The Good, Bad, and Ugly Things AI Provides Small Businesses

Artificial intelligence (AI) is still one of the top assets helping small businesses thrive, and one of decision makers’ top concerns, Harvard Business Review says.

It is traditionally understood that AI helps small businesses get a better grasp of their health and prospects, and understand how well they’re doing internally.

For example, Harvard Business Review points out key benefits AI provides small businesses, such as:

• Customized dashboards that provide access to a business’s bank accounts, sales history, tourism data, inventory lists, etc.
• Robo-advisors to help with financial decision making, bill payments, payment reminders, etc.
• Prediction solutions that help business decision makers see the company’s creditworthiness for large purchases.

But while there seem to be endless positives to AI’s role in small businesses, Harvard Business Review points out the tech’s “darker side,” or risks. For example, there’s a chance that some companies could bloat into monopolies of data, which could hamper the data’s benefits and the company’s future innovation.

Plus, as AI tech becomes smarter in how to identify human decision makers, especially those who might default on loans and other business opportunities, there’s a chance that discrimination and exclusion could increase. Finally, decision makers are concerned that the decisions AI makes for a business could be conducted by a “black box,” meaning “no one would know exactly which data attributes the machine was using to make recommendations or decisions,” Harvard Business Review says.

For example, “A machine might identify a risk factor that happens to correlate strongly with race, gender, or the characteristics of other protected classes and…include it as a pricing factor,” according to Harvard Business Review. “More generally, sophisticated algorithms that perform exceptionally well along some narrow dimensions yet lack intuition and situational awareness could create serious problems.”

Despite these concerns, Harvard Business Review says that a piece of these problems – the data – could be the key to preventing and solving them.

For example, decision makers that are concerned about AI risks might find peace of mind by collecting data on their own for their company, such as on access to capital. “Collecting this information and using it to identify and correct market gaps is a critical foundational element of a highly functioning small business credit market, and it will only become more essential as artificial intelligence becomes an integral part of lending decisions,” Harvard Business Review says.

If you enjoyed this article and want to receive more valuable industry content like this, click here to sign up for our digital newsletters!