Vogel Wakefield blog

Vogel Wakefield blog

July
14
2011

Phone hacking and social value

The final edition of the News of the World

The final edition of the News of the World

 

For some months I’ve had occasional thoughts of writing a blog post about the phone hacking scandal at News International. The reason I never got round to doing so until now is instructive. At some level, I doubted the point of deconstructing News International’s venality as this has appeared so self-evident to me since I was a schoolboy delivering newspapers that it seemed unremarkable.

In recent days, the pace of events has been so fast and the volume of commentary so large, that I doubted that I had anything distinctive to contribute. However, the affair prompts me to pull together some thoughts on the social purpose of business and why I’m convinced this is an increasingly important focus of leadership.

At the level of pure self-interest, the rapid meltdown of News International demonstrates that even the most powerful and commercially successful of institutions cannot last indefinitely without some form of reckoning with society. Like a fallen Arab dictator, Rupert Murdoch did very nicely, thank you, for decades. But when the public turned against him, the tide was unstoppable. Such allies as he had gathered around him over the years had befriended him out of fear. When the fear factor fell away, Rupert and his lieutenants discovered that they had no friends.

As Steve Richards wrote in The Independent, of the moment political leaders lost their fear of obstructing News International’s take-over of BSkyB:

The potential significance of what has happened is bigger than one deal, and can be conveyed in a single question: If there were an election tomorrow which party leaders would want the endorsement of Rebekah Brooks? A week ago they would have died for it.

More fundamentally, the question of social value goes to the heart of the responsibility of executives such as Rebekah Brooks, James Murdoch and even Rupert Murdoch. One does not need to doubt the word of Rebekah Brooks, that she was unaware of the criminality that occurred under her watch, to recognise that she and her bosses have presided over serious errors of leadership. They created a culture that lacked a morally-grounded sense of social purpose and that was guided instead by cut-throat competition and attention to its own most instrumental interests.

The statement given to The Guardian by the private investigator, Glenn Mulcaire, who was jailed for his activities, gives a sense of the moral confusion that News International’s leaders created for their staff:

Working for the News of the World was never easy. There was relentless pressure. There was a constant demand for results. I knew what we did pushed the limits ethically. But, at the time, I didn’t understand that I had broken the law at all. A lot of information I obtained was simply tittle-tattle, of no great importance to anyone, but sometimes what I did was for what I thought was the greater good, to carry out investigative journalism.

I’m reminded of the famous Milgram experiment and Zimbardo’s Stanford prison experiment which established the scarcely believable extent to which people would do unconscionable things when authority and the prevailing culture normalised them.

The culture normalised at News International was and is the reflection of its founder, Rupert Murdoch, encapsulated a tad generously by – of all people – the disgraced newspaper magnate, Conrad Black, in the FT today:

Although his personality is generally quite agreeable, Mr Murdoch has no loyalty to anyone or anything except his company. He has difficulty keeping friendships; rarely keeps his word for long; is an exploiter of the discomfort of others; and has betrayed every political leader who ever helped him in any country, except Ronald Reagan and perhaps Tony Blair. All his instincts are downmarket; he is not only a tabloid sensationalist; he is a malicious myth-maker, an assassin of the dignity of others and of respected institutions, all in the guise of anti-elitism. He masquerades as a pillar of contemporary, enlightened populism in Britain and sensible conservatism in the US, though he has been assiduously kissing the undercarriage of the rulers of Beijing for years. His notions of public entertainment and civic values are enshrined in the cartoon television series The Simpsons: all public officials are crooks and the public is an ignorant lumpenproletariat.

It’s not that Rupert Murdoch and this followers lack a sense of the public interest in their business. It’s just that their vision so underestimates the public that their net contribution to the public domain is more harmful than beneficial. This is so, even after taking into account the public value created by the massive risks taken to build BSkyB which not only created a market for multi-channel, digital television but also popularised technological innovations such as digital video recorders and high definition TV.

In the end, negative social value created a business that was unsustainable. At the time of writing, it’s hard to tell where the contagion in Murdoch’s empire will end, with News Corp’s operations in the United States beginning to look vulnerable.

Which brings me to the broader point that all businesses, but particularly consumer-facing ones, now operate in an environment that is hyper-sensitised to social value. As News International’s plight demonstrates, they are liable to be held to account in quite unpredictable ways.

The roots of this are quite complex. There has been a long-term trend in Britain of declining deference towards authority – fuelled in part, ironically, by the Murdoch papers. People are more sceptical and questioning of institutions and have less of a sense of affiliation to parties, communities and the like. So their values are more likely to surface through direct expression around a smörgåsbord of isolated issues than through subcontracting them to professional representatives such as politicians, union leaders or campaigners.  A seemingly transient issue can connect with people’s sense of identity, fire their imagination and then rise up the public agenda.

A more recent phenomenon has been the collapse in trust of business in the wake of the financial crisis. The phone hacking story played into this context. There is evident impatience with the idea that the profit motive trumps all else. You can see this not just in the anger felt by the public to the banks, but also towards MPs over their expenses scandal and in the seeming inability of the government to set the wider public interest against more narrow financial considerations in decisions such as the procurement of rolling stock for the railways.

Into this mix has come the maturing of social media as a vehicle for public accountability. The turning point for News International came not just because it became apparent that the News of the World had profaned the public’s moral sensibility in hacking the phone of the murdered schoolgirl, Milly Dowler. It was because – as Rory Cellan-Jones has described – a loose group of people were able to use tools like Twitter, Facebook and their own site-making skills, to enable masses of people quickly to put pressure on advertisers. The social media became a conduit for many of Britain’s biggest companies to grasp just how seriously their brands were being tainted by association with Murdoch.

The News International saga is as good an example as one could find of the negative case for paying attention to social value. The contribution an organisation makes to the society of which it is a part may seem like a frivolous distraction compared with the hard-nosed business of making money. But the creation of social value is the more likely route to long-term commercial success in the current climate. To be focussed too narrowly on one’s own sectional, corporate interest creates contradictions which put your organisation at odds with the wider interests of society. These tensions can explode into the open at any time and ultimately risk the sustainability of the whole enterprise.

As my former colleague Penny Young puts it, “The public has a basic right to be able to trust the nation’s institutions.” She argues that public service values should pervade every institution: public, private or charitable. I would go further in that I believe the public expect and demand this. The organisations that will flourish will be those that grasp this and figure out how to drive a social value sensibility through their cultures.

Image courtesy Gene Hunt.

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