8 Lessons for Business to Take Away from the Sony Hack

Daniel Banas |

Unless you’ve been living under a rock (or in a fascist totalitarian state) for the past month, you’re no doubt aware of the The Interview. You know, the sophomoric Seth Rogen/James Franco comedy that’s been the catalyst for an unprecedented international incident?

The film’s plot – about two goofballs who are tasked by the C.I.A with assassinating North Korean dictator Kim Jong-Un – didn’t sit well with a group that called itself “Guardians of Peace”. Unfortunately for Sony, instead of taking to their blog like a normal paranoid reactionary, the GOP chose to illustrate this by hacking into Sony’s computers and threatening to continue releasing private data until the company agreed to cancel their release of the film.

Last Wednesday, Sony Corporation (SNE) relented to the terrorist demands. They effectively buried the film, refusing to release it in theaters, on DVD or Video on Demand. On Friday, the FBI confirmed that North Korea was indeed behind the attacks, and after nearly a month of chaos and confusion, it appears the dust is finally beginning to settle (for now).

It’s a story with far-reaching implications for international diplomacy, for freedom of expression – heck for fans of silly stoner comedy. So, to keep the weight and complexity of this story from completely crushing us all, we’re going to look at one angle in particular: What lessons does the Sony Hack offer for business?

1.       Your Boss Was Right – a Business Email Account is for BUSINESS PURPOSES ONLY

Many of us have rolled our eyes when the boss stresses using email and instant messaging for work purposes only. Begrudgingly, though, we’ll have to admit that maybe – juuuust maybe – the boss was actually right on this one. Or at least, the world has caught up to management’s draconian rules about personal sharing. What once seemed like strict authoritarianism may now be right on the money.

An occasional joke or casual chatter between close colleagues may go a long way toward easing tension throughout the day. But even though we all secretly believe we deserve our own Comedy Central stand-up special, the truth is that even the most innocuous comment can come across as offensive or worse when viewed out of context…and for most of us, that’s probably not worth the risk.

Whether you choose to dub the private comments made by Sony Pictures Co-Chairman Amy Pascal and mega-successful Producer Scott Rudin as “racist remarks,” or less salaciously as “unfunny jokes,” the fact is that they are private no more. Whether fair or not, Pascal and Rudin, and anyone else who suffers a similar breach, is going to be expected to answer for even their most idle and inane online chatter.

2.       Humor and Tone can get Lost in Translation

Upon seeing the trailer for the The Interview, the thinking for most Americans probably went something like this: “Oh, another one of these goofy comedies? Well, Superbad had its moments, and James Franco is most tolerable doing his doofus shtick: it might be a rental. Oh good, Cupcake Wars is back on!” Notice how little moral outrage or nationalistic fervor could be found in any of that thinking? Well, it’s important to remember that our ability to fill our minds with vapid entertainment is a luxury that few on the planet get to share.

Further still, as the world is increasingly connected, it’s abundantly clear that many cultural cues that are engrained into our communication – like irony, absurdity, hyperbole, and sarcasm – can be wildly misconstrued to those from cultures that are based in earnest sincerity. Even the cultural divide between Los Angeles and New York can seem vast at times, so a tactful approach is essential when working with clients from abroad. After all, in a million years, who would have expected that a Seth Rogen movie could inspire such vengeful rage?

Other than The Guilt Trip, of course.

3.       Everyone Knows Everything, but Nobody Knows Anything

With the constant onslaught of information we’re faced with today, it can be easy to feel like we have a firm understanding of these type of stories as they arise. Yet, with so much information to process, plenty can get lost – and at times, everyone has seemingly moved on before some of the most pertinent questions are ever resolved.

In the Sony hack, the common wisdom was that North Korea had mounted the attack. In the end, that turned out to be true, but it could have just as easily been a disgruntled employee – and according to some sources, that may partially be the case. Further still, what does it even mean to say that “North Korea” hacked Sony? Does it mean the GOP group was sanctioned by the North Korean government? Are they part of the North Korean government? Is the GOP just Kim Jong-Un with a MacBook? How did such a poor, starving country get access to a computer hackers who can avoid capture by the FBI?

We won’t know the details that give a much richer, more valuable picture of what has happened here for weeks, or months, or maybe never – and by that point, the news media will have likely already moved on to whatever the latest sensational disaster might be. In the end, the onslaught of info is making us all masters of sound bites, but with little substantive information on anything.

4.       There IS Such a Thing as Bad Publicity

“There’s no such thing as bad publicity!” – Some idiot

Like most age-old platitudes, there’s a nugget of truth in there. As your local social media manager undoubtedly knows, there’s a lot of value in getting a viral debate going on Twitter. But I’m willing to wager that Amy Pascal and Scott Rudin wouldn’t be so quick to agree. Both have had long and celebrated careers in Hollywood – while still remaining comfortably far from the public eye.

Well, now they’re firmly in the spotlight, and known around the globe as “those mean/racist/misogynist/greedy/irresponsible executives.” Perhaps in a simpler time, when one’s public image was far more manageable, the old adage about bad publicity was true, but I think we can all agree there are plenty of high powered figures, from cherished Hollywood A-Listers to company executives, who would be more than happy to conduct their lives far from the public eye.

Of course, in this particular case, the majority of publicity has gone to the film that sparked the international incident to begin with. While there can be little doubt that the crisis has spurred interest in the film, it may also make it much more difficult to see, as many top theater chains are now canceling their showings of the film? Why? Well, because…

5.       9/11 Threats are Still Very Much a Thing

We’re more than thirteen years out from September 11, 2001. Yet, after years of patriotic Oliver Stone movies and Giuliani presidential bids, invoking 9/11 is still a potent way to suggest Earth-shattering horror.

Which is precisely what happened on Dec. 16, when anonymous hackers promised “a 9/11 event” at theaters that deign to show The Interview. While investigation into the claims suggested there’s little chance of an actual organized attack occurring at nearly every major movie chain in the U.S., it was still enough for a number of chains to cancel plans to show the film.

Ultimately, Sony canceled plans to release the movie altogether – a move that means they’ll be taking a bath on an investment of $42 million (plus tens of millions more in marketing costs). It has cost Sony their reputation as well, because…

6.       Despite what Huey Lewis Says, it Ain’t Hip to Be a Square

For many, pulling the film also served as a blatant example of censoring artistic expression and free speech out of cowardice. The decision has raised the ire of a diverse array of Hollywood and media elite that range from Judd Apatow and George Clooney to their usual nemeses at Fox News, and no less than Barack Obama. Of course, had Sony moved forward with the release, you’d no doubt have seen no shortage of Op-Eds decreeing the brazen greed and a recklessness of releasing a film despite terrorist threats upon those who go to see it.

You’re not going to find an argument that Sony handled anything well up to this point here. Yet, when faced with a bevy of class-action lawsuits, the potential for further personal and professional humiliation, as well as terrorist threats, would any other company have responded differently?

What company, in today’s political climate, would risk aggravating a fascist state that has already proven to have to be capable of causing severe damage after they threaten physical harm? Further still, though Pascal has taken the brunt of abuse for this, let’s not forget that Sony Pictures is one small arm of a multibillion dollar Japanese conglomerate, and it seems likely that the big shots in Tokyo may have actually the folks making the final call.

It might not be a particularly inspiring thought, but when running a global company, the stark reality is that sometimes you’re going to have to be comfortable knowing that whatever choice you make, you’re going to be the lambasted as the bad guy. Though I guess you can always take solace in knowing Kim Jong-Un is much, much worse.

7.       Blustery Lawyers are no Match for the 24-hour Media Cycle

There’s a common belief that at a certain pay grade and level of control, you can count on a high-powered attorney to make any unpleasantness that might arise in your life magically go away. While there are countless examples where this has been true, the pace and voraciousness of constant online news media has shifted the balance dramatically.

While slick attorneys may still be able to keep those in power out of the courts, PR gurus are increasingly powerless when it comes to managing the court of public opinion. What’s more, while attorneys representing Sony brass argue that media outlets have no right to publish the material released regarding their clients, that’s looking like a lot scare tactics without a legal basis to back it up. So in today’s modern world, where the idea of privacy seems as antiquated as the payphone, what’s a CEO to do? Simple:

8.       INVEST IN ONLINE SECURITY!!!

While the hacking and publication of private correspondence between Rudin and Pascal is undoubtedly seedy business, it seems a lot of us have trouble empathizing too much with them – perhaps understandably. After all, they represent two of the highest-powered and highest paid players in a global, multibillion dollar industry that is often touted for its pioneering technological breakthroughs. Granted, this is the film and television division, but it’s still Sony, after all – even if the brand has faltered in recent years, aren’t they still supposed to be synonymous with high-quality technology?

What’s more, from all accounts, breaching Sony’s online security was more akin to turning off the parental controls on a TiVo than hacking into The Matrix. In other words, Sony execs weren’t taking online security the least bit seriously, and now they’re responsible for the release of personal data for hundreds of employees – many of whom are planning to sue, and who very well may have a strong case.

By neglecting to change their email passwords from “password” and various, similarly egregious oversights, the Sony brand has been severely tarnished. They’re going to lose multiple millions, and if Sony Pictures is able to come back from this, it seems to be a foregone conclusion that Pascal’s days at the studio are numbered. All of this could have been avoided had they taken a proactive stance on securing their employees online communications. Now let’s hope that Sony’s remake of Annie doesn’t take any potshots at Putin.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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Symbol Name Price Change % Volume
SNE Sony Corporation 29.18 0.57 1.99 1,250,399

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