Last week I was asked to serve on a panel for an event for local small businesses. "Future-proofing your small business" was the main theme of the session, and naturally AI came up a lot. I figured I'd use this space to reiterate and elaborate on what I covered there.
To begin with, I believe it's coming a lot faster and better than most people realize. Many of us have had the experience (or heard about others') of our AI tool being laughably bad at something relatively easy. This was true a lot up until recently, and remains quite common. But, these things learn, and their learning curve is not only steep but getting steeper. We will wake up one day and things will be way faster, way better, and way more accurate than we can presently fathom. And it will truly be a wake-up call.
Because there is so much about our businesses and jobs that is, shall we say, commoditizable. Which is to say, it is something for which there is no differentiation. Which means that, if given a choice between paying $10 and paying $10,000, or waiting 10 minutes versus waiting 10 weeks, or 92% accuracy as opposed to 99.99% accuracy, customers will unanimously choose the cheaper and faster and better.
We are used to very few things being true commodities. A gallon of gas of a certain octane level is largely a commodity, no matter what the gas stations tell us about their gas being better for your car. But all apples are not the same, as there are different varieties, and even within a variety you can have a good apple and a bad apple. And of course things like computers and cell phones and dinner tables are not pure commodities in that their producers can differentiate their product in some way to get you to buy it.
And that's just products. Most services are never thought of as commodities. Many accountants can do your taxes, but there's a reason you pick your accountant, and it's not necessarily because she or he is cheaper or faster or better, right? (More on this later.) Same with massage therapists and car mechanics and foot doctors. Surely we humans have a moat against the fast encroachment of AI, right?
I would argue the possibility of being overtaken is sooner and more dire than we think. Every product and every service has aspects of it that are commoditizable. as AI gets cheaper and faster and better, the proportion of products and services that are commoditizable will grow, and the magnitude of cheaper and faster and better will also grow. At a certain point, it becomes untenable to compete.
What do I mean? The numbers I cited above are illustrative but they are not crazy. If you're used to paying $10,000 and you're offered to pay $10, that's a game-changer. So is a 10-minute wait as opposed to a 10-week wait, and so is 99.99% accuracy versus 92% accuracy.
What I think will also catch people off guard is what is commoditizable. I don't think the human element will be completely removed from the jobs of massage therapists and car mechanics and foot doctors. But computers and robots and scanners may end up doing 90+ percent of these occupation's work within a few short years. Not 100 percent, but enough to render obsolete anyone who is doing all of the work without technology.
So how do you build that moat? I think the clear answer is twofold. First, you have to embrace those tools yourself, so that the cost and quality and accuracy advantage is yours rather than others'. And second, you have to identify what of your product and service is not commoditizable, for which the human touch remains part of the value proposition. A robot may one day give me a massage for my creaky back, but if I go into the establishment and never once interact with a human then I'm not sure that's the best service out there. Same with the auto shop and the orthopedic clinic.
Easier said than done. But the revolution is coming. What will small businesses do to make sure they are not overthrown but instead survive and thrive?
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