Challenges Associated with Rapid AI-driven Technological Change

Challenges Associated with Rapid AI-driven Technological Change

The staggering pace of AI development and adoption is rapidly reshaping how economic development organizations (EDOs) operate, analyze data, and serve prospects. Even the invention of the internet and its integration into everyday business practices do not compare to the rapid advancement of AI technology.

“The pace of change is remarkable. I’ve been in business a long time; I’ve never seen anything like it,” said GIS WebTech CEO Ron Bertasi. “This is the most exciting and simultaneously challenging technology environment I have ever experienced in what has been a long business career.”

As AI capabilities continue to evolve at an unprecedented pace, economic developers must balance innovation with oversight to maximize value while maintaining the accuracy and credibility that site selectors and businesses expect.

Utility of AI Agents

AI agents are rapidly becoming one of the most transformative applications of artificial intelligence in economic development. An AI agent can make decisions and take actions to complete tasks, which differs from consumer-level chatbots that only answer questions or respond to basic commands. These AI agents and AI assistants enable users to submit questions in natural language and effectively engage with GIS tools to produce valuable output, such as infographics or maps.

“When you have an AI assistant, it improves access to GIS tools and efficiency for asking questions,” said Keith Cooke, Esri’s Director of Planning and Community Development Markets. “Now it just opens up access to even the most casual GIS user, allowing them to be able to access GIS tools without knowing anything about GIS.”

The challenge with the AI agents lies with users not recognizing the importance of governance and oversight. Understanding the sources from which AI systems retrieve information is imperative to ensure authority, authenticity, and accuracy.

“The problem with an AI agent is that if you don’t wrangle it, if you don’t put boundaries around it, if you don’t identify what you’re working with, it’s like having a ranch with no fences,” Cooke said. “I think making sure that you have a properly governed AI strategy is probably the most essential thing for really any organization, but certainly an economic development organization, to be able to understand where are we getting our data from, if it is authoritative, who maintains it, and what questions can it answer for us.”

Organizations can address these challenges through various approaches, with collaboration being a key component. Cooke encourages EDOs to identify areas of improvement, understand opportunities for automation, and assess existing workflows. From there, EDOs can develop a strategic path forward.

In addition, EDOs must collaborate with local and state officials and technology professionals. Through collaboration, EDOs can strengthen their AI capabilities, improve decision-making, and maximize the value of emerging technologies.

Human Element: What AI Can – and Can’t – Do

Though it may sound counterintuitive, one of the most difficult challenges companies face when implementing AI is the human element. Placing the right people in the right positions, who not only understand technology, but who can translate new technology into practical business solutions, is key.

“Everybody thinks it’s all about technology. Well, yes, it is,” Bertasi said. “But without the people to translate that technology into solutions for your customers, you’re not going to do well.”

For economic development organizations, the challenge extends beyond understanding AI itself. Communities are increasingly being evaluated by companies that expect fast access to accurate site, workforce, infrastructure, and demographic information. Economic developers must understand both the opportunities and limitations of AI to meet those expectations while maintaining data quality and credibility.

To address this need, companies such as GIS WebTech are partnering with economic development organizations to serve as trusted technology advisors and sounding boards as clients navigate rapidly evolving technology.

At the same time, a foundational understanding of AI remains essential for economic development professionals. According to Bertasi, one of the most significant challenges facing economic developers is the misconception that AI can automatically generate and maintain accurate property data.

“A lot of economic developers are being told that they can use AI for generating property data and it just isn’t there. It’s not going to be there for a long time,” Bertasi said.

Indeed, while generative AI tools can help summarize information and improve productivity, inaccurate property data can undermine site selection decisions and damage credibility with prospects. Maintaining reliable, verified data remains essential.

One area where AI shows significant promise is property search, which Bertasi believes is “about to explode.” GIS WebTech is currently preparing to introduce new products designed to support this emerging use case.

As AI capabilities continue to evolve, Bertasi believes the organizations that succeed will be those that combine emerging technology with experienced professionals who understand both the tools and the realities of economic development.

The Need for Education & Guardrails

Incenti has established itself as a prominent player in AI-driven solutions for economic development. The company offers products that help economic development professionals increase operational efficiency and streamline key processes. Their current Economic Development Operating System helps support back-office operations and enhances efficiency in the deal-making process.

Despite the growing adoption of AI technologies, education remains a critical component of successful implementation. Economic development organizations can only get out of AI what they put into it.

“Garbage in, garbage out,” said Incenti CEO Adam Perschke, quoting the well-known adage.

It is essential for EDOs to develop a working knowledge of the AI systems they use. One potential solution is the development of an AI curriculum, something Incenti is exploring through internal discussions.

In addition, the use of proprietary data in large language models remains a concern. Multiple risks are involved, including the potential violation of non-disclosure agreements. Improper use of proprietary data can also contribute to AI hallucinations, which could cause AI systems to generate false or misleading information.

“The guardrails and restrictions that should be there are not there in the public AI versions,” Perschke said.

To address these challenges, Incenti has focused on building a team with deep industry expertise. Everyone Incenti hires has economic development experience, allowing the team to better understand client needs and provide solutions that align with the realities of the profession.