Making Ethics Fundamental
In March 2019, on the occasion of the World Wide Web’s 30th birthday, Sir Tim Berners-Lee, the inventor of the web, urged businesses to make ethical considerations fundamental to their product design. “Companies must do more to ensure their pursuit of short-term profit is not at the expense of human rights, democracy, scientific fact, or public safety,” he said. “Platforms and products must be designed with privacy, diversity, and security in mind.”
The mere existence of guidelines doesn’t guarantee that those guidelines are up to the task of steering digital innovators through the ethical dilemmas they might face.
Most businesses, even digitally maturing ones, are falling down in this regard — and by their own admission. Digital maturity aside, only 35% of all respondents to this year’s survey say that their organization’s leaders spend enough time thinking about and communicating the impact of their digital initiatives on society. Respondents from digitally maturing companies are the most likely to say their leaders are doing enough, but even then, the percentage barely breaks into a majority, at 57%. Only 16% of respondents from early-stage companies answer this question affirmatively.
Less than half (46%) of CEOs say their company is spending enough time on ethical matters — a notable figure, considering that they have the most control over their company’s agendas. For CIOs and chief digital officers, that number drops to nearly 40%, and for directors/board members, to about 32%.
Only 35% of respondents to this year’s survey say that their organization’s leaders spend enough time thinking about and communicating the impact of their digital initiatives on society.
Still, some digitally maturing companies have begun incorporating ethics into their operations and leadership structures. In 2016, for example, software company Salesforce created the position of chief equality officer, filled by Tony Prophet, to address the shortage of diversity in Silicon Valley.12 Then, earlier this year, it added its first chief ethical and humane use officer, Paula Goldman, who, according to the company website, is charged with ensuring that Salesforce “drives positive social change and benefits humanity.”13 One executive we spoke to commented on the importance of thinking about a company’s broader obligations and impact, noting discussion of topics such as equality, trust, and the ethical use of technology at the 2019 World Economic Forum Annual Meeting in Davos, Switzerland.14 These issues are becoming particularly critical in today’s environment, as companies are increasingly being held accountable not only for their own actions and those of their employees but also for the actions of those with whom they do business.
It’s unlikely, however, that well-considered policies and high-profile posts are enough. If innovative teams have more autonomy and are expected to experiment, they’ll encounter situations where the guidelines don’t apply because the problem at hand hasn’t been envisioned. Who, for instance, could have imagined the ethical quandaries social media would present? Even dating sites and their algorithms can toss up unexpected moral dilemmas, such as how much, if any, A/B testing should be allowed with people’s profiles and date recommendations. It’s one thing to manipulate people’s choices of headphones, yet another to toy with their chances of finding love and happiness.
Berners-Lee’s stipulation for the Contract for the Web, a new effort among businesses, governments, and citizens to ensure that the web serves the public good, applies to any enterprise’s approach to thinking about ethics: “It must be clear enough to act as a guiding star for the way forward but flexible enough to adapt to the rapid pace of change in technology.”15
When problems do arise, a company’s ethical muscles will be tested, and if they haven’t been exercised, they may fatigue too fast. “You can have the best ethical code of conduct in the world, and you can nail it to the wall as the employees walk in,” Santoro says. “But if you don’t have an ethical culture to support it, you’ve really got not very much.” Enron, after all, had a values statement.16
Ethics often seem like the part that’s bolted on after the corporate engine has been built and tuned, like the speed limiters applied to some school buses and long-haul trucks. But, as MetLife’s Baxter notes, ethical norms and policies are not add-ons but an integral part of a digitally maturing company, akin to an automobile’s brakes.
How to Begin
Our fifth annual study of digital business reveals that a company’s approach to innovation has a decisive impact on its progress toward full digital transformation. Now more than ever, a company’s belief in the importance of innovation is not sufficient; taking concrete steps to drive innovation is what matters.
A survey of more than 4,800 managers, executives, and analysts and our interviews with 14 executives and thought leaders establish that the most digitally mature enterprises have innovation efforts that reach both outside and inside their organisations. They encourage flexibility but develop ethical standards to guide them through the unanticipated dilemmas created by the loosening of hierarchical structures. To achieve digital maturity, consider the following:
Look beyond your organization to drive innovation.
Digitally maturing companies identify opportunities to foster and participate in innovative ecosystems, which are less formal and more flexible than traditional partnerships. Some of these ecosystems are platform- and product-driven, like Amazon, while others provide a way to tap into new innovations or market opportunities, like the MetLife-Techstars accelerator described in the introduction. Because ecosystems involve less control than traditional partnerships, managers must communicate clear objectives to employees and create governance practices to guide participation.
Reassess how your company cultivates and supports cross-functional teams.
Cross-functional teams are an integral part of the innovation efforts of digitally maturing organisations. They function best when managers pair team autonomy with clear team objectives that are understood both by the members and by the stakeholders working with them. Cross-functional teams ought to be evaluated against performance metrics at the team and individual levels. Of course, not all teams in an organization need to be cross-functional. Build up your use of cross-functional teams strategically in instances where increased innovation and agility can add significant value to the organization’s business model. See, for example, CarMax’s use of teams to drive new business opportunities.
Loosen formal hierarchies. Let teams explore and occasionally fail. Learn fast, and correct as you go.
The biweekly cross-functional team meetings at CarMax exemplify how a company can foster an innovation mindset centered around products rather than projects. The involvement of top executives across departments has helped leaders cultivate a supportive environment. A similar move is underway at another software-as-a-service company we spoke with. The company has been shifting from project-aligned to product-aligned funding. Traditionally, project-aligned funding necessitated budgeting for a specific project at the outset, which limited the scope of the outcome to what was paid for at the start. By contrast, product-aligned funding encourages innovation and exploration, with funds received as agreed-upon milestones, including return on investment, are achieved.
This can be a substantial change. Give yourself time to achieve it. A marathon, after all, is just a collection of footsteps.
Establish ethical guardrails as you drive innovation in your company. Make sure your company’s values keep pace with its innovations and are attuned to all the markets you operate in.
Start talking about the importance of ethics as an enabler of growth rather than as a constraint. Incorporating ethical considerations into product design can enable an organization to get ahead of potential problems before they materialize. If it’s too late for that, consider establishing ethics policies now, if none exist. These policies can be reassessed and updated as technologies and markets evolve. Finally, employee enthusiasm for ethical and social issues can be leveraged to build a culture of trust and civic engagement. The creation of such a culture will not only benefit your brand but also attract new talent and new external partners who want to work with you.
The impact that digital technologies have on organisations, we find that the goalpost of digital maturity keeps moving. Because internal collaborations and ecosystems enable companies to be not only more innovative but more agile as well, businesses will most likely continue to expand their participation in these arrangements. But where does this all lead? News headlines tell us that ethical challenges are a risk as organisations innovate and transform at an accelerating pace. Companies that take the time to understand this risk and prepare for it by establishing ethical guardrails to support their path forward are in a better position to reach their digital goalpost faster and safer.