It’s been an existential crisis kind of year for Silicon Valley and new economy companies. We’ve seen outrageous claims crumble under scrutiny, as in the case of Theranos, whose founder Elizabeth Holmes is currently under trial for fraud. We’ve watched familiar giants face mounting pressure, like when the FTC fined Facebook to the tune of $5 billion, and again recently with the Facebook whistleblower scandal. We’ve witnessed the largest amount ever imposed for consumer policy violations, during the Cambridge Analytica scandal that left 87 million accounts compromised. We’ve followed the implosion of OzyMedia due to its fabrication of performance metrics and creation of an “imaginary” analyst. And we’ve come to realize the prevalence of bro culture in the Ubers, Tinders, Blue Origins, and WeWorks of the world.
How did we get here? The rapid, unregulated growth that gave us the innovations and technologies that power our lives sprung from a winner-take-all culture of bravado. Startup culture with its fast-moving founders and entrepreneurs frequently live by the new economy adage of “Fake it till you make it.” But the problem with moving fast and breaking things is it matters what and who gets broken in the process. Because sometimes it’s the employees that suffer, sometimes it’s the customers, sometimes it’s our entire culture, our collective mental health, our privacy, and sometimes, it seems our democracy itself.
What’s needed is integrity. But the challenge for companies is how to put integrity into action – to take it beyond a value listed in the code of conduct and into the fabric of the company.
So what can tech and new economy companies do to reinforce integrity?
- Encode Strong Values: First, companies do need a set of values or principles that guide behaviors and decision-making. And not the pretty but toothless kind that you hear about once in onboarding and never again. Rather, tech companies need specific values by which leaders’ behaviors are measured and that serve as guardrails for decision making, helping to determine expectations and acceptable behavior. These values need to be a part of every discussion in which company leaders are making decisions.
- Design for Dissent: Next, tech companies are going to need a diverse team ready to dissent. There’s something about the star power of individual founders and the way we tend to deify them that may keep them from hearing the hard truths and seeing the blind spots. By putting together a team of people who think differently and come from a range of backgrounds (socio-economic, geographic, gender, racial/ethnic, discipline/expertise), you increase the chance that someone will challenge an idea or a decision before there are downstream consequences. Recognizing and celebrating these moments and the people who create them matters because when leaders show that they’re not just paying lip-service to diversity and a culture of debate, employees feel safer taking the risk of dissenting and raising those ethical flags.
- Frontload Ethical Leadership: That’s why, both integrity and purpose need powerful support from the top. The leadership team and the board set the ethical tone for an organization. If leaders take shortcuts or boards overlook poor behavior, it gives employees unwritten permission – or even pressure – to do the same. Nowhere is this clearer than in the many tech sexual harassment scandals where the actions of top leaders, board members, and founders have come under question. In fact, a survey from 2020 showed more than 40% of women in tech say they have been sexually harassed by a boss or an investor.
- Invest in Ethics: Additionally, venture capitalists and funders have a stake in the game. When they show the same care and attention to the heart of the enterprise as its financial performance, real change can take place. Investors almost always sit on boards, and they control the seed capital. As key stakeholders, they not only have a fiduciary responsibility to protect their investments; as board members they are accountable for the positive and negative outcomes. Investors must hold founders accountable for their purpose-driven leadership and tie subsequent funding to achieving financial and values-driven Check out our whitepaper: Institutional Investors Discover the Power of Purpose to learn more.
- Double Click on Purpose: Last, but far from least, tech companies need to circle back to their purpose. The purpose of a tech company can be found in the moment of its inception¾in the dreams that drove their innovation, in those garages and basements, at universities, and late-night working sessions. Tech leaders can move from powerful to purposeful by reclaiming that inspiring sense of why¾of the role they play in society, beyond growth. When a company focuses on “why” they exist versus only on “what” they’re making and “how” they’re going to get it all done, it helps orient employees to the long-term impact of their work and prevents short-term or myopic thinking that can result in lapses of integrity. Learn more about the connection between purpose and integrity in our whitepaper: Integrity and Purpose: a Match Made in Business.
Fortunately for all of us, this isn’t wishful thinking.
There are examples¾good, concrete examples of companies that are acting in principled ways that benefit their investors, their employees, their customers, and society, as well as their reputations and brand.
Bumble’s Founding: When Bumble CEO Wolfe Herd began working for Match Group as Vice President of Marketing in 2012, she came up with the name Tinder and presided over marketing during their period of massive growth. She left the company only two years later in 2014 – and filed a lawsuit for sexual harassment. With this experience top of mind and a $1 million settlement, she turned around and created Tinder-competitor Bumble, where women make the first move. Bumble’s IPO made her a billionaire and the youngest woman ever to take an IPO public, but the real win was a platform that turned the tables on the exact kind of toxic culture she experienced at Tinder.
As misinformation has consumed social platforms in recent years, while increasing their clicks, most social networks seemed loathe to take any action that would see their advertising revenues take a hit. But after the January 6th insurrection at the Capitol, Twitter swiftly banned accounts; misinformation on the platform fell by 73% according to third-party monitors. Then Twitter began committing to longer- term steps that Facebook didn’t take, and now the latter is battling leaks from employees who believe Facebook’s inaction was unethical.
Lyft’s rise on Uber’s scandals:
By the time Uber took its IPO public, it had already been embroiled in at least 49 newsworthy scandals, like violating foreign bribery laws, mass firings after internal culture issues with sexism and harassment, and covering up a cyber-attack that resulted in a massive data breach. Seeing the opportunity for a more ethical alternative, Lyft made its play in the market with a plan to treat drivers better, a noticeably scandal-free corporate culture, and numerous charitable promotions, like rounding up to donate locally. This positioning swiftly put Lyft in a close #2 and changed the way other rideshare options were marketing. Instead of arguing over discounts in a race to the bottom, the entire rideshare category is fighting over who is the most ethical, with Via and Gett both entering the market on a play of ethical corporate citizenship and environmental stewardship. Prompting Lyft to announce in May of 2021 its ambitious commitment to 100% electric vehicles by 2030.
See more examples and statistics in our whitepaper: Purpose can Power Progress in the Tech Industry.
Purpose and values don’t mean perfect.
Purpose and a company’s articulated values are not an antidote to making mistakes, and it doesn’t sign a company up for saving the world. In this case, it’s the entire collection of our recommendations that create a higher likelihood of principled and purpose-driven success.
Taking a stand for integrity as foundational to your company and rooted in your purpose is risky because it signals intent and invites accountability. But given the wide ranging, high stakes impact of tech companies on our lives, it is imperative. Tech companies must urgently create cultures that value integrity as an integral part of their purpose. Acting with integrity is not a one-time deal. It must be upheld through and in every interaction. That’s precisely how tech companies can rebuild the trust they’ve lost in recent years.
This trust doesn’t run counter to the thrill of innovation or the pursuit of profit. Embracing these recommendations can foster the kind of company that can drive growth while also doing good.