Structurally embedding ethics in your organisation
The use of advanced and artificial intelligence-powered algorithms can lead to serious ethical breaches. Deloitte’s Digital Ethics proposition helps organisations to develop a clear vision of their business principles, and to create a governance framework to ensure that their use of technology is aligned with their values.
A few years ago, a teenage girl in Minnesota received a booklet from a department store with coupons for baby gear. Her father was furious: Why was this company sending these coupons to his daughter? A couple of days later, the girl admitted to her father that she was, in fact, pregnant. The department store had developed an algorithm that was able to assess the likelihood that a customer was pregnant based on her shopping behaviour – in this case, the algorithm happened to be spot on.
The story sparked great controversy. The department store hadn’t breached any of the US privacy laws of the time, but for the general public, it had crossed an ethical boundary. Living in a world in which companies know more about our children than we do ourselves made people feel uneasy. Since then, the number of incidents in which the use of data and advanced or artificial intelligence (AI)-powered algorithms caused controversy has exploded. Every week there is something in the news: hacks, leaks, data breaches, algorithmic bias and privacy infringements. By now, large technology companies are even formally warning investors of ethical uncertainties around AI.
“Companies are actively developing and exploiting their technological capabilities, often without considering the ramifications,” says Tjeerd Wassenaar, partner at Deloitte Risk Advisory with a focus on ethics and corporate values. “This can lead to serious reputational damage, legal issues and fines, and worst of all, the loss of trust and loyalty of customers. Trust is a company’s most valuable asset: if you betray your customers’ trust for short-term profit, you will lose in the long run.”
Safeguarding ethics in the use of advanced or AI-powered algorithms has become one of the most prominent questions of this era. Deloitte’s Digital Ethics proposition addresses this question. It provides a framework to help organisations develop guiding principles for their use of technology, to create a governance structure to embed these principles in their organisation, and finally, to monitor progress and see whether these principles have been effectively implemented.
Leadership needs to step up
When companies run into ethical breaches, it is usually not because employees deliberately want to hurt the trust of customers. It’s simply not clear to them what the values of the company are and how they relate to their work, says Wassenaar. “Take the example of the warehouse: the data analytics department and the marketing team were probably just trying to do their jobs as well as possible. Nobody had instructed them to think about ethical aspects of their campaign, such as: How do our customers feel if we target them with advertisements for baby products if they didn’t inform the company explicitly about their pregnancy? Should we have an age barrier with these promotions?”
Marketing and sales departments are usually instructed to reach their targets, which might incentivise them to utilise their company’s data capabilities to the max, says Wassenaar. People working on technology are often driven by technological innovation and want to push the boundaries of what is possible. Wassenaar believes that this is where the leadership of a company needs to step up. “You need to have a clear vision of your values, communicate them deeply within your company and make sure your use of technology is aligned with these values.”
What makes this issue more complex is that legislation is typically slow to catch up, certainly with rapidly developing technology like data analytics and AI. “It is not simply a compliance issue that you can leave to your legal department,” Wassenaar says. “It is an ethics issue: What are your business principles? What are the boundaries you set for yourself?”
Digital ethics: a structural approach
Deloitte’s Digital Ethics proposition helps organisations deal with ethical considerations in their use of technology in a structural way. “We take into account eight factors that are relevant for Digital Ethics: accountability, transparency, privacy, inclusiveness, bias awareness, informed consent, proportionality, and individual data control,” Wassenaar explains. “We offer a list of possible steps organisations can take to get a grip on these complex issues.”
First, Deloitte assesses a company’s current situation with a ‘Digital Ethics Quick Scan’. Based on this, an improvement plan is made to address immediate areas of attention. Deloitte can help to define the core principles of an organisation through vision and strategy sessions with senior leadership and by interviewing stakeholders inside and outside the company. A Digital Ethics Survey can explore how employees feel about these topics.
The next step is to establish governance frameworks to put these values into practice. This can involve launching awareness campaigns and training for the workforce. Other innovative options include e-learning, gamification or an ethics escape room in which people need to solve an ethical dilemma within a time limit. “It is important that a company’s core principles do not end up somewhere in a brochure that no one will read,” says Wassenaar, “but that they are truly understood and lived up to throughout the entire organisation – from the board room to the interns.”
Deloitte can help to draft new policies and procedures, like an appeal procedure for customers who object to an AI-based decision. It is also possible to create new functions, such as an ethics department. “More and more companies have an ethics department that helps to develop training programmes, and that can investigate when there are reports of things going wrong,” Wassenaar says. A crucial factor here is that this department should report directly to someone on the board, he adds. “Empowering the ethics function sends a strong message to the organisation that ethics matter, and it ensures that the ethics department can have an impact.”
Finally, Deloitte can help to set up benchmarks to see whether the principles have been effectively implemented. “It makes sense to return after a couple of months or years to see whether the principles have been applied throughout the organisation, or whether there are some areas that are still pretty rogue,” Wassenaar says. Moreover, since technology is developing rapidly, organisations might be confronted with new possibilities and ethical dilemmas that require new thinking about principles and related policies and procedures. “Embedding Digital Ethics in your organisation requires continuous attention.”
Exploring potential ethical implications when deploying advanced technologies has several business advantages, says Wassenaar. First of all, it will help organisations avoid legal issues. Secondly, it is more efficient to think about ethics early on: “If you start thinking about digital ethics when you have a finished product, you might have to redevelop the entire product,” says Wassenaar. “Thinking about these issues at an early stage helps you to get to the market faster and in line with your business principles.”
Third, Digital Ethics will help build to create a strong reputation. “If customers do not feel comfortable using a service, if they feel it’s too aggressive or insensitive, they seek alternatives,” Wassenaar says. “On the other hand, having the customer’s trust and loyalty ensures a long-term business profitability.” The same goes for employees: a clear vision and strong reputation will attract the right workforce, which is an important business advantage.
Most importantly, embedding digital ethics will help to make a positive impact on society. Advanced technologies can be very impactful – both in a positive and a negative way, Wassenaar explains. “If you make sure you think of all ethical considerations in time and have all policies and procedures and a governance framework in place to live up to them, not only will you gain a competitive advantage and make profits, but you’ll also create a positive impact on the world.”