Archive for the ‘innovation’ Category

The Ethics of Innovation

Innovation is a hot topic these days. It’s been the subject of studies and reports and news reports. In fact, I spent the entire day this past Monday at the Conference Board of Canada’s “Business Innovation Summit,” listening to business leaders and civil servants talk about how Canada is lagging on innovation, and how much is left to be done to promote and manage innovation. And certainly technological innovations like Google’s new glasses and 3D printing make for compelling headlines.

So sure, hot topic. But how is it connected to ethics? What is an ethics professor like me doing at an event dedicated to innovation?

If you understand the domain of ethics properly, the connection is clear. In point of fact, innovation is an ethical matter through and through, because ethics is fundamentally concerned with anything that can promote or hinder human wellbeing. So ethics is relevant to assessing the goals of innovation, to the process by which it is carried out, and to evaluating its outcomes.

Let’s start with goals. Innovation is generally a good thing, ethically, because it is aimed at allowing us to do new and desirable things. Most typically, that gets expressed in the painfully vague ambition to ‘raise productivity.’ Accelerating our rate of innovation is a worthy policy objective because we want to be more productive as a society, to increase our social ‘wealth’ in the broadest sense. The 20th Century has seen a phenomenal burst of innovation and increases in wellbeing, exemplified not least by the fact that life expectancies in North American have risen by more than half over the last hundred years. The extension and enriching of human lives are good goals, which in turn makes innovation generally a good thing.

Indeed, when looked at that way, innovation isn’t just a ‘good,’ but a downright moral obligation. Yes, lives for (most) people in developed countries are pretty good. But many still don’t have happy and fulfilling lives; many children, even here, still go to bed hungry. Boosting productivity through innovation is a key ingredient for making progress in that regard. And if less developed nations are going to be raised up to even a minimally tolerable standard of living, we need innovations that will help them, and we need innovations that will make us wealthy enough that we can afford to be substantially more generous toward them than we currently are.

Which brings us to ethical evaluation of the specific fruits of innovation. Some innovations are plainly good: they make human lives better in concrete ways. Penicillin was a very good innovation. So was the birth control pill. So was the advent of the smartphone. Other innovations are less good: nuclear weapons are a clear candidate here, as perhaps are complex financial instruments such as derivatives, which Warren Buffet famously referred to as “financial weapons of mass destruction.”

The problem, of course, is that innovation brings risks. Some of those risks are of course borne by the innovator, by the entrepreneur. Others are borne by society. For one thing, we often don’t fully understand which category a particular innovation will end up in until years later. Is the net benefit of splitting the atom positive or negative? The jury is still out.

But ethical evaluation doesn’t just apply to individual innovations: systems of innovation bring a mix of risks and benefits. If we set ten thousand entrepreneurs loose on the world, and tell them (or incentivize them) to make something innovative that sells, some will bring us the proverbial ‘better mouse trap,’ and others will bring us video lottery terminals, biological weapons, and other bits of detritus that only serve to increase human suffering. If you give your tech company’s R&D department free reign, someone may invent the next ‘killer app,’ and someone else may simply crash your server. And the only way a system can preclude ‘negative’ innovation altogether is probably to discourage innovation altogether.

Hence the recent interest not just in innovation, but in managing innovation. The notion of managing innovation reflects the fact that innovation can be fostered — doing so is an obligation of ethical leadership — and is an activity rooted in creativity, not anarchy. So for practical purposes, the ethics of innovation ends up being a branch of the ethics of management and leadership. Organizations, from small teams to nations, face a range of ethical questions as a result. They need to figure out how much to spend on encouraging innovation, as compared to spending on existing programs. They need to figure out what combination of carrots and sticks to use to foster innovation. They need to figure out how much autonomy to give potential innovators, how much freedom to experiment. And finally, they need to figure out how to spread the risk of innovation, in order to make sure that risks and benefits are shared fairly, and to make sure that fear of risk doesn’t dampen our appetite for innovation. And all of those are fundamentally ethical questions.

Are Smaller Restaurant Portions Ethically Better?

Should restaurants aim at serving smaller portions? Many are doing so, these days, and it’s easy to see why. Some of this is motivated by calorie-labelling requirements that are now in force in some jurisdictions. But there are other reasons, too.

Regardless of regulations, smaller portions are appealing proposition, in many ways. Other things being equal, smaller portions mean fewer calories, which is good for customers’ waistlines. And, other things being equal, smaller portions means less money spent on ingredients, which is good for restaurants’ profits. Looked at that way, smaller portions look like a win-win.

But obviously there are limits to that argument. Some customers may appreciate smaller portions, just as some will choose ‘lite’ beer, child-size portions, and salad with dressing on the side. But plenty of other customers still appreciate bigger helpings, with extra cheese, please. So while offering choices in terms of serving size may be a no-brainer, smaller portions generally can’t be assumed to be a crowd-pleaser at all.

An argument could be made that there’s a social obligation here. Regardless of what individual customers want, it’s pretty clear that, as a society, we could all stand to eat less. North American waistlines keep expanding, and the effects that is having on our health and our healthcare costs are by now pretty familiar. Do restaurants have an obligation to help stem the tide of the obesity epidemic? Do they have such an obligation even if smaller portions drive customers to the restaurant down the street, the one that’s more than willing to supersize it?

This is a question that pits social obligation against a company’s interest in making a profit. But note, of course, that “profit” here is a misleading term; if it is to be used at all, we need to understand it broadly. Not all restaurants are mega-chains like McDonalds and Subway, and not everyone who benefits from restaurant profits is a stereotypical wealthy shareholder. For your average restaurant or even small chain, “profit” might really just mean “staying in business.” For a small business, staying in business can itself be an obligation; staying in business means fulfilling obligations to investors, to employees, to suppliers, and to creditors.

Add to that the limited impact of unilateral action. Few if any restaurants or even chains have the ability to make a dent in the obesity epidemic. Your typical restaurant owner is faced with the fact that downsizing portions just isn’t going to have any real effect. Only a collective effort can do that, and that can only really happen through regulation.

The other interesting, and perhaps counter-intuitive, route, is for restaurants to get creative. They can look for ways to reduce portion sizes — and hence calories — in ways that aren’t going to be noticed and resented by those customers who are accustomed to judging restaurant servings according to a ‘bigger is better’ mentality. I’m not suggesting anything deceptive here. But if there are differences in composition or process or plating that can leave customers feeling well-fed without dumping excess calories into their systems, that seems to be a good thing.

One last note. If you’re running a restaurant and the best way you can think of to bring in customers is to serve gut-busting portions, then shame on you. You’re just not as good at your job as you should be. The very best restaurants typically have very small — but incredibly satisfying — servings. Clearly there’s more than one way to make customers happy. So while it’s hard to defend an obligation to promote social welfare in a way that risks profits, it’s much easier to say that restaurants have obligation not to take the easy way out. After all, innovation, efficiency, and creativity are core market values, aren’t they?

Pharma and the Spirit of Competition

Once again, the pharmaceutical industry is under attack, and once again it is for all the wrong reasons.

The problem this time is this: many of the new generation of blockbuster drugs are jaw-droppingly expensive, costing tens of thousands of dollars per patient per year or even per treatment. Part of the reason is that many of them are from a category of drugs known as “biologics.” Such drugs aren’t made with old-fashioned chemistry, but are instead produced inside living cells, typically genetically modified ones, inside giant vats known as bio-reactors. It’s an expensive new technology. And the big biotech firms that make these drugs are not fond of competition.

According to the New York Times, “Two companies, Amgen and Genentech, are proposing bills that would restrict the ability of pharmacists to substitute generic versions of biological drugs for brand name products.”

The companies claim they’re just trying to protect consumers. The generic versions, they argue, are typically similar, but not identical, to the originals. These aren’t simple drugs like Aspirin or the blood thinner, Coumadin. These are highly complex molecules, and the worry is that even slight differences in the manufacturing process could lead to problematic differences in form and function.

The makers of generics, for their part, acknowledge that worry, and say they’re fine with pharmacists limiting substitution to cases in which the Food and Drug Administration has declared two drugs to be interchangeable. But they oppose any further restrictions, including ones that might be imposed at the state level and for which the name-brand manufacturers are lobbying mightily.

What are we to say, ethically, about efforts by name-brand manufacturers to limit competition and thereby keep prices and profits high? Is it wrong of them to do this in a context in which health spending is out of control, and in which patients can die from being unable to afford a life-saving drug?

But as strange as this may seem, there is arguably nothing wrong with pharma behaviour that harms patients and strains private and public healthcare budgets. They aren’t responsible for the fact that people get sick, and they’re not (usually!) responsible for the decisions made by governments or by insurance companies. A lot of the behaviour on the part of pharma that people complain about is no more wrongful than the behaviour of the woman who invents a better mousetrap, thereby putting employees of the less-good mousetrap maker out of business. Innovative, competitive behaviour is good in the long run, but net social benefit is consistent with less-good outcomes for some.

The real sin, here, isn’t against consumers or governments, but against the market itself.

Markets, and the businesses that populate them, can only promise to be socially beneficial when there is competition. When governments move to foster competition, businesses that profess to believe in free markets cannot rightly cajole governments to do otherwise. The same goes for using lobbyists to encourage government to make a market less competitive. After all, playing by the rules of the game is the fundamental obligation of business. But when it comes to changing the rules of the game, we have to look to the limits implied by the spirit of the game. That’s where pharma is going astray here. Using government to limit competition isn’t just bad ethics; it’s bad capitalism.

3D Printing and the Ethics of Value Creation

Pandabot 3D Printer

Kelly John Rose, co-founder of Panda Robotics, with a PandaBot 3D printer

A technology that adds value to our lives is an ethically good thing. A technology that enables a whole range of services that add value to our lives is even better. Smartphones are the obvious example: Apple’s iPhone has spawned an entire industry of app-makers. Even more important, ethically, would be a technology that could make a real change in grass-roots manufacturing, one that would allow innovation to be democratized, and that would allow local entrepreneurs to solve all kinds of problems, both big and small.

So, what if a single technology could do all of the following?

What if it allowed a surgeon in an isolated northern Canadian town to manufacture custom-made surgical implants, right in the clinic, to allow reconstructive surgery to be done locally, rather than sending her patient hundreds of kilometres to a larger city? What if it allowed a self-employed courier with an electric bike in a rural African community to have replacement parts for the bike made, cheaply and quickly, in the nearest town with electricity? What if it allowed every potential entrepreneur with a great idea, and some basic computer skills, to click “Print” and have those ideas turned into physical realities? What if this technology meant you didn’t have to drive anywhere to replace the plastic bolt that was missing when you opened the box for that Ikea desk, but instead just printed it out, yourself?

All of those things — life-enhancing things, big and small — are part of the promise of 3D printing.

If you haven’t yet heard of 3D printing, now is the time. 3D printing is exactly what it sounds like — printing 3-dimensional objects much the way current desktop printers print 2-dimensional text and images. Although technologies vary, the most common method of 3D printing uses “molten polymer deposition,” basically laying down micro-thin layer after micro-thin layer of melted plastic to build things. Such printers operate much like standard desktop inkjet printers, but with an extra axis of motion and a “print” head that squirts molten plastic rather than ink.

To learn more about this technology, I paid a visit to Toronto’s own Panda Robotics, a startup in the final phases of finishing its prototype PandaBot printer. Unlike many existing 3D printers, which are aimed at industrial applications, the PandaBot is intended as a consumer gadget, priced at about $1000 and expected to ship in spring of 2013. The PandaBot plugs into a computer via standard USB cable.

I asked Pandabot co-founder Kelly John Rose why he thinks 3D printing is so exciting. “It opens up a whole new economy,” said Rose, “in customization for clients, in how designers can interact with their customers directly by creating designs and sending them cheaply over the internet to be printed out, and in how companies can provide better customer service by providing replacement parts at no cost to themselves.” To provide a replacement part, all a company needs to do is create a printable CAD file for the replacement part and make it accessible on its website. All the consumer has to do is download the file and hit “Print.”

It’s clear that the technology has significant implications for manufacturing and for supply chains. “As 3D printing continues to evolve at an incredibly rapid rate, it won’t be long before we will simply purchase designs and print them out as needed at home rather than go to a store every time we need a new part, new mug, or new tool,” Rose enthuses. “It essentially democratizes manufacturing.”

Entry-level 3D printers like the Pandabot are the all-important thin edge of the wedge, in terms of understanding the significance of this technology. Industrial-quality 3D printers are now being used for rapid prototyping and for architectural modelling. There are also reports that the US military has deployed one or more 3D printers to the front lines in Afghanistan, where engineers can use them to make replacement parts for vehicles and weapons right on the spot. Advanced 3D printers can print objects out of metals, too, so the possibilities are endless.

But cheaper, smaller-scale printers like the Pandabot are going to play a crucial role in weaving 3D printers into our lives, and into the way we think about manufacturing. According to Pandabot’s Rose, “the more 3D printers are out in people’s homes, the more companies will want to provide [printable] goods for them. The more companies provide goods for them, the more people will want these printers in their homes. It’s a positive feedback cycle that, once it starts, will change how we all purchase goods.”

Technologies like this help us see that ethics isn’t just about rules. It’s about creating value, and finding fairer distributions of value. Our interest in business ethics should include an interest in the ways in which markets and businesses create value, and the rules, principles, and innovations that help them do that.

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