72 MIT SLOAN MANAGEMENT REVIEW SPRING 2020 SLOANREVIEW.MIT.EDU
DISRUPTION 2020: DOING BUSINESS WITH INTEGRITY
Facebook ushered in a new era of publishing by
building the world’s largest content creation and dis-
tribution network, amassing billions of users. It invited
content makers and advertisers to subsidize those
users on a platform that many people feel they can’t
live without. No longer was the media value chain
being orchestrated by a few large organizations;
Facebook was opening up markets by enabling anyone
with a keyboard and an internet connection to effort-
lessly plug into the world’s largest distribution system.
In effect, Facebook broke apart the media value chain
and simultaneously re-created it around the compa-
ny’s application programming interfaces (APIs).
But as Facebook helped transform an industry
ecosystem, it didn’t concern itself with editorial
ethics. It sold access to its user base — to companies
like Cambridge Analytica — while maintaining
distance from anything posted on its own platform.
Content creators could tap into end-user data to
precisely target their messaging, whether the infor-
mation they were putting out was false, misleading,
or true. Driven by demand from billions of users,
Facebook focused only on ensuring that the con-
tent on its network amassed clicks.
In this new world of publishing — where authors,
editors, and distributors are separate entities
pursuing their own interests — the scandalous
consequences may seem predictable. After all, ac-
countability also splinters with the rest of the value
chain. But when no one steps up to maintain ethical
standards across the system, we all suffer in the end.
Facebook is just one example of the evolving —
and murky — world of self-defining ethics in
technology. In this article, we argue that as techno-
logical systems rapidly restructure, ethical dilemmas
will become more common and that well-understood
theories can help us predict when and where prob-
lems may arise. Executives across industries find it
enticing to democratize access to cumbersome mar-
kets like health care, lending, and publishing. But if
you’re the executive who happens to decouple con-
sumer protection from mortgage lending, all the
positive intentions in the world won’t protect you
from the unavoidable backlash.
Bottom line: Predicting where your industry
will stumble within this new world can make the
difference in ensuring your business flourishes
with its reputation intact.Modularizing Faster Than Ever
To be clear, this is not about a few software bugs
resulting from a “move fast and break things” men-
tality. This is about leaders, acting in the best
interest of markets and consumers, enabled by the
ubiquity of the internet, who unintentionally side-
step the ethical protections that underpin society as
we know it. To understand the imminent ethical
crisis and why current circumstances are so differ-
ent, we need to understand how value chains
emerge and why even responsible technology com-
panies may overlook their ethical obligations.
In 2001, Clayton Christensen, Michael Raynor,
and Matthew Verlinden published a lauded article
in Harvard Business Review, “Skate to Where the
Money Will Be.”^2 It explained what they called the
Theory of Interdependence and Modularity. The
theory holds that when new technologies emerge,
they tend to be tightly integrated in their design be-
cause dependence among components exists across
the entire system. To combat this fragility, one en-
tity must take tight control of the system’s overall
design to ensure performance.
Consider the early iPhone. Apple controlled the
software, hardware, and even the network — to
give users the best experience. There was one size,
one browser, and one carrier. Features were elimi-
nated to support battery life, capacitive touch, and
call quality. In Christensen’s language, the design’s
interdependence was critical, as the phone itself
struggled with basic performance issues related to
its core function of voice communication. Only
Apple’s unequivocal control made the product rea-
sonably competitive.
Christensen and coauthors argued that, over
time, the connections among different parts of
complex systems become well understood. Each el-
ement’s role is defined. Standards are developed. To
use Christensen’s term, the industry becomes mod-
ular, and an array of companies can optimize and
commercialize small, specific components with no
meaningful impact on overall system performance.
Today’s iPhone consumers can choose their screen
size and phone thickness, the app store is filled with
tools and games from millions of different develop-
ers, and phones are available on any network. An
entire smartphone industry now exists whereby
consumers can pick and choose practically