From day one of your business, maybe even before day one, you should be prepared to make digital a part of both daily operations and innovation. It's a solid way to be efficient and reach more people.

But a new study from Deloitte Digital and MIT Sloan Management Review reveals that there are big differences in ethics and innovation across the different stages of digital maturity (early stage, developing, and maturing).

Smaller companies don't have the ethical guardrails larger ones do

The study, which surveyed 4,800 managers, executives, and analysts from global organizations, found that just 10 percent of early-stage companies cite innovation as a strength of their company, compared with 36 percent in developing businesses and 81 percent in maturing companies. That's primarily because maturing companies are more likely to give more time and resources for experimentation, form digital partnerships with external partners, and develop cross-functional teams.

More mature companies get some flexibility in return for their approach. But the risk then is that there is a greater potential for ethical screw-ups. So to keep some semblance of control and stay on track, mature companies end up putting more ethical guidelines in place as protection. Seventy-six percent of digitally maturing companies say they're using policies that consider ethics regarding digital innovation. But only 62 percent of developing companies and 43 percent of early-stage companies say that's true for them.

But companies at all stages believe they could do better. Just 35 percent of the respondents across maturity levels say their businesses are talking enough about the ethical implications of digital business and the influence their digital initiatives are going to have on society. And fewer than half of CEOs (46 percent) say their businesses are spending enough time on ethical matters.

Why we're not spending more time on ethics

Gerald Kane, co-author on the report and professor of information systems at the Carroll School of Management, Boston College, says many executives simply don't have the training, experience, or knowledge to tackle all the new ethical challenges digital technologies are posing.

And Kane identifies some key roadblocks that are preventing leaders from dealing with ethics well.

  1. "An increased pace of business means small ethical failures can quickly get out of control. I've heard it said, 'An inch off at launch means miles off in orbit.' This was the challenge for one ride sharing company -- small lapses in recruiting, training, and governance spiraled into a toxic culture.
  2. "Rapid scalability of companies means that success in a business sense often has unanticipated additional outcomes. These second-order effects -- or the consequences of success -- result in some unexpected downsides. For example, success in the house-sharing business is changing real-estate markets.
  3. "Ambiguity and constant change means that many ethical challenges are new and not easily foreseen. It's difficult for companies to foresee ethical challenges in the way design decisions can go wrong.
  4. "Decentralized decision making means that employees far lower down in the organization are having to make ethical decisions when they haven't really been equipped to do so. Recent airlines have experienced this challenge with employees applying rules that did not align with corporate decision making causing missteps in ethical judgment.
  5. "The legal framework is extremely behind, in many cases laws 30-40 years old govern the digital space.  Lawmakers are not digitally savvy. In fact, many laws prevent companies from making ethical decisions. As we've seen with social networking sites and fake news."

But co-author Doug Palmer, principal at Deloitte Consulting LLP, sees good reason to be optimistic.

 "We are already starting to see a shift where companies are looking at this more broadly and early on. For example, a CMO of a large bank reviewed many of the digital capabilities presented and asked the question, 'Just because we can, doesn't mean we should'--customer perception of the bank's usage of digital data and preserving customer trust was ultimately the driving force."

4 things you can do to make ethics better

The Deloitte/MIT SMR report gives you some good tips for improving ethics in your own business.

  • Start talking about how important ethics are as an enabler of growth, rather than a constraint. The authors of the study use the analogy of brakes on a car here. You end up going faster when brakes are available because you trust that they'll keep you safe. Great ethical policies work the same way, keeping you out of the mire as you work quickly.
  • Incorporate ethical considerations into product design. This can keep potential problems from actually becoming reality.
  • Create, reassess, and update ethical policies as the market changes. This ensures you're considering elements that are relevant for both current and future work.
  • Leverage employee enthusiasm for ethical and social issues. This lets you build trust and get workers more involved in both the business and community. It attracts new talent and partners, as well.

In sum, ethics don't have to be, as the report puts it, "bolted on after the corporate engine has been built." In fact, a frank discussion about the ramifications of what you're doing and how to act--and action based on that discussion--can be a key driver in staying competitive and getting to your goals at a rapid pace. Know the answers to "why," "what if," and "should we" and a lasting legacy of innovation will follow.

 

Published on: Jun 14, 2019
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