February 27, 2009
You don’t have to be younger than 25 to know that Facebook is reshaping the way we communicate. Social networking is now mainstream, and with Facebook’s fascinating decision to open up the terms of use to definition by its users, the company may be reshaping corporate governance the same way it’s reshaped the web.
This five-year old company was hit by an immediate firestorm when it changed its terms of use in a way that many users saw as restricting their privacy. Within 24 hours, CEO Mark Zuckerberg rescinded the change—demonstrating that companies have to respond a lot faster to consumer rejection of their moves in the digital era than they did in the days of the New Coke fiasco.
The real innovation, though, came yesterday, with the company’s announcement that its new policy would be opened up to a vote by its users. Here’s how it will work: the policies will be posted for comment, and Facebook will use “town halls” that will result in comments to be considered for inclusion in final documents. Those final documents will then be put to a vote by users, with a requirement that 30 percent of recent users vote for the results to be binding for the company.
There is another step here that’s potentially quite interesting: the use of plain language for Facebook’s policy, which would run counter to the often obtuse words used to set such standards.
And as is so often the case for the online world, this innovation tracks social mores in the offline world: it is as though the landlord lets the members of a club decide on clubhouse rules, within some boundaries set by the landlord.
It’s unlikely that we’ve seen the last of this issue. We are still working out the rules of the road for preserving freedom of expression and privacy on the net. As an example, the Global Network Initiative—which BSR has helped to facilitate through a long birthing period—developed principles that have been adopted by Microsoft, Google, and Yahoo!, and are supported by leading human rights organizations and socially responsible investment firms. These principles set out important new commitments that are now being implemented and will very likely establish new benchmarks for the industry.
Facebook has taken an innovative step that sets a new standard that other companies will no doubt consider as an option for stakeholder engagement and corporate governance 2.0.
Where will this all go? It’s early to know whether this is a step that will be replicated by other companies, especially those for whom the online world still feels alien. This will be a good test of whether Web 2.0 is a channel for venting, or an emerging force in governance. Bravo to Facebook for opening up their process this way.
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