Corporate ‘Purpose’ Is No Substitute for Good Governance

In February 2017, Facebook Inc. CEO Mark Zuckerberg published a 6,000-word opus on his platform titled “Building Global Community.” In it, he lays out a compelling purpose for a global platform company like Facebook in an age of nationalists or politicians with protectionist agendas:

“The most important thing we at Facebook can do is develop the social infrastructure to give people the power to build a global community that works for all of us.”

Zuckerberg listed five ways to pursue that purpose: (1) supporting life experiences by building communities, (2) increasing the quantity and quality of information, (3) increasing civic engagement, (4) creating more-inclusive communities, and (5) keeping people safe.

In 2016, Facebook vice president Andrew Bosworth circulated a memo to staff acknowledging that casualties are a foreseeable and acceptable result of the company’s pursuit of its mission. This was quickly disavowed by Zuckerberg, as well as Bosworth himself, once the content became public. Even so, the memo had burbled along through the company’s communication channels unchecked for more than a year. This length of time matters.

In June 2017, Facebook’s board of directors decided to revise the guidelines for its own responsibilities, which includes this statement about the board’s first responsibility:

The Board acts as the management team’s adviser and monitors management’s performance. The Board also reviews and, if appropriate, approves significant transactions and develops standards to be utilized by management in determining the types of transactions that should be submitted to the Board for review and approval or notification.

The term “monitors management’s performance” is vague, and it might be tempting to interpret performance in strictly financial terms. However, a strictly financial interpretation, devoid of important human values or concern for nonfinancial stakeholders, has become a managerial anachronism. A more reasonable interpretation of “performance” for a 21st-century board of directors should include a broader range of concerns, such as, for example, communications by senior management that appear to tolerate trade-offs between the growth of user connections and the loss of life. Governing how the company pursues its mission is an essential role of a board of directors.

The company’s board typically sets the boundary conditions in which management pursues its purpose, giving structure and meaning to the pursuit of a given corporate purpose.