Artificial Intelligence: Shaping SME's for the Future

Text of the “Freedom Talk” by Dr. Ronald Meinardus, Regional Director of the Friedrich Naumann Foundation for Freedom (FNF) in Chennai, August 26, 2018
artificial intelligence for SMEs in india

Delivering the “Freedom Talk” at the annual celebratory event of our partners TFSC in Chennai has become a pleasant tradition. Over the years, the organizers have proven highly topical and forward looking in selecting the theme they wish me to talk about. I remember sharing thoughts about e-commerce, then it was digital transformation and, this year, the theme given to me is “Artificial Intelligence and SMEs”.

I am pleased to share with you some information and personal commentary about this important topic. Likewise, I hasten to add that I am nowhere close to an expert, I am neither an engineer nor an entrepreneur and all what I will say today is derived from my readings and my own superficial deliberations.

Some of you may ask, what is the relationship of the topic with freedom - as I am delivering the “Freedom Talk”. Artificial Intelligence – or AI – has much to do with innovation and technological progress. Both of these flourish in a free environment.

Freedom and innovation are two sides of one coin. Freedom (in a liberal sense) is never without limits. It is always restricted, limited by the principle of responsibility. The borders or limits of technological progress have rightly become a topic of debate. This is a very controversial and in parts emotional debate with strong ethical undertones. As we ponder about the potentials of AI, some warn of the devastating impact these new technologies may have on existing employment patterns. Others voice ethical concerns when humans enable machines to replace humans.

Among the prominent critics has been Elon Musk, the American billionaire and tech entrepreneur who has warned that “the danger of AI is much greater than the danger of nuclear warheads by a lot and nobody would suggest that we allow anyone to build nuclear warheads if they want.”  Musk, himself in the business of artificial intelligence demands “regulatory oversight” for the evolving industry.

While we may not all agree with the first part of Musk’s assessment, there should be no question that this field needs regulation. The only question, I believe, is how this regulation would look like and who is in charge.

Let’s look at a definition of AI. The Encyclopedia Britannica defines it as “the ability of a digital computer or computer-controlled robot to perform tasks commonly associated with intelligent beings”.  A newspaper report describes AI as “the computer science that aims to replicate the critical functions of the human mind.”

It is almost a platitude that AI will revolutionize our economies - and likewise our lives. The question seems to be more how fast and to what extent the massive disruptions will occur. In an extensive report Price Waterhouse Cooper (PwC) terms AI “the most significant general purpose technology of our era”. With some likening AI to the discovery of fire, or the invention of the printing press, this is a rather modest wording.  

All agree that we are at the beginning of implementation; mainly big tech companies from the US and China are aggressively advancing AI and machine learning. Some say, it is a matter of time and AI will conquer the world economies. Therefore, businesses of all sizes need to adapt or fall behind – and ultimately perish.

The next phase of digital transformation will have winners and losers. It is too early to determine the disruptive impact of AI on the Indian economy; I would assume Artificial Intelligence will create more upheaval than earlier phases.

India’s government is taking the challenges seriously. The Ministry of Commerce and Industry has set up an Artificial Intelligence Task Force and the National Institution for Transforming India (NITI) Aayog is working on a national program to promote research and development in the field.

While here and there we read about success stories of innovative Indian start up entrepreneurs, the discussion about AI in this country is still strongly focused on the strategic level with the operational implementation of Artificial Intelligence still in the early stages.

One challenge also for India is to close the widening gap with the US and China, a challenge that is also felt strongly in Germany and other European nations.

I highly recommend the PwC report which gives a detailed overview of the policies and the possible areas of adaptation of AI in India quoting concrete examples. The report highlights the potentials in the fields of agriculture and healthcare – with the latter particularly pertinent not at least following the announcement of the government’s national health scheme. The government – and possibly many Indians in need of professional health care - will be inspired by the following sentence:

“Access to AI-powered intelligent technologies can boost the productivity and accessibility of the existing resources such that they can serve more patients with the dual benefits of improved outcomes and at lower costs.”

While this is music in the ears for patients and politicians, reality is not there yet. The PwC-report cautions that the successful use of AI-applications and robotics is dependent on standards for data transformation, high bandwidth communication networks, provisions for vocational training and, last not least, domain-focused education in schools and universities covering AI applications and robotic.

Importantly, the need for skilled highly specialized experts and engineers is also highlighted in reports about the challenges facing AI implementation in Germany. Also there the lack of expert staff is a particular concern of small and medium sized enterprises.

Big companies have started long ago to employ digital technologies such as AI and machine learning to optimize their business processes. SMEs, on the other hand, are still at the beginning.

I have come across numerous media reports which describe the adoption of AI as a matter of life or death for SMEs. Others are more cautious; I tend to side with them.

“While it’s true that AI is still in its infancy, many small businesses are already leveraging the technology, if indirectly”, writes Adam Uzialko. As a first step, these firms use services for digital marketing and advertising of third party companies such as Facebook or Google which apply AI.

“An essential ingredient for AI to really work is a large data set, and many small businesses simply aren’t capturing the volume of data that demands AI intervention”, says Uzialko, He goes on to argue that small businesses don’t really need to move on the AI front right now. His advice: SMEs should prepare for the coming wave of innovation, study the industry and think about suitable strategies for the long run.

This would also be my advice to SMEs in this part of the world. Training of staff or hiring expertise would be an essential element of any strategy – as should TFSC actively taking a role in the ongoing public debates about suitable policies in the field.

I am positive TFSC has chosen this important topic with foresight. I hope our partner will develop their own strategy to deal with Artificial Intelligence so as to optimize the marketing and member support, to name but two possibilities.

My Foundation encourages you to take up this topic in your annual planning so that you may provide expert seminars, trainings and mentorships for SMEs in Tamil Nadu and beyond. It is important that your members and others learn how to deal with a technology that will impact - if not revolutionize – how they will earn their money in the future and change the nature of work.