Israel leads the world in artificial intelligence development. But walk into most Israeli small businesses and you will find operations that haven’t fundamentally changed in a decade.

Ask anyone in the global technology industry to name the world’s leading AI nations and Israel will appear on that list without hesitation.

The country’s credentials are genuine and substantial. Israel produces more AI startups per capita than almost any country on earth. Its machine learning researchers are cited in the foundational papers of the field. Its computer vision, natural language processing, and predictive analytics companies have been acquired by and integrated into the largest technology enterprises in the world. American banks, European manufacturers, and Asian logistics networks are running, in part, on infrastructure that Israeli engineers designed.

This is a story that Israel tells about itself frequently, and it is a true story.

Now walk into a small business in Petah Tikva, or Netanya, or Be’er Sheva. Sit down with the owner of a four-person accounting firm, or a local medical clinic, or an independent consulting practice that has been serving its community for fifteen years. Ask them about artificial intelligence.

What you will encounter, with a consistency that I find both striking and troubling, is a gap. Not ignorance — Israeli small business owners are generally well-informed and commercially sophisticated. Not indifference — they are acutely aware that the world around them is changing rapidly. Something more specific and more difficult to address: a combination of genuine uncertainty about where to start, deep concern about cost and complexity, and a persistent fear that the technology celebrated in every headline about Israeli innovation has nothing practical to offer a business their size.

Israel built the Startup Nation. Its small businesses are living in a different country entirely.

Two Economies That Don’t Speak to Each Other

The Israeli economy contains two distinct technological realities that operate in a remarkable degree of isolation from one another.

The first is internationally celebrated: the venture-backed startups of Tel Aviv’s tech corridor, the R&D centers that global multinationals have established in Herzliya and Be’er Sheva, the university research programs producing world-class computer science graduates who are recruited before they finish their degrees. This economy is globally connected, generously funded, and operates at the frontier of technological possibility.

The second economy employs the majority of Israeli workers and generates a substantial portion of the country’s domestic economic activity. It is made up of small and medium-sized businesses — the clinics, law firms, real estate agencies, consulting practices, and service businesses that most Israeli families interact with on a daily basis. This economy runs on long working........

© The Times of Israel (Blogs)