By Jonathan K. Hustis, Member, Fulton Jeang PLLC, Dallas, Texas USA
This is an article for CEOs of smaller businesses about falling in love with AI, and about staying safe in the relationship. Safe but smitten, as you grow your business, cut costs, and have more fun with your growing business. It's about tech lawyers like me and my firm, too, but just a little bit, down there at the end.
FALLING IN LOVE (IF THIS AIN'T LOVE, THEN WHAT IS?)
A September 2024 report published by the US Chamber of Commerce tells us that 99% of small businesses are using at least one technology platform to run the business, with nearly half using 4-6 tech platforms in operations. They generally report tech-related improvements across the board in lowering costs and fighting effects of inflation. Higher tech small businesses grow faster than lower tech companies. 81% of small businesses say that tech platforms help their operators enjoy running the business.
40% of small businesses self-identify as users of artificial intelligence (AI) platforms in their business, doubling the 2023 AI usage statistics and bringing AI to #5 in the ranking of technologies used in small business. 91% of those AI-using businesses expect AI to increase business growth. 77% of all small business owners plan to adopt AI and/or other emerging technology platforms and tools.
Love, right?
THE WORRIES.
AI is a scary step for small businesses. The level of uncertainty is intimidating, even for tech firms. CEOs don't know if they can afford a legion of product procurement experts, algorithm experts and troubleshooters, trainers, lawyers, etc., that they may think they need to use AI without going into a swamp somewhere.
How can we use it? This answer will be different for each firm, and the question first leads to more questions. What questions can the AI system answer? Who in the company should be asking them? How do we filter out "hallucinations" and nonresponsive answers to early, clumsy questions? Should we let it make business decisions for us? Does it understand our business sufficiently well, or is it a general tool that we have to educate or customize? How do we train it? Will it work directly with our other tech platforms? Will it annoy our customers if we let it write them messages or make recommendations to them?
What will the costs be? How do we target what components the return on this investment will be composed of, how will each target be calculated, and how can we trust the forecast of benefits we are relying on to reach an ROI target?
What will it do to our culture? Will employees be threatened? Will they leave? Will expertise in the business bleed away as employees let machines do their thinking for them? Will we lose touch with each other from one department to the next, from one user to the next?
How do we encourage safe innovation and experimentation in employee use of AI tools? Can we do this without inadvertently implementing complex automated business processes and decisions that run afoul of the risks above but that we can't figure out how to modify?
How do we avoid regulatory risks? Will it violate our customer's privacy rights? Will it leak their (or our) business's confidential information? Will it illegally discriminate in its results before we can avoid bias in algorithms we don't understand? Will a wrong answer breach our warranty obligations to clients? Will it be training and infringing on intellectual property that we don't understand? What do we do TODAY with the US Chamber of Commerce and others reporting that increasing regulation related to high tech use threatens small businesses with compliance costs and liability risks?
You get the idea. Nobody’s perfect, and as much in love as we are, we don’t really know AI very well yet.
KEEP WORRYING, FEEL SAFER AND SAFER, AND GROW THE LOVE WITH AI
Start with what you want to improve in your business. Prioritize one or two key improvements.
Find a slate of AI tools that say they will help you implement these improvements.
Do it!
Prioritize the tools by
Expected short-term improvement. Be realistic.
Target long term improvements. Be realistic.
Research platform providers as you would other procured tech platforms or in-process tech platforms that are being procured. If 99% of your peers are using tech platforms, you ought to know how to do this.
Pick an AI platform.
Consult your advisers on cybersecurity, privacy, HR, finance, warranty risk and others, about your proposed choice, about increasing benefits and decreasing risks, about unintended consequences.
Create metrics so you track for success.
Buy and get started. Start to realize the increased growth, lower costs, increased enjoyment in running your business with powerful AI components. Work with your advisers and experts to maximize those benefits by reducing the risks.
ABOUT LEGAL RISKS IN PARTICULAR: YOUR LEGAL COUNSELOR, GUIDE AND PROTECTOR
This is the topic I know best. You want growth, profit, inflation-fighting tools, and more enjoyment running your business. You should want an experienced legal guide and protector looking ahead, watching your back, and telling you his or her best current advice about how to stay clear of the legal and regulatory risks of high tech use, especially AI, while helping you to fully enjoying the benefits. You should want a general counsel who appears at your side when something new comes up, ready to respond, with a solid bench of tech law and business experts at his or her back. Find that person, either a fractional general counsel with inhouse experience. They can be operating from a law firm, or you can bring one inside as an employee. My experience is that both work well in high tech small businesses, and are well worth it. I am one such counselor. My firm, Fulton Jeang PLLC has more.
Jonathan K. Hustis, the author, is a career business executive and practicing lawyer. He is a member of Fulton Jeang PLLC. His legal practice includes technology company corporate governance, M&A, compliance, financing, contracts, and privacy law. He is admitted to practice in Texas and federal courts in the Northern District of Texas. Jon is also a Certified Information Privacy Professional/US. You can reach Jon at jhustis@fultonjeang.com.
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