A Crisis Playbook for Big Tech
There are many similarities between the trust deficit that still plagues the financial sector and the one that is beginning to undermine technology companies. Firms like Amazon, Facebook, and Google should study five lessons that most banks never learned after the 2008 crisis.
OXFORD – The predictions were wrong: the global economy didn’t collapse after the 2008 financial crisis. Buoyed by taxpayer-financed bailouts, banks recovered and business at most institutions stabilized. But if there is one lingering casualty of that era, it is the erosion of public trust in the financial sector. Ten years after the crisis began, Main Street still has little faith in Wall Street.
A similar crisis of confidence plagues the technology industry today. As executives at Facebook and Cambridge Analytica rationalize their companies’ use and abuse of personal data, trust in technology firms is approaching a tipping point. “Big Tech” can still salvage its reputation, but its most powerful companies will need to change fundamentally how they operate. And to do that, they must avoid the mistakes that nearly crippled the financial sector a decade ago.
Five key lessons from the financial crisis should guide decision-making in the tech sector today. First, consumer illiteracy can be costly. Shortly before the housing bubble burst, many investors realized they had no understanding of the products they were buying; some didn’t even know they were buying anything. Financial journalism contributed to this atmosphere of ignorance by focusing only on the potential gains, and ignoring the risks.