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Seeing Around Corners: Inflection Points to Watch for Economic Paradigm Shifts, with Rita McGrath, Professor of Business Strategy, Columbia Business School, and Author, Seeing Around Corners
The Rise of Stakeholder Capitalism
We’ve gone through a period where the philosophy was that companies were basically run for the benefit of investors and shareholders. And I think we’re now potentially at an inflection point where that’s starting to change. Uh, you know, a lot of actors are starting to say, “Hang on,” You know, employees have a vested interest in the future of companies, communities have a vested interest in the future of companies. And again, I don’t make predictions, but I think we’re going to see things like demands on companies to put community members or even their workers on boards, the way that they do in Germany. I think we’re going to start to see some pressure for reigning in some of the most egregious practices like the unfettered use of share buybacks, for example.
You know, if you’ve got a worker on your board and you’re discussing things like closing a plant or changing the pension system or whatever, you know, that presence is going to make sure that at least that perspective is taken into account. Now, it doesn’t mean you’re going to make stupid economic decisions, but it means that perspective would be missing if it was all people who weren’t going to be affected by the decision. In fact, this is one of Nicholas Taleb’s, um, arguments about black swans. He says, if you’ve got, if you want to avoid a black swan or you want to be prepared for a black swan, involve somebody in your decision-making, who’s going to be effected. If it happens.
Consumer Protection Concerns in the Data Economy (The Case of Facebook)
I got interested in Facebook, oh, this is probably going back a few years now. And when I proposed using Facebook, as an example in the book, my editor actually said, “Whoa, you think Facebook’s going to have a problem?” And I said, “Yeah, I mean, if you believe in early warnings, yes!” Because all the handwriting was on the wall. In the sense of you have a very insular senior team, you have an addictive and very, very profitable business model that’s based on questionable respect for people’s privacy. You have many, many users, who really don’t understand what their data is being used for. They don’t understand that Facebook owns it. I mean, you think you own that baby picture, you posted? You don’t, they do. And they’re basically asking you to sign away your rights for that kind of content that you create yourself. So you’ve got this business model, which I honestly think has run away with the founders.
I don’t think the founders of Facebook and its senior team kind of, expected the unintended consequences. So the ability to use their targeting tools to influence elections, for example, or to flout laws, the fair housing act. As a landlord, for example, you can post advertisements on Facebook that are actually illegal, but we haven’t figured out how to regulate them. And I’m not saying Facebook is inherently an evil organization. I do think that they have, in many cases, abused people’s trust. And their willingness to do so was indicated very, very early on in one of the earliest investigations of Facebook’s practices. Um, an email that I’m sure Mark Zuckerberg never intended to see the light of day was revealed in which he said, “Oh, you know, if you want to know anything about students at Harvard, just ask.” And his counterpart said, “How do you get all this stuff?” He said, “They just gave it to me.” And then a few expletives after that. But you know, it’s, it’s indicative of an attitude about privacy that I think is only now coming to be commonly understood. And I think it has the potential to get the company in real trouble.