Mark Zuckerberg’s leadership failures set to anger Facebook investors

Facebook CEO Mark
Zuckerberg.
Getty

• The New York Times exposé on Facebook’s crisis
  management exposes a spectacular failure in leadership from CEO
  Mark Zuckerberg.
• The report suggests he was at best uninterested in some
  of the scandals that engulfed his company, and at worst,
  complicit in exacerbating them.
• It’s red meat to powerful investors who want to oust
  Zuckerberg as chairman.
• Stepping down as chairman would allow him to
  acknowledge his failings, throw a bone to Facebook’s critics,
  and still maintain control of the firm he built.

If you haven’t read The New York Times’ blockbuster
6,000-word opus on how Facebook has dealt with a sequence of
scandals, it’s a worthwhile investment of your time.

Based on interviews with 50 people, it is rich with devastating
anecdotes and mini-scandals. In its own right, the black-ops mission to cast George
Soros as the puppetmaster behind an anti-Facebook movement is
startling and disturbing.

But overall, the impression I took away was one of a spectacular
failure in leadership. And in this sense, all roads lead to CEO
and Chairman Mark Zuckerberg.

The Times portrays Zuckerberg as, at best, uninterested in some
of the existential issues that have threatened Facebook over the
past three years, and at worst, complicit in exacerbating them.

On the former, the report said Zuckerberg, and his right-hand
woman Sheryl Sandberg, were “distracted by personal projects” as
Facebook was dragged into danger.

As evidence of Russian meddling mounted last year, Zuckerberg was
on a “listening tour.” It was also said he prefers to focus on
“broader technology issues,” leaving the politics to Sandberg.

Facebook
Chief Operating Officer Sheryl Sandberg.
Drew Angerer/Getty Images

In Zuckerberg’s defence, Facebook said on Thursday that
he and Sandberg were “deeply involved in the fight against false
news and information operations on Facebook.”

And as far as making things worse, well there’s an anecdote about
him misjudging the anger against his social network in a clumsy
conversation with Republican Congressman Greg Walden.

But something else stood out — and it speaks volumes about
Zuckerberg deals with crisis. In the heat of the Cambridge
Analytica data debacle, Facebook was criticised by Apple CEO Tim
Cook. Instead of taking it on the chin, Zuckerberg was reportedly
riled.

“Mr. Cook’s criticisms infuriated Mr. Zuckerberg, who later
ordered his management team to use only Android phones — arguing
that the operating system had far more users than Apple’s,” the
Times said.

It smacks of petulance at a time when Facebook needed reasoned
responsibility. (Facebook said in response to the Times report
that it has “long encouraged our employees and
executives to use Android.”)

Zuckerberg’s failures are red meat for furious investors

All of this is red meat to growing cabal of angry investors,
who want Zuckerberg gone as
chairman.

Business Insider has spoken several times to activist
shareholders, with holdings worth more than $3 billion. They
believe Zuckerberg’s feet need to held to the flames by an
independent chairman.

Read more: These investors control $3 billion
of Facebook stock — and they want to take Zuckerberg
down

“He is not accountable to anyone, not the board or the
shareholders, which is a bad corporate governance practice,”
one told me. “He’s his own
boss, and it has clearly not been working.”

A proposal to oust him as chairman was put forward last year.
Analysis has shown that it was supported by 51% of independent
investors at the annual shareholder meeting. There is now a fresh proposal to
split Zuckerberg’s dual role, which will be voted on at next
year’s shareholder meeting. It is already gathering
support.

Erskine
Bowles, chair of Facebook’s new Audit & Risk Oversight
Committee.
Getty

Facebook has consistently brushed off these demands. It has said
an independent chairman would create “uncertainty, confusion, and
inefficiency.” This is despite this governance mechanism
functioning pretty smoothly at other tech companies, including
Apple, Twitter, and Microsoft.

And there’s one element of the Times’ story that underlines the
value of independent oversight. It features board member Erskine
Bowles, the chair of Facebook’s audit committee, conducting a
foul-mouthed grilling of management on how the company allowed
itself to become a tool for Russian interference.

Zuckerberg and Sandberg were stunned into action.

It’s not like Zuckerberg is blind to Facebook’s failings. He
accepts the buck stops with him. “I designed the platform, so if
someone’s going to get fired for this, it should be me,” he told Recode earlier this
year.

Stepping down as chairman will allow him to acknowledge his
failings, throw a bone to angry shareholders and Facebook
critics, and yet still keep control of the $40 billion company he
created in his Harvard dorm room.

It might also help achieve the ultimate aim of making Facebook a
better, safer place for 2 billion users.