AI in SMEs: Why Basic Understanding is a Leadership Must

AI in SMEs: Why Basic Understanding Becomes a Leadership Imperative

In the executive suites of mid-sized companies, I've been hearing the same sentence for months: "The technology behind it is too complex for me, that's what I have people for." Behind this statement lies the quiet hope that one could strategically lead Artificial Intelligence without understanding how it actually works.

My clear message: This is a dangerous fallacy.

If you want to deploy AI in your mid-sized enterprise not just as an interesting experiment, but as a genuine value creation lever, you cannot simply accept the "black box" approach. Because AI strategy without technical foundational understanding quickly develops into a serious governance risk.

The Foundation: Stephen Wolfram's Eye-Opener

This is precisely where Stephen Wolfram's book "What Is ChatGPT Doing… and Why Does It Work?" comes in. A real eye-opener for decision-makers who want to understand what's really behind the eloquently formulated answers from ChatGPT and similar tools.

The good news: The book is now also available as a German translation. Even more important: You don't need a mathematics degree for it. Wolfram accomplishes the remarkable feat of translating highly complex technical relationships into clear, understandable language. Instead of a formula desert, he offers illustrative examples and meaningful diagrams.

Not a Tool Manual, But a Foundation

This book is deliberately not a "current tool manual" that becomes outdated in six months. It conveys timeless fundamentals. Because the fundamental principles of how Large Language Models function change much more slowly than features, updates, and hype cycles.

Those who truly understand the principle once will make better, more informed decisions with the next tool generations as well. This is the crucial difference between reactive tool-hopping and strategic AI leadership.

What Many Decision-Makers Overlook: AI "Knows" Nothing

The central insight that Wolfram articulates crystal-clear: AI "knows" nothing in the classical sense. It generates answers probabilistically, based on patterns in training data. It is not optimized for truth, but for plausibility.

This sounds abstract at first, but has massive practical consequences for your company.

The Crucial Question for Executive Management

Who ultimately makes better decisions for your company?

• Someone who blindly trusts the eloquently formulated result because it sounds convincing?
• Or someone who understands why a model can sound plausible and still be wrong, and therefore makes verification and governance mandatory?

The answer is obvious. But it requires a rethinking in many executive suites.

The Strategic Bottleneck of the Future

In the coming years, the bottleneck will not be text generation. AI models will become increasingly powerful at producing content. The real chokepoint will be the evaluation of reliability, quality, and accuracy.

Companies need leaders who can:

• Critically question when AI outputs are reliable and when they're not
• Establish governance structures that can handle probabilistic systems
• Define processes where AI may be "creative" and where hard fact-checks are mandatory

All of this presupposes that you understand how the system fundamentally operates. Delegation does not replace understanding here.

What This Means Strategically for SMEs

For mid-sized companies, this results in concrete action areas:

1. Invest in Education, Not Just Tools

Read this book. Even better: Have your entire leadership team read it. Organize a workshop where you collectively discuss the insights and translate them for your company.

The investment of a few hours of reading time pays off many times over when strategic missteps are avoided as a result.

2. Define Clear Processes and Governance

Use the knowledge gained to establish structured processes:

• Where may AI be "creative"? In brainstorming, initial drafts, idea generation?
• Where do we need fact-checks? In legal texts, technical specifications, customer communication?
• What verification paths are required? Who verifies critical outputs before they leave the company?

You can only answer these questions if you understand how AI actually works and where its systematic weaknesses lie.

3. Make Technical Basic Understanding a Leadership Competency

The days when technical understanding was purely an IT task are over. In a world where AI penetrates all business processes, technical basic competency becomes a core qualification for executive management.

This doesn't mean every CEO must be able to program themselves. But understanding how the systems fundamentally function, what possibilities and limitations they have, is indispensable for responsible leadership.

From Black Box to Strategic Clarity

The good news: The path from "black box" to strategic clarity is achievable. Wolfram's book demonstrates that complex technology can indeed be made understandable without simplifying or trivializing it.

Clarity instead of hype is the order of the day. While many are still chasing the next prompt workshop, smart decision-makers are building the fundamental understanding they need for the long term.

Conclusion: Technical Basic Understanding is Mandatory, Not Optional

AI will fundamentally transform the business models of mid-sized companies in the coming years. The question is not whether, but how you shape this transformation.

Decision-makers who develop the necessary basic understanding will:

• Make better strategic decisions
• Recognize and manage risks earlier
• Establish governance structures that actually work
• Position their companies to be future-proof

The alternative of retreating into non-knowledge and delegating everything is no longer an option. Because responsibility cannot be delegated, only tasks can.

Your Next Steps

1. Get Stephen Wolfram's book (in German or English)
2. Block time for reading and reflection
3. Discuss the insights with your leadership team
4. Define concrete governance rules for AI deployment in your company
5. Make technical basic understanding a fixed component of your leadership culture

The investment in understanding is the best investment in your company's future viability.

And now to you: Do you consider technical basic understanding a mandatory competency in executive management, or do you delegate it completely?