The use of AI has been a boon for business owners, because it enables them to analyze large amounts of data quickly and inexpensively, which accelerates their decision-making process without the need to consult others. This expansive, fast input can make it appealing for business owners to consider replacing their human business partners with an AI subscription, i.e., securing the same wisdom but without any hassles. The temptation to jettison human partners for an AI substitute, however, poses serious risks, including (1) the loss of access to capital, (2) the lack of real-world experience that challenges the owner’s views, and (3) increasing the isolation that many business owners already feel in leading their companies. This post reviews benefits for business owners who incorporate AI into their operations but also considers negative outcomes that may result if owners abandon their human partners and place sole reliance on digital guidance.
The Benefits of Implementing AI for Business Owners
The targeted use of AI provides business owners with significant value. AI tools can quickly analyze data regarding sales, pricing, manufacturing, labor and other costs, and they can also provide owners with detailed financial projections and guidance on a 24/7 basis regarding strategic options that are available to expand their business. The incredible speed at which AI processes information permits business owners to make decisions on an expedited basis. The takeaway is that business owners can deploy AI tools to improve their bottom line by achieving cost cutting or increasing profits, or some combination of the two.
But if business owners opt for the use of AI in a way that eliminates or sharply reduces the role of their human partners, this decision can lead to dire consequences for the business, which are discussed below.
Loss of Access to Capital
As businesses grow, they often need to secure additional capital to fund the costs of their expansion and avoid becoming burdened by excessive debt. That is one of the reasons why a private company owner may add business partners who can contribute capital, as well as opening doors to other new sources of capital for the business.
While AI is a helpful digital resource that can identify potential new sources of capital for the owner to consider, AI cannot directly open doors for business owners to secure capital from human partners. Stated another way, AI cannot write checks, and securing an AI subscription will not create introductions to a new network of friends and colleagues who have capital to invest in the business. As a result, an AI strategy that deemphasizes human partners may close off or reduce access to new capital sources the business needs to expand.
Lack of Real-World Experience
AI has vast amounts of knowledge and analytical capacity, but it does not provide input based on actual life experience. Experience in life is often the best teacher, but AI has not gone through a market downturn, laid off employees or scaled back a business in response to adverse market conditions. We learn more from our mistakes than our successes, and partners who have experienced setbacks have invaluable life experience they can tap into, which they can rely on to help business owners avoid repeating the same costly mistakes the partner made in the past.
A couple of examples may help make this clear. AI can evaluate a resume and point out the pros and cons of a potential lateral hire for a management position. But a business partner who has experience in the industry will have a strong sense of what personality and skill set is necessary for success, and in addition, the partner may have industry contacts who know the candidate and may be able to offer inside information about the specific applicant. This type of real-world experience may help avoid hiring someone who would be a disaster for the business.
Similarly, AI can analyze various performance indicators, compare compensation structures, and offer guidance to the business owner about how to create a strong company culture. But an experienced business partner can assess what is not working in the company’s culture and offer suggestions that will help build a more vibrant and cohesive work environment. From popular culture, the recent Top Gun remake featured Tom Cruise taking his pilots to the beach for a touch football game. The flight commander wanted the pilots back in the classroom, but Cruise’s character knew that team bonding on the beach would bring them closer when it counted. Here, AI may offer ideas that make sense on paper without appreciating what truly fosters human connection.
The Echo Chamber Effect — AI as Cheerleader
Depending on the AI model, the results may be supportive without offering hard-hitting and necessary critique. AI is a composite of huge amounts of data that can be analyzed at breakneck speed. But it does not have skin in the game as it has not invested time or money in the business, and it could be weighted toward confirmation bias. When a critical decision requires the application of informed judgment rather than mathematical certainty, does the business owner want to trust the information that AI provides to one of its subscribers? Or would the owner place more trust in advice offered by someone who shares the same risk of success or loss in the business?
In short, human business partners are likely to be more accountable than AI on key decisions such as the hiring or firing of employees, investing in new areas of the business, or deciding on which potential new business partners to bring into the business. Will AI provide the business owner with a firm “no” when a key decision has to be made, and if so, will the answer be trustworthy? Ultimately, the business owner must decide whether to accept advice that is being offered solely by AI or whether to insist on also obtaining thoughtful input from another experienced businessperson.
Isolation and Its Consequences
A final issue for the business owner to consider is whether using AI to the exclusion of human partners will become more isolating. Running a business can be lonely when the buck stops with the owner who has to make final decisions frequently. A business owner who consults solely with AI in making decisions to the exclusion of human partners may become more disconnected and disengaged, which is not healthy. A study conducted by the University of California, San Francisco, found that 49% of entrepreneurs deal with at least one mental health condition. Common issues include anxiety, depression, and burnout.
AI can help the business owner make decisions far more promptly. But creating a business model that involves seeking collaboration and consensus with others who are part of a management group can create a much stronger sense of teamwork for the owner and the company as a whole. Engaging in this collective teamwork also will help the business owner avoid experiencing burnout and depression.
Conclusion
AI is here to stay. The benefits it provides for business owners are profound, and its ease and accelerated delivery of results add to its utility. But jumping on the AI bandwagon should not lead business owners to dispense with their human business partners, whose real-life experience, extensive contacts, and wisdom add value to the company in a host of different ways. The balance that can be struck here, instead, is for business owners to use AI tools to enhance the work they do with their business partners, whose wise input can make the use of AI even more positive and impactful for the business.