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The Effects of Cambridge Analytical Scandal on Facebook’s Leadership: Leadership Coursework

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In March 2018 Christopher Wylie told The New York Times and The Guardian that Cambridge Analytica had gained access to the Facebook data of 50 million users across America, without permission, to build a psychological welfare tool (Granville, 2018). The crisis stems from Facebook policies that allowed third-party app developers to extract users’ and their friends’ personal data 2007-2014 without consent (Wong C, 2018). They used their ‘likes’ to create personality profiles for the 2016 US election and created advertisements that would influence each individual’s vote (Granville, 2018). This app was built by the Cambridge University academic Aleksandr Kogan in collaboration with Cambridge Analytica (Badshah, 2018). The Cambridge Analytica scandal was never just about the firm, but the ‘backlash grew to encompass the ways that businesses, including Facebook, take more data from people than they need, and give away more than they should’ (Lapowsky, 2019). It wasn’t until The Observer’s report in March 2018, that the scandal erupted and became international, ‘inspiring global outrage’ over the company’s failure to protect users’ personal data and ‘wiping $134bn off Facebook’s market value as its stock price plunged’ (Wong A, 2019). ‘The Federal Trade Commission fined Facebook $5bn to settle an investigation into the company’s privacy violations’ (Wong B, 2019). However, it is argued by critics that the changes required of Facebook are not substantial enough. Facebook also agreed to pay a £500,000 fine imposed by the UK’s data protection watchdog for its role in the Cambridge Analytica scandal (BBC News, 2019).

This essay discusses the effects of Cambridge Analytica scandal on Facebook’s leadership and how effectively it was dealt with using three key leadership theories.

James McGregor Burns introduced the concept of transformational leadership in 1978 (Kuhnert & Lewis, 1987). He defined leadership as a process where ‘leaders and their followers raise one another to higher levels of morality and motivation’ (Mind Tools , 2020). House & Shamir (1993) supported this by believing transformational leaders raise the motivation and morality of both follower and leader (Ahmed, Nawaz, & Khan, 2016). The leader is then asked to focus on followers’ needs and input in order to transform everyone into a leader by empowering and motivating them (House & Aditya, 1997). The leader is then asked to focus on followers’ needs and input in order to transform everyone into a leader by empowering and motivating them (House & Aditya, 1997). Warrilow (2012) argues transformational leadership theory is about leadership that creates positive change in the followers whereby they take care of each other’s interests and act in the interests of the group as a whole (Odumeru & Ifeanyi, 2013). Bass identified four key elements of transformational leadership: idealised influence, inspirational motivation, intellectual stimulation and individualised consideration (Richardson, 2011). This can be explained fully By Warrolow (2012) (Odumeru & Ifeanyi, 2013).

Facebook’s leaders can be seen to use transformational leadership in some of the effective ways they responded to the scandal. Facebook uploaded a 3,000-word treatise on Facebook’s ‘privacy-focused’ future and Zuckerberg’s new ‘vision’ for social networking (Wong D, 2019). Zuckerberg announced a shift away from public sharing towards private messaging and conversation (Wingard, 2019) in an apparent plan to integrate all three of the company’s platforms into one, with end-to-end encryption (Wong E, 2019). However, this has been criticised for being a ‘strategic play’ to use privacy to further ‘lock-in’ Facebook as the dominant messaging platform (Wong E, 2019). This new vision displays the inspirational motivation element of transformational leadership theory: “the degree to which the leader articulates a vision that appeals to and inspires the followers with optimism about future goals, and offers meaning for the current tasks in hand” (Odumeru & Ifeanyi, 2013). Zuckerberg also shows idealised influence of transformational leadership, which is: “the degree to which the leader behaves in admirable ways and displays convictions and takes stands that cause followers to identify with the leader who has a clear set of values and acts as a role model for the followers” (Odumeru & Ifeanyi, 2013). He defends Facebook and addresses his critics’ doubts that Facebook could or would want to build a privacy-focused platform saying they have shown that they can evolve to build the services that people really want, including in private messaging and stories (Wong E, 2019).

Conger and Kanungo’s (1998) believe charismatic leadership is based on follower perceptions of their leader’s behaviour (Conger, Kanungo, & Menon, 2000). This model consists of: environmental assessment, vision formulation and implementation (Conger, Kanungo, & Menon, 2000). A charismatic leader generally generates positive individual and organizational outcomes by displaying behaviours that stimulate followers’ needs (Choi, 2006). This theory is based on three core components: envisioning, empathy and empowerment (Choi, 2006).

Zuckerberg demonstrates charismatic leadership in decisions made and how some issues are addressed. He claimes to be committed not to store user’s data in “countries that have a track record of violating human rights like privacy or freedom of expression”. He notes that “upholding this principle may mean that our services will get blocked in some countries, or that we won’t be able to enter others anytime soon, but that’s a trade-off we’re willing to make” (Wong E, 2019). The third stage of Conger and Kanungo’s charismatic leadership model: the implementation stage (where managers are ‘seen to be engaging in exemplary acts that subordinates interpret as involving great personal risk and self-sacrifice) is illustrated here. Zuckerberg risks losing business in some countries to better secure people’s data. This also represents authentic leadership as Bill George believed that an authentic leader puts the interest of the organisation and its followers first, and focuses on the long-term, steering the organisation in the right direction (Mulder, 2020). After mistakenly trusting that the data obtained by Kogan had been deleted, Facebook investigated thousands of third-party apps and suspended “more than 400” (Wong D, 2019). This meant there is was risk of losing out on business and profit by banning some apps’ use of the platform. These risks arguably enable Facebook leaders to ‘build trust’ with followers (Conger, Kanungo, & Menon, 2000). This is another representation of stage three of Conger and Kanungo’s model. The second stage of Conger and Kanungo’s charismatic leadership model is also demonstrated where Zuckerberg announced his ‘new vision’ (see above): the vision formulation stage is based on ‘the followers’ perceptions of the manager’s formulation of a shared and idealized future vision’ (Conger, Kanungo, & Menon, 2000). Zuckerberg’s new vision is one that ‘satisfies followers needs’ – the basis of a charismatic leader (Conger, Kanungo, & Menon, 2000).

Authentic leadership theory is “those who are deeply aware of how they think and behave and are perceived by others as being aware of their own and others’ values/moral perspectives, knowledge and strength” (Cooper, Scandura, & Schriesheim, 2005). Authentic leaders are self-actualized individuals who show their real self to their followers because they are aware of their strengths, limitations and emotions (Kruse, 2020). Avolio and Gardner (2005), Luthans and Avolio (2003), and May et al. (2003) have argued that authentic leadership includes a positive moral perspective characterized by high ethical standards that guide decision making and behaviour (Walumbwa, Avolio, Gardner, Wernsing, & Peterson, 2008).

Facebook’s leaders are shown to be authentic as they addressed their mistakes publicly. Facebook had an honest initial response to the Cambridge Analytica scandal as Zuckerberg apologised by testifying before Congress: “We have a responsibility to protect your data, and if we can’t then we don’t deserve to serve you” (Wong C, 2018). Bill George believed authentic leaders use their natural abilities, but they also recognise their shortcomings and work hard to over-come them (George, 2003). Zuckerberg is transparent in that he is willing to discuss Facebook’s successes as well as failures, a key characteristic of authentic leadership (Mulder, 2020). Wingard (2019) argues that over the years, Zuckerberg had difficulties with transparency and this has negatively affected his leadership influence, so it was important to make the right impact on followers. Authentic leadership was also displayed when Facebook highlighted its value for user privacy by taking steps to increase security. “Self-regulation is the process through which authentic leaders align their values with their intentions and actions” (Avolio & Gardner, 2006).

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However, although there were positives, Facebook was also lacking in certain implementation of leadership theories, one being speed of response. It took Zuckerburg five days to address the public (Wong D, 2019). Followers began to question, very publicly, how they could support a platform that didn’t do more to protect them (Paul, 2018). Facebook’s users’ confidence in the company dropped by 66% (Weisbaum, 2018). A company-wide Q&A was called for but it was led by Facebook’s legal counsel, not its leaders which increased the concern as to why Facebook’s leaders were avoiding responding (Paul, 2018). By avoiding addressing the situation, in this respect, Zuckerberg was not being transparent with his followers. Transparency is key to effective leadership and is an element of all three leadership theories discussed.

When Facebook discovered data had been bought by Cambridge Analytica from an app developer, it took down app, demanded that data was deleted by securing written assertions from Cambridge Analytica, Kogan and Christopher Wylie, however it was a mistake not check that this had been done (The Guardian, 2018) – an audit should have been demanded (Paul, 2018). However the main cause for concern and further lack of transparency is demonstrated in that, even after discovering the threat to user’s data in 2015, they did not notify those 87 million who could had been effected or the US FTC for too long (The Guardian, 2018).

Facebook showed a lack of empathy and support of its followers’ needs and beliefs; qualities required within the three leadership theories. When Paul Grewal was seen to defended Facebook’s policies in a statement which appeared to blame users for giving consent (Wong, 2018), there followed five days of public outrage, which made the company acknowledge that blaming users for not understanding is not the best way to go about things (Wong C, 2018).

Facebook’s chief of security Alex Stamos had grown dissatisfied with the top of senior management and planned to exit the company (Paul, 2018). His departure reportedly came as a result of disagreements over how to handle the spread of misinformation on the social network. Facebook’s leaders pushed away a critical staff member instead of addressing his needs and beliefs, by failing to address the warnings he made. Transformational leaders are able both to unite followers and to change followers’ goals and beliefs (Kuhnert & Lewis, 1987).

Microtargeting is a fantastic tool for selling more goods to consumers and is argued to be a vital for allowing campaigns, big or small to reach their audiences. However it has shown to be easily abused in the recent past and critics believe it is a huge problem (Murphy, 2020). Other platforms have responded to the scandal by limiting how campaigns target people or banned political ads completely (Murphy, 2020). However Facebook continues to ‘ allow its clients to serve political ads, with no fact-checking, to selected groups of its nearly 3bn users, based on a range of characterises (Murphy, 2020). Facebook argues that its decision is not financial as political advertising will account for just 0.5% of its sales this year (Murphy, 2020). The fact that Facebook is still allowing what has been so heavily criticised by its followers shows another example of a lack of transformational qualities in its leaders as they are not addressing the needs and values of its followers or even attempting to change their beliefs by explaining their decision (Ahmed, Nawaz, & Khan, 2016).

Facebook’s actions following the scandal can all be criticised on the basis of the three main leadership theories. Since charismatic leadership is linked with personal traits and the transformation of subordinates this model often links it with transformational leadership theory (Luenendonk, 2020). Both idealised influence and inspirational motivation involve charisma, which are two of the elements of transformational leadership (Alvesson & Kärreman, 2015). These theories seek radical changes around the organizational structure they operate in (Luenendonk, 2020). The primary dissimilarity is the basic focus of the two styles (Alvesson & Kärreman, 2015). A main criticism of charismatic leadership is that it doesn’t make judgements on whether the vision is good or sustainable. There isn’t much room for inner moral conflicts within this leadership theory (Luenendonk, 2020). Yukl (1999) identified seven major weaknesses of Transformational leadership (Odumeru & Ifeanyi, 2013). It is argued that ‘authentic leadership theory was constructed due to critics arguing that existing frameworks are outdated and not sufficient for developing leaders of the future’ (Cooper, Scandura, & Schriesheim, 2005). ‘A unified, agreed definition for authentic leadership does not exist’, however three themes do reoccur across them (Ladkin & Taylor, 2010). ‘It is not clear from authentic leadership theory how deeply self-referent aspects of a leader’s self (authenticity) and the leader’s underlying moral values (integrity) become apparent to followers’ (Ladkin & Taylor, 2010). It can be argued that authentic leadership should be the ‘root informing construct of all new positive forms of leadership’, including transformational and charismatic leadership. (Ladkin & Taylor, 2010). However, authentic leadership is also criticised as there is no way of measuring it and so research needs to be done focusing on points of divergence and accentuate these to eventually allow the empirical differentiation of authentic leadership from other types of leadership (Cooper, Scandura, & Schriesheim, 2005).

Investigations into the scandal are still ongoing. The Electoral Commission is investigating the role Cambridge Analytica played in the EU referendum (Cadwalladr A & Graham-Harrison, 2018). In January 2020 there was a leak of more than 100,000 documents from the data Cambridge Analytica uncovered (Cadwalladr B, 2020). Critics are still sceptical. “I’m not convinced that Facebook shared all the information they had around data and political advertising in that period of time,” (Jason Kint, CEO Digital Content Next (Murphy, 2020). There is still doubt as to whether our democracy is in danger because of privacy issues on social media platforms: “It’s so abundantly clear our electoral systems are wide open to abuse” (Brittany Kaiser (Cadwalladr B, 2020). As a result of the scandal some loyal staff have left the company. Between March 2018 and March 2019 there were 13 senior staff departures (Ghosh & Hamilton, 2019), highlighting the lack of transformational leadership and inability to unite the staff..

As a whole, Facebook was mostly criticised (largely from “subordinates” suggesting lack of charismatic leadership) for its response to the scandal and received hundreds of negative news stories as a result. Regarding privacy, Facebook lacks the trust of many of its users. Its vital to have trust otherwise the willingness of followers to be influenced is lost (Wingard, 2019) however, despite this, the business continues to grow (Aboulhosn, 2020). It arguably failed on every measurement of leadership, lost the trust of its users and employees and yet as a business, it is successful because it is a service that people value and want in their lives.

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The Effects of Cambridge Analytical Scandal on Facebook’s Leadership: Leadership Coursework. (2022, August 25). Edubirdie. Retrieved December 1, 2022, from https://edubirdie.com/examples/the-effects-of-cambridge-analytical-scandal-on-facebooks-leadership-leadership-coursework/
“The Effects of Cambridge Analytical Scandal on Facebook’s Leadership: Leadership Coursework.” Edubirdie, 25 Aug. 2022, edubirdie.com/examples/the-effects-of-cambridge-analytical-scandal-on-facebooks-leadership-leadership-coursework/
The Effects of Cambridge Analytical Scandal on Facebook’s Leadership: Leadership Coursework. [online]. Available at: <https://edubirdie.com/examples/the-effects-of-cambridge-analytical-scandal-on-facebooks-leadership-leadership-coursework/> [Accessed 1 Dec. 2022].
The Effects of Cambridge Analytical Scandal on Facebook’s Leadership: Leadership Coursework [Internet]. Edubirdie. 2022 Aug 25 [cited 2022 Dec 1]. Available from: https://edubirdie.com/examples/the-effects-of-cambridge-analytical-scandal-on-facebooks-leadership-leadership-coursework/
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