Cloudflare's Leadership is an Example of Top Notch Corporate Governance and Communication

In the world of technology and big tech, transparency is often the differentiator between a company that thrives in the face of adversity and one that crumbles under the weight of its mistakes. Consider a recent incident involving Cloudflare, a major internet infrastructure company, which serves as a striking example of how transparency can turn a crisis into an opportunity. In this article, I will delve into Cloudflare’s response to a significant outage and explore why their approach should serve as a blueprint for modern corporate governance.

What Happened

Recently, Cloudflare experienced a major outage. Their response to this outage wasn’t to hide or pass the blame to other parties or to try to control any fallout. No, instead they addressed the problem head on from the start. They sent a team of experts physically to the data center they were having trouble with and they immediately started working with the data center operator to resolve the issue.

Then, taking things a step further, they maintained FULL transparency of the event with their customers by releasing a blog post, penned by their founder and CEO Matthew Prince. The post starts with an acknowledgement of the facts, what happened and when, followed quickly by an apology and taking full ownership of what happened.

Throughout this post, Prince stuck with the facts and the sequence of events. He lays out what went wrong, how they failed to properly plan for this possibility, their thinking at the time, and how they will move forward in the future. As a manager, a shareholder, and a customer of theirs I find this immensely satisfying, professional, honest, and appropriate.

Their actions taken here and many times throughout their history have shown a business run by true professionals and not people that are just trying to save their jobs. The honesty and integrity at the very top speaks volumes for the entire organization. It also means that even when things go wrong they can be counted on to do right by their customers as fast as possible and as the first response. Many organizations have to be dragged kicking and screaming to the point where they fess up to their mistakes and grudgingly take ownership of failures and solutions.

Too often companies resort to “damage control” and the “PR optics” instead of addressing the problem head-0n, identifying the cause, and implementing changes to prevent it in the future. Cloudflare is doing things the right way and should be held up as an example of the best practices of corporate governance.

What Cloudflare and Matthew Prince Got Right

It cannot be understated that the way this situation was handled was a masterclass in transparency and corporate governance. They did many things right in the process and I will go over the high points.

Steps Taken

1. First, they communicated quickly and openly with full transparency. Both with the vendor and with the public.
2. Second, they didn’t immediately lay blame on anyone and instead took steps to identify the problem and address it.
3. They provided a clear timeline of events.
4. They provided the thinking that led up to the fateful event. And how that thinking was a mistake.
5. Then they provided clear, logical steps to show how they will prevent the problem in the future.
6. Finally, they owned up to the mistakes they made and apologized for their part in the problem.

Importance of Transparency

It cannot be understated just how important such transparency is for an organization. Transparency builds trust with your customer base, your shareholders, and with the community at large. All of us, everyone, understands that mistakes can and will be made. What the mistakes are, often are not the most important thing (depending on the gravity of the mistake). How we deal with them is the most important thing.

This is something that many parents try to teach their children. But a lesson that doesn’t always make it into adulthood, nor corporate culture. Transparency tells others that you will own up to your mistakes, that you will be honest with them, and that you will try to make changes to prevent the problem in the future.

Why Their Approach is so Important

This approach is crucial because it instills confidence in customers, employees, and shareholders that the issue will be addressed promptly and professionally. It signals to everyone involved that things will be handled professionally and quickly.

Consider the case of Theranos, a biomedical company that claimed to have revolutionized blood testing but concealed critical information about its technology. The lack of transparency eroded trust and led to the company’s downfall. The company had claimed to have developed a revolutionary blood-testing technology but was never transparent about the technology itself nor their methods and full results.

Investments in Theranos depended on trusting the company and its founders and on the “wow” factor. They played on a general ignorance of the medical world. When the truth finally came to light the company was shuttered and its founders arrested and prosecuted.

Then there is Enron, the poster child of corporate deception. This was perhaps one of the biggest corporate scandals every perpetrated. Their leadership wove a web of lies and deceit for years. Culminating in the company’s bankruptcy and a significant financial loss for investors. Their lack of transparency not only eroded public trust, but ultimately doomed the company.

It also likely reduces your chance of lawsuits. When companies hide important information it eventually gets out and they look far worse when that happens. That will lower shareholder and customer confidence which lowers the price per share and likely will lead to a revenue hit. At best you can hope for short term losses as people’s memory of the incident fails. Hope is not something you want to hang your business hat on.

Conclusion

Businesses that handle their mistakes and problems with grace, transparency, and ownership have a much better forecast for their futures then those that hide, pass the blame, and never really try that hard to solve a problem. These are businesses you should invest in over time as they will serve you better than those that don’t handle things so well.

Thank you Cloudflare and Matthew Prince for being exceptional examples in the corporate landscape.