Why Networking Feels Icky

Brain scans confirm: business networking feels icky. There is not much I can add. Working Knowledge, at Harvard Business School:

Professional Networking Makes People Feel Dirty

A tip of the hat to Christopher Penn for pointing out this story.

This Week in Bank Failures

There is hardly anything in the internal HSBC documents that leaked to the press from multiple sources this week that will shock anyone who has worked in high finance. A financial institution under pressure and its regulators will become willing to tolerate essentially any transgression by its employees and customers. Tax evasion, bribery, nepotism, smuggling, sexual assault, armed insurrection — it almost doesn’t matter what it is because it officially doesn’t exist if word never gets out.

What makes the HSBC case different is how pervasive the culture of corruption seemed to be and how many regulators knew and took no action. Indeed, one of the figures at the center of the HSBC scandal was appointed to a high government position in what looks like an attempt to help the bank use the power of government to cover up its problems.

Of course, this fell apart with this week’s revelations. Its reputation is so shaken, institutional continuity at HSBC seems to be at risk. Someone in charge has to take the blame.

The new government in Greece is moving forward with reforms after a parliamentary vote of confidence.

The specter of bank failure returned to Atlanta tonight, with state banking regulators closing Capitol City Bank & Trust, which had eight locations and $267 million in deposits. North Carolina-based First-Citizens Bank & Trust is taking over the deposits and purchasing the assets.

State of TV

Five TV stories.

“Please, not in front of the TV”: Some voice-control TVs, we found out, are relaying everything said in the room to a unknown data center; that’s where the spoken words get converted to TV commands, which are then relayed back to the TV. Some of the same TVs recognize the video tapes you are playing, and are capable of showing advertising selected to go with the corresponding movies. We found this out when TVs in two countries accidentally started to play commercials over people’s prerecorded programs. The total U.S. TV audience is declining a little faster than last year. A small fraction of former TV viewers are switching to movie subscription services such as Netflix. Jon Stewart will be leaving The Daily Show later this year. A “serious” newscaster is suspended after worries that several stories from the past were fabricated.

The decline of TV is not exactly snowballing, but it has reached the point where every time a TV show ends, you have to wonder how many TV viewers cancel their subscriptions the next day or the next week. In the case of Jon Stewart’s exit, the number will probably be a few thousand. There are millions of viewers whose regular TV habit has been reduced to a single show. Every TV show ends eventually, and when it does, a fraction of those screens will go dark. Part of the reason, I think, is that the TV industry has gotten too slick at the way it controls viewers’ behavior. If they have pushed the envelope too far, it’s no surprise if viewers feel that they’re not getting what they want anymore and are walking away.

The All-Cash Solar Farm

There is plenty of press attention for Apple’s billion-dollar solar facility deal announced today, and Apple CEO Tim Cook rightly commented that now is the right time for action on atmospheric carbon, which is the cause of climate change. An important detail was lost in the story, however: how much money Apple will save by having its own dedicated electric source. The company has to buy electricity anyway, and in this deal it is buying wholesale and paying cash, pretty much what it likes to do in general. This will save Apple a small fortune in electric bills, particularly as the cost of energy from ordinary commercial sources goes up over time.

Apple can make a deal like this because it has the cash to spend. Other investors who have cash and are wondering what to do with it may want to follow Apple’s example.

Insurance Companies and Other Large Soft Data Targets

Insurance is supposed to make you feel more secure, but it is having the opposite effect this week after a data leak at one of the largest insurance companies in the United States. The Anthem data leak affects around 80 million customers, which makes it sound similar in size to the 2014 JPMorgan address book data leak. In truth, the Anthem data leak is far more serious. The leaked data included not just names and addresses, but dates of birth and Social Security numbers. For most customers, the leak also included information about employment history and the identity of immediate relatives. Now your confidential personal information is in a criminal organization’s data warehouse in China — or at least, that is investigators’ best guess as to where all that data went. Feeling secure yet?

The insurance industry is a large soft target for criminals wanting to steal personal data. Its information technology is a generation behind the technology that you find in retail and banking, two of the more obvious targets. Anthem in a statement said it had state-of-the-art information security technology, and that is surely true, but that wasn’t the technology that gave way when intruders broke in and started poking around. Anthem’s statement is like boasting about the burglar alarms on your windows while you leave your doors unlocked. But Anthem is one of the largest and wealthiest insurance companies ever. There are hundreds of insurance companies that couldn’t afford the kind of technology that Anthem has. Many, I feel sure, don’t have the capacity to tell when outsiders have broken in to their data. That means the number of insurance company data breaches is fundamentally unknown.

There are other large soft data targets that I hope are already thinking about how they van bring their technology up to the level of retail, at least. You might think of schools and hospitals, but what about government tax and licensing authorities? Many of these government agencies operate on equipment so old they would actually save money if they could upgrade to an off-the-shelf retail-style system.

Pundits agree that we will see many more of these large data leaks. It is inevitable just because of flaws in management culture. I describe it as management by failure: the strategy is to wait until you see something break, and only then take a close look at what could go wrong.

“Management by failure” sounds like a mistake, but I am not sure it is. The typical large business enterprise is so complex, awkward, and unwieldy that senior managers couldn’t possibly keep track of the essential operational details. What else would you want managers to focus on but the most pressing problems that have the potential to bring down the company? And so, these large data leaks and other similar failures are perhaps just the price we pay for doing business with such large and ultimately unmanageable businesses.