Why AI Will Replace Small Business CEOs Sooner Than You Think!

Professor Saras of the Darden School of Business, once highlighted the critical role of the "middle class of business," where firms with five to three hundred employees are the engines of job creation globally. These firms, however, face unique challenges that can stifle their growth, particularly their need for specialized expertise.

Typically, these businesses require specialists in areas such as marketing, sales, finance, product buying, customer, and vendor management. However, they often need only fractional roles and cannot afford to hire full-time specialists for each function. This lack of accessible expertise can limit their growth potential significantly.

Historically, outsourcing these roles has not been a viable solution either. The fractional nature of their needs and the requirement for domain-specific knowledge meant that generalists, often found through outsourcing, did not fit the bill. These generalists lacked the deep understanding of the business’s specific context and needs.

This is where AI comes into play. If AI specialists can be developed for these roles, using the business context derived from existing digital data and augmented with direct input from business owners, these AI tools can provide the expertise needed. AI specialists could be available 24/7, assisting in making better decisions and improving the quality of work in areas where businesses currently lack human specialists.

A critical requirement for this transformation is the increase in context lengths for AI models. The goal is to create a framework that encompasses the entire business context of a small business, which can then be applied to a Large Language Model (LLM) with a sufficiently high context length. This setup would allow the LLM to be utilized in specific functional roles effectively.

One such framework is EOS, a small business framework designed to help growing businesses by capturing a vast amount of business context. An AI could start by building an EOS framework for a business by working with the owner and then use it to suggest activities that a marketer, salesperson, or other functional experts would perform to drive business improvement.

Moreover, many small business owners start as functional experts rather than aspiring CEOs. For instance, a business owner in a trading business might excel in product sourcing, a restaurant owner might be an exceptional chef, and a manufacturer might be a skilled salesperson. As their businesses grow, these owners are often pushed into a CEO role for which they may not be well-suited, moving away from their areas of expertise.

Looking ahead, it’s worth considering whether AI could eventually assume the CEO role in these businesses. An AI acting as a CEO could provide higher-level strategic guidance in addition to making specific functional decisions. This would allow business owners to continue focusing on their areas of expertise while still benefiting from strategic oversight and direction.

In summary, AI holds the potential to transform how small businesses access and utilize specialized expertise, enabling them to overcome growth limitations and thrive in their respective industries. By leveraging frameworks like EOS and increasing context lengths in AI models, small business owners can tap into the power of AI to drive their businesses forward.

Now will these growing SMBs hire people as well? Or will their growth be entirely in AI-agents!?