Further notes on ethics and analyst research
It’s been quite a weekend for discussion of analysts and ethics. A few more thoughts:
1. The terms “ethics” and “ethical” are used somewhat inconsistently, along a spectrum from:
There are procedural rules of good behavior, and if you violate them that’s bad. That’s the essence of ethics.
to
Unless the motive was impure, an act was not unethical.
Either extreme, in my opinion, quickly leads to nonsense.
2. Actually, I think calling that a spectrum is a bit misleading. I’d prefer to say an act is unethical if:
- It is (too) likely to have bad effect AND
- The perpetrator was guilty of bad behavior in not acting differently.
Thus, somebody can make an error in the area of ethics and still be fully ethical if, upon realizing it, they straightforwardly correct it. On the other hand, a pattern of such “errors” can suffice to convict them of unethical behavior.
3. In particular, I stand by the following views from the post and comment thread that set this all off:
- Oracle behaves unethically by repeatedly foisting off sponsored analyst content as independent research.
- Merv Adrian is a fine, ethical guy.
- One reason I believe Merv is an ethical guy is because when I pointed out a screw-up to him, he characterized it as an oversight (I believe him) and said he’d move quickly to correct it.
- Commenters in that thread who suggested I shouldn’t even have mentioned Merv’s error were out of line. When you make an innocent mistake, you may suffer some embarrassment as a result.
4. Merv’s analysis of white paper ethical issues was excellent, and supersedes mine. Continuing the oneupsmanship :), I’ll now try to synthesize by saying:
- White papers should never give a misleading view of the analyst’s opinion. Therefore:
- They should always be prominently labeled as to sponsorship.
- They should never be quoted out of context (a longstanding rule of mine that Merv thankfully also enforces).
- They should always be clearly dated (a point I forgot to mention before).
- Merv points out that many companies have the same specific failing I lambasted Oracle for. While I think Oracle is particularly egregious, I don’t dispute his general observation. What’s more, since a white paper has many possible routes to get to an individual’s desk, the only reliable protections are those embedded within the paper itself.
5. In my post on white paper ethics, I confessed that I knew little of practices in sponsored podcasting. Eric Kavanagh helpfully filled me in on how he does it, tweeting
DM Radio is not pay-2-play; sponsors get leads & commercial but no editorial preference; enforced by tag team of me & Ericson.
Several rules: no product promotion; we talk business, tech, architecture, how-why-when stuff; I do a pre-call with ~all guests.
The policy is unscripted dialogue; in the pre-call, I tell guests to think of 3-4 key points they’ll make; no questions banned!!
6. I am generally appalled by the behavior of certain companies toward analysts, and their efforts to control what analysts say. Practices include:
- Demanding a review cycle on anything the analyst writes about them, sponsored or otherwise.
- More generally, heavily tailoring access not just according to an analyst’s importance (by whatever measure of importance or influence makes sense to them) but also pliability.
- As noted above, mischaracterizing the nature of analyst research.
Oracle is generally reputed as the worst offender, but while I agree with the criticism in general, I’m somewhat mellowed by the fact that I, personally, still have good access to key Oracle product people at important times.
As for Microsoft, on the other hand … well, let’s just say the best insight I’ve gotten from my back channels to date has been to find out exactly what falsehoods were being circulated about me in internal Microsoft communications. I also frankly am steamed at the moment that a Microsoft exec had the nerve to tell me that I shouldn’t post about ethical issues (a dictum I obviously have no intention of adhering to).
7. It absolutely is possible for companies to change their analyst relations practices, both for better and for worse. The most dramatic positive change I recall is when, in the mid-1990s, Sybase went fairly quickly from utter dishonesty to having one of the best analyst relations guys ever (Dave Taber, when he had that role for them). In a slower evolution, IBM — which once filed a $7.5 billion lawsuit naming a Gartner Group analyst as co-defendant — has become pretty reasonable (even if large and bureaucratic) to deal with.
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