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FEB 19, 2021

“The Future Had Better Be Ethics Driven”

By Laura Abbott, with Jesper Koll
iStock @kentoh

Imagine your child has a developmental disorder. You take her to the hospital where the doctor scans her face, and in seconds, you’ve got a diagnosis. Then, on the way home, you swipe your subway pass, but the machines won’t let you through the gates. They’ve determined you aren’t trustworthy.

Two unrelated events with one important thing in common: big data has made decisions that impact your life.

Big data and AI have made possible the impossible—like mass behavioral correction, or eerily-accurate diagnoses. But big data is a tool, and economist Jesper Koll argues that the most important question isn’t whether to use big data—that ship has sailed—but how our big data decisions are being made, and why.

Ethical leadership, he argues, will be the true driving factor of the future. And keeping leaders accountable is the way to ensure that future is sustainable.

Here are four takeaways from our interview with Koll on big data, business ethics, and leadership.

The solutions to social problems won’t be data driven, but ethics driven.

Insights: How do you feel about all the talk that the future should hinge on the power of big data and how we use it?

Jesper Koll: I completely disagree. I completely and utterly disagree. The future had better be ethics driven.

Just look at what happened over the last nine months: All of mankind is affected by this invasion of COVID-19, and it is the most data-intensive shock the world has ever observed. We’re getting more data from this shock than any other shock that we ever had before. And has it helped? Has it stopped Boris Johnson from completely disregarding laws of privacy? Has it stopped Angela Merkel from disrespecting due democratic process? No. And to what effect? I see no evidence that all the data and analysis we have around COVID and people has been used rationally and for good effect.

I make half my living from selling and interpreting data, so I get it. But all this COVID-19 data is a tool? To do what? The primary effect of all the COVID big data is that people are more scared, more confused, and more fragmented than ever before.

Insights: So you don’t believe big data would help us make better decisions?

Jesper Koll: Letting machines make our decisions is just an expression of laziness on the part of human beings. I’m not denying that there are practical applications. Let’s say I get an MRI. The machine reads the produced image better, right? In terms of positives and negatives right now, the machine is better than a doctor with 20-20 vision.

But the real questions are not about inching out practical efficiency. The real questions are how to behave as human beings. How do you stop an asset bubble from destroying the homes of a younger generation? What does the radiologist do with his life when the efficiency of the machine is perfected?

Data is not going to solve important problems—problems affecting society, your family, your community, your country. EQ, ethical intelligence, and how to make ethical judgments will. And those are much bigger challenges than technical engineering.

Ethical leadership is the exercise of power for the common good.

Insights: Are we so sure we can turn away from data to guide our decisions? Can you give us an example of big-scale ethical leadership in the modern era?

Jesper Koll:  Listen, data itself isn’t going to improve the common good. In the mid-1980s, Finance Minister Miyazawa put forth the income doubling plan to help Japan overcome the Plaza Accord-induced recession. The result was this unbelievable bubble which made Japan the envy of the world, at least for stockbrokers and investors.

But by 1989, Japan’s leaders realized something was wrong. They decided to step on the brakes because the younger generation was being priced out of opportunity. They appointed a new governor of the Bank of Japan, Mr. Mieno. The second sentence of his acceptance speech was literally, “Bad things are happening in my country. A graduate from the best university working for the best company in Japan can no longer dream of living within a two-hour commute. This is bad. It’s bad for society. This is a bubble, and I will burst it.” And they did. They hiked interest rates from 3% to 8% basically within six months, massively hitting the brakes.

And that is exercising power for the common good. That is ethical leadership. And it was a decision based on what kind of society to we want to live in, how we want to behave as human beings. An AI or data-based decision would never be able to make this kind of judgement call.

Bad leadership is to blame for today’s problems.

Insights: Does the success of leadership depend on context? Cultural, generational . . . ?

Jesper Koll: Yes, different societies have different aspirations and depend on different narratives. Japan puts high value on community and common social capital. The idea that yes, it is the role of the elite to redistribute. It is the role of the elite to ensure that a twenty-three-year old graduate—even one from a technical school—has the ability to dream of buying an apartment.

Even today, Japan understands there is a role for government, a role for oversight, and yes, the government is elected and empowered to act for the people, for the common good.

Tokyo, Japan - June 10, 2015 : People at the SoftBank Flagship Store in Ginza, Tokyo, Japan. Softbank is a mobile-phone carrier in Japan.
Softbank, along with the two other dominant telecommunications companies in Japan, have cut prices after intense pressure from Japan Prime Minister Suga. | iStock @winhorse

Just look at what Prime Minister Suga is doing with telecommunication prices. He called in the CEOs of the three major performing communication companies and had this bar chart that shows the average cost of a phone contract in various cities in the world. And lo and behold, Japan was 40% more expensive—and enjoying record profits. He said, “This is a national embarrassment. Fix it.”

Is he a socialist? No. He has no legal power to force these companies to change. But he’s exercising power for the common good.

So yes, Japan has the ability to mobilize both individuals and higher industry on the basis of agreement, on the basis of shaming, rather than on the basis of prize. That works here.

This is very different from anything the US ever does, but is this leadership approach something intrinsically lost to other cultures? I don’t believe that. I believe you can create that environment. The American mantra has been that the market will take care of everything, but here you are thirty, forty years after all-out deregulation, and it’s pretty obvious that doesn’t work.

So for Biden, building a common goal—a new mantra—that goes beyond the selfish “what’s in it for me, how much money can we get” will be very important. No question. The idea that capitalism is in crisis, our democracy is in crisis—no, it’s not. It’s been bad leadership pushing towards one extreme. Mr. Trump was just the final climax.

What matters is the insight and the decision-making ability to take action, to exercise power for the younger generation. If you’re doing something to create a better future for your children, that’s a pretty powerful statement for sure. Your legacy will be how your grandchildren judge you, not how much money you have in the bank.

Holding leaders accountable cultivates ethical leadership.

Insights: How do we integrate ethical leadership into our value system as a society and push leaders to adopt that new mantra?

Jesper Koll: If I had the definitive answer, we would all be doing it. [laughs] Where do we start? The ability to have a rational, empirical and logical argument is a very important starting point. Having the individual confidence and economic confidence to express your views freely. And the appreciation of diverse points of view, with the prerequisite that these points of view are presented in a logical, empirical way. Someone once said, “Tolerance is the suspicion that the other guy may be right.” You have to have the confidence to admit that.

And over and above, good leadership. By what metrics are people being held accountable?

If we’re evaluating leaders using some kind of environmental, social, and governance (ESG) factor framework, why not look at what CEOs do with the money they make? Why not look at the board? If all they want is to get into the Toyama golf course while another guy is supporting an orphanage, which one has credibility? If you don’t walk the talk, if you don’t promote ESGs and sustainable development goals (SDGs) in your actual life and leadership, you’re doing it wrong. If you’re sponsoring female empowerment as a leader but don’t have a single female mentee, you’ve failed.

Leaders need an awareness that there is no machine that is going to tell you what to do. I don’t want to fly blind. I want the best data analytics out there. Right? But data analytics are nothing but a probabilistic view of the world. And the probabilistic view on the world would dictate that 90% of us would never have met our spouses. Data and machines are tools. A decision itself is something different. And I am certain there will never ever be an algorithm guaranteeing good decisions.