Be Principled, Take Bold Action, Put Stakeholders First: The Real Lessons to Draw from Facebook’s Missteps

It didn’t have to end up this way. Not for Facebook or indeed for any other company with ambitions to change how we all work, live, learn, connect and communicate.

Facebook, among the most visible, valuable and consequential companies in the world, finds itself grappling with a long list of skeptics, critics and detractors, and a shrinking list of allies, advocates and believers. But that wasn’t always the case. 

While today Facebook’s reach is ubiquitous, its roots are not so different from today’s high-growth companies receiving huge valuations and scaling apace, hoping to make their own dent in the universe. 

There’s reputation-building wisdom to be gleaned from Facebook’s journey from founding to present day. Some of that wisdom is obvious, some of it less so. But ultimately, the lesson is that taking principled, often bold action that puts stakeholders’ interests first really matters. 

Facebook has repeatedly sought the benefit of the doubt, a valuable reputation measure, from a variety of audiences ranging from policymakers and regulators to parents and privacy advocates. But stakeholders have mostly withheld such a benefit for good reason: Facebook simply has not demonstrated—either through action and evidence, or in word and deed—that its intentions are good and that it should be trusted when things don’t go as planned.

Facebook simply has not demonstrated that its intentions are good and that it should be trusted when things don’t go as planned.

Companies with a strong reputation share a common quality: they often receive the benefit of the doubt. Through fostering transparency and trust, they have developed an ability to get stakeholders to give them a chance to explain why things didn’t go as planned and grant them permission to try again. The benefit of the doubt allows companies to continue to pursue important business goals such as entering new markets, launching new products, making acquisitions and more. 

Building reputation is about shaping and protecting business outcomes, making reputation-focused efforts harder to quantify using traditional PR or marketing metrics. At Mission North, we approach reputation building with our clients in order to help them:  

• Protect their license to operate. Ensure stakeholders beyond users and customers allow companies to exist and operate their core business.
• Win permission to innovate. Companies are seen as responsible and trustworthy, and stakeholders welcome their new innovations and ideas.
• Have a seat at the table. When legislation, regulation and oversight are debated, companies are invited to participate in constructive ways.
• Attract quality partners. Companies make sure that the best organizations and vendors want to work and partner with them.
• Acquire and retain talent and engage employees. Hire and retain the best people at a time when unlocking purpose at work is more valued than ever. Make certain that employees are mission- and vision-aligned, trust the leadership team and believe that the work they do can positively impact society.

Using these measures as a guide, the business and reputational harm Facebook has incurred—due to its own actions and/or inaction—becomes easy to observe: 

• Benefit of the doubt. The head of Facebook's wallet initiative, in his own words, sought this benefit while implicitly acknowledging the company had not necessarily earned it. 
• License to operate. Facebook’s license to operate is under constant pressure from global policymakers and regulators, as well as other advocacy and activist groups. While still an open question, lawmakers are being asked to rein in Facebook and revoke at least some aspects of that license. And a corporate rebrand won’t change that fact.
• Permission to innovate. Facebook recently paused its Instagram Kids effort, demonstrating a rare moment of self-awareness that it did not have permission from a wide variety of stakeholders to advance the platform.
• Seat at the table. Facebook has often appeared before the U.S. Congress to testify when things go sideways. The company has been less effective in its efforts to advance policy goals, even in attempts to proactively reform Section 230 of the Communications Decency Act that would make Facebook seem like a responsible actor. Lawmakers are not giving Facebook any credit for those efforts. 
• Quality of partners. When Facebook first attempted its Libra cryptocurrency launch in 2019, it surprised regulators who expressed real concern and sought to halt the effort. As a result, launch partners like PayPal, Visa, Mastercard and eBay backed out, likely sensing potential reputational harm to themselves by remaining part of the program.
• Talent and Employee Engagement. Facebook’s whistleblower came forward with an incredible amount of detail and documentation after repeated failed attempts to raise issues internally as an employee. Frances Haugen’s testimony indicated Facebook is constantly understaffed and under-resourced to solve its biggest challenges often leading to the next crisis—acute or existential. Those crises then make it harder for the company to attract great talent, creating a vicious cycle.

Unintended consequences aren’t always unforeseen or unknowable.

Whether a company’s ambition is to achieve the ubiquity and scale of Facebook, or to shake up an industry or product category ripe for disruption, leadership teams will be presented with reputation-defining moments from their earliest days onward. Unintended consequences aren’t always unforeseen or unknowable. Encrypted messaging, for example, was always destined for misuse or abuse from those seeking to hide from authorities or do harm. Companies must look ahead and think holistically about how their products and services can impact a wide range of stakeholders both today and far into the future. 

While future business outcomes for Facebook are harder to predict, they are certainly being imperiled or slowed due to the company's reputation and the lack of support it has from audiences beyond its shareholders. But it didn’t have to be this way for Facebook. And it doesn’t have to be this way for your company either. By taking principled business actions early and often, your organization can build out a body of evidence that speaks to business performance, corporate character and why the world is better off through the work your company does and the impact you have on your employees, partners, communities and customers.