Can artificial intelligence meet the needs of small businesses? Some push to find out.

The Nashville Area Chamber of Commerce has been convening an annual meeting of local business leaders since the 1800s, but the most recent meeting had a decidedly modern theme: artificial intelligence.

The goal was to demystify technology for the Chamber's approximately 2,000 members, especially small businesses.

“My sense is not that people are wary,” said Ralph Schulz, the chamber's chief executive. “It's just not clear its potential use for them.”

When generative AI entered public consciousness in late 2022, it captured the imagination of businesses and workers with its ability to answer questions, compose paragraphs, write code, and create images. Analysts predicted that technology would transform the economy by driving a boom in productivity.

Yet so far the impact has been limited. While AI adoption is on the rise, only about 5% of businesses nationwide use the technology, according to a survey of businesses by the Census Bureau. Many economists predict that generative AI is still years away from measurably influencing economic activity, but they say change is coming.

“For me, this is a five-year story, not a five-quarter story,” said Philipp Carlsson-Szlezak, global chief economist at Boston Consulting Group. “On a five-year horizon, will I see anything measurable? I think so.”

While some of the largest companies, in Nashville and elsewhere, are finding uses for artificial intelligence — and dedicating time and money to develop more of it — many smaller companies are just starting to dabble in the technology, if they use it at all.

“The best and the biggest are currently working to implement it and get value from it, but the adoption curve is really ahead,” Carlsson-Szlezak said.

Allison Giddens, co-president of Win-Tech, a 41-employee aerospace manufacturing company in Kennesaw, Georgia, said she started using ChatGPT about six months ago for some operational tasks, such as writing emails to employees, analyzing data and draw up basic procedures for the company front office. A note taped to her computer monitor simply says “ChatGPT” to remind her to use the technology.

“We have to get used to actually using the tool,” he said.

But he faces obstacles in implementing it more broadly and using it to make his company more efficient. Sometimes it finds ChatGPT responses off base. Cybersecurity is important in her industry, so she has to be careful about the information she feeds into AI models. And it hasn't found a place for the technology inside the factory, where machinists make custom aluminum and titanium parts for the defense industry.

“There aren't many use cases for the shop yet,” he said.

Historically, technological innovations, including computing and the Internet, have taken many years or decades to spread through the economy and affect productivity and production. The American economist Robert Solow said in 1987: “The computer age is seen everywhere except in productivity statistics.”

Economists generally believe that the diffusion and adoption of generative AI will occur much more rapidly, in part because information flows more quickly than in the past. The consultancy EY-Parthenon, for example, in a recent series on generative artificial intelligence, concluded that the technology could increase productivity in three to five years.

But there are some significant barriers, including hesitancy to use the technology, legal and data security hurdles, regulatory friction, cost, and the need for greater physical and technological infrastructure to support AI, including computing power, data centers and software.

“We are still in the early stages of the revolution as we have started to see significant investment to create the foundation for that revolution,” said Gregory Daco, chief economist at EY-Parthenon. “But we haven't yet seen the full extent of the benefits from a productivity standpoint, from a greater production standpoint, from a greater labor distribution standpoint.”

David Duncan, CEO of First Hospitality, a Chicago hotel management company, said the company is working to ensure its internal financial data can be used by artificial intelligence systems in the future.

“We are planning the next generation of AI applications,” he said.

Duncan said he plans to use artificial intelligence to analyze this data and create initial draft reports, freeing up executives and general managers. The company, with about 3,600 employees, also hopes to leverage artificial intelligence to analyze weekly worker surveys over the course of a year to glean insights into trends in their teams' overall morale.

“I think we are in the early stages of a massive transformation in how we process ideas, strategies, data and business outcomes,” Duncan said.

According to surveys, the use of artificial intelligence is greatest in the information and professional services sectors, which include graphic design, accounting and legal services – traditionally white-collar jobs that have been least threatened by automation.

Research shows that marketing is among the most common uses of AI across businesses. Gusto, a payroll and benefits platform for small businesses, found that of companies created last year that used generative AI, 76% did so for marketing.

However, many economists believe that, in the long term, few if any professions will not be affected in some way by artificial intelligence. EY-Parthenon estimates that two-thirds of U.S. employment – ​​more than 100 million jobs – are highly or moderately exposed to generative AI, meaning those jobs could be altered by the technology. The rest, typically jobs with more social and human interaction, will likely be affected too, through activities such as administrative work.

And the spread of AI seems to be gaining momentum. A working paper from the Center for Economic Studies, using data from the Census Bureau's Business Formation Statistics, found a “substantial and discrete jump” last year in AI-related business applications, which could fuel the spread of AI. technology. The paper also showed that businesses born from AI-related applications over the years had greater potential than others in terms of job creation, payroll and revenue.

Putting this data together, “we believe there is potential for these AI-based startups to impact our economy in the near future,” said Can Dogan, an associate professor of economics at Radford University in Virginia and a of the authors of the study. .

“In general, existing companies should find out what they can do with these technologies,” he added. “I think this is the key to broader adoption.”

Chris Jones, the founder of Planting Seeds Academic Solutions, a training and tutoring company with nine employees and 100 to 150 independent contractors, is among those trying to figure out how to use emerging AI technologies. Mr. Jones, based in Dallas, said he was interested in using AI at his company in 2021 or 2022, but that he “never had the full focus to identify how AI could be incorporated in our business.”

It hopes to hire a consultant soon to show the company how to use AI for sales, administrative tasks and program operations such as resume building. He is aware of the potential effect on his employees' jobs, he said, but is clear-eyed about the changing economic landscape.

“As a business, I have to stay afloat, because the competition is real,” Jones said.

In Nashville, a driving force in pushing small and medium-sized businesses to embrace artificial intelligence is House Speaker Bob Higgins. He spoke with other business leaders, held webinars and worked with a Vanderbilt University professor who is an expert in generative artificial intelligence

Mr Higgins is also trying to lead by example. At Barge Design Solutions, an engineering and architectural services firm where he is CEO, his human resources team used generative AI to help create job postings that yield more qualified candidates for hard-to-fill positions. He also uses technology as a “thought partner” to prepare for meetings and create agendas.

The ultimate goal, he said, is “to help make Nashville this GenAI city.”

“If you live in fear,” he said, “I think you will be left out.”

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