Making an impact: corporate social responsibility

A close-up photograph of a single water droplet about to hit a pool of water; pool of water is causing a circular ripple motion. Water, in this case, signifies sustainability. Business Impact article for Making an impact: corporate social responsibility.

How impact and CSR feed into the sustainability debate, and what Business Schools could and should be doing to exert a greater influence on business and society

A new way to do business with social impact is emerging – purposeful, ethical and sustainable. This approach, with a focus on business as a ‘force for good’, disrupts established thinking around traditional profit-based models, but is this model viable?

With the most forward-thinking organisations actively putting people, the environment, and positive impact first to achieve a fairer society and a more sustainable economy, there is evidence that pursuing a ‘force for good’ business model can be more successful than a profit-driven approach. 

There is also a growing consensus that business leaders have a responsibility not only to shareholders, but also to wider society – customers, employees, suppliers, communities, and the environment.

What does this mean for business education? A session of the AMBA & BGA Festival of Excellence gathered CSR experts for a debate on the subject of positive impact, innovation, sustainability, and responsible management. 

Topics under discussion included: the challenges surrounding the role of Business Schools; how sustainability and social impact could and should be integrated into every MBA programme; how MBA students can learn the key skills required to become forward-thinking leaders; and how the sector can challenge the business models that have resulted in the unintended consequences of today. The following paragraphs are just a selection of highlights from this panel debate.  

Measurable impact

Pavlina Proteou, Founder and CEO of BeyondCSR, started the conversation: ‘The challenge, in part, is that lots of corporations still view sustainability as a PR activity, rather than a core activity. It should be CEO level; it should be the umbrella strategy – the only strategy, actually,’ she said, before adding: ‘When you have CSR and you have that budget, you can use it to come out with a positive measurable impact, because impact has to be measured; it’s not just adopting initiatives and corporate philanthropies. CSR is there to progress and accelerate sustainability strategies, but it has to be part of the core business development, not a marketing division. 

‘This is how you make impact, and social impact is part of sustainability. We talk about sustainable development and social impact as if they are two different things but it’s one thing. If you have concrete sustainable strategies, then you can make measurable social impact and environmental impact. 

‘One of the problems is that corporations feel it’s like ticking a box. There are game-changing companies, but if the approach is only ticking a box, you’ll never have the desired outcome.’ 

Echoing calls for a reset

James Gomme, a Director at the World Business Council for Sustainable Development, added: ‘In the long term, businesses will only be successful if they are operating sustainably. All governments are moving in that direction and societal expectations are moving very strongly in that direction as well. 

‘There were calls at the World Economic Forum for a complete reset of our capitalist model, of the way financial markets work and the way financial markets value sustainable business behaviour. 

‘I would encourage Business Schools to start to echo that and to incorporate sustainability-related topics into the class on financial accounting, the class on strategy, the class on HR-related discussions, and so on. 

‘It is a topic that touches everything you do as a business. Purpose should be something that runs through all of these different functions and those functions should be in support of that purpose.’

Being held to account

Celia Ouellette, Founder and CEO of the Responsible Business Initiative for Justice, noted that there is a clear link between diversity, CSR and social justice, against a backdrop defined by unrest. 

‘Diversity should be the bedrock of good teams,’ she asserted, before pointing to her experience of leading and running a non-profit organisation: ‘The strength of our team lies in the diversity of experience, culture, ethnicity of our organisation, as well as the diversity of its agenda. You need to continually look at each aspect of an MBA programme through these lenses. It will create more sustainable businesses in the long run. 

‘You can create businesses that are less risky and more future-proof. I think that “cancel culture” is just one symptom of what will come when businesses don’t align their purpose and values with the people that they are employing, or that they are selling to. 

‘One of the things that businesses will really need to face is how they’re being held to account, particularly post-Covid-19.’  

Chair: Andrew Main Wilson, CEO, AMBA & BGA

Panellists: James Gomme, Director, World Business Council for Sustainable Development; Celia Ouellette, Founder and CEO, Responsible Business Initiative for Justice; Pavlina Proteou, Founder and CEO, BeyondCSR

This article was originally published in Ambition (the magazine of BGA’s sister organisation, AMBA).

Why businesses must develop greater integrity

A white and brown dog propped up with his two front paws looking outside a window. Business Impact article on Why businesses must develop greater integrity.

There is a need for more integrity and a greater depth of character among leaders, says B-Corp Ambassador, Paul Hargreaves, pointing out that SMEs often get away with not doing the right thing because of their size

If you were described as an integrous person, you may wonder whether it was a compliment or not, but it simply means a person full of integrity. I heard the story of a man called James Doty, a neurosurgeon, entrepreneur and university professor, who early in his career was involved in developing the Cyberknife, an invention that netted him millions of dollars. At the turn of the millennium, he promised $30 million USD out of his $75 million USD net worth to charity – just before the dot-com crash of 2000 to 2001, which brought his wealth down to around the $30 million USD he had already pledged. Doty’s lawyers advised him that he could renege on his promise and get out of the pledge; surely people would understand the change of circumstances and he wouldn’t lose his standing in society. However, Doty was a man of his word and decided to do the right thing and go through with his promise, giving away the last of his fortune to charity.

In a much less costly example, at Cotswold Fayre, we announced in the spring of 2019 that we were going to become carbon neutral from August that year; this was based on some logistical change we had made to vastly reduce the carbon impact of our distribution network, meaning that the carbon offset figure for the carbon used in the distribution of our goods was attainable. The data came from our new logistics company, and either we misunderstood the data at the time or we were just given the wrong figures, but the amount we had to pay to sequester our carbon was considerably higher than what we had budgeted for within the business plan. However, there was never any doubt within our management team that we would go ahead and pay the higher amount, even though no one outside the company would know any different. Money doesn’t make decisions for us; doing what is right does.

These days, many companies want to link a social purpose to their products and make great claims about the percentage of their profits they are giving to social justice projects, such as charities working with street children in Brazil. They often push back when I challenge them and ask them how much they have contributed so far. Of course, many startup brands don’t make a profit for a few years, yet these brands’ products often carry such claims during this time. To my mind, this approach lacks integrity. Surely, it is far better for a young company to say that it will give 5p for each product sold, for example.

In many cases, SMEs can often get away with not doing the right thing because no one notices what small companies do. That is the great advantage of a certification process such as B Corp, where businesses must provide evidence of what they are doing and be analysed on how good they are for the world: both the people and the planet.

Doing the right thing when no one is watching

The Urban Dictionary definition of ‘integrity’ is based on a quote often attributed to [author of The Chronicles of Narnia] CS Lewis, but which might actually paraphrase a line by author, Charles W Marshall: ‘Integrity is doing the right thing when no one is watching.’ It is all too easy to trumpet a high moral standing on social media yet not follow through when the heat is turned up a little. I am concerned that occasionally even renowned ethical companies and their leaders sometimes present a better view to the outside world than what is really happening inside of their organisations. There is a need for more integrity and a greater depth of character among leaders.

People detest hypocrisy more than absolutely anything in a leader, and it has been the downfall of many political figures – as seen by the huge furore caused when the UK prime minister’s closest advisor broke his own rules with regards to the Covid-19 lockdown restrictions on at least two occasions. Imagine a stick of Blackpool rock that you can cut through at any point to reveal the word ‘Blackpool’. Would people see integrity running through us and our businesses if they were to figuratively cut through us at any point?

The wonderful message from the James Doty story is that even though he ‘lost’ personally, he still went through with his promises. For some of us, winning is too important and can come at the cost of all else. I know the appeal of this, as, like many entrepreneurs, I am very competitive and hate losing, and I have had to temper that competitive streak to maintain my integrity. The former tennis player, Andy Roddick, provides a great example of this. He was once awarded a match when a second serve from his opponent was deemed to be out. However, Roddick saw the ball’s mark in the clay himself and made the umpire reverse his call. Roddick went on to lose the match, but he maintained his integrity.

The danger of overpromising and underdelivering

So, how, do we develop our integrity? Well, probably the most important factor is silence. If we speak too hastily and make promises, we are in danger of overpromising and under-delivering. It is best not to speak hastily and to even learn to say ‘no’ on some occasions, where we may risk losing our integrity and disappointing customers, suppliers or, worst of all, team members. One of the most common reasons people leave employers is when they have been promised promotions, money or bonuses that haven’t been forthcoming.

In these instances, circumstances may well have changed – as they did for James Doty, to the tune of being $45 million USD poorer; but he stuck with his promises all the same. Incidentally, Doty claimed to be happier than he had ever been after he had given that money away, saying: At that moment I realised that the only way that money can bring happiness is to give it away.Being integrous, or full of integrity, is not only the right thing to do, but we will almost certainly be more fulfilled and happier as a result.

Paul Hargreaves is a B-Corp Ambassador, and the Founder and CEO of food and beverage company, Cotswold Fayre. He is also the author of The Fourth Bottom Line: Flourishing in the new era of compassionate leadership (2021).

Preparing tomorrow’s leadership for climate change

Schools must help tomorrow’s leaders take decisions together, with those from several areas of expertise, while understanding how these decisions will affect different groups in different ways across the world, say the University of Gothenburg’s Thomas Sterner and Åsa Löfgren.

Global changes are so significant that geoscientists speak of Earth entering a new geological era, the ‘Anthropocene’, during which many crucial variables for the planet are controlled by man, and our activities and consumption patterns risk exceeding the planetary boundaries. This leads to a changed climate, acidification of the oceans, loss of biodiversity and many other global environmental problems. These problems are global, long term and uncertain. They are also interconnected and must be analysed together in order to find solutions that provide synergies and avoid those that solve one problem but worsen others.

For example, it is not sustainable to aggravate problems related to a loss of biodiversity, or vital water/nutrient cycles, when you are trying to solve the climate problem through a poorly conceived forest policy.

Biologists, physicists and other natural scientists document and analyse many of the changes mentioned above, and are usually the ones who write about planetary boundaries and the Anthropocene. Social scientists, meanwhile, are experts on how society and the economy work. Both of these areas of expertise are indispensable when analysing social causes and proposing solutions that are effective and politically feasible. Therefore, collaboration between economists, social scientists and natural scientists is urgently needed to discuss solutions.

An interdisciplinary approach

Business Schools have the important task of preparing students to become tomorrow’s leaders in business and other organisations. It is vital that these aspiring leaders are given tools to understand our current and future predicament since it will be decisive for future success and, indeed, survival. One of the prerequisites for a sound future education is an interdisciplinary approach to problems where this is necessary. When it comes to sustainability, we need expertise that understands both natural and social sciences. 

When training tomorrow’s leaders, standards must be high in all areas. We need interdisciplinary understanding of environmental challenges and opportunities, high ethical standards, and a capability to
work with leaders from other countries, cultures and disciplines. 

The School of Business, Economics and Law at the University of Gothenburg (the School) has taken on this challenge in several ways. Most importantly, it is a strategic mission of the School to integrate sustainability into all education: ‘To develop knowledge, educate and foster independent thinking for the advancement of organisations, policy and a sustainable world’.

Over the the past decade, the School has turned its mission into practice by integrating sustainability-related learning outcomes for all undergraduate programmes and strengthening the progression of sustainability concepts between courses. This allows programme coordinators and lecturers to develop curricula in the knowledge that these learning goals must be met.

Sustainability days

Another important activity is the School’s compulsory sustainability days. The concept was introduced in 2013 and was implemented fully in all undergraduate programmes in 2016. It consists of three full days of focus on sustainability from various perspectives. The overall aim is to complement the sustainability content of courses by raising awareness and providing knowledge around three themes: challenges, responsibility, and solutions. During this time, students from different programmes meet and learn to work with, and respect, those from a variety of backgrounds.

At an international level, and in collaboration with Gothenburg’s Chalmers University of Technology, there is the School’s Environment for Development unit. With support from the Swedish International Development Cooperation Agency, the Environment for Development has trained PhDs from emerging markets in environmental economics for decades and helped build centres in more than 12 countries in the
Global South. 

In the future, the unit’s plan is to co-teach master’s courses with students in several countries simultaneously. In a pilot course run at Chalmers this year, students in Asia, Africa and the US solved problems related to fairness in climate negotiations simultaneously. In a second step, students held discussions with real climate negotiators to develop their negotiating and leadership skills. A capability to work with leaders from other countries,
and understand the positions of other groups or countries, is key to addressing global environmental problems such as
climate change. 

More specifically, while it is important to find effective solutions, it is also important to educate students about the income distributional effects of policy measures and their perceived fairness. These effects are vital determinants of political feasibility and aspects that must be considered carefully when policy instruments are selected and designed. The task is complex since policies need not only be feasible in Europe or the US, but globally. 

There are ways that global environmental problems can be addressed. But the solution relies on there being leaders who are responsible, knowledgeable and understand the importance of, and are open to, collaboration with those who possess skills from other disciplines. Business Schools have a responsibility and an important role to play in the education of such leaders.

Thomas Sterner is Professor of Environmental Economics and Åsa Löfgren is an Associate Professor in the Department of Economics, part of the School of Business, Economics and Law at the University of Gothenburg.

Business Schools for business and society

Business Schools must understand how they can contribute to the wellbeing of society, adopting an active stance, writes Loïck Roche, Director and Dean at Grenoble École de Management

On 11 December 2017, the then French Minister of Environmental Transitions and Solidarity, Nicolas Hulot, announced in a speech, at the Medef Employer Federation in Paris: ‘We [the French Government] are going to help companies evolve in terms of their social objectives, which can no longer be limited to earning profits without regard for working women and men, and without consideration for environmental consequences.’ 

His proposed French Pacte Law (action plan for business growth and transformation) was put forward, with the goal of helping to ‘reintegrate morality in capitalism’. 

To ensure financial objectives better support the greater good, the law will re-write two 200-year-old articles in the French Civil Code (articles 1832 and 1833, see box overleaf). 

The articles redefine a company’s role as simply  creating profit for shareholders. The proposed modifications will integrate social and environmental considerations. At the time of AMBITION going to press, the law was to be voted on in autumn 2018 and its primary actions could come into effect as early as 2019.

But, taking this news out of the context of the French arena, and into the wider global economy, could this development suggest that the era of the Chicago School and one of its most noted economists Milton Friedman – who coined the phrase ‘money matters’ – is over? 

A reason for existence

The step change outlined above looks set to take business thought back to 19th and 20th century business magnate Henry Ford’s fundamental advice: ‘Business must be run at a profit, else it will die. But when anyone tries to run a business solely for profit, then also the business must die, for it no longer has a reason for existence.’

This gives us, as Business School leaders, the opportunity to position social responsibility as the foundation for business. 

The perspective that a company can no longer exist within a silo, but instead must be part of the whole, builds on the stakeholder theory developed by R Edward Freeman, an American philosopher and Professor at the University of Virginia’s Darden School of Business.

His theory suggests companies should not only consider their own interests but also the interests of all concerned parties (employees, customers, stakeholders, leaders, and so on). This helps to improve the wellbeing of society. Corporate social responsibility is an example that was born from the concrete application of this approach.

To implement these changes, and to ensure companies accept that they must go beyond their mission (to manufacture products or deliver services) and participate in a larger responsibility, Business Schools have a primary role to play as they train future managers and leaders and offer continuing education for working professionals who are ready to question their practices.

Beyond the ‘usual goals’ of the Business School

The first step in taking on this new role, is to go beyond a Business School’s usual goals (for example ‘training the leaders of tomorrow’ or ‘ranking in the top 10, 20 or 30’) in order to ask: ‘why train the leaders of tomorrow?’, ‘what do the leaders of tomorrow need to be able to do?’, and ‘why attempt to be in the top 10, 20 or 30 Business Schools?’

The second step is a result of this exploration: in addition to working through these questions with students, professionals and employers, Business Schools have to consider the bigger picture. 

Much like what is expected of companies, Business Schools have to understand how they can contribute to the wellbeing of society. As a result, Schools are preparing and implementing a process of change to become ‘schools for business for society’. 

It is a positive sign to see that what was once the perspective of a few has become a generally shared vision. While not all Business Schools are currently working in this way, they are all headed in the same direction and that’s a great result.

It might not seem like much, but there is an important difference between saying ‘we want to train the leaders of tomorrow,’ and ‘we want to train the leaders of tomorrow to do something special’. 

It’s vital to understand that this concept of doing ‘first, for society’ is, in fact, quite complicated to implement because it’s a reversal of traditional values. For Business Schools,  it means that if we only carry out our mission to offer training and support research we will miss our fundamental objective. And, if we miss this fundamental objective, we will still be doing something positive – but the current stakes are so much higher.

In addition to working with students and companies, Business Schools have to offer a vision and solutions for major global challenges (issues surrounding end of life, climate change, energy transition, immigration crises, terrorism, epidemics, corruption, child exploitation, human rights, women’s rights, cybersecurity and artificial intelligence).

The challenge for Business Schools

The mission is for Business Schools, and higher education in general, to continue working in their particular fields of expertise, while contributing to solving the world’s larger challenges. They have to go beyond their comfort zone; in other words, move beyond their limited focus on business, in order to understand and explore the complexities of the world. 

It’s a change that will enable them to provide support in overcoming the major hurdles faced by society.

When Business Schools take the step to work on major societal problems, they open the door to risks and are forced to take sides. By this, I mean that Business Schools do not currently think (and this is a simple fact, not provocation). Their researchers and professors think, but the Schools themselves do not. They ‘describe’ and often they do so after the fact. This was illustrated by the 2008 financial crisis – no Business School anywhere in the world predicted or anticipated this crisis. In other words: Schools do not think, they do not take sides, they do not act.

For example, what does Harvard Business School think about problems impacting on society? Does Harvard voice an opinion, not on immigration, but on what we should do in concrete terms about immigration and immigrants? Going further, if a School’s opinion supports immigrants, does the School work actively to welcome them?

Another example that might offer better perspective is the case of US President Donald Trump. The researchers and professors at Harvard voiced many negative opinions before and after the election of Trump. But in concrete terms, what has Harvard done about it? Nothing. 

If the School had an editorial policy, if it truly wanted to change the world, then Harvard wouldn’t simply denounce policy or take sides. The School would act in concrete terms. How? For example, by setting up locations in the US where people voted overwhelmingly for Trump. 

That would be going beyond its comfort zone in Cambridge, Massachussets, and entering the playground where things are taking place. To understand societal changes, events and facts, it’s important for Business Schools to be ‘external’ and to maintain a certain impartiality. But if you want to change things – and to have an impact – you have to be where the action is. While Business Schools have been limited to describing and explaining, they now also have to (and I do mean ‘also’, not  ‘instead’), state their aims, choose sides, communicate and convince. 

They have to act, which is at the heart of being engaged and inciting change within the world. In this way, Schools can help federate the business world and public institutions in order to work together on important human values and the goal of companies: to perform and create profit for all concerned parties, thereby improving our shared social fabric and contributing to the common good.

Loïck Roche is Director and Dean at Grenoble École de Management (Grenoble Business School). Coming from a corporate background, he worked for 10 years in France and internationally as a consultant in the field of human resources.

Creating responsible citizens to lead organisations to sustainable success

Preparing MBAs to lead sustainable economic growth is the core task of Business Schools, argues Professor Percy Marquina, Director General, CENTRUM PUCP, the Graduate Business School of the Pontificia Universidad Católica del Perú. Interview by David Woods-Hale

What do you think differentiates the MBA at CENTRUM PUCP?

When students search for a Business School at which to study their MBA, they look for prestige, a high-quality academic programme and networks. At CENTRUM PUCP, we possess and offer these elements to students. But we offer more than that.

We prepare our students for the future by creating responsible and socially committed leaders, who think, decide, and act based on principles. We believe in an holistic form of education that enables students to assimilate the knowledge they require to lead companies based on the experiences they have shared in our classrooms and in their lives. 

Our programme also provides students with the human skills demanded by companies, such as time management, task prioritisation, complex problem solving, the ability to train others and to build sustainable networks.

With reference to Latin America in particular, why is it still vital to develop world-class business education? 

Globalisation and interconnectedness are growing at an exponential rate; every day it becomes evermore important to understand that our actions have far-reaching impacts. As technology advances, it will become easier to reach new audiences, but it will be more important for professionals to acknowledge that competition is no longer local, but international as well.

What innovative teaching methods have you come across that are used to create the leaders of tomorrow?

Emerging, disruptive technologies such as artificial intelligence, virtual reality and machine learning are changing teaching methods in Business Schools and can help us to adapt teaching to each student’s learning needs. For example, at CENTRUM PUCP, we use IBM Watson Personality Insights analytics to understand and predict the personality characteristics of our students. Using these results, we take a more humanistic approach to our MBA programme.

How important is sustainability, and in what ways have Schools adapted this into their programmes? What does sustainable leadership looks like?

Sustainability is crucial nowadays and we try to instil this in our students. By sustainability, we mean that professionals should meet society’s needs, preserve humanity, increase opportunities for others and make their organisations’ marketing, finance and human resources departments sustainable. We guide students to take decisions that put society’s needs ahead of profits. 

What are the biggest challenges facing global Business Schools today?

The biggest challenge for Business Schools is helping to create responsible citizens. We must be able to develop competent professionals while guiding students through a process of social sensibility. And we must also be competitive. 

When facing global competition, we find that every School that has been able to obtain good results and trained their professional workforce is making a name for itself in the areas in which it excels. 

Gone are the days when professors used to teach traditional subjects in a static way; the time is ripe for a new model of professor who is able to inspire students’, teaching and learning from them in a constantly evolving environment that demands greater skills and vision in order to develop social innovators. 

At CENTRUM PUCP we have developed the NeuroManagement-Lab initiative, with the objective of identifying students’ main leadership competences and areas of development. Through this programme, we enhance the user experience, helping to personalise education, shaping skills and helping students to discover their strengths and work on their weaknesses.

How do you instil the thirst for global mobility and an international mindset in your students? 

Whenever I step into a classroom or I encounter a student, the message I always try to communicate is a simple one: do what makes you happy and you will lead the way. Having visited so many places, I have confirmed this theory: students overachieve when they are able to work and pursue their goals in something that makes them happy. 

If you are able to identify and understand your passions, your thirst and commitment towards your goals will increase every day and your competition will become global. 

You will innovate, search and look for solutions to questions that have never been asked before because your thirst for knowledge will push you to think more broadly. During their MBA, our students are exposed to global experiences such as international faculty, peers, global case studies, international study stages, business programmes abroad and so on.

You urge your students not to put limits on their goals – can you share some insight into how MBAs can take theory into practice? 

Through many case studies, we teach students the ways firms and managers have faced and solved unexpected problems. I advise them to stick to their principles and the message of their organisation. 

If your organisation has a distinctive characteristic or stands for something, wear it as your own personal badge of honour. 

One story that people can relate to is Apple’s. Steve Jobs, former Co-Founder and CEO of Apple, believed in innovation and in the superior quality and practicality of products. He used to say: ‘Apple products should be easy to understand. Everyone should know how to use them’.  

His team believed this, too – at a time when this was not expected – and created products accordingly. Acting in line with the beliefs of your organisation can help it differentiate itself in a saturated or extremely competitive market. 

At CENTRUM PUCP we promote entrepreneurship as a way of creating innovative business models. Several start-ups are created every year by our students, and have a great impact on society. For example, three graduates from CENTRUM PUCP and three from the faculty of engineering PUCP were among the 15 finalists in the Cisoc Global Problem Solver Challenge. The talented Peruvians developed Pukio, an intelligent mechatronic system that generates clean water through the condensation of water vapour in the air. Collaboration is vital in an uncertain climate. 

How does your Business School link and work with other Schools, employers and alumni? 

Relationships are about co-operation, and co-operation is about progress. We challenge ourselves to establish partnerships with other Business Schools to provide the best each School can offer in a combined MBA or specialised master’s programme. 

We promote co-operation between our departments to allow the ideas and innovation to flow through the veins of our School. We create opportunities for alumni to collaborate with us so that we benefit from the skills and experiences of the professionals we create in our classrooms. Co-operation has grown in importance among Business Schools and it is yielding better results.

What would your advice be to other Business School leaders operating in such a volatile and uncertain world?

Education is not about outcomes. It is about the impact. At CENTRUM PUCP, we have a mission: educate to serve. We serve academia, the business world and wider society. But we are also here to educate people about sustainable development. 

We want people to learn to thrive in a competitive world. Business Schools should also follow suit: educating people to allow them to see the bigger picture and teaching professionals how to lead the departments within their organisations.

Do you feel optimistic about the future of business, Business Schools, and the economy?

I believe we are all more aware of the global challenges ahead than we were a couple years ago. We are in the process of acknowledging the impacts of our actions and the dangers of not doing so over the long term. 

Business Schools have taken advantage of this. We teach students to think about impacts on society and how our actions can be turned into positive outcomes for the greater good. 

Sustainability is both an individual responsibility and about teamwork: we all have to engage in the right actions to produce a positive impact. I believe Business Schools are preparing people to provide sustainable and egalitarian economic growth.

Professor Percy Marquina is Director General at CENTRUM PUCP, the Graduate Business School of the Pontificia Universidad Católica del Perú. He was previously General Manager of Rhone Poulenc and General Manager, Commercial Manager and Marketing Manager of companies related to the Richard O’ Custer group. Marquina holds PhDs from the Maastricht School of Management and the Pontificia Universidad Católica del Perú in business administration and strategic business administration, respectively.

Is AI making dangerous decisions without us?

Artificial intelligence (AI) is set to take control of many aspects of our lives, but not enough is being done with regards to accountability for its consequences.

The increasing application of AI across all aspects of business has given many firms a competitive advantage. Unfortunately, its meteoric rise also paves the way for ethical dilemmas and high-risk situations. New technology means new risks and governments, firms, coders and philosophers have their work cut out for them.

If we are launching self-driving cars and autonomous drones, we are essentially involving AI in life-or-death scenarios and the day-to-day risks people face. Healthcare is the same; we are giving AI the power of decision making along with the power of analysis and, inevitably, it will have some involvement in a person’s death at some point in the future, but who would be responsible?

Doctors take the Hippocratic oath despite knowing that they could be involved in a patient’s death. This could come from a mistaken diagnosis, exhaustion, or simply missing a symptom. This leads to a natural concern about research into how many of these mistakes could be avoided.

The limits of data and the lack of governance

Thankfully, AI is taking up this challenge. However, it is important to remember that current attempts to automate and reproduce intelligence are based on the data used to train algorithms. The computer science saying ‘garbage in, garbage out’ [describing the concept that flawed input data will only produce flawed outputs] is particularly relevant in an AI-driven world where biased and incomplete input data could lead to prejudiced results and dire consequences.

Another issue with data is that it only covers a limited range of situations, and inevitably, most AI will be confronted with situations they have not encountered before. For instance, if you train a car to drive itself using past data, can you comfortably say it will be prepared it for all eventualities? Probably not, given how unique each accident can be. Hence, the issue is not simply in the algorithm, but in the choices about which kinds of datasets we use, the design of the algorithm, and the intended function of that AI on decision making.

Data is not the only issue. Our research has found that governments have no records of which companies and institutions use AI. This is not surprising as even the US – one of world’s largest economies and one that has a focus on developing and deploying AI – does not have any policy on the subject. Governance, surveillance and control are all left to developers. This means that, often, no one really knows how the algorithms work aside from the developers.

When 99% isn’t good enough

In many cases, if a machine can produce your desired results with 99% accuracy, it will be a triumph. Just imagine how great it would be if your smartphone can complete the text to your exact specification before you’ve even typed it.

However, even a 99% level of precision is not good enough in other circumstances, such as health diagnostics, image recognition for food safety, text analysis for legal documents or financial contracts. Company executives as well as policymakers will need more nuanced accounts of what is involved. The difficulty is, understanding those risks is not straightforward.

Let’s take a simple example. If AI is used in a hospital to assess the chances of patients having a heart attack, they are detecting variations in eating habits, exercise, and other trends identified to be important in making an effective prediction. This should have a clear burden of responsibility on the designer of the technology and the hospital.

However, how useful that prediction is implies that a patient (or her/his doctor) has an understanding of how that decision was reached – therefore, it must be explained to them. If it is not explained and a patient [that is given a low chance of having a heart attack] then has a heart attack without changing their behaviour, they will be left feeling confused, wondering what the trigger for it was. Essentially, we are using technical solutions to deal with problems that are not always technical, but personal, and if people don’t understand how decisions about their health are being made, we are looking at a recipe for disaster.

Decision making, freedom of choice and AI

To make matters worse, AI often operates like a ‘black box’. Today’s machine learning techniques can lead a computer to continue improving its ability to guess the right answer or identify the right result. But, often, we have no idea how the machines actually achieve this improvement or ‘learn’. If this is the case, how can we change the learning process, if necessary? Put differently, sometimes not even the developers know how the algorithms work.

Consumers need to be made more aware of which decisions concerning their lives have been made by AI, and in order to govern the use of AI effectively, the government needs to give citizens the choice of opting out of all AI-driven decision making altogether, if they want to. In some ways, we might be seeing the start of such measures with the introduction of GDPR in Europe last year. However, it is evident that we still have a long way to go.

If we are taking the responsibility of decision making away from people, do we really know what we are giving it to? And what will be the consequences of the inevitable mistakes? Although we can train AI to make better decisions, as AI begins to shape our entire society, we all need to become ethically literate and aware of the decisions that machines are making for us.

Terence Tse is an Associate Professor of Finance at ESCP Europe Business School and a Co-Founder of Nexus FrontierTech, which provides AI solutions to clients across industries, sectors, and regions globally. His latest book, The AI Republic: Building the Nexus Between Humans and Intelligent Automation is due for release in June 2019.

Translate »