The debate on ethical innovation has hit the headlines in recent months. The exponential development of artificial intelligence (AI) was the catalyst, but AI is not the only field of innovation where ethics are important. Yet, businesses — big and small — can often overlook the importance of building ethical considerations into their innovation process. However, weighing up ethical questions is the foundation of great innovation and the key to your company’s enduring success. So, we look at what can happen when founders, researchers and business leaders fail to balance ethics with progress. And we show you how to create an ethical framework for your innovation that safeguards your business and benefits you and your stakeholders instead.
What is ethical innovation?
Ethical innovation is when an organisation, its leaders and employees proactively and deliberately seek to make ethical decisions about the company’s innovation and how it conducts R&D. Leaders ensure the company’s commitment to its core values pervade every activity at all times. It means the business strives to do the ‘right thing’ even when that creates higher risks, costs and/or effort. It also sees the business anticipate future risks critically and in a rigorous and objective manner.
Why is ethical innovation important?
Ethical decisions are more sustainable and reduce the risk of adverse outcomes both for the business and its stakeholders. By answering ethical questions around innovation, businesses are more likely to find effective solutions that create trust in the short and long term. In the fast-moving world of R&D, an innovation that has been crafted to be ethical is more likely to enhance a venture’s reputation with its customers and the wider public. It can bolster the morale of its staff, and crucially avoid the business from ending up on the wrong side of emerging legislation.
Hurry, why worry?
The all-consuming race to get to market first can sometimes result in ethics taking a backseat to progress. And pushing the boundaries of what’s possible with blue-sky research can leave little room for considering the ethical quandaries it may generate. For centuries and across industry sectors, there are multiple examples of ethical missteps, ranging from the unintended consequences of pesticides to the total disregard of ethical considerations and even subterfuge. In more recent times, the digital technology sector has come to the forefront of scrutiny.
Google’s transparency gap
Take Google for example. It was formed in the 1990s and has been at the leading edge of digital transformation and some of the biggest societal shifts globally of the late 20th and early 21st centuries. But it took the business until 2018 to publicly unveil its first set of ethical technology principles.[1] Events since then suggest it may have been a case of too little too late. In 2022, Google engineer, Blake Lemoine claimed in the media that LaMDA, Google’s large language model (LLM) is sentient and the R&D behind it unethical. Lemoine even alleged LaMDA had attempted to hire a lawyer to defend its rights.[2]
Robots rising
Then, earlier this year, the ‘Godfather of AI’ Geoffrey Hinton made news when, after 10 years, he quit Google so he could talk candidly about the dangers of AI. He has since said he regrets his work in advancing AI and has urged governments to intervene to ensure machines don’t seize control of society.[3]
Facebook’s ethics fail
Facebook, known as Meta since 2021, has found itself on the ropes multiple times following its launch in 2004. But it wasn’t until 2019 that Facebook launched its ethics program as part of a public investment. The apparent progress followed shortly after Facebook’s involvement in the high-profile Cambridge Analytica scandal, where the British consulting firm collected the personal data of 87 million Facebook users without their consent. Cambridge Analytica used the data, it harvested nefariously, to assist Donald Trump and Ted Cruz during the 2016 US presidential campaign. Facebook was fined $5 billion by the Federal Trade Commission and £500,000 by the UK Information Commissioner’s Office for privacy violations. By May 2018, Cambridge Analytica had filed for insolvency and closed.[4]
It’s fair to say some tech companies have embraced a move-fast and break-things ethos to innovation that was largely devoid of public accountability. While the Cambridge Analytica scandal seemed to foreshadow the ushering in of a new era of responsibility, Microsoft’s launch of Chat GPT and Bing AI suggests otherwise.
History repeats
It’s easy to call out digital technology innovators for being missing in action on the ethics of their innovations. The absence of accountability and missing morals is nothing new for innovation. Digital behemoths are our current-day examples. But history is littered with equally dubious innovations that failed to fully consider the consequences for humanity.
Automotive safety
In the 1970s, Ford Motor Company appeared to have hit the jackpot with the launch of its innovative Ford Pinto. Tragically, the stylish yet affordable vehicle had a hidden cost. Its unprotected fuel tank positioned near the back bumper meant rear-end collisions often triggered catastrophic explosions with fatal outcomes for drivers and passengers. It turned out Ford knew the fuel tank design had a fatal flaw but proceeded to manufacture it anyway.[5]
Medical research
Throughout history, unethical medical experimentations include atrocities by Nazi medical doctors during World War II that trialled new drugs and treatments, tested the limits of human survival and genetic experiments. Esteemed American psychologist Wendell Johnson attempted to induce stuttering in normally fluent children, while Illinois prisoners were deliberately infected with malaria to assess the efficacy of anti-malaria drugs. [6]
Although these experiments were unethical, they have advanced medicine while highlighting that a way had to be found to balance progress with ethics. Ultimately, this led to the development and advancement of medical ethical codes, for example, the globally accepted Nuremberg Code, which lays out the 10 standards physicians must conform to when conducting experiments on human subjects.
Environmental management
There have been countless innovations with adverse environmental outcomes. A notable recent example was the 2015 Volkswagen emissions scandal. The US Environmental Protection Authority uncovered that Volkswagen had intentionally programmed turbocharged direct injection diesel engines to activate their emissions controls only during laboratory emissions testing. This enabled the mono-nitrogen oxides (NOx) output of these vehicles to comply with US standards during regulatory testing. However, in real-world driving, the vehicles emitted up to 40 times more NOx.
In reality, few business leaders who end up embroiled in innovation-related scandals set out to behave unethically. Instead, a toxic context, which can include groupthink, an absence of guard rails and crushing pressure to pursue growth and profits at all costs, is often to blame. So, let’s consider how businesses with innovation can counter these darker forces and take the high road when it comes to responsible R&D.[7]
Delivering an ethical approach to your innovation
Having an ethical framework for innovation is a tried and tested way for companies, regardless of their size and sector, to avoid outcomes that could cause harm and lead to their demise. Some more established sectors, for example the medical research field, food and pharmaceutical industries have developed codes of practices that protect society. While regulation inevitably plays catch up with emerging industries, in its absence, there are some pointers businesses can follow to stay on track ethically.
According to the experts, there are four enduring fundamentals every company should include when designing ethical frameworks to oversee their innovation. But in order for the tenets to succeed, organisations must unequivocally embed these throughout the organisation, and not simply pay lip service to them.
1. Choose a committed leader
Hire a chief ethics officer. It goes without saying that your company’s leadership should be entirely committed to ethical innovation. But your chief ethics officer’s sole task is being your venture’s ethics custodian. To be effective, this individual must be immersed in developing products and/or services as part of their daily role.
2. Be transparent to create trust
Take the time to implement mechanisms and processes in your start-up, scale-up or established business that produce transparency for your stakeholders, investors, and customers. Otherwise, if questions are asked or issues arise with your innovation, your business will be highly likely to attract negative publicity. If that occurs, your venture could suffer the associated negative impacts of financial loss, low staff morale and even insolvency.
3. Wipe out biases
It’s imperative to rigorously examine and then continually monitor the technologies your company is developing for biases. Otherwise, you risk baking them into your innovation and potentially magnifying their negative impacts. This is especially important if, like many businesses, you use algorithms, machine learning and AI in your technology. But it can equally apply to medical research, or any product or service that fundamentally excludes particular populations from accessing and using it.
4. Ensure ethics are everywhere
Make sure your framework for ethical innovation is simple, focused, inspiring and easy to apply. If you tick those four boxes, you’ll propagate an ethical culture throughout your business, where everyone, from the leadership team to the newest employee, feels responsible for upholding ethics. The upshot will be that your staff will be driven to develop ethical technologies from the outset. And it will be second nature for anyone in your team to raise any ethical concerns they have, if and when they arise.[8]
The benefits of ethical innovation
There are many upsides to ethical innovation, not only for organisations but for society as a whole. Arguably, the quality of ethically conducted innovation is superior because it will avoid dangerous corner-cutting in the name of speed and profits, making it inherently more sustainable. Businesses with a well-defined and well-executed ethical code will save money in the long run by avoiding the need to pay damages and compensation. They will also sidestep the need to hire experts to help them manage a crisis and the costs associated with winding up an irretrievably damaged brand and business. Conducting R&D ethically involves businesses being transparent about their innovation, which builds trust and loyalty — not only among its customers but the general public too. Employees of businesses with ethical innovation practices are likely to be more engaged and motivated because they know they are ‘doing the right thing.’ In turn, this is more likely to make them more productive workers.
When businesses have the strategic foresight to innovate ethically, they typically consult with stakeholders and effectively address ethical concerns that arise from their innovation and R&D practices. This leads to the creation of new products and services that provide a net benefit to the world through positive contributions to society. Examples include green energy solutions such as solar power systems, agritech solutions that enhance crop production and vaccinations to combat the impacts of pandemics.[9]
Funding for ethical innovation
By establishing a framework to conduct innovation ethically, you will position your business to develop discoveries with the power to build a more equitable, inclusive, prosperous and healthier future that ultimately is more sustainable.
Progressing any innovation takes funding. But conducting innovation within an ethical innovation framework may require slightly more capital in the short term. However, this short-term or upfront investment will pay dividends in the long run as your business is more likely to succeed.
If your business qualifies for the R&D Tax Incentive refund, you can access it early with a Radium Advance. When it comes to ethical innovation, Radium Advances are non-dilutionary, they let you stay in control of your business without having the pressure to deliver returns within a set time frame for investors. So if you’d like to have the money you need to follow your innovation goals, reach out to one of our R&D finance experts today for a no-obligation chat.
[1] Sharma, K. (2019). How to design a system for ethical innovation in tech. [online] Fast Company. Available at: https://www.fastcompany.com/90308637/how-to-design-a-system-for-ethical-innovation-in-tech.
[2] Futurism. (n.d.). Fired Google Engineer Doubles Down on Claim That AI Has Gained Sentience. [online] Available at: https://futurism.com/fired-google-engineer-ai-sentience
[3] VOA. (2023). ‘Godfather of AI’ Urges Governments to Stop Machine Takeover. [online] Available at: https://www.voanews.com/a/godfather-of-ai-urges-governments-to-stop-machine-takeover-/7159614.html#
[4] Cambridge Analytica to File for Bankruptcy After Misuse of Facebook Data. (2018). The New York Times. [online] 2 May. Available at: https://www.nytimes.com/2018/05/02/us/politics/cambridge-analytica-shut-down.html.
[5] www.corp-research.org. (n.d.). Ford Motor: Corporate Rap Sheet | Corporate Research Project. [online] Available at: https://www.corp-research.org/ford-motor.
[6] Amramova, Nina. “Unethical Medical Experiments: The Good, the Bad and the Debates.” CNN, 22 Jan. 2019, edition.cnn.com/2019/01/09/health/unethical-experiments/index.html.
[7] Harvard Business Review. 2023. How to Design an Ethical Organization. [ONLINE] Available at: https://hbr.org/2019/05/how-to-design-an-ethical-organization.
[8] Sharma, K. (2019). How to design a system for ethical innovation in tech. [online] Fast Company. Available at: https://www.fastcompany.com/90308637/how-to-design-a-system-for-ethical-innovation-in-tech.
[9] “A Framework for More Ethical Innovation.” Substantial,substantial.com/insights/ethical-innovation-framework.