The Ethics of Managing People’s Data

The five issues that matter most

by

Michael Segalla

and

Dominique Rouziès

by

Michael Segalla

and

Dominique Rouziès

From the Magazine (July–August 2023) · Long read

Justyna Stasik

Summary.

Over the past few years the European Union has fined companies more than 1,400 times for a total of nearly €3 billion for violations of the General Data Protection Regulation (GDPR). Almost every week stories appear about how AI-driven decisions result in discrimination against women or minority members in job recruitment, credit approvals, medical diagnoses, or criminal sentencing. These stories are stoking feelings of unease about how data is collected, used, and analyzed. According to the authors, managers who are examining projects that involve gathering human-provided data or leveraging existing databases need to focus on five critical issues: the provenance of the data, the purpose for which it will be used, how it is to be protected, how the privacy of the data providers can be ensured, and how the data is prepared for use. They begin with a brief overview of the organizational requirements for a robust ethical-review process.

Idea in Brief

The Problem

As companies jockey for competitive advantage in the digital age, they are increasingly penalized for the abuse of data. In 2018 the Cambridge Analytica scandal alone wiped $36 billion off Facebook’s market value and resulted in fines of nearly $6 billion for Meta, Facebook’s parent firm.

Why It Happens

Most problems arise from (1) ethical failures in data sourcing, (2) using data for purposes other than those initially communicated, (3) lack of security in storing it, (4) how it is anonymized, and (5) how it’s prepared for use.

The Solution

Companies should create a special unit to review projects involving people’s data. In its reviews this unit should carefully consider the five Ps of data safety: provenance, purpose, protection, privacy, and preparation.

The ability to encode, store, analyze, and share data creates huge opportunities for companies, which is why they are enthusiastically investing in artificial intelligence even at a time of economic uncertainty. Which customers are likely to buy what products and when? Which competitors are likely to move ahead or fall behind? How will markets and whole economies create commercial advantages—or threats? Data and analytics give companies better-informed and higher-probability answers to those and many other questions.

A version of this article appeared in the July–August 2023 issue of Harvard Business Review.

MS

Michael Segalla is a professor emeritus at HEC Paris and a partner at the International Board Foundation.
DR

Dominique Rouziès is a professor of marketing at HEC Paris and the dean of academic affairs at BMI Executive Institute.

The Ethics of Managing People’s Data

Idea in Brief

The Problem

Why It Happens

The Solution

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