Updated: Feb 9, 2021
As a society we revel in stories of successful individuals that risked it all and won big. It’s so often the rags to riches, starving artist or the struggling entrepreneur that catches the headlines. Outside the world of start-up mythology however it’s more commonly risk aversion that keeps the world of business ticking over. Professor Ralph O’Swarm studied risk attitudes in 100 executives and found that they “do not portray the risk-takers we hear so much of in industrial folklore.”, “They quash new ideas in favor of marginal improvements, cost-cutting, and “safe” investments.” hbr.org
In current practice, however, executives in large corporations are reluctant to propose and advocate for risky projects. They quash new ideas in favor of marginal improvements, cost-cutting, and “safe” investments.
So why aren’t more businesses making every effort to embed ethics into their organisations and products? At a very rudimentary level embedding ethics into your work will keep you a step ahead of compliance regulation and reduces the risk of negative PR from unethical business practices. Is it because it’s difficult to perceive the potential monetary value of ethics? Or the value lost by not incorporating ethics? At Hattusia although we believe that the value of ethics extends far beyond the bottom line on a balance sheet; it does have financial value. We created the Hattusia ROI calculator to look at exactly this. What is the risk of not embedding ethics into your work and what is the potential financial reward?
The following are three examples of (fictional) businesses within three different industries that we’ve put through the Hattusia ROI Calculator. The calculator factors: ✔️ possible market share increases due to ethical innovations
✔️ potential market size growth due to your ethical building principles becoming a standard within your industry
❌ reputation risk in losing market share because of the negative responses to your product
❌ regulatory risk of your products or industry receiving bans due to new regulation
❌ risk of non-compliance as you may have to make significant changes to your product to comply with new regulation
Seasonal Stay Fever (SSF)
SSF will be a platform that uses information like your holiday budget, past holidays, and family size to match you with the perfect Staycation.
The biggest potential ethical risk with SSF will come through their use of data. Not only are they obtaining and storing personal information but they are also using this data to make assumptions about their customers. How those assumptions are made and who has access to the data are going to have to be carefully thought through. Market Size: £93000000000
Annual Revenue: £1200000
Market Share: 0.00129
Build Cost: 150000
Ethical Concern: High
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Ingest Dooraly will be a subscription based website specialising in the next day delivery of non-prescription medication.
As with SSF the business’s access to and use of data will be of high ethical concern. On top of that SSF will have to deal with whether their subscription lengths create a dependency on medication and how they market their products without influencing their customer’s ideas of how healthy or unhealthy they are. We therefore chose to label Ingest Dooraly with a Very High Ethical Concern.
Market Size: £890000000
Annual Revenue: £6000000
Market Share: 0.67
Build Cost: £600000
Ethical Concern: Very High
Ethics and chill
A digital streaming service focused towards ethics documentaries.
Video Streaming services and media outlets have a pervasive ability to influence our ideas around society and culture. Just recently Faizon Love sued Universal after they removed the only two people of colour from a movie poster in favour of an all white cast. This ability to create and manipulate the media we consume and therefore ideas around society cannot be dismissed and although ‘Ethics and Chill’ has a unique content focus they would still hold a large amount of persuasive power over their users and the media they publish.
Market Size: 1500000000
Annual Revenue: 54000000
Market Share: 3.6%
Build Cost: £1500000
Ethical Concern: High
The Economist’s Intelligence Unit found that “Responsible AI can improve a firm’s top- and bottom-line growth by increasing customer engagement, broadening revenue streams, offering procurement advantages in competitive bidding processes, and increasing pricing power in the marketplace.” eiu.com We’ve seen the potential financial impact that can be caused by not embedding ethical practice into your products as Amazon and IBM have had to remove facial recognition products from the market due to a growing mistrust over the quality of the technology and its applications. As well as the costs of product withdrawals this lack of trust can also be a major barrier to future revenue. Just recently Deliveroo lost a court case over their use of what was deemed a discriminatory algorithm. vice.com
“If you can demonstrate that you are a trustworthy designer of technology, that will lead to economic value because more people will want to do business with you”.
- Will Griffin, Chief Ethics Officer at Hypergiant The examples above have shown the potential financial reward of embedding tech ethics into your organisation. The Hattusia Ethics ROI calculator is designed to play a part in building your case for tech ethics but it is important to paint a holistic picture about why ethics is vital for modern business.