The Hidden Key to Ethical AI Leadership (It’s Not What You Think)

The rapid advancement of artificial intelligence has left leaders from every industry grappling with unprecedented ethical challenges. How do we navigate decisions about AI implementation when traditional rule-based approaches to ethics seem inadequate for the complexity we face?

Mark Schwartz’s Adaptive Ethics for Digital Transformation offers a compelling alternative: virtue-based leadership that focuses not on rigid rules, but on character traits that enable flourishing in digital workplaces. In an era where AI systems make decisions that affect millions of lives—from hiring algorithms to medical diagnoses to financial lending—the character of the leaders who deploy these systems may matter more than the code itself.

Why Rules-Based Ethics Fall Short in the AI Era

Traditional compliance-focused ethics—with their emphasis on policies, procedures, and prohibitions—struggle to address the nuanced challenges AI presents. Should we deploy an AI system that improves efficiency but might displace workers? How do we balance personalization with privacy? When algorithms make decisions that affect people’s lives, who bears responsibility?

Schwartz argues that in complex, rapidly changing environments, virtue ethics provides a more adaptive framework than deontological rules. Rather than asking “What does the policy say?” leaders should ask “What kind of person—and what kind of organization—do we want to be?”

The Virtue Framework for AI Leadership

Schwartz proposes fourteen workplace virtues particularly relevant for digital transformation—from impeccability and authenticity to stewardship and practical wisdom. While all have merit, certain virtues become especially crucial when organizations wield the power of artificial intelligence. These virtues aren’t abstract ideals but practical character traits that help leaders navigate the unique challenges AI presents: algorithmic bias, job displacement, privacy concerns, and the need to maintain human agency in increasingly automated systems. Here are the most critical ones for AI-era leadership:

Impeccability: The Master Virtue

This overarching virtue involves constantly asking yourself, “Am I acting impeccably?” It’s about striving for excellence on behalf of your organization while supporting colleagues in doing the same. In AI contexts, this means taking responsibility for the full life cycle and impact of AI systems, not just their technical performance.

Intellectual Integrity

“A commitment to the rigorous use of the tools of the trade, a willingness to present both sides of any story, and an unwillingness to distort information or hide bad news.” For AI leaders, this means honest assessment of AI capabilities and limitations, transparent communication about algorithmic decisions, and acknowledgment when systems don’t work as intended.

Humility

Perhaps the most crucial virtue for AI deployment. Schwartz notes that humility involves “a willingness to be surprised” and acknowledging that “customers may behave differently from what you expect, that competitors may outsmart you, that your brilliant business plans may fail.” AI systems are particularly prone to unexpected behaviors and unintended consequences—humility helps leaders remain open to course corrections.

Curiosity and Continuous Learning

The digital world, as David Epstein describes in his 2019 book Range: Why Generalists Triumph in a Specialized World, is a “wicked domain” where “the rules of the game are often unclear or incomplete.” AI amplifies this wickedness. Leaders need broad knowledge and the ability to draw analogies across different domains to understand AI’s implications.

Justice and Inclusivity

Moving beyond bureaucratic fairness to address equity. AI systems can perpetuate or amplify existing biases. Virtuous leaders actively work to ensure AI serves all stakeholders fairly and that diverse perspectives inform AI development and deployment.

Practical Wisdom

The meta-virtue that helps balance competing demands. AI decisions often involve trade-offs between efficiency and equity, innovation and safety, personalization and privacy. Practical wisdom helps leaders navigate these tensions thoughtfully.

From Managing to Stewarding AI

Schwartz challenges the traditional view of management as applying neutral techniques to achieve efficiency. Instead, he advocates for “stewardship”—taking responsibility for advancing organizational ends while supporting others.

For AI leaders, this means:

• Taking ownership of AI outcomes, not hiding behind algorithmic decisions.
• Fostering collaboration across technical and non-technical teams.
• Enabling others to contribute their expertise to AI initiatives.
• Considering broader impacts beyond immediate business metrics.

Creating Flourishing in the AI Workplace

Schwartz envisions workplaces where people bring their full selves to work, contribute meaningfully, and find purpose in their activities. AI can either support or undermine this vision, depending on how it’s implemented.

AI that supports flourishing:

• Augments human capabilities rather than simply replacing them.
• Provides transparency about how decisions are made.
• Preserves human agency and dignity.
• Creates opportunities for learning and growth.

AI that undermines flourishing:

• Treats people as mere data points.
• Removes human judgment from important decisions.
• Operates as a “black box” without explanation.
• Eliminates meaningful work without creating new opportunities.

Practical Steps for Virtue-Based AI Leadership

1. Develop Ethical Vision: Don’t just implement AI—articulate what kind of organization you want to become through AI. Make this vision part of your strategy.
   
2. Practice Intellectual Humility: Regularly ask what you don’t know about your AI systems. Encourage teams to surface concerns and unexpected behaviors.
   
3. Prioritize Transparency: Explain AI decisions to those affected. If you can’t explain how a system works, question whether you should deploy it.
   
4. Foster Inclusive Development: Ensure diverse voices participate in AI design and governance. Different perspectives reveal blind spots.
   
5. Embrace Iterative Learning: Deploy AI incrementally, learn from outcomes, and adjust accordingly. Virtue-based leadership means adapting when you discover better approaches.
   
6. Take Responsibility: Own the outcomes of AI systems. Don’t deflect accountability to algorithms or data.
   

The Competitive Advantage of Virtue

Schwartz argues that virtue-based organizations aren’t just more ethical—they’re more effective. In our “Marketplace of Morals,” customers and employees increasingly demand ethical leadership. Organizations that embrace virtue-based AI leadership will attract better talent, build stronger customer relationships, and create more resilient operations.

The question isn’t whether your organization will grapple with AI ethics—it’s whether you’ll lead with virtue or be led by circumstance. In an age of rapid technological change, character matters more than compliance. The leaders who thrive will be those who ask not just “Can we?” but “Should we?”—and who have the virtues necessary to act on the answer.

Read more in Mark Schwartz’s book Adaptive Ethics for Digital Transformation.

- About The Authors

Leah Brown

Managing Editor at IT Revolution working on publishing books and guidance papers for the modern business leader. I also oversee the production of the IT Revolution blog, combining the best of responsible, human-centered content with the assistance of AI tools.

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