Outsourcing-Insulation from Liability

After the presentations this week, we discussed outsourcing as a tool businesses use to insulate themselves from liability.  The classic example of this is the cab company.  Most cab companies operate simply as dispatchers who maintain contractual relationships with the drivers of the cabs.  Each cab driver is an independent contractor as opposed to an employee of the cab company they work for.  With this arrangement in place, it is each driver (not the cab company he or she works for) that bears responsibility for the accidents that the cab is involved in.  This increases the awareness of the driver, because he will personally have to pay for any damage he causes, and also significantly reduces the costs of cab companies because they aren't required to pay for the negligence of their drivers.

This is the same strategy that BP employed with the Deep Sea Horizon rig.  The general rule of law is that businesses are not responsible for the damages caused by their independent contractors.  The exception to this rule, however, is that businesses ARE responsible for the damages caused by their independent contractors while engaged in "ultrahazardous activities".  Ultrahazardous activities is a legal label that is not easily definable.  Deciding whether an activity is ultrahazardous depends upon the nature of the activity, the appropriateness of the activity for the place it is being engaged in, and finally (and most importantly) whether the exercise of due care can prevent the kind of damage that took place.  The idea behind this is that you don't want companies to be able engage in incredibly dangerous activities without the possibility of having to pay for them just because they hire independent contractors.

The problem for BP is that it would be very easy to convince most people that maintaining a deepwater well is an ultrahazardous activity.  No matter how safely the well was maintained, there is no way to completely forestall the kind of disaster that took place because of the difficulty involved with stopping the flow of oil from a well that far under the ocean's surface.  So in this situation, BP's outsourcing arrangement probably isn't going to help them very much.

So if a company is utilizing outsourcing to insulate themselves from liability, an important thing they have to do is consult their lawyers and figure out whether the activities that are being engaged in are ultrahazardous or not.  A good rule of thumb is that is it probably ultrahazardous if it involves any kind of uncontrollable explosions.  If the activity is ultrahazardous, outsourcing may be a waste of your time.

We Live in Public: When Technology Invades Personal Space

I blogged earlier about the potential for social network advertising to go beyond the scope of normal marketing tactics and turn off potential customers by thoroughly creeping them out.  I just recently watched a movie that explored this idea in detail.  The movie, called "We Live In Public" documented the odd life and social experiments of pseudo.com millionaire Josh Harris.  It explores the effect that social media like FaceBook and Twitter could have if taken to the extreme.

The main social experiment that took place involved the placement of over 100 artists in an ultra-wired, locked basement where everything was recorded, and everyone could monitor everyone else.  Each person had their own "pod" with a TV and a camera, and everyone had the ability to monitor everyone else's pod. There was no privacy, and privacy was eliminated.  The important thing to remember is that everyone involved in the experiment did so voluntarily and with quite a bit of enthusiasm about this bold new project.

After about 2 weeks of the experiment, the project imploded.  Even the most ardent exhibitionists had trouble giving up their privacy completely.  Tensions ran high, violence broke out, and the shooting range that had been included in the basement as a mode of entertainment became an accident waiting to happen.

Eventually the experiment was shut down by the police for zoning and weapons violations.  But the film emphasized the potential dangers of social media to the extent that people make their personal lives privy to the observations of others.  Even if it seems like a fun or exciting idea at the time, once a person gives up their privacy using social media, it isn't something that they can take back.  Their personal life will forever exist in a public forum.

The movie seems to suggest that the internet is an inherently impersonal place--which is why I thought our speaker in the panel discussion who talked about his church was so interesting.  The idea of trying to promote intimate, spiritual connections on a medium that is in many cases impersonal and unforgiving struck me initially as counter-intuitive.  But with them I think it all came down to the way that they used the internet to connect to people.  The church seemed to use the internet to reach out for ways to help people in times of crisis (personal or environmental).  So it seems like the key is using the internet as a tool for accomplishing your goals as opposed to the place that you live your life.

For information about the movie: http://www.imdb.com/title/tt0498329/