Crisis in Tech: Who Can Save Companies When Execs Go Off the Rails?

Several us have become increasingly concerned about the lack of ethics on the part of market-leading companies at the moment. Kara Swisher’s New York Times column is an eye opener, considering that she concluded that “too many digital leaders have lost their minds.”

She cited some frightening examples of poor leadership — ranging from Saudi funding (concerning given the alleged murder of a reporter); to Facebook’s Portal device, which appears designed to violate user privacy; to Elon Musk’s increasing insanity; to Google’s recent coverup of a massive user data breach that forced it to close Google+.

Swisher’s column points to the solution adopted by Marc Benioff, CEO of Salesforce, who hired a chief ethical officer — but I think that would just repeat the mistake we made with chief risk officers around a decade ago.

In response to her piece, Scott Cleland, who runs Precursor Watch, commented that these huge firms and their CEOs have ethics problems following them around like the dirt that followed Pigpen in the Peanuts comic strip. These firms, through Section 230 of the U.S. Code, largely have been given immunity to civil law, which appears to have promoted wrong, unjust, dishonest, unethical, and/or uncivil behaviors by the firms’ employees and leaders.

While I think Cleland overemphasizes the impact of Section 230, which detracts from what is more likely a practice of hiring people who think ethics is optional, his proposed solution should work. He suggests these firms and executives need to be held more aggressively to the same laws we all must follow.

I’ll share my views on that and then close with my product of the week: a new video-conferencing solution that could evolve to make most business trips obsolete.

Power Corrupts

I’m sure you’ve all heard the saying, “Power corrupts and absolute power corrupts absolutely,” but I often think that as they come up the ranks, executives view this as a goal and not a warning. It is clear that at some point executives feel they have reached a level of power where the rules their companies have just don’t apply to them.

In a way I was lucky — or unlucky, depending on how you look at it — to have an extremely unethical father. I was lucky in that I saw the damage it did to his marriages, finances, opportunities and the quality of his life. I was unlucky because I was often collateral damage, as were my brothers, sister, and his wives.

The amount of damage this behavior can cause, once it is discovered, can be devastating. It can wipe out the companies and the executives’ personal fortunes, and in some cases it can even land them in prison.

The thing is, it isn’t as if these folks weren’t already wealthy — but it becomes a competition as to who has the most expensive car, the most yachts, the biggest island, or the prettiest mistress (even if she is an employee).

They lose perspective — placing physical things, often inanimate, as higher priority over the things they really should care about: their families, employees, image/reputation, and even their continued freedom.

Ethics Officer Won’t Work

Over a decade ago, companies became concerned about taking on too much risk, and they came up with the not-so-brilliant plan of hiring risk officers. These folks had staff and were given the responsibility to ensure that the companies, generally financial institutions, didn’t take on excessive risks. Instead, it was if these institutions suddenly felt that any risk was acceptable, and the U.S. market crashed catastrophically as a result of loans that weren’t properly secured.

What happened was that the risk managers had responsibility but no real authority, so while they were viewed as some kind of shield, they were in effect more like sacrificial goats. They became blame magnets, which actually didn’t really work well either. Since they had no authority, the blame still flowed to the idiots making the bad decisions.

Hiring ethics officers won’t work either, because they won’t have enforcement authority. Often, they won’t have the necessary visibility into company practices to ensure that the firm complies with policies and laws — let alone behaves ethically. If the government comes calling due to a CEO misdeed, there might be an attempt to throw the ethics officer under the bus, but law enforcement — as with the risk managers — likely will go after the decision maker and not the sacrificial goat ethics officer.

Appointing an ethics officer might have the unintended impact of convincing the other executives that ethics is no longer their concern, and they might go off the ethical rails even more than before — similar to what happened with financial institutions after they got risk officers.

That, of course, most likely would be catastrophic, because governments and investors eventually react poorly to out-of-control CEOs. In fact, they tend to overreact with company-killing regularity.

Internal Audit

I think a better solution would to be to reinstate, fund, and once again empower internal audit operations in these firms, allowing auditors to function much as they did when internal auditing first came to be, largely after the market crash in the first half of last century.

Internal audit can, and often does, operate like internal affairs in police departments. However, both of those operations often have been gutted over time, losing qualified people, funding and authority. Today — particularly in some newer firms — those functions are either nonexistent or assigned to an ineffective department of employee rejects who comply with the letter but not the intent of their mandate.

Staffed, funded, and with adequate authority, internal audit not only would have the experience to root out bad behavior but also the ability to terminate those exhibiting it. The internal audit department also would have the added benefit of ensuring the quality of operations, something that firms like Tesla currently need badly. (Its plants are so badly run, the firm is hemorrhaging money.)

When properly set up, internal audit’s ability to prevent behavior ranging from just bad management to embezzlement and sexual harassment largely would be unmatched and could go a long way toward ensuring that a firm isn’t taken out by its own employees.

Wrapping Up

Whether we are talking about the book Brotopia, which focuses mostly on misogyny at scale, or Technically Wrong, which focuses on idiotic product development practices, or on a slew of recent articles on related subjects, the common message is that these firms are largely out of control.

Given that a number of us believe they are massively overvalued as well, the potential for a catastrophe driven by bad executive behavior is almost a given. Such a catastrophe could reset the market, likely wiping out jobs, 401Ks and savings tied to the segment.

I think internal audit is the only type of organization that could be capable of fixing this problem in a timely way, and that the interim use of ethics officers actually would do the exact opposite of what was intended. I don’t expect this will end well at all.

Rob Enderle's Product of the Week

I’ve been involved with video conferencing in some shape or form going well back to the 1960s, when I first saw the video call demonstration at Disneyland as a child. I was part of a joint Apple/IBM trial in the 1980s, which ended badly, and I’ve been involved with the technology since the mid-90s as an analyst.

Generally, the cycle goes like this: The market gets really excited about technology that could reduce plane travel and increase employee collaboration, everyone and their brother jumps into it, companies buy the products, the employees avoid using them, the market consolidates, and in around five to 10 years, the market forgets and starts the cycle over.

One of the more interesting recent attempts were telepresence robots with tablets that could display the faces of those remotely using them. They weren’t that successful, even though they did attempt to deal better with creating the impression that the remote worker was there.

Spatial, which launched last week, has an idea that, while not yet mature, could get us far closer to where we need to go. It uses augmented reality to create ghost-like avatars of the remote people, who then can move around the room and interact with others as if they were present. The remote workers also get avatars of those in the conference room, almost as if they dropped into the workers’ homes to collaborate with them.

Spatial Mission Planning

Spatial Mission Planning

Even though the technology is raw now, I can see that the increased application of artificial intelligence tech, better AR glasses, and improved rendering capability — like what exists in the new Nvidia RTX platform — could make this experience far more realistic.

Even in its raw form, an impressive number of companies have seen the value and have signed up, because it seems to work better for a number of interactions than the technology they have.

I really hate getting on planes, and I live in a resort town now, which means that I’m going to love anything that has the potential to make most of my air travel obsolete. As a result, Spatial is my product of the week.

The opinions expressed in this article are those of the author and do not necessarily reflect the views of ECT News Network.

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