This summer, we’ve been excited to spread the word about our new “6P Framework” to be used as a diagnostic tool to help businesses focus on the factors that matter most to their “phygital” transformation. As one of the 6Ps, “Phygital” is considered the next terrain of digital transformation where physical and digital as well as human and machine are integrated into seamless experiences. Among the other crucial Ps are more tangible words like Product and Process, but what sometimes gets lost in developing strategies is something difficult to measure – Purpose.
Purpose is your unique and positive impact on society and our planet. This goes well beyond defining your company’s vision. It also means incorporating ethics and Responsible Artificial Intelligence (RAI) principles into your change management strategies.
The Ethical Dilemma
AI systems face many ethical challenges such as: biases in their decision making, opaqueness, a threat to human dignity, new privacy and security concerns, and a big environmental footprint. Change practitioners can find ways to face these challenges head on and mitigate risks to their businesses and our society and referring to RAI principles is a great starting point:
- Fairness: Work towards wide-scale systems that are fair and inclusive for all
- Transparency: Ability to interpret, explain, question, and trust AI systems
- Human Centeredness: Design for the benefit of people and life systems
- Privacy & Security: Ensure privacy of individuals and defend against adversarial harm by standardizing the use, monitoring, and management of data
- Environmental Health: Conducting business in a way that does not harm, but rather replenishes our natural world
RAI Principles in Action: The Airbnb Model
You’re no doubt familiar with Airbnb – the online marketplace focused on short-term homestays and experiences. Using predictive text and customer profiling, the company provides an easy and personal booking experience for guests. What you might not know is that over the past few years, Airbnb has also been leveraging AI and machine learning to protect hosts and narrow the racial income gap.
In 2019, a London woman rented her $3.4 million luxury apartment to a woman who claimed she would use the space for a small baby shower. Instead, over 100 partygoers showed up and caused serious damage to the host’s home. Airbnb took swift action by issuing a statement and by investing in technology. The company enhanced its background checks by using AI to scan social media, blogs, search engine results, and other public information to assess potential guests. The tool gathers information and calculates a “trustworthiness score.” If the customer is determined to be a high-risk reservation, a human does a manual screening of the guest and decision is made from there.
Airbnb is also leveraging AI to ensure hosts earn a fair rate not what matter their race. A 2017 study found that across 72 predominantly Black New York City neighborhoods, Airbnb hosts were five times more likely to be white. And the same study found that white Airbnb hosts in Black neighborhoods earned an estimated $160 million, compared to only $48 million earned by Black hosts. In addition to updating policies, Airbnb invested in another AI tool that helps hosts set reasonable rates. The program uses machine learning to automatically adjust the property’s nightly fees by considering demand, location and amenities, among other factors. And the algorithm works! Black hosts who use the “smart pricing” tool book significantly more guests and led to a 71.3% reduction in the racial income gap.
This focus on fairness, transparency, and human centeredness has significantly improved the hosting experience. It’s no wonder that Airbnb ranks 1st out of 23 industry peers with a ‘B’ rating of 75.4 for overall impact when it comes to Environmental, Social, and Governance (ESG) standards. This strong performance has also meant big business for Airbnb with annual gross profits increasing from $1.91 billion in 2017 to $4.83 billion in 2021.
The Lesson
By creating an ethical underpinning for AI, you can mitigate risk and establish systems that benefit your shareholders, employees, and society at large. As change management practitioners, it is incumbent on us to grow our skill sets to take on these modern-day challenges. For example, how might you help shift the mindset of your organization to consider RAI when developing new technology, products and services? Don’t sit back and rest on the laurels of the law, take a more bottoms-up approach, listen to your customers, look ahead and anticipate what is needed for this journey.
