These are no longer things that employees have to imagine but tangible realities that workers can now embrace.
Since artificial intelligence (AI) platforms such as generative AI language model ChatGPT-4 have gained traction, more and more people are discovering simple ways to speed up and improve business processes.
The possibilities of AI are endless; yet with great power comes great responsibility.
BusinessBecause spoke to AI experts at top business schools to find out: what are the challenges of artificial intelligence in business?
Artificial intelligence meaning
You’d be forgiven for not knowing exactly how to define artificial intelligence since AI covers a vast array of different things. It’s common for artificial intelligence and machine learning to be thought of as one and the same. Yet there are distinct differences between these two terms.
Jacob Kinsey (pictured) is the director of Illinois Business Consulting at the University of Illinois Urbana-Champaign Gies College of Business and runs consulting strategy and disruption labs with business school students.
He explains that ‘AI’ is an umbrella term while machine learning is a subsection of AI.
“AI expands more broadly to encompass all forms of computer-simulated human behavior,” he says.
This breadth is one of the reasons why it can be hard to pin down an exact definition of a complex phenomena such as AI. It also defies precise definition as it is adapting and changing day by day.
Ram Gopal is a professor in Information Systems and Management at the University of Warwick Business School.
“AI is about machines trying to mimic human activities and intelligence, understanding logic, reasoning, and solving problems,” he explains.
Types of artificial intelligence
Since AI is an umbrella term, there are multiple different branches or types of artificial intelligence.
The generative language processing model ChatGPT-4 is the most obvious example of AI but there are also deep learning models such as Dall-E, which transforms text into imagery, facial recognition systems, robotics, narrow AI such as Siri or Alexa, computer vision, and more that are developing every day.
Well-known examples and application of artificial intelligence in business
There are few businesses untouched by AI, and here are some of the common uses of artificial intelligence in business.
Whether you’re searching for a new movie to watch on Netflix, browsing for clothes, or on YouTube, you’ll have noticed that you’re confronted with suggested products or services that are based on your previous habits—these recommendations are driven by AI.
Customer service chatbots are also popular among businesses, helping to answer customers’ queries within seconds without the need for a labor force.
Plus, if you’ve ever encountered your credit card getting blocked after using it in a foreign country or for a large transaction, you’ll have experienced AI algorithms at play. AI is regularly used in fraud detection and cybersecurity, using historical data to identify unusual patterns or ‘risks’ that could amount to fraudulent activity.
Benefits of artificial intelligence in business
There are endless possibilities and benefits that artificial intelligence can bring to business practices.
“The key issue businesses face revolves around uncertainty—AI can be a huge tool to manage this problem,” explains Ram from Warwick.
“There are always going to be blind spots when humans make decisions—AI can solve this issue,” he says.
For instance, financial institutions and credit unions are using AI to enhance the decision-making process in consumer loan underwriting. The use of AI in this process can have the benefit of increased accuracy in consumer underwriting decisions, reduced costs, and improved efficiency and performance, according to the Congressional Research Service.
Iis Tussyadiah (pictured), a professor of Intelligent Systems in Service at the University of Surrey, explains that AI tools such as ChatGPT
can be helpful for business functions that rely on content, such as marketing.
“It’s not only that you achieve more efficiency in creating content, but there’s also diversity in the content that it can create,” she says.
Coding is another area that’s likely to benefit from AI. ChatGPT can create useful code, help launch websites, and generally speed up intricate tasks related to programing.
The power of AI to automate mundane tasks that require human intelligence is one of its main benefits, believes Ram from Warwick.
As a result, the business world is likely to see a shift in the types of jobs available and the disappearance of jobs that can easily and efficiently be undertaken by AI.
“AI poses the question: do we all need to be working 40-hour weeks to create the goods and services? With automation and AI, you don’t need as much human input. There will need to be a fundamental rethink of what work means in this advent of technology,” adds Ram.
One example is service robots that are automated by AI and can take on repetitive or dangerous tasks. On the one hand, this could be seen as taking away jobs from service or construction workers, while on the other this could be improving the economy as this labor can be redistributed to other areas.
“The question then becomes as a society how efficiently do we redistribute that labor, so it doesn't create economic hardship?” says Jacob from the University of Illinois Urbana-Champaign.
The main challenges of artificial intelligence in business
While technological innovation aims to improve human life, there are challenges afoot. What’s more, these challenges are likely to impact every industry, so business leaders need to prepare themselves for these rapid developments.
One of the main issues with generative AI relates to privacy concerns around data and questions of ownership of information.
“With generative AI tools such as Dall-E, these sometimes don’t provide references to the original data or source. This is where copyright infringement could be a potential risk,” explains Iis from the University of Surrey.
Businesses can overcome these issues by ensuring that the basis of the idea or concept comes from the employee, while generative AI platforms can then assist in the process.
Another issue with AI is verification. If you’ve ever asked ChatGPT to complete a task such as write an article, video script, or provide a summary, you might have noticed that not every part of the response is factually correct.
Algorithmic management is another cause for concern.
Iis from the University of Surrey researches the deployment of AI in hospitality and tourism management. She explains that the management of workers via AI in gig economy platforms such as Uber and Deliveroo can create problems as humans are essentially managed by an algorithm that dictates rewards, punishment, and performance.
Regulation of artificial intelligence: a solution to solving the challenges of artificial intelligence in business?
As we pave the way for a world becoming more deeply entrenched in AI systems, how do we work with the limitless capabilities of this disruptive technology? For many, the answer lies in the regulation of artificial intelligence.
“Regulation helps create clarity on where we can innovate and push forward industries,” says Jacob from the University of Illinois Urbana-Champaign.
While innovation is necessary to create such new possibilities, leaving innovation unchecked can have dangerous consequences.
“Regulation is necessary to protect against discrimination, the unfair use of AI to harm individuals, and lack of transparency,” says Ram (pictured) from Warwick.
In 2021, the European Parliament proposed regulatory framework for AI. This proposal is the first of its kind and suggests that AI systems used in various applications will be evaluated and categorized based on the level of risk these pose to users.
While regulation is necessary in many cases, some argue that it can also be prohibitive, by stifling the progress of artificial intelligence.
“It’s about not restricting the development of the technology itself but identifying the far-reaching impact of the applications and then ensuring that the negative impacts will be limited,” says Iis from the University of Surrey.
The call for responsible artificial intelligence reflects the need to minimize biases and build an AI system that’s equitable and fair.
The true potential of artificial intelligence in our daily lives and in the business world will continue to be revealed. One thing, however, is certain: both business leaders and employees must learn to collaborate effectively with AI for the greater good.
“If you look at human existence, technology has helped increase our standard of living—we’re better off now than we were 1,000 years ago—this trend is likely to continue,” concludes Jacob from the University of Illinois Urbana-Champaign.
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