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Artificial Intelligence
AI-Driven Decisions in Business
Balancing technology with founder intuition.
Posted October 8, 2024 Reviewed by Abigail Fagan
Key points
- AI can sharpens business strategies, but finding a balance with human intuition is key for entrepreneurs.
- AI brings data-driven insights, but true success lies in blending technology with gut instincts.
- Trusting AI means using it to inform decisions, not replace the human touch that drives innovation.
What began as casual networking at a recent meetup turned into a spirited debate on AI’s influence in business. While we were excited about AI’s potential to provide insights that once took days to uncover, concerns about losing our human touch emerged.
Some saw AI as a tool for sharper strategies, using data to predict trends and enhance operations. Others argued that intuition and relationships are essential parts of business decisions. We concluded that AI and human instinct don’t need to be at odds. The real challenge is using AI to inform decisions while preserving the human element of entrepreneurship.
AI is changing the way entrepreneurs approach decision-making, turning instincts and guesswork into sharp, data-driven strategies. For many founders, AI acts as a tool that provides valuable insights drawn from large datasets. However, this shift also brings challenges, particularly the feeling of giving up some control over critical business decisions. Trusting AI requires both an understanding of the technology and a consideration of its psychological impact on entrepreneurs (Wilson & Daugherty, 2018).
Powering Up Your Decisions
Startups often thrive on quick, high-stakes choices. Traditionally, entrepreneurs have relied on experience, intuition, and market knowledge to guide their strategies. AI is now adding a new dimension to this process. With the use of machine learning algorithms and data analytics tools, startups can analyze market trends, customer behaviors, and financial patterns to gain insights that were previously difficult to obtain (Jordan & Mitchell, 2015).
Why Letting Go Feels So Hard
Despite these benefits, adopting AI in decision-making is not without its psychological hurdles. Entrepreneurs are often accustomed to relying on their instincts and hands-on involvement. Handing over key aspects of their business to an algorithm can feel like losing control, which may lead to fear, doubt, or anxiety. Founders may worry about what happens if the AI makes an error or misses important nuances that only human intuition might catch. This internal conflict can create stress, potentially resulting in hesitation or decision paralysis (Raisch & Krakowski, 2021).
There is also a deeper concern about identity. Many founders take pride in being the primary decision-makers for their companies. Using AI in this way can sometimes feel like diminishing their role in guiding the business (Glikson & Woolley, 2020).
The Secret to Easing Your Mind
How can entrepreneurs build trust in AI tools and overcome these psychological barriers? A few strategies can help:
1. Get to Know Your AI Through Familiarization. Learning how AI works, what data it uses, and how it generates recommendations is a crucial step in building trust. Understanding the technology can reduce fear and turn AI from a confusing tool into a helpful partner (Dietvorst, Simmons, & Massey, 2015).
2. Ease In With Gradual Adoption. Entrepreneurs can start small by using AI to support less risky decisions before applying it to more critical, high-stakes business areas. This approach allows founders to see the value of AI over time, building confidence in its capabilities without feeling overwhelmed (Raisch & Krakowski, 2021).
3. Balance the Brain and the Bot by Blending Intuition With AI. AI is powerful, but it has its limitations. By using AI-generated insights as a starting point and combining them with their own experience and market knowledge, entrepreneurs can create a balance. This approach maintains a sense of control and enhances decision-making (Glikson & Woolley, 2020).
Make It Work for You
In addition to these steps, entrepreneurs can use psychological techniques to support their transition to AI-enhanced decision-making. Mindfulness practices, for example, can help founders stay focused and calm when interpreting complex AI data (Good, 2016). Cognitive reframing, or changing how one views the use of AI from “losing control” to “gaining support,” can also be helpful in shifting attitudes toward AI tools.
Peer networks and mentors who have successfully integrated AI into their decision-making processes can also provide valuable support and insights, normalizing the experience and offering practical advice (Raisch & Krakowski, 2021).
Moving Forward with Smarter Decisions, Better Balance
AI is undoubtedly reshaping how entrepreneurs make decisions, providing insights that were once difficult to access. However, to effectively use AI, entrepreneurs must also address the psychological aspects of adopting this technology. By learning to trust AI while still relying on their intuition and experience, founders can improve their decision-making processes.
The key is to find the right balance, using AI as a tool that complements human judgment rather than replacing it. In doing so, entrepreneurs can navigate the challenges of AI adoption with greater confidence and steer their startups toward more informed, resilient futures.
References
Dietvorst, B. J., Simmons, J. P., & Massey, C. (2015). Algorithm Aversion: People Erroneously Avoid Algorithms after Seeing Them Err. Journal of Experimental Psychology: General, 144(1), 114–126.
Glikson, E., & Woolley, A. W. (2020). Human Trust in Artificial Intelligence: Review of Empirical Research. Academy of Management Annals, 14(2), 627–660.
Good, D. J., Lyddy, C. J., Glomb, T. M., Bono, J. E., Brown, K. W., Duffy, M. K., & Lazar, S. W. (2016). Contemplating Mindfulness at Work: An Integrative Review. Journal of Management, 42(1), 114–142.
Jordan, M. I., & Mitchell, T. M. (2015). Machine Learning: Trends, Perspectives, and Prospects. Science, 349(6245), 255–260.
Raisch, S., & Krakowski, S. (2021). Artificial Intelligence and Management: The Automation–Augmentation Paradox. Academy of Management Review, 46(1), 192–210.
Wilson, H. J., & Daugherty, P. R. (2018). Collaborative Intelligence: Humans and AI Are Joining Forces. Harvard Business Review, 96(4), 114-123.
