Facebook, openness and listening to your customers

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I attended a Memorial Day parade with my family Saturday morning. My high school’s marching band made an appearance, which brought back a flood of memories. So I documented it the way I often do with these sorts of things, by uploading a picture and caption to my Facebook page.

Within minutes I was reminded of candy sales held 25 years ago to raise money to buy new uniforms, as well as a long-forgotten crack in a Sousaphone bell and how it got there. Old friends in other states were reminiscing with me, practically in real time, about things my memory had misplaced. It was another testament to the power of Facebook, the way the social networking platform bridges vast distances of time and place and powerfully connects people.

Coming as it did within days of Facebook announcing changes to its privacy policies, however, my warm remembrance also had a healthy streak of cynicism running through it.

Who was “listening” in on my virtual conversation and concocting marketing pitches to send my way? How long until an ad popped up for Sousaphone lessons (even though I played drums in the band)? How long would it take me to audit my privacy settings and make changes? Why did the default setting keep getting changed in favor of complete openness, instead of the other way around?

I followed the mushrooming controversy — which started several weeks ago when Facebook unveiled several new features designed to weave the service into the everyday fabric of the Web itself — with interest, looking for insights into how Facebook and CEO Mark Zuckerberg would handle it.

Ultimately, how would Facebook respond to the complaints of its customers, the soon-to-be 500 million users? Despite what you may think about Facebook’s ear for public relations — and may PR experts would tell you it’s a tin ear at best — there would surely be lessons to draw for anyone running a business.

A recent Time magazine cover story nicely summarized the tension:

“Facebook has changed our social DNA, making us more accustomed to openness. But the site is premised on a contradiction: Facebook is rich in intimate opportunities — you can celebrate your niece’s first steps there and mourn the death of a close friend — but the company is making money because you are, on some level, broadcasting those moments online. The feelings you experience on Facebook are heartfelt; the data you’re providing feeds a bottom line.”

According to a New York Times account last week of Facebook capitulating to pressure over privacy concerns, the new settings would simplify a system that required users to sort through about 150 options. The changes would make it easier for users to understand how much of their personal information was publicly accessible. Users would have simple controls to determine whether their information was visible to only friends, friends of friends, or everyone on the Internet.

Makes both common and business sense. People apparently weren’t deleting their Facebook accounts any more than normal (testatment to the power of the service) but the company felt compelled to make changes anyway. This follows the lead of other companies over time that have listened to customers and pulled the plug on big corporate initiatives, even when it was painful to do so after the initial the fanfare — think New Coke, the Ford Edsel, or Ghettopoly.

What do you think, do companies do a good job of listening to their customers in times like this? Or do they only take action when their hand is forced?