It’s important for innovators to establish ethical guardrails.
Editor’s note: A version of this summary was provided by getAbstract.
The internet sparked rapid standardization within value chains, enabling innovative interlopers to break them faster than ever before. Yet, companies that occupy only a small space in an ecosystem risk losing sight of the big picture. Often, these disrupters focus solely on consumer demand without regard for any long-term negative consequences on society. SAP chief innovation officer Max Wessel explains why it’s in your business’s best interest to develop technology that addresses potential ethical issues from the very start.
The creators of autonomous automobiles carefully considered the moral issues pertaining to the development of technology that enables multiton vehicles to operate in the same space as pedestrians and human-driven transportation, Wessel notes. However, not all technology innovators tread as carefully. Often, disrupters limit their visions to fulfilling consumer demands with cheaper, less complicated, and more accessible products without considering the long-term repercussions of their business models.
The late Clayton Christensen’s Theory of Interdependence and Modularity holds that when companies develop new technologies, they attempt to manage every aspect of the system’s design to optimize performance. For example, Apple initially controlled every part of the iPhone’s complex system. As the components became standardized, other companies entered the fray to specialize in specific pieces of the system. The internet and other technologies increase modularity in value chains across industries, which enables other businesses to insert themselves into the value chain.
Morally responsible startups develop technology and create ethical benchmarks as if they already dominate the industry. As new developers create products in response to consumer demand in a narrow slice of a system, individuals enjoy the abundance of choice without worrying about the overall negative effect on society. Moreover, the rate of innovation outstrips governments’ ability to regulate preventively. That’s why the onus of establishing these ethical priorities rests on the innovators.
As an organization, “put yourself in the role of standard-bearer, instead of just imagining what you can do to break apart the value chain,” Wessel argues. Assuming ethical responsibility for an innovation may decelerate a company’s development in the short run but will be a competitive advantage in the long run. Apple’s attention to privacy protection in its technology may have slowed its progress compared with competitors’, but Apple has gained public trust.
Other companies, such as Uber, were late to address certain moral issues but worked to adapt, which arguably helped fend off user backlash.
Create an objective advisory board to review the ethical considerations of your company’s activities. Genetic testing firm 23andMe handles possible regulatory and user concerns proactively. Executives created an independent board to review the ethics of the company’s activities — for example, around its customer data. Such prudence has given 23andMe an edge when dealing with regulatory bodies and made its good intentions more credible for consumers. Taking its responsibility seriously has helped the company create a more solid foundation for future success.
Advisory boards made up of people with different perspectives, backgrounds, and expertise provide guidance on relevant issues and counter the cognitive bias that exists in every organization. In the media industry, for example, established companies such as The New York Times and The Washington Post understand the role they play in society. Relative newcomers building the next generation of communication technology must be aware of the implications of their business models at scale and understand the existing players’ precautionary measures.
Management’s role is crucial. The CEO should provide clear guidance on ethics and infuse those principles into the culture. Don’t take shortcuts, even in times of crisis. Google and Apple are stepping up to trace and track infected individuals in response to the COVID-19 crisis, yet they can’t disregard privacy considerations, even during a global pandemic.
Takeaways from the session:
- Value chain disrupters often fail to consider the negative consequences that their innovations might have on society.
- Morally responsible startups develop technology and create ethical benchmarks as if they already dominate the industry.
- Create an objective advisory board to review the ethical considerations of your company’s activities.
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