Ethics Takes Centre Stage

Last night I attended an event where Ann Roberts of Badoo and Nick Lisher of Nextdoor were discussing the meaning of enterprise values and their application to governance for Digital Platform based enterprises.

In the wake of the various regulatory issues that Facebook has had with Data Privacy legislation in Europe and Uber has encountered with employment law and regulation of taxis in a number of countries and cities, including London, this was a highly relevant discussion. It was pparticulalry refresshing to hear Nick Lisher say "I find GDPR liberating." as he went on to expound the fact that Nextdoor's values and approach meant that they had not had to alter or adapt their product at all to ensure compliance, which confirms assertions that I made in an earlier post that GDPR forces you to do the things that you should do anyway. It gives a great argument to persuade finance that it is necessary to pay for them.

All in all it boils down the the issue of running a digital enterprise as an ethical concern, which is a pre-requisite that I identified in "The Way of DAU", my take on how to adopt a Business as Usual business model.

Digital Business models amplify the concepts behind customer care theory. Traditionally this has proposed that 70% of sales are repeat sales to existing customers and that it is roughly 10 times cheaper to do something to keep a disgruntled customer, by addressing complaints positively, than it is to gain a new customer. Also if you manage to delight a customer, he or she will tell 10 people and sell your company. If you annoy them, they will tell even more and damage your reputation. Badoo's business model actually relies on this, because if you successfully match someone up with another person, Badoo may lose them as customers, but they will tell everyone that it was how they met and sell Badoo positively. Conversely, there have been significant backlashes over how Facebook uses people's data, and recent slow downs in growth and consequent loss in market value, are not the first time that Facebook has suffere significant customer defections.

Google used to have a great reputation when everyone believed in its "Do no Evil" credo, but is gradually losing mindshare with significant portions of people as a result of failure to translate this into a positive corporate culture where ethical concerns are addressed and seen to be addressed by the people who work there, its customers and increasingly EU regulators.

However, whilst we were discussing this and what happens in many traditional PLCs, a penny dropped. It's not just the the Leaders of a digital enterprise who need to be focussed on instituionalising ethics as a core of company culture, but also the shareholders. The llatter need to align themselves with the long term view and how value is created. There's too much emphasis on quick results and returns and not enough on long term value and scalability. Ethics needs to be seen part of a digital business's scalability, not just the architecture of digital products and operational robustness.