Are You Making Ethical Decisions During the Digital Transformation Process?

Digital transformation represents the critical response needed by organizations to meet rising customer expectations, deliver scalable individualized experiences, and respond to market forces with ever-increasing levels of business agility.

Digital services and disruptive technologies such as cloud computing, robotics, AI and big data combined with optimised operating models enable organizations to drive innovation and respond to internal and external events quicker and cheaper than ever before.

Whilst digital transformation is, of course, enabled through technology, these observations should remind us that the human dimension is as important as technology. What we stand for and how we behave represent the fundamental concepts of ethics and if organizations want to deliver enduring success in a digital world they will need to ensure that above all, they understand the need to act ethically.

Ethics is the practice of making a principled choice between right and wrong, it’s about how people ought to act, not how they do act. And whilst the topic has in the past, struggled to gain acceptance by the business community, things are thankfully, much different now.

Not only is ethics seen as important by many organizations, it now represents a key differentiator in a highly competitive market where reputation and values are as important as their products and services.

Whilst ethics is clearly something all organizations with a digital transformation agenda should actively embrace, the most difficult challenge will be at an individual level – organizations do not make decisions, individuals do.

Ethics is no longer simply a question of ‘right’ versus ‘wrong’, sometimes there is more than one ‘right’ answer depending on the viewpoint taken. In many cases, individuals will need to make a decision requiring a choice to be made between alternatives that are not only less than desirable, they all have consequences for other stakeholders that will need to be considered – a true ethical dilemma.

Digital professionals and executives will need to determine what the ‘right’ thing to do actually is from an ethical perspective. Notwithstanding the level of ethical awareness or ethics training that may or may not exist within organizations, what is considered ethical can vary across individuals, groups, religions and cultures, and in a global and fast-moving digital society, these leave considerable room for interpretation.

Even when the right course of action is clear, real-world competitive pressures can cause individuals to make decisions that could have damaging consequences for others. Being ethical will ultimately mean having the skills and moral courage to challenge existing norms and act in an ethical manner. So, in a digital world, what does being ethical actually mean and how can we translate ethical values into real-world ethical decisions?

Business ethics for digital organizations

Behaviours that reinforce trust and demonstrate integrity, for example, will be as important as the technical challenges faced by application integration, cybersecurity and data governance. The rights of the individual, for example, must be respected by accepting the duty to do no harm.

When organizations act in ways that are deemed unethical by others they are likely to attract adverse local, national and even international media attention.

The events surrounding Volkswagen especially, will not be easily forgotten. Once a household name throughout the world as a pioneer in motor vehicle engineering, Volkswagen is now likely to be remembered more for its unethical behaviour than for any of its previous achievements.

While digital initiatives may be able to generate long-term organizational value, such benefits must be set against the issues raised by declining trust, prompted by the unease at the way some organizations are exploiting digital technology.

Confidentiality and data security issues remain; not only do breaches of information occur at unacceptable rates, but organizations have also been reluctant to inform those affected when they do. Equally, concerns regarding accountability are becoming more vocal as existing mechanisms may no longer be valid, or worse, compromised by the growth of AI and machine learning algorithms to make autonomous decisions.

What is becoming clear is that trust in the digital economy is only likely to be achieved if business leaders are willing to make ethical decisions despite working in highly competitive environments where the desire to rapidly deploy digital services is likely to prevail over the need to consider the ethical implications of doing so.

Top 5 ethical principles for digital transformation

1. Design for privacy, security and integrity

Whilst the opportunities to generate innovative and lucrative insights from big data are likely to be significant, so too are the risks from perceived unethical behaviour, whether actual or merely unintentional. How data is collected, managed and used is not just a legal issue, it is an ethical issue.

In the digital world, transparency and integrity must be the core values that guide professional behaviour. Organizations must use data in responsible and ethical ways; and that means not using it in ways that are considered intrusive, manipulative or disrespectful to others.

Being transparent means that organizations must state their intentions regarding data usage and allow their customers to provide their consent. Organizations are often criticised for the amount of customer data that they collect and monetize. Part of the challenge here is the disconnect or lack of transparency around the value exchange between customers and service providers. Any benefit gained from collecting personal data must be shared by both parties and not exploited for monetary gain.

The concept of ‘informed consent’ is a key principle within ethics, referring to permission granted in the full knowledge of the likely consequences. This represents a significant challenge to organizations harvesting data, especially personal data for analytics as very little may be known about the intended use of the data when it is collected.

In reality, obtaining informed consent may be impossible or prohibitively expensive owing to the scale of the task but that said, the principle should still be adopted during the design and development of digital services where possible. Even then, informed consent will remain the subject of some debate as organizations will still need to consider both the validity and scope of consent provided if agreements are mandatory to access digital services.

Already, concerns have been raised over the ability of mobile phone software to track individuals’ movements even when the location services feature on the phone is inactive and reports that facial recognition applications are being used in certain countries have a darker objective - to collect personal data for reasons that are likely to be less than sincere.

2. Promote trust

Data consumers, whether they are individuals, groups or organizations must be able to trust the digital services and the data they are using.

Those who collect and manage data must uphold the principle that its integrity must be assured if it is to be of value to consumers. Assuring data integrity must mean organizations have a duty to ensure that the data they hold is subject to robust governance and audit procedures. Simply put, organizations must know what was put there hasn't changed.

Digital infrastructures provide the capability to not just hold data but to enable it to be made available to others for a multitude of uses, including validation, replication and analysis. If information consumers are to trust the underlying data driving their services, it must have a clear provenance, end-to-end traceability from source to the user interface, and be of sufficient quality, fit for its intended purpose.

If the provenance and veracity of the data cannot be verified it creates a significant level of risk on those consuming it – once it’s been processed, any actions undertaken as a consequence can’t be undone.

A 2014 survey by the Pew Research Center in the US found that only 11% of individuals were at least ‘somewhat confident’ that online video and social media sites would keep their personal data private. Part of the challenge is the difficulty of segmentation of consumers by their attitudes to privacy, which are context-specific and defy generalization. But it’s a challenge that businesses need to address: nine out of ten internet users in the UK and the United States would avoid doing business with companies that do not protect their privacy (Deasy, 2013).

Organizations who are racing to deliver ‘the art of the possible’ without acknowledging the core principles of privacy, security and integrity are likely to leave themselves exposed to high levels of ethical risk.

3. Beware of bias

Unintentional ethical behaviour can be caused by many things, but one of the more likely reasons will be due to the subconscious biases that can influence human behaviour.

Confirmation bias is probably the most well-known example, where individuals seek or interpret information in a way that that confirms their beliefs, hypotheses or expectations and dismisses opinions and information that are contrary to these. ‘Cherry-picking’ data that will be used for analysis, research or testing purposes is one potential consequence of confirmation bias and one that could raise ethical concerns with those expecting such activities to be performed with a high level of integrity and impartiality.

Digital transformation programmes are especially at risk of bias often showing any form of favouritism to clients, suppliers and subcontractors are probably one of the more challenging dilemmas consultants are likely to experience during their engagements. The most likely reason for this is that the boundaries between demonstrating loyalty to stakeholders and behaving in a

way that gives them an unfair advantage are not always clear. For example, is it acceptable to give a favoured supplier information concerning a competitor’s quote so the supplier has a better chance of offering the best quote?

Equally, organizations responding to a tender that has been drawn up and managed by a team of consultants on behalf of their client have the right to expect the process will be fair and transparent. Competitors rightly invest time and money in the bidding process and they have the right to expect a level playing field. If this right has been violated, this may negatively affect the way they work with other organizations in the future.

4. Ensure there is accountability

Inference models and algorithms are fundamental components within the burgeoning range of ‘smart’ digital services that provide an artificial intelligence and machine learning capability.

Owing to their ability to combine social data with decision-making engines, concerns have grown about the extent to which clear accountability structures can be maintained. For example, if algorithms are used by financial services organizations to make decisions that would normally be made by qualified and regulated professionals, questions must be raised around where accountability lies.

Organizations seeking to develop digital services must, therefore, ensure these services are not used to avoid or reduce corporate accountability.

5. Promote an ethical culture

Organizational culture can be described as the set of shared values, beliefs and norms that influences the way individuals within it think, feel and behave.

Values especially are important as they articulate what the organization stands for, such as ‘providing an excellent digital experience’ or ‘excellence through innovation and teamwork’.

Whilst corporate values can be readily found on corporate websites, publishing a list of values is not the same as adopting values. Value-driven organizations are those that actively demonstrate their values and use them to guide their behaviour, even if doing so it means making some difficult decisions. Such values are possible, being ably demonstrated by Ben and Jerry’s which started by selling scoops of homemade ice cream at a loss, and has now built a brand that has a reputation for caring more about people than profits.

Whilst digital transformation has the potential to create opportunity, value and success at all levels within the organization, these must be achieved through fairness, honesty and integrity. Digital organizations, therefore, have a moral responsibility to safeguard their employees from taking unnecessary risks that could ultimately prove to be damaging to both the individual and the organization. Let’s not forget that professional reputation is as important to individuals as it is to organizations.

Ethics for Digital Success

In the digital economy, the successful organization will be the one that is not only aware of ethical values such as trust, honesty, fairness, confidentiality and accountability but actively uses them to do the ‘right’ thing and make decisions that are above reproach. How well such values are adopted and shared amongst their employees, suppliers and other key stakeholder groups will ultimately determine the level and type of success achieved.

Deasy, D., “A Booming Market for Mobile Commerce Where Trust Is Essential,” TRUSTe blog, January 28, 2013.