As an analyst interpreting trends in the IT industry, corporate opacity was a common challenge I had to deal with in the line of day to day research. Opacity in terms of one group not knowing what the other team was doing, prioritizing, promoting or otherwise concerned about and often a selective presentation of the facts. While it was not sinister, it certainly made the process of understanding an organization more difficult than it needed to be. So when The Naked Corporation was published, the context of my microcosm of issues became clear. It was part of a larger trend.
Don Tapscott and David Ticoll started with the premise that financial data, employee grievances, internal memos, environmental disasters, product weaknesses, international protests, scandals and policies, good news and bad; all can be seen by anyone who knows where to look.
They argue that transparency is revolutionizing every aspect of the economy and its industries, and forcing organizations to review some of their behaviours and values. The authors then proceed to make the case for the upside of this phenomenon:
1. Transparency and corporate values enhance market value, due to the fact that better understanding creates empathy and connection between the organization and its stakeholders
2. Transparency has an organizational form, and therefore needs to be governed.
3. Transparency brings a power shift to employees; and employees of an open enterprise have greater trust in one another and their employer
4. Transparency is critical to business partnerships, especially as the era of personal choice, even in who do business with, becomes pervasive.
Why is this a corporate risk?
Most organizations are not ready for greater transparency. As Tapscott and Ticoll illustrate, “if you have to be naked, you had better be buff”. The best firms have clear leadership practices and understand that investments in good governance and transparency deliver significant payoffs: engaged relationships, better quality and cost management, more innovation, and improved overall business performance.
However, the process of building transparency and integrity into business strategy, products and services, brand and reputation, technology plans, and corporate character is not an easy one. It is a natural human behaviour to present the best side of our actions and to hide our less savoury actions. From a pragmatic stance, efforts to enhance corporate transparency or honesty compete with the rush of daily operations and human predisposition. More significantly, the skills and experience to promote transparency are in short supply; without critical know-how and commitment, the migration towards greater transparency is likely to falter.
Change is gradually happening – facilitated by an explosion of information sources owners and other stakeholders are honing their ability to scrutinize the manner in which their investments are managed. Regulatory bodies too are slowly raising the bar on how third-party overseers such as auditors are themselves held accountable. Stakeholders should expect integrity and will punish those who continue to opt for opacity. Dialog on the subject of transparency will serve to fuel the trend of continuous improvement.