Business Growth & Strategy

High-level questions for leaders from an AI expert

Since the launch of ChatGPT in November 2022, the use of AI in small and midsize businesses (SMBs) has become mainstream, creating efficiencies for day-to-day tasks across many different areas of their business. Many experts have come forward, helping make this new technology accessible and understandable. There is the risk to SMBs not taking advantage of AI as a competitive advantage, and also an advantage in their ability to be nimble in harnessing the power of AI.

AI consulting for small businesses

One of the experts helping business leaders hone their approach is Michael Kanaan, former (and first) Chairperson of AI for the U.S. Air Force and author of “T-Minus AI: Humanity’s Countdown to Artificial Intelligence and the New Pursuit of Global Power.” He recently spoke to a group of Vistage leaders at an event held in Dallas-Ft. Worth, offering a framework for leaders to guide their approach to AI.

He recognized the difference between the current advances vs what has happened in the past. “Even with previous technological shifts everything was classical, it was about inputs to discrete answers. Now it is about data to predictions. Think about how that changes your world.”

He also acknowledged the new vocabulary and set of acronyms that might confuse people. Expanding your language and understanding is critical to expanding our perspectives as philosopher Ludwig Wittgenstein shared “The limits of my language mean the limits of my world.“

How can small businesses use AI?

Kanaan defined 4 distinct areas that leaders need to focus on when using AI for small business, delving into each It starts with executive decisions, then moves into ensuring the goals are set, investments are aligned with goals and policies are in place.

1. Executive choices

CEOs need to lead the decision-making process, creating the rationale behind these decisions using three strategic questions offering guidance

  • What’s your plan?
  • What’s your expenditure?
  • Do you have strategic patience?

Kanaan advises that these questions take time to answer and that leaders should be aware that “it will cost more than you think. It will take longer than you think.” But with early successes, Kanaan believes that companies can “start seeing the world through the lens of AI and what kind of solutions and predictions it could solve for.”

Kanaan uses the Gartner hype cycle to illustrate where we are with AI today and visualize how focusing the conversation on risk blindness over succumbing to the natural inclination of risk aversion brings us to a plateau of use in a more streamlined manner.

AI for SB slide 3

Managing AI is not a back office function, solely aligned under the CIO or relegated to an IT function; it’s an R & D mindset that must be instituted throughout your entire company. Designing cross-functional teams across your business disciplines is the only real thing Kanaan has seen work for companies. The people on cross-departmental teams will shape and inform your next step(s).

2. Framing use cases for AI

Once a vision has been developed, the next step is the art of crafting compelling use cases and determining what specifically can and will be done. AI can help small businesses when the technology is aligned with different goals, focusing on productivity and creativity.

Kanaan shared this simple framework using productivity and creativity to divide tasks into 4 categories, which align with the questions leaders should ask themselves about where the greatest opportunity lies. “This formula existed before the 1950s in psychology called the JHA Window,” Kanaan shared. “It’s a really elegant way of thinking about the world that’s also infinitely divisible from top-level strategy down to each individual use case,” he continued. It helps leaders answer the three important questions:

  • What do I know?
  • What don’t I know?
  • How do I manage across it?

AI for SB slide 10

Known Knowns: Both the problem and the solution are well understood. AI can help small businesses in the following areas:

  • Automated customer service
  • Inventory management
  • Process automation for things like billing and invoice processing

Known Unknowns: The problem is understood but the solution is not. Areas that small businesses could use AI to help determine the solution include:

  • Product development
  • Marketing personalization
  • Disease research for healthcare and biotech

Unknown Unknowns: Both the problem and the solution are not understood

  • Exploratory data analysis
  • New business models
  • Advanced scientific research

Using this framework, leaders can determine where the greatest opportunity lies and diversify the breadth and depth of their efforts and investments.

3. Build the foundation

From the top down, it is important to ensure your technology portfolio is leveraged effectively, maximizing the full potential of data, people and systems. Leaders need to consider not just what they need to invest in, but the specific criteria for those investments. Kanaan recommends that leaders put an investment strategy that considers the relationship between data, talent and hardware and software.

AI for SB Slide 13

Questions for CEOs and business leaders to ask themselves about whether they have the proper foundation for AI:

Do you have good data?

Kanaan defines good data as high volume, high velocity and high veracity. Having enough data that is current and accurate is critical to effectively being able to use it to make predictions.

If you have the data, do you have the systems?

Al functions at the baseline require robust computing capabilities that are part of a scalable infrastructure. Additionally, partnerships and licenses are needed for users of these applications, which is important as free versions are riskier in terms of offering less security and privacy. He urges leaders to understand the litany of tradeoffs associated with what they decide to outsource versus develop internally.

Do you have the expertise?

Contrary to what one might think, people are the most critical element of the AI equation. Leaders need to put policies and lifecycle governance in place and provide education to upskill people to understand and leverage these tools. Promoting talent to roles focused on this is also important, and while cross-departmental teams are critical, it is also necessary to give one person authority.

4. Effective due diligence

To future-proof their investments, leaders need to focus on effective due diligence. This not only protects themselves, their employees, and the choices they make but also ensures they’re guiding decisions and actions the right way and for the right reasons in an enterprise world.

Prioritize cybersecurity. Kanaan cautions that cybersecurity is NOT a cost center. Risk is not about compliance, risk is contextual and temporal. It’s a moving thing. The world’s borders are not just geographic; if you think you’re not at risk, you are at risk. CEOs can avoid punitive damages by conducting due diligence that will lessen the damages when the mistake occurs; the event itself is inevitable.

Create (or embrace) an AI ethical framework. Ethical frameworks help establish common ground regarding values and principles a community can agree upon and adopt. Based on the contributions of many organizations and entities, the goal is to create alignment on ethical guidelines and standards. These frameworks can be adopted or adapted for a company as a way for all workers to understand

Anticipate regulatory change. States ahead of the game have differing laws about data, cybersecurity standards, and operational guidelines. Federal regulations will not keep up with the pace of change. For instance, GDPR, already in place in Europe, creates difficulties that can be mitigated by being proactive with security and adopting ethical frameworks.

For small businesses embarking on a journey with AI, it is important to make strategic decisions to bridge the digital divide aligning with the ultimate goals of your enterprise. At the same time, processes, security and governance need to be in place to protect your organization, your employees, and the integrity of your decisions. Be mindful of the new context of anti-monopoly and antitrust in the AI era, and ensure your use of AI embraces democratic values and norms.

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About the Author: Anne Petrik

As Vice President of Research for Vistage, Anne Petrik is instrumental in the creation of original thought leadership designed to inform the decision-making of CEOs of small and midsize businesses. These perspectives — shared through repo

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