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Prevention Vs. Mitigation

One of the causes of problems of this magnitude is that firms often move to prevent the enforcement of laws they are violating rather than put into place policies that prevent the behavior.  This is generally tactical thinking because the odds tend to favor that eventually the company or industry will be caught and that the longer this behavior goes on the bigger the impact when they are.  Apparently, law enforcement entities in most countries have no sense of humor when it comes to cover ups.

Google clearly recognized they had a problem when they placed so many people into the Obama administration but it was always unlikely that this practice would pass from administration to administration.  And as the objectional behavior increased, the potential liability increases with it and the problem moves from one that is just painful to one that could destroy the company.  Over the decades we’ve seen companies as strong as Google broken up or crippled including Standard Oil, RCA, IBM, Microsoft, and Google looks to be next.

Wrapping Up:

Power corrupts and leads companies to into decisions that can destroy them.  One of the interesting lessons from the Microsoft EU case was that part of that was due to Microsoft not allowing other firms to integrate with their solutions.  But once forced to integrate, Microsoft became one of the best at integration and customers loved this flocking back to the firm.  In short, at least in that one instance, doing the right thing also became the most profitable thing which, when you think about it, if we are talking about treating customers well, is the way it always should work.

In the end, there are a lot of lessons here, one is that firms have to make sure they aren’t corrupted by the power they gain, that staying more focused on customers than short term profits remain the better practice, and that when a firm starts behaving badly working to stop that behavior rather than covering it up generally has a far better result.  Ask Uber about that this year.   And, in the end, doing the right thing, often is the more profitable long terms, and generally less stressful, than the alternative.