Tech Industry Must Implement Old-School Corporate Best Practices


There is little doubt that Silicon Valley has taken a reputational hit in 2017, partly as a result of the media’s usual star-making and -breaking process, but mostly through self-inflicted wounds. However, while specific details in the press may be shocking, the problems were predictable: Bad behavior often follows when there is an imbalance in power, and in the past few years, the heat of the tech market has created an environment where historical lessons of conduct and oversight were ignored for the sake of expediency.

The most egregious situations involved misguided—sometimes evil—human behavior. Two thousand years ago, Luke wrote in the Bible that “nothing is hidden that shall not be revealed,” and the reveal part of that is quicker than ever in the constantly connected 2017. When one human has unchecked power over another, bad things happen; the #MeToo movement clearly displays the often tragic results of those imbalances in power, particularly when the careers of the victims are at stake.

Robust corporate governance often serves as a necessary check on the behavior of executives, but 2017 showed that the tech community failed to learn the lessons of history. “Rock star” treatment of some tech execs and a selectively overheated investment market led to odd corporate structures in many of the highest-flying companies. These structures often consolidated power in a single person and removed true governance, thereby allowing behavior by a few that violated basic tenets of business ethics, as well as the trust of investors, employees, and customers. The situation at Uber was certainly the most public (and seems to get worse by the day), but it was only one of many embarrassments to the industry.

A growing, but more nuanced, issue facing Silicon Valley—and the tech community as a whole—is the disconnect between the ethos of progressive thought that it projects and its actual track record on social progress, particularly in the area of diversity. It is an industry that is overwhelmingly male and even more overwhelmingly white and Asian, and there are legitimate concerns that the deck is stacked against true change in this regard, even as more traditional organizations are facing it head on.

What major public company has the highest percentage of women directors? It’s not Facebook or Apple; it’s the reborn “old school” company, General Motors. From their own past struggles, legacy companies have learned that more diverse representation in leadership is not just window dressing; it actually makes a company smarter and avoids “echo chamber” decision-making by leaders, ultimately better aligning the company with its diverse customer base.

Reaching the goal of creating a tech community that we can all be proud of is, in part, simple, and in other ways, extremely challenging. First, true corporate governance rules, best practices for which have existed for more than a generation, must not be ignored by venture capitalists and independent board members, even when working in a hot market with a revered CEO. That is straightforward, even though it takes discipline.

More difficult is truly creating an ethical, socially conscious underpinning for the tech world, one that meets the fundamental expectations of a changing society, while also not burdening innovation with bureaucracy. Fortunately, there are several good examples of this in the technology community, and they are reaping the rewards: attracting a young workforce that has overwhelmingly shown a desire to work for organizations with authentic missions they can believe in, and better aligning companies with their customers to create sustainable, long-term business success.

[Editor’s note: This is part of a series of posts sharing thoughts from technology leaders about 2017 trends and 2018 forecasts.]

Chris Rizik is the Chief Executive Officer and Fund Manager of the Renaissance Venture Capital Fund, a venture capital fund of funds formed by a consortium of several of Michigan’s largest corporations. Follow @ChrisRizik

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