3 Emerging Ethical Issues of AI And IoT That Top Leadership Teams Need to Prioritize
Listen to Episode 160:
Episode 160 Transcript:
Chris Curran: This episode is brought to you by Business Advancement Incorporated — enabling successful leaders and companies to accelerate to their next level of success. On the web at BusinessAdvance.com. And now, here’s Pam and Scott.
Pam Harper: Thanks, Chris. I’m Pam Harper, Founding Partner and CEO of Business Advancement Incorporated, and sitting right across from me as always is my business partner and husband, Scott Harper. Hi, Scott.
Scott Harper: Hi, Pam. It’s exciting to join you again for another episode of Growth Igniters Radio, and as always, our purpose is to spark new insights, inspiration, and immediately useful ideas for visionary leaders to accelerate themselves — and their companies — to their next level of game changing innovation, growth, and success.
Now, Pam, one of the ways that businesses from almost every industry are changing their game is by incorporating smart technology into their business models. In fact, many new products and services that we use on a daily basis in business and personal life regularly incorporate AI and IoT, and it’s becoming so common that you don’t even have to say “artificial intelligence” and “internet of things” anymore.
Pam Harper: That’s right. You know, every day I don’t even think about all the things that we’re using. We have Alexa somewhere in the room, hopefully not listening…
Scott Harper: She’s turned off right now.
Pam Harper: …And smart toasters and all kinds of things, and of course much more sophisticated business models are coming about.
Scott Harper: Now here’s the thing though — there are always issues that we have to consider beyond what that thing does.
Pam Harper: That’s right. So as I like to say, there’s always more to the story. And with everyday use of smart technology, we’re all learning about these issues that have ethical and legal implications. And of course, nothing stays the same. So changes in the culture, for example, that made something acceptable at one point make them unacceptable at another point.
Scott Harper: Well, right. So, for instance, there’s a question of should companies that use chatbots actually announce that you’re talking to a robot? Or there was the thing I read about in Business Week just a little bit ago about the people who found out that their baby monitor had been hacked when it started playing porn in the nursery.
Pam Harper: Exactly; and there are more and more issues that are coming up all the time. So, every leadership team is going to need to be on the lookout for these emerging ethical and legal issues about AI, and IoT, and prioritize them not just during strategy sessions, but in everyday decision making.
And our guest today is very well qualified to help us dig into these issues. He is David J. Sorin, CPA Esquire, partner and chair of the venture capital and emerging growth companies practice at McCarter & English LLP. His national practice focuses primarily on privately and publicly owned startup, early stage, emerging growth, and middle market technology, tech-enabled, and life science enterprises, as well as the investors, executives, and boards of directors who support and lead them. Dave has been repeatedly recognized by well-known periodicals for a unique combination of legal acumen, and sound business judgment. He has received multiple awards, and recognition, so much that we’d be spending our whole episode talking about it. You can read more about Dave at GrowthIgnitersRadio.com, episode 160. And with that, I’d like to welcome Dave. Hey, Dave. Welcome to Growth Igniter’s Radio.
David Sorin: Thank you so much, Pam and Scott, I’m delighted to be here.
Pam Harper: Dave, how have you seen the ethical issues of AI and IoT most evolve as companies are incorporating these technologies into the very fabric of their services and products?
David Sorin: It’s such a great and frankly very important question. What we are seeing today is the convergence of so many technologies that it represents potentially the most transformative and disruptive forces that I’ve seen throughout my legal career. There are three issues that come to mind that are perhaps most significant.
David Sorin: One is that artificial intelligence and IoT are rooted in programs, software programs, that are themselves created by individuals. And so, there’s an issue of inherent bias that must be confronted when determining what the outcomes are likely to be from the AI and IoT solutions.
Pam Harper: Dave, have you seen this coming up as a new kind of thing, or do you think this is something that has always been inherently part of the problem?
David Sorin: Well certainly it’s inherent; it’s in anything that we do. But we now reach, I think, a new height of concern. An example that we’ve discussed a lot relates to autonomous vehicles. Autonomous vehicles obviously are built on artificial intelligence that determines what and how the computer program should react to certain events. And so the decisions about how the program is going to react are themselves imposed by the people who write the code.
For example, should the code be written in a way that always seeks to protect the safety of the driver and the occupants of the vehicle? Or should the code be created in a way that ensures the least amount of damage, regardless of who is ultimately injured? If in fact there’s going to be some kind of problem, accident, etc. Someone runs in front of an autonomous vehicle. Does the vehicle stop to ensure it doesn’t hit that person, or what if stopping too suddenly would harm the occupants? So artificial intelligence, as it’s being created, imposes guidelines that are built upon moral and other strictures of the people who are writing them, and we have to understand what bias is going into the creation so that we will understand what the outcomes may be as a result.
Scott Harper: Dave, have you seen this and other issues of ethics and legality emerging in litigation or legislative debate?
David Sorin: Well certainly it’s being debated by legislators all over the country, both at the local, state, and federal levels. I am not a litigator, so I have not personally seen it in the litigation realm. And I suspect that we’re still a little bit away from it actually being litigated, because we’re still at stages prior to that. How is it being built into transactions, for example, how is it being built into business processes? But it’s important to think about it in advance of how this is going to play out. There are all kinds of policy issues, there are socioeconomic issues, there are geopolitical issues, there are economic issues, and so the fact that these technologies are being developed, that they are converging, and that they are being implemented and integrated into underlying business processes, means that the law really has to catch up.
David Sorin: So, I would say this — this overall theme of inherent bias is an absolutely critical one. It reminds me of the old saying of kind of garbage in, garbage out. If we don’t start from the right premises, we can’t expect to have the right outcomes. And so those are things that certainly need to be thought through, and need to be built into our AI and IoT solutions.
Pam Harper: Mm-hmm (affirmative). Dave, we’re talking about the emerging issues. Are you starting to see that more leadership teams, top leadership teams, are starting to prioritize conversations about not just the current, but the emerging ethical issues of AI and IoT?
David Sorin: Well I think we are, where we have a lot of road to travel, so to speak. But yes, you see it; it’s being debated at the university level. It’s certainly being debated in boardrooms for companies, it’s certainly being considered by lawyers and thought leaders. And I think there’s a clear understanding that there’s tremendous upside associated with this. But just because there’s tremendous upside doesn’t meant that there aren’t potential tremendous downsides as well. And as we think about winners and losers in development of these kinds of solutions, we have to think well in advance.
David Sorin: And directly related to that is I think the second really important ethical issue, and it’s really two things sort of tied together, security and privacy. And Scott, you mentioned hacking, which obviously goes to the question of security.
I’ll use the example of autonomous vehicles again. Anything that is online is potentially capable of being hacked. What happens if somebody hacks the software of an autonomous vehicle? And takes control of that vehicle? This is true in any aspect. The introduction of robotics, for example; the internet of things includes many products that can also be the subject of hacking. So security, cyber security is an absolutely critical element of creating these kind of AI and IoT solutions. This must be thought about in advance, and these kinds of safeguards are absolutely required.
Pam Harper: We’ve touched on just the very tip of all of this, and we’re going to continue the discussion. But first, we’re going to take a quick break, and then we’ll talk more about what that third emerging issue is when we return and talk with Dave Sorin, McCarter & English. Stay with us.
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Pam Harper: Welcome back to Growth Igniters Radio with Pam Harper — that’s me — and Scott Harper. Today Scott and I are speaking with David Sorin, partner and chair of the venture capital and emerging growth companies practice at McCarter & English. We’re discussing the ethical issues that are emerging as artificial intelligence and the internet of things take a greater and greater prominence in business and our everyday lives.
Pam Harper: Dave, how can people find out more about you and your practice?
David Sorin: Well, one rather simple way is to visit our website at www.McCarter.com. Take a look at my profile. Included is some biographical information, as well as either articles that I’ve written or interviews that have been conducted, as well as events where whether it’s me or one of my colleagues we are speaking at programs of interest to the technology and emerging growth and investor communities.
Pam Harper: We’re also going to have a link on GrowthIgnitersRadio.com, episode 160. And people can scroll down under resources.
Pam Harper: So, Dave, we’ve been talking about some of these emerging issues with AI and IoT. You were about to tell us the third emerging issue. Let’s start with that.
David Sorin: Sure. You know, the first issues that we talked about may seem largely esoteric, almost more academic than commercial. But I think this third one really hits at the heart of how people earn a living, and how they are engaged. I don’t think anyone would argue that AI, internet of things, these incredible converging technologies will create some really massive numbers of new jobs. And these new jobs will be highly technical and will involve the need for some significant levels of education and experience.
But one of the dark sides of the emergence and implementation of these technologies, is that at a minimum, the emergence of robotics and AI involves significant declines in labor intensity needs of businesses. Massive job loss is projected from the implementation of these technologies. Whether it’s people who earn their living from driving vehicles, truck drivers, bus drivers, cab, taxi drivers, folks who operate trains, planes, and automobiles, are all at risk of losing their jobs. People who work in call centers, and customer centers to answer questions are similarly at risk of losing jobs as natural language processing and AI technologies converge.
Virtually anything that involves process, anything that involves repetition, anything where machines are capable of actually conducting the act means replacement of human labor. And so we really have to think about what are we doing today and tomorrow to alter our educational system, to prepare our students and our current workforce for the jobs of next year, next decade, and so on. We also have to think about how we are going to deal with the transition of our economy from a wage based economy to a leisure based economy. How do we engage people? How do people earn a living when we have an economy and a society that is capable of producing at incredibly substantial levels without actually employing as much labor as it does today?
Pam Harper: Dave, what you’re saying is huge; it’s a huge issue. And one of the things that crossed my mind is as a leadership team is thinking about, “how can we incorporate this into our business model” and indeed, it does result in less labor intensity, for some leadership teams they would see this as a value. But you’re talking about a greater responsibility, or at least ethical consideration for every leadership team of what is our responsibility to our employees. Is that what you’re saying?
David Sorin: Well, there’s certainly that. And I am a capitalist, and I recognize and appreciate the profit motive associated with business, and certainly as businesses can decrease the costs of production of goods and services to increase profit, that is a significant part of their role. They do have other constituents. For example, their employees and their labor force. And so what if anything will they do to consider that? At the same time, even if it is not based from kind of an altruistic perspective, if the consumers who drive the economy and drive production don’t have the financial wherewithal to purchase the things our economy is capable of producing, the system begins to fall apart.
So there is not only an underlying interest in the employees that businesses actually employ, there’s also potentially a consideration that the entire system is built upon the fact that we need consumers who have the financial wherewithal to buy the things that we produce.
Scott Harper: Absolutely; these issues are huge and weighty, and it strikes us that business leaders need to get involved in these conversations with other people — with consumers, with governments, because if they are not involved and don’t take a lead, somebody else is going to do it to them, and it’s better if everyone is engaged so that we come to the best solutions to these really difficult questions.
David Sorin: I couldn’t agree with you more. It’s absolutely essential that business leaders be part of the solution to this emerging problem. And it’s critical that we partner with educators, we partner with policy makers, and we partner with workers and consumers themselves, because we don’t want a solution that is imposed by those who are not directly impacted by what’s about to happen.
Scott Harper: Absolutely.
David Sorin: And in my view, it’s much more near term than many of us would like to consider. And failure to act means we have an entire generation of people who are not educated for the jobs that we will have. We will not have the tax policies in place to assure that we have the appropriate incentives for businesses and workers to behave in a way that produces the right outcomes.
We have to make sure we have policies in place to deal with displaced workers and transition. It is an enormous issue that must be thought about from many different aspects.
Pam Harper: You’re right, Dave. This is a problem that’s not about tomorrow. It’s a problem that’s about today. That’s what you’re pointing out so well.
Pam Harper: We’re going to take another quick break, and when we come back Scott and I will speak more with David Sorin, partner and chair of the venture capital and emerging growth companies practice at McCarter & English about how we, in fact, do start to take action about this pressing issue of ethical considerations of AI and IoT. Stay with us…
Scott Harper: You are listening to Growth Igniters Radio with Pam Harper and Scott Harper. We’re brought to you by Business Advancement Incorporated, and we focus on enabling visionary leaders to dramatically increase momentum for game-changing results. We’re on the web at BusinessAdvance.com.
Scott Harper: Now, Pam it’s not always easy for everyone to talk about ethical issues, for instance, about IoT and AI, especially when people may be concerned about being viewed as getting in the way of progress. This can lead, however, to the growth of elephants in the room.
Pam Harper: These are the issues that everyone knows are there, but nobody wants to face. But leaving these issues unaddressed not only contributes to the us and them divisions, it can also lead to real ethical and even legal risks for your company. So how can you begin to address this dilemma? Find out by downloading and reading our Harper Report, How to Take Control of the Elephants in the Room.
Scott Harper: This is one of our more popular reports, because it’s practical and it addresses an issue that every leader and team faces at one point or another. Especially when moving into new territory. So, go to GrowthIgnitersRadio.com, select episode 160, and request our complimentary copy of the report, How to Take Control of the Elephants in the Room.
Pam Harper: Welcome to Growth Igniters Radio with Pam Harper and Scott Harper. Over the last two segments, Scott and I have been speaking with Dave Sorin, partner and chair of the venture capital and emerging growth companies practice at McCarter & English about the ethical issues that are emerging as artificial intelligence and the internet of things take a greater and greater prominence in business and in our everyday lives.
Pam Harper: Dave, can you remind everyone how they can find out more about you and your practice?
David Sorin: Certainly. I invite you to visit our website at www.McCarter.com, and within that my profile, simply by searching my name, David Sorin. You can also find me on LinkedIn and various forms of social media, such as Twitter.
Pam Harper: Okay, and again, you can find links and other information about this episode by going to GrowthIgnitersRadio.com, episode 160, and scrolling down to resources.
Pam Harper: So Dave, we are starting to see, and you’ve made it very evident that this is not an issue for some time tomorrow, and it’s not just everybody out there needs to be concerned abstractly, it is real, it’s here, and we need to start taking immediate action. So, let’s talk about what are some of the immediately useful next steps that leadership teams can take as they begin the process of prioritizing current and emerging ethical issues of AI and IoT.
David Sorin: I think the first one is to recognize and accept the fact that the issue is here, and it is an issue for now and tomorrow, not one that will allow us to kick the can down the road. Because if we fail to act now, we’re going to suffer the consequences of our own inaction. And so at the business level, boards who set strategic vision, thought leaders, officers of companies and employees need to start establishing a dialogue. This problem is real, and we’re not going to avoid it by ignoring it, and we’re not going to avoid it by fighting against it. For me, it’s a little bit like standing at the shoreline and saying we don’t want the waves to come in. No matter what we do, they are coming, and we have to be prepared for it.
Pam Harper: Dave, would you suggest that a scenario be incorporated in?
David Sorin: Absolutely, we are seeing more and more of our clients, for example, establishing … for lack of a better term, exploratory committees to really start thinking about the direction in which we are heading, and what they need to do to stay ahead of the curve from a business process perspective.
At the same time, we need to be engaging our policy makers. It’s critical that our political leaders, our civic leaders, our community organizers all be involved in establishing this. At the same time, we have to consider the necessary changes to our education system. Education reform, retraining as jobs are lost in entire industries. Historically, we’ve seen it happen maybe in one or two industries at a time. Today we are confronting change across virtually all sectors. And that’s going to impact education.
Scott Harper: Dave, you’re absolutely right, the problem is, it can seem overwhelming. What is a practical thing that a leadership team can do right away to start this ball rolling so they’re not passively watching, they’re actually engaged and helping to lead that dialogue?
Pam Harper: With some of these political forces you’re talking about, or in the community?
David Sorin: Well, at the business level, a practical thing is to actively educate yourselves at the board level, and the officer and employee level. Engage with appropriate consultants to try to understand the direct effects on your particular business. Right, I mean, obviously businesses are going to first try to ensure that their sources of revenue are maintained, that they can reduce costs and increase productivity, to maximize the profitability of their companies, that’s their sort of overwhelming priority, or imperative. But we cannot lose sight of how all of this is interconnected. So every business pursing its self-interest is fine. And they should be doing that. But at the same time, we have to consider how all of this impacts well beyond the bottom line of any single business. And government has a substantial role to play here, not as decision maker, because ultimately that is the role of capitalism, and the allocation of scarce resources, but to create policies that ultimately motivate and incent the behavior we would like to have in our society.
So there truly are issues of what are our core values? What is our mission? What kind of society do we want to have when confronted with what is going to be an absolute sea change in how we earn our living, and how we are engaged on a daily basis?
Pam Harper: Okay. So we need to be very clear about what our own company’s values are, what we as leaders prioritize. Is there a third immediately useful idea if somebody’s done listening to this, they could go right out and make this happen?
David Sorin: It’s such a great question. And as I think about it, I am concerned that there’s so much nuance, and so much complexity to the issue, that it needs to be a thought out, well implemented plan. For those of us who are students of history, I think of things like post World War II Marshal plan. I think about the GI Bill. I think about JFK’s challenge to America to get to the moon in 10 years. I believe that what we are looking at is so disruptive that we need to be looking at this at a really grand level. Because failure to do that could very well mean that we just don’t move forward in an appropriate way at all.
So, although it feels good to act, and we all have to act and there are things as we’ve been talking about we can all do, ultimately, the solutions that need to be devised require us to think far more broadly.
Pam Harper: Yes. You know Dave, what you’re saying is true. This is just the tip of the iceberg. There is so much more to this issue. And we recognize that we’re not going to solve the world’s issues today. But what we do hear is that we need to prioritize, we need to think about it more strategically. We need to be very clear about what our own values are, the values of our company, and to understand how this impacts not just our customers even, but society as a whole, and where we want to play in it.
David Sorin: Yeah, I absolutely agree with that. I think this is nothing short of a call for action. And I believe really strongly that this is a defining moment, and how we react to this is going to have implications for at least a generation or two to come. And frankly, we need to be ready for one of those moments in history when we really are transitioning.
People talk about the fact that we’ve been a wage labor based economy for a good couple of hundred years at this point. But I believe that the underlying system of employer, employee relationships is about to undergo massive change. And all of it relates to these new technologies, how they converge, how they are integrated. I believe we are looking at a period of potentially explosive economic growth, but at the same time, in every event, there are winners and losers, and we have to figure out how we maximize the winning side of this and reduce and mitigate the losses that are sure to come as a result.
Pam Harper: Okay! Dave, you’ve given us so much to think about. This is a conversation that’s going to continue. So thank you so much for being our guest today.
David Sorin: My pleasure; this is an exciting, sometimes frightening subject and we have to take control and make sure that we’re dealing with this in the best way for our country, our businesses. And it is a global problem because it’s going to affect people all over the world.
Scott Harper: Absolutely. Thanks, Dave. And thanks to you out there for listening to Growth Igniters Radio with Pam Harper and Scott Harper. To get show notes and resource links for this week’s episode, go to GrowthIgnitersRadio.com, episode 160.
Pam Harper: Until next time, this is Pam Harper…
Scott Harper: And Scott Harper…
Pam Harper: Wishing you continued success and leaving you with these questions to discuss with your top leadership team:
Scott Harper: How can we stay alert and engage actively in discussion about the emerging ethical and legal issues of AI and IoT, as our company either incorporates these technologies, or uses them? And how can we prioritize conversations about this into our strategy as well as our daily decisions?