it's all about trust

And now to something tricky spurred by a discussion MarkN and I have here.

What level of transparency can a company live with?

Fact #1:

Trust is what makes a company exist. Without trust no customer, no investors, no suppliers, no place in society.

Fact #2:

Transparency equals trust. That simple.

In other words, it's simple - a corporation should be fully transparent.

But, conflicting interests exists:

Concern for individual members of the firm and their rights.
Marketing wants to be cute and seductive.
Competitive tactics.
Earnings and salaries.
Control, control, control.

Guess which ones are used as arguments by the chaps-in-power. Guess which one I suspect as being the only real one for those-who-decides. Sure NYSE and SEC may have some ideas of what not to disclose, but that's a technicality.

And the counter interests win, no real transparency is available in the corporate world. I mean it, no real, true, complete transparency.
Better to spend money on branding they say. Freeze-dried transparency as it where.

That is turning reality upside down.

If I want to cross a lake I use a boat. A boat is the main thing. Dangers lurks in my mind so I subsequently address those, I throw in a bailer, put on some floating device, flares, extra oars, whatnot. But boat it is.

In the corporate world it would be like this:

Boat you say? Nope, no way. Uhh, the wind is picking up, monsters lurks, you're no good rower. Forget it, let's buy more advertising time and lure the chaps on the other side to cross over to us.

Transparency is the main thing, every other counter issue is secondary and should be addressed and sorted.
Start with the main thing, complete transparency, add flares, EPIRBs and whatever if need be.

[BONUS LINK:] Not exactly top management induced transparency as experienced by a clueless manager, me, once upon the time, here :)

Comments

[Ric]

Perhaps what needs to change is the model for the business - if transparency = trust (and your argument is, I think, that trust = prosperous business) but business model = obfuscation, then we need a model which allows the transparency. I suspect that existing businesses have become too entrenched in their practices to change this, but if the issue is "the market" then de-list, get smaller, privatise, break up the corporation into its functional components. THEN you can work on the transparency ...

Look, I don't think it's impossible for a public corporation to be 100% revealing, but the odds are against it, so there will never be 100% trust - and trust is like pregnancy - you can't go halfway, it's all or nothing.

[sig]

Ric, I agree completely. I'm just cautious when I really wanted to say to the corporates, be brave! Have courage! It's in your interest! We know who wins; the brave, the courageous :-)
But one day one will, and he'll win and then the sheep, eh, the timid, will follow, is it not like that?

[MarkN]

Per Ric's point about getting smaller, separating into functional components, this is precisely the trend I have been watching unfold in the management consulting arena and among domain experts and, to a degree, software developers: technology is facilitating hyper segmentation and specialization. It is ever more possible for small groups, right down to a single person shops to make a living doing something very precise and personal.

Another observation on the transparency front is how one would measure the honesty of the transparency. One of the first things that comes to my mind when someone says to me "let me be perfectly honest/transparent/on the level with you..." is that they're lying through their teeth about something.

Sadly, I think a world that claimed to be 100% transparent would simply be a world rife with disinformation. This is already readily apparent in the evolution of the blogosphere.

If it isn't one thing, it's another...

[sig]

Mark, "how one would measure the honesty of the transparency": Are not blogs a good pointer I wonder...
Where using one's own voice, warts and all, seem to work?

If we hear and see the flip sides of the coin, the gaffes, the rough as well as the smooth - then we do feel there must be some level of honesty?

Talking about blogs, corporate blogging could very well be the dip-the-toe and under-the-radar method for corporations to find the value of being transparent. Even unintentional, or probably unintentional.

Suspect that Robert Scoble is much valued person in MS these days, or at least he should be. For me he certainly changed my views of his firm :-)
What happened there must have been unintentional, top management-wise?

[Rockster]

You may not believe this, but there is a raging debate in the Management/Org Science/Org Theory literature about "why organizations exist."

It is NOT a trivial matter from a theoretical point of view. My conclusion is that the reason things are the way they are is because there is something fundamental about humans that prevents us from letting someone get credit for something they didn't do. The achilles heel of "flat" or "team-based" organizations is always compensation. Paying everyone the same regardless of individual contribution (a way oversimplified example) doesn't work for anyone who really works hard (read this article from Fast Company: http://www.fastcompany.com/magazine/03/ideas.html). When you start trying to tweak the flatness to account for individual performance differences, you slide down a slippery slope. Best case is that you mitigate the negatives, but the "pure" case looks like communism and it doesn't work for the same reasons. Let me put this another way: if you want to "engineer" this system, it ain't gonna happen. It has to built into the organization's foundation.

Transparency is near impossible AS LONG AS rewards are tied to your personal performance. There will always be an incentive to hoard information. You simply cannot expect altruistic behavior (if I have an opportunity to increase my personal earnings and provide for my children's education... shouldn't I do it?).

Final piece of this then, is that collective wealth must be tied to collective performance. The only thing I can think of that does that is aggressive profit-sharing, or aggressive employee-ownership. Western Canada's WestJet and the oft-cited Southwest Airlines are exemplars.

[sig]

Rockster,
I do not disagree, but what I do see sometimes out there a slight jump-to-conclusion when one talks about organisations, all to often it equals some sort of a hierarchy, a tree-and-command-structur.
When flat organisations are presented they frequently have the air of a hierarchy been flattened by a hammer :-)

Many inherent features of / requirements to make hierarchy work are thus brought into the discussion of alternatives ways of organising work: Management, accountability, compensation have been mentioned so far. I would suggest these are married to (command structure) hierarchies.

I think all of above, as you point to for compensation, may be superflous in some alternative organisation forms. If going from horse and carriage to automobile why keep the carriage, or the horseshoes?
Crux for the discussion is I beleive to theoretically start over, forget all about how it is today, then move forward and see if anything of the current methodology is useful at all. That said they might be, in some form.

p.s. You may have seen this, but here's a take on "why hierarchies exist" :-)
http://thingamy.typepad.com/sigs_blog/2005/01/marketing_manag.html

[Rockster]

"Starting over" from "how we do this organizing thing," I've concluded, is impossible to do with any existing structure. Starting over must mean, literally, starting a new organization. The opportunity to create a more "humane" (that's what I call it!) form of organizing work only truly exists at startup. It takes about 18 seconds for the hierarchical mindset to take over, so you have to purposefully embed it in the DNA of the organization.

The proof of the pudding though... will be when this type of organization goes up against the existing monoliths... will it win?

[As your friendly-neighborhood management prof, I'd encourage you to also read this article: Organizing in the Knowledge Age: Anticipating the cellular form, Academy of Management Executive, Vol. 11, No. 4 1997.]

[Bill Covert]

Being a serial entrepreneur and having helping hundreds of businesses, guess what has made the difference? A System. They all learned a system (or foundation) on which to build profits. Something called Strategic Mindset, and The Covert Matrix.

It's about raisining the BAR of success you create. Fun Stuff!

Here's to higher profits.

Bill