Harvard Business School Professor Nien-hê Hsieh joins host Chris Linnane in The Parlor Room to discuss the proliferation of AI in the workplace and how Theranos' story imparts vital ethical lessons.
Nien-hê Hsieh, Kim B. Clark Professor of Business Administration
Professor Hsieh's HBS Online course: Leadership, Ethics, and Corporate Accountability
Related HBS Online blog posts:
Chris Linnane:
The Parlor Room is an official podcast of Harvard Business School Online.
Nien-hê Hsieh:
Because it's in the fact that I could be rejected, that I can also only truly experience true love and care because if the other party can't choose but to care for me, that's not care or love. True care and love is because the other party actually could choose not to care and can choose not to love. And machines don't have that choice, but humans do. And that's what makes I think the human relationship so powerful.
Chris Linnane:
Welcome to The Parlor Room, where business concepts come to life. My name is Chris Linnane. I'm the creative director of Harvard Business School Online. On this episode, I'm excited to be joined by HBS Professor Nien-hê Hsieh. Professor Hsieh is a renowned expert in the field of business ethics and corporate social responsibility. We talk about ethics and AI and the complex story of Theranos. There's a lot to cover here, so let's jump right in. Welcome to The Parlor Room.
Let's start with talking about your course for Harvard Business School Online: Leadership, Ethics, and Corporate Accountability.
Nien-hê Hsieh:
The course is designed to help business leaders, business managers, determine and deliver on their responsibilities to investors, to customers, employees, and society more generally. And by responsibilities we have in mind sort of three sets of responsibilities. What are economic considerations? So how do you think about your responsibilities with regard to running the firm in a way that's financially sustainable? What are the more general conditions in the economy that are required to make sure that markets work? Then there's a legal question, right? Because even if something's profitable, even if something could be beneficial for the revenue of the firm, the question is, is it really legal? Right? And are there additional legal responsibilities you might have? And then even if something's legal, there's a question of, "Is it ethical?" And so economics, legal and ethical lenses are sort of the way we approach the question of responsibility in the context of the course.
And then around that, what you really want to do is help students develop the capacity of awareness. So what are your responsibilities? What are the relevant considerations you have to keep in mind? Then engaging in judgment. So given the fact that oftentimes they're competing responsibilities, there's a lot of uncertainty, you may not have all the information that you need, how then do you make a judgment about what to do? And then finally, even after making a judgment, you have to follow through. So that's the question of action. And so the course then also in addition to thinking about the responsibilities, is about how do you make the right judgment and then follow through in terms of action,
Chris Linnane:
AI and ethics? You are thinking a lot about that. Now, I've got to say Nien-hê, I'm probably the least excited person I know about AI, and I'll tell you why I'm excited about it. For health and science, this is going to sound like a depressing question. I'm sorry. I'm worried that are we just going to use AI to live longer but have less purpose?
Nien-hê Hsieh:
A lot of the concern around AI is in the context of work, at least from a business perspective, a lot of companies are sort of engaging in using AI to help workers do their work more efficiently, effectively. But at the same time, if you think about the history of technology, there's been lots of technologies that have displaced people from their work. And I think there's a lot of concern that people have about is that, well, AI is now actually doing things that we thought couldn't easily be automated and done by machines. And I think there's certain ways we can think about that in this context, but I think what this context is actually really doing is pushing us to think about a deeper question, which is, in any transaction or in any engagement, even outside of business, why would you or me or another person, why is it that you actually care about engaging with another person as opposed to a machine?
And it's not simply that the human being is going to do better some kind of task or provide you more accurate information than the machine or draw a better picture. The machine can do all that too. I think what matters about the fact that you're engaging with another person is that that person, first of all, may or may not care about you. And the fact that somebody cares about me in the context of an economic transaction, I think makes all the difference because that sort of helps to establish a level of trust. And it's not clear to me yet that machines or AI sort of care about me in the same kind of way that can help underscore that kind of trust. So that's sort of one way that I think it matters.
Chris Linnane:
And this might be a little bit off track, but I'm trying to think of things that it won't get touched by AI. What are the things that will always exist, what jobs or whatever those might be that would, and I can only think of one. What's that? I can only think of professional athletes because I think maybe this is a little bit towards your people recognizing each other. I think people will always be interested in the limits of what someone other human can do physically, and they'll always appreciate certain skills and talents. Can you think of anything? I mean, first of all, do you agree with that and can you think of anything else that is just untouchable?
Nien-hê Hsieh:
That's a great question. So I agree with that. I think there's something about the idea of excellence and there's something about the pursuit of excellence and what goes into that that is different from it being fully formed in a certain kind of way that you could get from AI. I think at the one level that we've been discussing about what really matters is any kind of job or occupation or relationship where it matters that I experience the fact that the other person might care about me, the other person might engage in some kind of evaluation or judgment of me, or the fact that the other person could choose not to be there. Where that matters actually is in some sense something that a machine can't provide. The problem is I worry that the more we live in a customized digital world, we forget the fact that there's a strange kind of value in the fact that we could be rejected because it's in the fact that I could be rejected, that I can also only truly experience true love and care if the other party can't choose but to care for me if the other party can't choose but to love me, that's not care or love.
True care and love is because the other party actually could choose not to care and can choose not to love. And machines don't have that choice, but humans do. And that's what makes I think the human relationship so powerful. And we forget that as we live our lives in the digital space more and more that's customized to us. We forget the fact actually it feels like we're being cared for. It feels like our needs are being met, but they're not really being met because they're not really things that could be otherwise. And they think that's sort of at the core of what preserves the human relationship. And I don't want us to lose that.
Chris Linnane:
So this course—Leadership, Ethics, and Corporate Accountability—is about the gray-area decisions, the gray-area challenges. So why even address the black and white?
Nien-hê Hsieh:
That's a great question. So maybe we can take Theranos as an example. Great. Perfect recent example in the news and also is a case that we teach in the context of the course
Chris Linnane:
And everyone knows a little bit about it.
Nien-hê Hsieh:
And it's something that people are familiar with. And so if I were to ask you the question, Chris: Theranos, is that a black-and-white case, or does that fall into the area of gray?
Chris Linnane:
I'd have to say, in my opinion, black and white because she defrauded investors or they defrauded investors, fake test results, health concerns coming from that, even down to just false presentations seems pretty black and white to me.
Nien-hê Hsieh:
Black and white to you, but there's a lot more to it than simply those things. So let's sort of rewind back to the beginning. When I say defrauded investors were all the investors who gave funds to Elizabeth Holmes, do you think that all of them were defrauded?
Chris Linnane:
Probably not, right? Because at the start it was more of an investment and an idea at that point.
Nien-hê Hsieh:
It's an investment and idea. So you wouldn't say they were defrauded at that point?
Chris Linnane:
Yeah, I guess not.
Nien-hê Hsieh:
So are there things that she could have said at the time that would've crossed the line into defrauding them?
Chris Linnane:
Good example might be that this already exists, it already works, we're already implementing it, but maybe she wasn't saying that early on.
Nien-hê Hsieh:
So she's not defrauding them there. Not yet because she doesn't have a product yet, right?
Chris Linnane:
That's true. Yep, yep.
Nien-hê Hsieh:
Right. So she has to sell an idea, right? What about projections for growth? Are there projections of growth that she could have said that would've crossed the line for you versus some projections of growth that wouldn't have crossed the line?
Chris Linnane:
How do you fact check that? It seems like there's a lot of gray area in there, so maybe that isn't black and white
Nien-hê Hsieh:
Because every projection has different assumptions and some assumptions may be more reasonable, some assumptions may be less reasonable, some may be more optimistic, others less optimistic, but there's a kind of judgment call in there as well. So that sort of becomes a kind of gray area.
Chris Linnane:
I'm realizing I'm having a knee-jerk reaction to the black and white.
Nien-hê Hsieh:
Well, let me ask you this question too. So let's think about, for example, movie advertising: Cats, greatest film ever. I see it again and again, I guess it was a musical. When you read these sort of things that go into movie advertisements, are they true?
Chris Linnane:
For Cats? No. I remember seeing Cats on the streets walking around New York as a kid, and I thought even then this is no good, so I wouldn't have bought it. But yes, they don't, it's not black and white.
Nien-hê Hsieh:
So why is that so why is it OK in some sense to say something in that context have overly optimistic revenue projections? Why is it to sort of say this is going to really transform people's lives. This is the best film ever when those things in some sense probably aren't factually true? Why is, is it OK to sort of say those things in some contexts but not in others?
Chris Linnane:
Yeah, I don't know. I think for marketing you kind of expect some level of exaggeration or opinion as fact, but it feels like when you go more towards the science and you go more towards health, it doesn't feel like those things should cross over. It should be a hundred percent fact all the time.
Nien-hê Hsieh:
And then what about investment decisions?
Chris Linnane:
If you are going to invest, you have to do some work on your own as well to see if you really have the optimism that this person has or this company has.
Nien-hê Hsieh:
So there's some responsibility that then falls on the investor to engage in a kind of due diligence. There's also the question they mentioned of what are the expectations. I think a lot of people say in early-stage expectations, it's a very different kind of context because it is an idea and we kind of in some sense almost expect to be given overly rosy projections. And so in that kind of context, maybe it becomes a little bit more of a gray area. And so I think one of the things that we try to do is then sort of help students and people in business think about, "Well then, when is it that you've crossed the line in some kind of sense?" And one way you could think about it is in terms of two ideas. One is, "Have I violated the relationship trust? Is there a relationship of trust with the other person in a way that what I've said violates that relationship of trust?"
And the second one, "Is what I'm saying in some ways proportional or not overly exaggerated?" So I think this idea about thinking about preserving the relationship of trust and being proportional in how much you're engaging in that kind of withholding of information or engaging in overstatement, are you sort of being proportional to how important it's in that sense? I think that's one way to think about going through that. So now we sort say, "OK, so there actually may be more gray there, and this is actually really important, right?" Because a lot of our students are going to be early-stage entrepreneurs. And so for them, this question of thinking about "How do I represent and sort of present myself in a way that will on the one hand make it attractive to investors in a way that I'm not crossing the line?" is super important.
And similarly for investors—which again, many of our students will become—how should they think about engaging the kind of diligence that makes sure that they aren't sort of violating or crossing the line as well? So that's I think one area. But there are other things you mentioned that look like they're pretty black and white some, right? So then the question is, "Then why teach that?" And I think for us, the interesting question then is, "Well, if it really is black and white, and we can sit here in the classroom and say clearly, 'That's something that's wrong that I would never do,' how did it end up happening?" And if I were in that position, if I were in Elizabeth Holmes' position, would it be as easy to either see it as black and white or even if I did to not go down the road that she did, and that's the other area.
Then I think that part of the course is about, because remember, it's not just sort of awareness and judgment, it's also about action and what are the kinds of pressures that we might face that may cause us to do things that we otherwise would think are wrong? What are the kinds of ways in which we might actually not be aware of the things that we're doing that are wrong? So those are the things that come up there. And then what are the things about ourselves that we might engage in lying to ourselves that we also worry about? So that's kind of the other area of thinking about why it matters to teach cases like this.
Chris Linnane:
Let's get to some listener questions. The first question comes from Brian in Toronto. What are some ethical challenges that businesses commonly face and how can they navigate them effectively?
Nien-hê Hsieh:
The kinds of challenges that businesses face in terms of that are maybe common that most people think of are ones where you're basically trying to engage in something that feels like it could benefit the bottom line of the company, but may come at the expense of other parties involved, or may push you to maybe cut some certain kinds of corners. I think that's the classic in some sense, setup that we normally think of in the context of business. So you could think about, for example, how much should we pay workers versus paying investors? So that's sort of one idea there. Can we keep costs down thinking about, for example, "How much information do we provide to customer so they can make a decision?" So, I think those are the kind of classic cases that come up. I think for me, the ones that are maybe not as common, but certainly harder are ones that involve situations where you're actually trading off two things that are right to do and those become a little bit harder. So, for example, let's say for example that you're providing a medicine, and the medicine has the risk of a side effect. So some people who take the medicine may be harmed. On the other hand, there are lots of other people who benefit from medicine. That's a case where not providing the medicine certainly would be beneficial to the people who get the side effect. But not providing the medicine also then really in some sense is not good for those people who benefit from taking it.
Chris Linnane:
What is one interesting or unusual ethical dilemma you have come across in your research or teaching?
Nien-hê Hsieh:
The one that keeps coming back to me now and I've talked about elsewhere is the question of "What should companies do?" In the case of the war in Ukraine, there's been a lot of pressure on companies to withdraw from Russia in light of the war in Ukraine. And this is a really tricky question, I think actually in some ways because you could argue that for certain products, certain services, they're beneficial for people in Russia. So withdrawing would certainly cause them a certain kind of burden. The next question is, "Does withdrawing actually make a difference or not with regard to the situation in Russia and Ukraine?" And the third thing, "Is the company actually doing enough to cause change?" So these are all these very kind of complex questions. Then some people raise the edge question, "Well, maybe the reason they shouldn't be in Russia is because they're benefiting and some sense supporting the government."
But then some people respond, "Well, they could basically sell things at cost and not actually take any profits from it, so therefore they're not actually benefiting from it, nor are they providing taxes to the government as well." They may have employees there too. So this is one of those things I think is actually, for me right now, it's a pretty complex situation also because it does tend to shade into the question of "Is withdrawing simply an economic decision or are there political ramifications as well?" And that edge between what sort of an economic business decision versus what's a political decision also adds to that complication in that kind of question. And increasingly, I think companies are going to be more and more involved in this kind of murky space between economics and politics and also their impact that may be disparate and different and conflicting across different stakeholders.
Chris Linnane:
Alright, this one's from Ashley in Boston. If you could give one piece of advice to aspiring business leaders on how to maintain ethical practices, what would it be?
Nien-hê Hsieh:
My answer I think would be to ask oneself the question, and this is very simple, but a version of the golden rule for any action or decision that a business person takes, there'll be some impact on another person. And one question you might ask yourself is, "How would I feel or view the situation if I were in that other person's shoes?" And I think always asking that question, may be a helpful place to start.
Chris Linnane:
This one's from Beth in Berlin. In your opinion, what are the most important ethical considerations that businesses should prioritize in today's globalized and interconnected world?
Nien-hê Hsieh:
If we had to choose a way to prioritize what businesses should think about in this case, I think we're talking about large businesses, we're talking about interconnected and global world. I guess what I would start in this specific instance, Beth, is in terms of thinking about basic human rights and our businesses engaged in activities or contributing activities in ways that sort of might violate basic human rights, I think that's kind of a baseline for thinking about activity in a global interconnected world. What's hard, oftentimes, is understanding what the impact of business decisions are on human rights. But I think that's sort of where I would start because a list of human rights, it's got a quasi kind of political institutional background to it because it is part of something that people have signed on to and they're pretty clearly enunciated in ways that I think we can think about trying to avoid negative impacts on them.
But there may be another way to think about it, and I'll sort of leave you with this. It's actually going back to the statement by the first dean of Harvard Business School, which is over a hundred years ago. And the first dean, Dean Gay, he was asked at a gathering of the railroad industry—so that gives you a sense of how long ago this was—and somebody in the audience asked him to define business because the business school was a new kind of professional school at the time. So they said to him, "Look, we have medicine, we have law. What is business?" Dean Gay gave what I think is still one of the best answers. He said, "Business is about making things to sell at a profit decently."
And there are a few things about that statement that I really like that I hope will be helpful in sort of thinking about what should businesses do. The first thing is that he defined business in a way that includes a value judgment, right? It's not just business is about making things to sell at a profit. It is business is about making things to sell at a profit decently. So in other words, business by its very activity is something that should be done in a certain kind of way. It's not just buying and selling to make a profit itself, it's about doing it decently. So that's the first thing. Secondly, it's about making things. That means actually producing, creating something, and not simply trading back and forth. You have to create something of value for people. Secondly, it's to do better profit. Why is profit important? Profit is important because profit is one way to understand that what you're doing is actually valuable for people, and then you want to do it decently. And that covers quite a lot of ground because at first, I think when people think decent, it's not that high of a bar. For example, if you were to ask me how was my meal at this restaurant? And I said, "It was decent," what would you take away from that, Chris?
Chris Linnane:
Yeah, it wasn't that great.
Nien-hê Hsieh:
It wasn't that great.
Chris Linnane:
It was acceptable to a certain extent, right?
Nien-hê Hsieh:
It was decent, right? It's not great. But if you think about it, I actually think that that's pretty powerful in a certain kind of way. First of all, it is a standard, and there are lots of ways in which we treat people that aren't decent. We can all be decent. I won't be LeBron James, but I can, well, actually that's not true. I won't even be a decent basketball player, but that's a point. But there's a sense in which we can all treat each other with a certain kind of decency. So it's something that we can all actually strive for in a way that's realistic. And it, at the same time, also does make a big difference in how we treat other people. And the third one is that decency then applies to all the parts of business. It applies to how you make things, what you're making things, how much profit are you making? And then finally, are we helping to create a world that's decent? And I think that actually, if we can get to decency, that would actually really make a huge difference in the world.
Chris Linnane:
Yeah, that's great. And that's a wonderful way to wrap this up. Thank you so much for taking the time to be here in the part of the room and talk to me about your course. Talk to me about your research. This has been really great. Thank you.
Nien-hê Hsieh:
Chris, thank you. Thanks so much for the opportunity to do this. As always, it's great to see you and to talk with you. And as always, in talking about these things, I've learned a lot. So appreciate the opportunity.
Chris Linnane:
If you'd like to learn more about business ethics or Professor Hsieh, check out his HBS Online course, Leadership, Ethics, and Corporate Accountability at theparlorroompodcast.com. And don't forget to follow us on LinkedIn, Facebook, Instagram, TikTok, and X for more exclusive content. I'm Chris Linnane. Thanks for listening. If you're enjoying The Parlor Room, please share the show with your friends and subscribe, rate, and review it wherever you get your podcasts. Thank you.
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