This week my Exponent podcast partner James Allworth wrote a section of Wednesday’s Daily Update critiquing why he felt I should have been critical of Facebook’s power sooner. It is available for free here to Exponent listeners.
There’s something about Facebook that I’ve always found troubling. For regular listeners of Exponent, the podcast that Ben and I do together, this disquiet with Facebook has been a recurring theme — going back almost all the way to the start.
That concern raised its head again last week in the light of Mark Zuckerberg’s recent post, Building Global Community. In it, Zuckerberg lays out his vision for the future of Facebook:
For the past decade, Facebook has focused on connecting friends and families. With that foundation, our next focus will be developing the social infrastructure for community — for supporting us, for keeping us safe, for informing us, for civic engagement, and for inclusion of all.
Ben, if he’ll forgive me for characterizing his position, has agreed with my concern to a point — but has always expressed more discomfort with the unintended consequences of regulating Facebook. His evolution to outright concern about the company only crystallized this week in Manifestos and Monopolies (if you haven’t, obviously, I encourage you to read the whole thing):
This is why I read Zuckerberg’s manifesto, Building a Global Community, with such alarm. Zuckerberg not only gives his perspective on how the world is changing — and, at least in passing, some small admission that Facebook’s focus on engagement may have driven things like filter bubbles and fake news — but for the first time explicitly commits Facebook to playing a central role in effecting that change in a manner that aligns with Zuckerberg’s personal views on the world.
Ben’s post from last year, The Voter’s Decide, hints at what the cause of our initial disageement might be (bold emphasis mine):
Given their power over what users see Facebook could, if it chose, be the most potent political force in the world. Until, of course, said meddling was uncovered, at which point the service, having so significantly betrayed trust, would lose a substantial number of users and thus its lucrative and privileged place in advertising, leading to a plunge in market value. In short, there are no incentives for Facebook to explicitly favor any type of content beyond that which drives deeper engagement; all evidence suggests that is exactly what the service does.
If there are regular themes that run through Ben’s work — lenses through which he sees the world, and which allow him an almost uncanny ability to play out the future — one of the key ones is incentives.
The interesting thing is that in this instance, the view of incentives didn’t provide the same predictive power that it usually does.
One of the most popular articles in the history of the Harvard Business Review is by Frederick Herzberg, entitled “One More Time, How Do You Motivate Employees?”. In it, Herzberg lays out what has come to be known as two-factor theory. The traditional thinking on motivation had it was one long continuum — from highly demotivated all the way to motivated. It turns out, that’s not the way our minds work at all. Instead, there are two independent forces acting on us.
On one hand, you have what Herzberg terms hygiene factors. There are more extrinsic in nature; things like prestige, your job conditions, the amount that you’re paid. Lack these in your job, and you’ll become demotivated, but an excess will not cause motivation; it just results in an absence of demotivation.
On the other hand, you have the motivators. These are intrinsic in nature; the ability to learn and grow, to shoulder responsibility, and to do something you believe in. These are what cause you to be motivated. Their absense won’t make you demotivated, but rather, will result in an absence of motivation.
While this theory was developed for managers to figure out how to motivate employees, it’s possible to apply the theory in another place:
There exists a certain class of founders who have managed to build companies that escape the stratosphere. They’re so awash in hygiene factors like money that, that from an incentive perspective, their behavior seems entirely irrational. They’re giving it all away!
This manifests not just the way they conduct their personal affairs; it impacts the way they run their business, too. If they remain active in the business (not all do), then they have the wherewithal to blow up an existing line of business for something new (like Netflix) that a traditional manager simply would not be able to do (like Blockbuster).
They’ve got a mission to succeed at, not just a quarter’s numbers to meet.
This obviously works wonderfully when the motivators ultimately align with making money — because you’ll end up with a world dominating business.
But what happens when they don’t?
I’m sure you’re familiar with Rupert Murdoch. His media empire is vast. The Wall Street Journal. Fox News. The New York Post. Dow Jones. The Sun. The Times. The Australian. The Daily Telegraph.
He’s not been afraid to use it, either. In the UK, “It’s The Sun Wot Won It” has become a political catchphrase for the impact of media on politics; it refers to the headline The Sun ran the day after an unexpected Conservative election victory. In Australia, Murdoch controls 70% of the capital city newspaper circulation and has had an outsized impact on Australian political life. And let’s not forget which was the first news outlet to call the 2000 Presidential election, and the subsequent impact that might have had on all the drama that unfolded in Florida.
But it’s not just Murdoch’s influence that’s of interest here. It’s his motivations.
Typically, people get involved in for-profit businesses, well, for the profit. But for all the reasons Ben has chronicled, newspapers haven’t been doing too well of late — to the extent that pressure from shareholders forced Murdoch to cleft his empire in half back in 2013. The very profitable entertainment assets formed 21st Century Fox; while the company’s struggling publishing assets remained in News Corp.
That latter entity still hasn’t been doing so well… to the point where you have to wonder: why is Murdoch remaining in the publishing business? It doesn’t seem to be about the money any more. When asked in a 2007 New Yorker profile, “Of all the things in your business empire, what gives you the most pleasure?” the following answer came back:
“Being involved with the editor of a paper in a day-to-day campaign,” he answered instantly. “Trying to influence people.”
Motivation trumps hygiene.
I’m not raising Ben’s evolution of thought here to criticize him. I’m lucky to count him as a good friend, and he’s one of — if not the — smartest analyst in tech today. If you’re reading this, chances are, you agree.
But rather, I do it as a result of a learning I’ve had from a mentor — Professor Clayton Christensen. Christensen always encouraged me to focus on anomalies — where theory doesn’t explain something, or where there is disagreement around a prediction. Why is that? What accounts for the difference in views? The most compelling contributions to knowledge often come from pursuing those anomalies, from driving to the root of such disagreements.
To that end, I nearly always agree with and learn from Ben’s insights into incentives and the role they play in understanding and predicting company behavior; however, that is why it’s critical to understand where they end and motivations begin — particularly for someone with the incredible success and unaccountable power of Mark Zuckerberg.