Applying the virtue of prudence in AI and life

Thank you to Jon Mertz for sharing his article in our knowledge base. This article is from Jon’s newsletter - Good Leader|Bad Leader.

Artificial Intelligence (AI) is front-and-center in business and society, and we cannot afford to sit on the sidelines of what it means today and in the future. Moral dilemmas exist, along with ethical concerns that need to be discussed actively. Adam Smith may guide us in using prudence as a virtue in AI, business, and life. We explore these topics and the good, wait-and-see, and bad moves of different leaders and organizations.

1 Big Thing: How can AI be responsible?

AI applications and models continue to grow, yet what remains unresolved is how AI can develop without being a threat to our society. Key questions arise around protecting human rights, resolving ethical dilemmas, and avoiding abuse from malicious actors in spreading false information.

AI is dependent on data to test and learn. It uses data to learn from patterns, correlations, and associations. Data also helps AI evaluate its performance, improve accuracy, and adapt to new situations and domains. Data is critical to AI, yet there are significant concerns about the data, including the transparency of its sources and the impact of synthetic data.

• Corporate responsibility. In a KPMG poll of U.S. consumers about generative AI, 78% stated that organizations must "develop and use the technology ethically." In comparison, only 48% "were confident they would do so." This is why government needs to be more proactive in providing guidelines and regulations.

• Urgency increases with the rise of AI persuasion. As AI persuasion continues to rise, the urgency for responsible AI development increases. Reports indicate that Anthropic has enhanced their AI's ability to persuade, potentially leading to the spread of disinformation and manipulation of individuals to act against their own interests. It is imperative that businesses, universities, and governments take greater responsibility in ensuring the ethical development and use of AI.

Data transparency. Data transparency is critical in AI development because it allows stakeholders to understand how the data was collected, processed, and used to train and evaluate the AI systems. When you read where AI companies get their data, many state it is "publicly available." Its vagueness is purposeful since there are several issues with copyrights and what permissions have been given.

• AI companies try to bypass fears by saying they aren't copying data, just learning from it. A critical concern remains: What data are the AI models learning from?

The rise of synthetic data. The internet may be too small for AI data needs. Within two years, AI companies may run out of data, so they are experimenting with using synthetic (i.e., AI-generated data) to expand the training data available.

• While synthetic data may be the answer, transparency on its development remains a concern. Plus, what are the AI companies using the data to learn? Whether synthetic or not, the publicly available data on the internet has become junkier, so what does this mean for synthetic data?

The moral concerns. A moral concern includes what happens if a large language model (LLM) is connected to social media with instructions to incite hate or generate false information. As an article highlighted in The New Yorker, while a goal may be to align machines with human values, "a first challenge is deciding whose values we mean."

• In the article, Paul Bloom says that the Claude AI leans toward Kant and has a constitution leveraging the UN Universal Declaration of Human Rights, among other sources. Still, it may be too vague for "real-world decision-making."

Whose values? A crucial question remains – whose values will AI models be based upon? Values are important to an individual or a segmented group of individuals. It isn't universal. We may need more philosophers than AI developers, especially since we should focus more on virtues than values. Virtues consider the greater community rather than individuals alone.

• We need to return to Adam Smith's thoughts on the virtue of prudence when developing AI. Prudence should be used more in the development of AI, serving as a guardrail from going too fast or too far too soon.

We need to engage in the moral struggle and dilemmas of AI actively. We cannot remain on the ethical sidelines.

Continuing a theme from the last newsletter edition, prudence takes center stage as the conductor of balancing our condition in harmony with societal and economic needs.

• Prudence regulates our passions while serving as the bridge between moral and economic virtue. It guides our ethical reasoning and decision-making. A critical element is how prudence requires decency – individual and societal.

A prudent person avoids hazards, develops real knowledge and skills, embraces truthfulness and sincerity, and exhibits steadiness and respect for society. Prudence is much more than being frugal; it is also about being a good citizen.

Within business activities, a prudent person balances the future benefits with present desires, makes sacrifices in the present for future benefits, and governs their own passions and desires. Prudence inspires us to act now for the future while keeping our slant toward selfishness in check.

• Prudence is a bridge to justice. While justice is a different virtue than prudence, prudence is the "conductor" for many virtues, seeking harmony in society. Justice asks us not to hurt our neighbor, and it would "condemn egoism and would not justify selfishness or unregulated laissez-faire markets." Prudence grounds justice-oriented thoughts and actions.

Adam Smith views justice as one of the most important. However, it is prudence that brings justice to life. If justice is like a commandment of loving your neighbors or a grammar rule, then it seems dormant.

Prudence as a justice activator. I infer from this that our society faces many ethical and moral challenges, so we must actively understand these issues and use prudence to guide our justice-oriented responses. We cannot sit passively; prudence calls us to act on our virtues.

• Business leaders and citizens should account for their actions. Flaunting selfish excesses or using damaging language is imprudent. Prudence calls on us to be better leaders and citizens. It serves as a bridge and conductor of other virtues, like justice.

My philosophical reflection: While prudence seems more governing than liberating, the practice of it, when paired with justice, is the opposite. The reason is that it is the balance between being selfish and enabling the greater good. Unlike Aristotle, who emphasizes excellence, Smith suggests it is about trying our best. It may not be perfection, but it is participating in the struggle between the two. Prudence helps us find our best selves and do what is fair for those less fortunate than us.

Reference: Schlag, M., Rocchi, M., & Turnbull, R. (2023). Adam Smith's Virtue of Prudence in E-Commerce: A Conceptual Framework for Users in the E-Commercial Society. Business & Society, 0(0). https://doi.org/10.1177/00076503231206735

The good | The wait-and-see | The bad

Good moves

1 - Bayer Chief Executive Bill Anderson embraces teams and iterating experiments. Bayer has been struggling, so rather than laying off more workers, Anderson is laying off more bosses and giving workers greater power. Rather than bosses telling workers what to do, a group of 15 to 20 workers will figure out the plan to pursue.

• While some point to Zappos and its holacracy approach, using W. L. Gore & Associates as the organizational and cultural example would be better. I hope that Anderson will focus more on Gore than Zappos as an example.

Anderson demonstrates adaptive leadership by viewing what is happening and then returning to the company to change its structures and apply its talents in new ways.

2 - The Girl Scouts created 8 Fortune 500 CEOs. Girl Scouts of the USA teach many life skills that convert into leadership talents. As Graybar Electric's CEO Kathleen Mazzarella emphasized:

"Being a Girl Scout gave me an opportunity to explore new ideas and step outside of my comfort zone, which helped me gain confidence and a belief in my abilities."

Here's to leaders who innovate and lead!

Wait-and-see moves

3 - Cisco chair and CEO Chuck Robbins is the new chair of the Business Roundtable, representing the major CEOs in the United States. Several years ago, the Business Roundtable caused a stir when it shifted its tone to stakeholder capitalism rather than a shareholder-only focus. Whether on stakeholders or other issues, the organization seems less vocal today.

• Robbins says he represents a "bunch of people" and wants to do so responsibly and pragmatically. While he mentions the crazy and chaotic world business leaders must navigate, how he will guide this organization is unclear, especially with a contentious election ahead.

The leader of the Business Roundtable needs to communicate a clear vision of their near and long-term purpose at the intersection of business and society. Business leaders can do more than play both sides of the political world.

Bad moves

4 - The Senate Republican political cowards. Whether Rob Portman or the others who abdicated their responsibilities, it is a study of cowardice that we should not follow in politics, business, and life. If our democracy isn't as important as a party's sense of power, then nothing matters much anymore.

• We will be tested to stand up for a virtue more significant than ourselves at different times. How will you answer?

We need to elect better examples of moral courage.

Activating quote

"Courage is more exhilarating than fear and in the long run it is easier. We do not have to become heroes overnight. Just a step at a time, meeting each thing that comes up, seeing it is not as dreadful as it appeared, discovering we have the strength to stare it down." ~ Eleanor Roosevelt

Thank you for reading. Please share Good Leader | Bad Leader with someone and add your thoughts and insights in the comment section. We need to learn the concepts and methods that help us become a better leader. It requires a group of mindful people to improve how business leaders can contribute to a better society and organizational culture.