand forecasting, and customer segmentation.
Reducing costs and risks by detecting and preventing fraud, errors, and anomalies, including cyberattacks, data breaches, and quality issues.
How the AI Revolution Will Impact Small Businesses
Small businesses or startups are especially cash-strapped, have fewer people at their disposal, and often have an unproven idea.
The power of AI can mitigate most of these issues plaguing startup entrepreneurs.
Small companies often find a lot of resources drained from them due to payroll-based expenses. With the advent of tools, like ZipRecruiter, an AI-based job recommendation and matching platform, companies can find excellent employees who meet their requirements without the hassle of marketing the job openings, inviting applications, conducting multiple rounds of interviews, and still ending up with someone who doesn’t align with company goals.
There are also a variety of AI-powered CRMs, chatbots, expense management software, and marketing tools that will help smaller companies thrive in the modern cutthroat environment.
Owing to SaaS-based tools for cybersecurity, payment processing, HR, CRM, EHR, customer support, etc., powered by AI, these small companies can punch above their weight class and compete with bigger brands with massive budgets.
For instance, with a platform to automate messages to customer queries, small businesses, and startups can save a ton of money and ensure their clientele is well-informed with minimal effort.
Additionally, tools, like DALL-E 2, ChatGPT, and Midjourney are empowering a new generation of startup marketers to achieve a return on investment without draining company resources. With the use of these tools, the marketing and sales departments can quickly generate sales emails, images for their social media posts, and even ads.
Despite these benefits, automation may end up costing 45 million Americans their jobs by 2030. This figure represents one-quarter of the workforce, most of whom find employment in small companies.
Potential Risks of the AI Revolution that Entrepreneurs Need to be Aware of
From chatbots and voice assistants to self-driving cars and smart factories, AI is enhancing productivity, efficiency, and innovation across various sectors. However, AI also poses significant risks and challenges for businesses and society that need to be addressed proactively and responsibly.
Here are some of the main risks of AI and how to mitigate them:
1. Disruption
AI can disrupt existing business models and markets by creating new competitors, products, and services that can outperform or replace human workers. This can lead to job losses, skill gaps, and social inequalities.
To cope with this risk, businesses need to invest in reskilling and upskilling their workforce, embrace lifelong learning and adopt agile and flexible organizational structures. They also need to monitor the impact of AI on their industry and customers and adapt their strategies accordingly.
2. Cybersecurity
AI can also increase the vulnerability of businesses to cyberattacks, as hackers can exploit AI systems or use AI tools to launch sophisticated attacks. For example, AI can generate fake images, videos, or texts (known as deep fakes) that can deceive or manipulate people.
To prevent this risk, businesses need to implement robust security protocols and standards, encrypt and anonymize sensitive data, and use trusted and transparent AI solutions.
3. Reputational
AI can damage the reputation of businesses if it behaves in unethical, biased, or harmful ways. For example, AI can discriminate against certain groups of people based on their gender, race, or other characteristics, or cause harm to humans or the environment. This can result in legal liabilities, regulatory penalties, or public backlash.
So, businesses need to ensure that their AI systems are aligned with their values and principles, follow ethical guidelines and best practices, and involve diverse stakeholders in the design and deployment of AI.
4. Legal
AI can also create legal uncertainties and complexities for businesses, as the existing laws and regulations may not adequately cover the novel issues and scenarios that arise from AI use. For example, who is responsible or liable if an AI system causes harm or makes a mistake? How can intellectual property rights be protected or enforced in the context of AI? How can data protection and privacy laws be applied to AI?
To address this risk, businesses need to consult with legal experts, comply with relevant laws and regulations, and advocate for clear and consistent legal frameworks for AI.
5. Operational
AI can also pose operational risks for businesses if it fails to perform as expected or intended, or if it encounters technical glitches or errors. For example, an AI system may malfunction due to poor-quality data, faulty algorithms, or human errors. This can result in inefficiencies, losses, or damages for the business or its customers.
As a result, you as a business owner need to ensure that your AI systems are reliable, accurate, and robust, test and validate their performance regularly, and have backup plans and contingency measures in place.
A Few Tips for Entrepreneurs to Survive the AI Revolution
AI poses some challenges and risks for entrepreneurs, such as:
Finding the right talent and skills to implement and manage AI solutions, such as data scientists, engineers, and analysts.
Ensuring the quality and security of data and algorithms, such as accuracy, reliability, privacy, and ethics.
Adapting to the changing market dynamics and customer expectations, such as competition, regulation, and convenience.
Managing the social and environmental implications of AI, such as job displacement, bias, and sustainability.
Therefore, entrepreneurs need to be proactive and strategic in embracing the AI revolution. They need to:
Identify the problems that AI can solve or the value that it can create for your business. Start with simple and low-risk applications that can solve your pain points or enhance your strengths. For example, when I was working at Samsung, I leveraged natural language processing (NLP) to segment audiences for the largest sales season — Black Friday. This new and innovative technique improved the effectiveness of our marketing efforts, increased customer engagement, and ultimately drove revenue growth.
Choose the right tools and partners that can help you implement and scale AI solutions. Consider cloud-based platforms that offer easy-to-use interfaces, pre-trained models, and affordable pricing. You can also collaborate with other entrepreneurs or experts who have complementary skills or domain knowledge. At Spotify, our team implemented an AI approach to scale segmentation across multiple data sources. This allowed us to quickly identify which segment any new or existing user fell into based on machine learning using training datasets. The outcome was a better understanding of the audience and better targeting across various needs in the company including research, messaging, etc. At Innerspace Counseling and Serene Mind (couple of my ventures), I am building towards AI integrations with our EHR in order to increase operational efficiency and deliver better patient outcomes.
Educate yourself and your employees on the basics of AI and its impact on your business. Access online courses, podcasts, blogs, and events that can provide you with relevant information and insights. When I helped companies prepare for upcoming tech disruptions like the “Internet of Things” with Samsung or “Streaming audio services” with Spotify, we took the following steps:
Collaborated with experts in the industry and/or market to learn about the trend.
Conducted foundational qualitative and quantitative research among consumers.
Ensured we understood what kind of implications this disruption had on our strategy and data infrastructure.
Developed new strategies based on the research findings and insights.
Tested ideas to refine and improve them.
Prioritized our direction based on an evaluation criteria including the strategy, viability, feasibility, and desirability to the customer.
Launched the strategies and ideas into the market.
The outcome was that Samsung and Spotify are the most ubiquitous brands in the world across mobile devices, home appliances, and other consumer electronics.
4. Set up ethical guardrails and legal protections that can ensure the responsible use of AI. Follow best practices and standards that can guide you on data collection, storage, processing, and sharing. Consult with legal advisors or regulators who can help you comply with relevant laws and regulations. For instance, I am currently working on a project that aims to assist companies in navigating the challenges of the rapidly evolving AI landscape. Through this project, I am contributing to the development of best practices and guidelines that can help companies ensure the ethical and responsible use of AI technologies.
5. Prioritize the Customer Experience. The customer experience is the total of all interactions that a customer has with a business across multiple touchpoints. It depends on factors such as product quality, service delivery, convenience, personalization, and trust.
AI can enhance customer experience by providing:
Personalization: AI can customize products, services, and experiences to each customer’s preferences, needs, and behaviors. For example, AI-based recommendations can suggest suitable items based on previous purchases or browsing history.
Convenience: AI can make interactions quicker, easier, and more seamless for customers. Chatbots can provide immediate answers to common queries or resolve issues without human intervention.
Delight: AI can create memorable moments for customers by surprising them with unexpected value or exceeding their expectations. Voice assistants can use natural language processing to engage customers in friendly conversations or crack jokes.
Remember that AI is a tool that can help you achieve your business goals. By taking the time to understand its capabilities and limitations, you can leverage AI to create value for your customers and your organization.
Conclusion
Entrepreneurs who embrace artificial intelligence and incorporate it into their businesses will not only survive but thrive in the AI revolution. However, it’s essential to understand the potential challenges that come with implementing AI technology, such as the ethical and legal implications of data usage. By harnessing the power of AI effectively and responsibly, entrepreneurs can make smarter business decisions, enhance customer experiences, and drive productivity.
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